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Light at the End of the Tunnel – Impressions of Excon India

BANGALORE/INDIA, December 18, 2013 - The Indian construction industry met under dark economic clouds at this year’s Excon trade fair in Bangalore (November 18-24), but spots an upcoming bright spot: 2014’s general elections spark new hope for greater growth and a more intensive infrastructure development. It is necessary after all, as is mutually agreed.

by Lasse Lommel

the new tower crane 85 EC-B 5i from Liebherr at the Excon India

Liebherr’s new tower crane 85 EC-B 5i stands tall into the dark macroeconomic clouds that hang over India. | photo: bi

2013 has been rather disappointing: The country saw a slowdown in GDP growth to a four year low at just over 4 %. In addition, the Indian rupee experienced an almost unprecedented depreciation over the course of this year: The exchange rate with major currencies such as the Euro and the American Dollar slipped 20% since spring time and much more over the last few years. This development has also been hindering for the construction industry. Especially the international machine manufacturers that rely on imports for a majority of their equipment have been hit hard. However, price hikes in the extremely sensitive Indian market have been rare. India’s original 5-year plan 2012-2017 featured an infrastructure investment volume of one trillion $. However, not even half-way through the plan-period, experts are skeptical if even half of the intended projects will get finalized.

heavy construction machinery from Vögele at the Excon India

Wirtgen Group’s Vögele is market leader in India when it comes to machinery for big construction sites. In order to target additional segments, the German based paver manufacturer is going to launch the “Master Series” in 2014 for the mass market. This new launch will attack Apollo’s position in the market. At Excon, Vögele presents the new “-3” paver series. Especially valuable for Indian customers: The visual indicators ameliorate communication between truck drivers and machine operators as the usually employed horn may not be heard in Indian traffic.| photo: bi

Nonetheless, there is hope in India. “We have reached the lowest point” concludes Rajesh Nath, Managing Director of VDMA India, hinting at a more promising future development. Raghuram Rajan, the new head of the Central Bank of India, has been well received by experts. But not only the rupee turbulence is a headache for the new boss over India’s currency, the country is also facing high inflation rates of roughly 10%. The next year’s general election is hoped to bring fresh new drive into the sluggish project realization at the bureaucrats end. To add on, this year’s monsoon has been strong and so has the harvest been which is also expected to add some momentum to the economy.

Besides, the construction industry itself is changing. Work safety standards have been a rising concern lately and builders are looking for higher efficiency on their sites. Some manufacturers even have a feeling that the so far seemingly endless stream of unskilled labor is coming to a halt. Stockbig, a plastering machine manufacturer from Germany, feels this will spark new demand for their small plaster mixing and spray machines that can replace a lot of manpower on the site and help to increase productivity.

presentation of the new electric breakers from Wacker Neuson at the Excon India

„Quick money? No!“ Wacker Neuson has made a long-term commitment to India. “This country is too big to miss on the map” says Senarat Jayasekera, Managing Director. Instead, one has to survive the monetary crisis and march towards the future with optimism. At Excon 2013, Wacker Neuson presents new electric breakers.| photo: bi

In case one is looking out for equipment to boost site efficiency, this year’s Excon was surely the place to be. On the outskirts of south India’s bustling Bangalore, 900 companies showed their latest products and technologies, roughly a third of the exhibitors represented international companies headquartered outside India. But also the Indian Industry showcased some new launches; Leyland Deere showed their new 435E backhoe loader with increased fuel efficiency, a BS III compliant engine and greater operator safety.

At Liu Gong, Assistant Director Rohit Punjabi presents the new wheel loader CLG836  featuring a new Deutz Weihai BS III engine. Liu Gong manufacturers some of its equipment in India and also does some exports to neighboring Bangladesh and to Africa. The company’s Indian operations have been hit especially hard by the currency market developments as the Chinese Yuan appreciated during the Indian rupee’s ongoing depreciation. However, the company has so far “taken the impact” as Punjabi points out, adding on that India definitely needs infrastructure: “One cannot deny, only delay.”

staff and machinery from LiuGong at the Excon India

Chinese equipment manufacturer Liu Gong proudly underlines their eleven-year presence in India. Besides sales, Liu Gong also runs a factory that produces wheel loaders for the local as well as export markets in Bangladesh and Africa. However, excavators are being imported from China. Liu Gong suffers especially hard under the recent developments at currency markets: while the Chinese Yuan saw a slight appreciation, the value of the Indian rupee slumped dramatically. As of now, Liu Gong has not adjusted their prices in the very sensitive Indian market. However, this may be the case in 2014 according to Rohit Punjabi, Assistant Director.| photo: bi

The international industry is employing different strategies to target the uncertainty at currency markets: While Liu Gong has stuck to prices so far and is still undecided on price hikes 2014 in the price-sensitive Indian market other manufacturers have directly hiked their prices. To stay competitive, sourcing in India is becoming more important. At Wirtgen Group, the production facilities in Pune already use a relatively high share of Indian-sourced parts. However, a lot of specialized components cannot be sourced from India. Thomas Schuh, Area Service Manager of Vögele, explains the particularities of the Indian market, namely the high demand for relatively inexpensive equipment along with skepticism towards new products and brands. So far, Vögele has been the market-leader at large and demanding construction sites but for 2014, the company is launching its new “master series” of pavers which will attack Ammann Apollo’s strong position in the mass-market. It will be slightly smaller than the existing pavers and feature a new engine. On the high-end side Vögele showcased the new “-3” series of large pavers with the new “ErgoPlus 2” operating system. Especially intriguing for the Indian market is the new traffic light system to avoid misunderstandings between machine operators and truck drivers. It helps ameliorate communication when the usually employed horn is easily overheard in surrounding traffic noise.

SDLG stall at the excon India

The Volvo group shows strong presence at Excon Bangalore with their two Brands Volvo (Premium segment) and SDLG (Value segment). This comes despite the low market growth and the group’s expectations of the market to hit rock bottom only in Q1 2014. “We will be there once the boom comes” assures A M Muralidharan, President of Volvo Construction Equipment India. Furthermore, the long list of lined up infrastructure projects is only getting delayed, projects are not cancelled. At Volvo, hopes also lay upon the times after the general elections in 2014. Concluding, it all seems to be a question of time in India.| photo: bi

In contrast to the Wirtgen group, Volvo uses a dual-brand strategy to serve the different needs of the Indian market. SDLG is the group’s value brand whilst the Volvo brand itself caters the high-end, high-efficiency equipment market. Volvo, which celebrated fifteen years in India in December this year and runs a production facility for compactors, small pavers and excavators near the Excon itself in Bangalore, launched the new EC220D and EC300D excavators. They boast a 10% increase in fuel efficiency, greater power and operator comfort, Volvo claims at Excon 2013. Despite the current difficult situation, with the “rupee exerting pressure on the bottom line”, Muralidharan Angadu, President of Volvo Construction Equipment India, smiles with confidence and ensures that Volvo “will be there once the boom comes. Volvo will be ready.”

Bauer Machinen stall at the Excon India

Happy faces at Bauer Maschinen despite the crisis: One reports that the bottom has been reached, a further slowdown seems impossible. Bauer estimates that 300-500 of approximately 1,000 drilling units in India are currently without work. In the light of these numbers, it becomes clear that Bauer did not come to this year’s Excon with high expectations. Nonetheless, the company sees a high need in India. The development may be slow, but it should pick up some more pacer with upcoming projects after 2014’s elections. In the months prior to elections, Indian politicians are not allowed to announce new projects or lay foundations as this might bias election outcomes.| photo: bi

Similarly, Senarat Jayasekera, Managing Director at Wacker Neuson India grins and calls out: “Quick money? Not in India!” and ensures that – despite the current difficult economic situation – Wacker needs and will march on into the future in India. The German tool and compact machine manufacturer is growing at a strong pace, planning to extend from currently 26 to 45 dealers in the country. Jayasekera is proud that Wacker Neuson has always introduced the latest technology to India offering the highest possible quality machines that do not stand behind their European versions. He agrees with some of his colleagues, pointing out a rising demand for higher efficiency and reduced labor dependency. Wacker’s latest solution to this problem comes in form of their new electric breakers that were introduced at Excon 2013.

Sommer Anlagentechnik stall at the Excon India

„We’re happy with the trade fair’s result; the number of new contacts was good. But we have a long way to go when it comes pre-cast concrete parts” says Jan Jaap van der Neut from Sommer Anlagentechnik. The weak rupee also presents an obstacle for Sommer. The payback period of new machines increases which in term hampers new investments in precast concrete element plants.| photo: bi

The industry’s next meeting is scheduled for the 2014 bc India in Delhi in December – by then the new government should be in power and the market upbeat again.