December 7, 2016 - One thing that struck me during my recent visit to Bauma China is the way local manufacturers seem to think that they must produce/offer their own versions of every type of machine as though the only road to success is to be all things to all people. Is this the last phase in the notion that bigger is better?
In the days when construction companies bought all the equipment they used, there may have been some logic to this. Companies such as Caterpillar, Komatsu, Case and to a lesser extent Terex, could provide everything from dozers and excavators to motor graders and even road equipment. The thought process is that the contractor gets all his equipment from one manufacturer and therefore one dealer - thus working with fewer suppliers which had the inventory when you needed it along with the parts and service and support it. Better to buy a weaker product with great support than a higher performance machine that caused a worry if anything went wrong and which might not have a global resale market.
This philosophy rarely applied to cranes or aerial lifts although some of the big manufacturers have dipped their toes in the market in the past - both Komatsu and Case tried the Rough Terrain crane market. However, the fact is that while contractors have always bought some cranes or platforms, they generally prefer to rent them if they can, for various reasons including the wide spread of models, high cost and sporadic demand. For this reason we have never seen CAT cranes and CAT scissor lifts etc…
With contractors increasingly outsourcing their equipment needs to rental companies, we might see companies like CAT struggle - this realisation is one of the reasons the CAT Rental store was born. But once you rent your equipment the attraction of a single manufacturer providing all of your equipment is no longer of particular interest - as you have a single supplier in the form of the rental company.
The rental company knows it has the advantage by sourcing the best product for the job, there is a benefit from standardising the fleet and limiting the number of suppliers. But if this can lead to a rental company supplying a model that does not stack up - because the manufacturer has not redesigned it for 25 years - or it has gaps in its product line, there is a risk that another rental company that is more customer focused in terms of product gets its foot in the door.
No full-range manufacturer is going to have the best model in every size and type range at any one time, no matter how hard they juggle the development programme. So most rental companies will have a selection of suppliers providing the best machines in each category taking both reliability and after-sales performance into consideration as well of course.
Manufacturers will certainly want to make sure that they have a sufficient spread of product to ensure they are considered as a supplier which can attract the best distributors/rental companies or to justify a sales and service network. However this can be within a sector - for example if you want to be seen as a credible telehandler supplier then you will at least need a full line of fixed frame models, OR a decent line of 360s. As JCB and JLG have shown, you can do well without offering every type of telehandler.
The same applies in access, Genie does not lose out because it does not have a spider lift or truck mounted line. If you do booms or scissors then you really need a decent line of both, although there are notable exceptions of course Manitou and Niftylift being among them.
With cranes it is even more clear cut. You only need a full line of a particular sector, such as tower cranes, crawler cranes or All Terrains. There is no pressing reason to emulate Liebherr, Terex or Manitowoc - Kobelco and Comansa are good examples of that. So why then do the big Chinese players like Sany and XCMG seem hell bent on offering everything from a concrete mixer to a 1,2500 tonne crane, to a small electric scissor lift? If I was a buyer of electric slab scissors I would not fancy my chances of getting the attention of the chief executives of Sany of XCMG if I was having problems with my 19ft scissor lifts, they might not even realise they made them!
Obviously one thing that is different for the Chinese producers is that they are still predominantly selling products directly to the contractors, both in their home markets and the export markets where they are currently doing well, such as the Middle East, Africa and South America. However given that big Chinese trading houses are often dealing in those export markets you would think that they could assemble the full offering from one or two slightly more specialised manufacturers?
Even among the Chinese companies that focus on specific markets such as powered access, many of them still feel they need to build every type and size. Leading Chinese manufacturer Dingli which said it is focusing entirely on aerial work platforms feels the need to launch a spider lift and make its own versions of the MEC Titan and Heavy duty PB scissor lifts, not to mention mast climbers which have zero manufacturing or operational synergy with other access products.
I raise this because Bauma China was packed with full-line manufacturers suddenly diving into access, even though they might do much better improving some of the products they already have a reputation for. There have also been signs and rumours that companies such as CAT and JCB have been sniffing around the powered access business again, considering acquisitions or other methods to enter the market. CAT apparently has a plan to start building its own telehandlers again, even though its dealers celebrated the day they started receiving JLG-built CAT telehandlers. Why?
The usual reasons a large company enters a new unknown market sector include a lack of credible suppliers, excessive margins highlighting an opportunity, or they can really bring something new to the table - look at Apple and the mobile phone business, Dyson and the vacuum cleaner market or the hand dryer market for that matter and Tesla with the electric car. They have all brought something new to the market and have made a massive impact.
It is hard to see what full line construction equipment manufacturers can bring to the aerial lift party - it looks as if they are simply gate crashing to eat some of the cake, rarely a good strategy for a large unwieldy corporation. They usually end up choking on it.
I think the long term impetus of movement is in the other direction with more reliable equipment, the availability of the latest design software to even the smallest manufacturers, fantastic third party parts and service suppliers, modern remote diagnostics and internet communications all favouring growth of the specialist rather than the jack of all trades.
Time will tell.
We appear to be sliding into an era where truth and facts are seen as disruptive irritations, not only by outspoken ‘populist’ politicians, but increasingly of large companies and industry associations.
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