Can machinery thrive thrive during slowdown?
Times are tough. Hit by a string of unprecedented – and at times unexpected – economic issues, from a slowdown in China to a free to trade Iran and a plummeting oil price, unstable markets are now erring on the volatile and many, still scarred by the memories of 2008, are preparing for the worst.
The impact of this on the machinery market is already being felt, but not in the same way as it has previously.
Machinery demands a sizeable portion of project budgets, and contractors and developers want to cut costs. Integrating operations to schedule phases in a way that reduces how long each equipment set is in use for, is a skill this region has yet to fully master.
The pitfalls of buying from China are known, counterfeit parts are facing new challenges in reaching the market – today’s customer wants more for their money and slowly but surely machinery manufacturers and retailers are being forced to add value.
When it comes to new machines, there is no shortage of market debuts. MAN, Volvo and Continental among others, have all brought new machinery to market in recent months and The Big 5 2015 was a who’s who of big brands and new launches; likely one of the busiest years in recent memory.
Each claims to have bigger and better performance, efficiency and safety features than the last, other or next, which is great news for the construction industry moving forwards, but the point remains: clients don’t want to part with the cash.
It’s a buyers’ – or renters’ – market, there is no doubt, with the terms “lifetime warranty”, and “finance” used more and more. At The Big 5, MAN Trucks focussed on pushing aftersales service, a new range of refurbished parts under the Ecoline concept, and the purchase of used models, rather than competitor.
MEA managing director Franz Freiherr von Redwitz said at the time: “One thing we are pushing big time is the after sales business and keeping the vehicles on the road. Where liquidity is tough or prices are bad, we can compensate with initiatives to keep the vehicles on the road.
“We are pushing the sales also of used vehicles. If investment fund are shrinking it is better to buy used, than from a cheaper source market, because the truck will last. It is still a MAN, even if it is a few years old,” he continued.
Over and above this, the firm is specifically pushing other business solutions: financing; telematics, which recently launched in the GCC; preventative maintenance and driver education.
The total value of contracts in 2015 may have been $2bn less than 2014, but projects still exist and progress must be continue. Ever optimistic, at the time that evaluation was made analysts attributed the drop to lower oil prices leading to building materials and transport costs falling too, with a trickle-down effect to contract values.
Today’s projects aren’t urban development plans or record breaking residential towers – the words Expo and FIFA barely require mention. This time the existing projects have a finite deadline and the eyes of the world upon them.
For the machinery and plant vehicle market, how such a competitive streak will play out in terms of dynamics, is anybody’s guess, especially when counterfeit parts are added to the competition mix. New challenges are on the horizon, and they must be faced.
