Volvo’s Reputation In Construction Machinery Segment Growing With New Products

Most people think of cars and trucks when they hear the name Volvo, but the company is also one of the larger and faster growing construction machinery suppliers in the world. Indeed, it can be compared to giant companies like Komatsu equipment, Caterpillar and Deere. Volvo’s construction equipment for sales.

That are expected to top $2 billion for the first time, versus sales of $1.9 billion and $1.2 billion. About 23 percent of those sales are generated in North America, while the largest portion of sales (about 60 percent of the total) comes from Europe.Volvo has always had an excellent reputation in the construction machinery industry. The company is managed from its headquarters in Brussels, Belgium, with production facilities in Brazil, Canada, France, Germany, Sweden and the U.S. The North American operations consist of Volvo Construction Equipment North America, Inc., located in Asheville, N.C., and Euclid-Hitachi Heavy Equipment, Inc., in Guelph, Ontario, and Cleveland, Ohio. Volvo Construction Equipment is responsible for the marketing and product support of the company’s business in the U.S., Canada and Mexico. Euclid-Hitachi oversees the development and manufacturing of rigid haulers produced in Canada.Volvo was known as VME. VME was formed, through the combination of the construction equipment divisions of both Clark Equipment and AB Volvo. Clark announced its intention to sell its entire interest in VME, so Volvo management reached an agreement to purchase Clark’s 50 percent interest for $573 million as part of its strategy to concentrate on the automotive and transportation industries. The company, renamed Volvo Construction Equipment, was consolidated June 30, 1995, at which time it became a wholly owned subsidiary of AB Volvo.Within the rigid hauler business, Volvo has a joint venture with Hitachi - Euclid-Hitachi - of which Volvo owns a 60 percent share. That venture was formed. The company also owns the German company, Zettelmeyer, which became a wholly owned subsidiary.Volvo acquired Groupe Pel-Job, a French manufacturer of mini-excavators for sale and a leading supplier of those machines in Europe.Volvo is the world’s leading supplier of articulated haulers, and it is a major producer of rigid haulers and wheel loaders. The company also produces hydraulic excavators - a product area it is planning to revamp completely during 1997 - and mini-excavators produced by its Pel-Job subsidiary.44 percent of the articulated dump trucks manufactured in the world rolled out of Volvo factories. It’s nearest competitor, Caterpillar equipment, accounted for about 25 percent of the market.The wheel loader product line has always been a mainstay for Volvo. Again, the company is a leader in this market, accounting for 10 percent of total industry production and sales annually. Caterpillar and Komatsu, the leaders in wheel loaders, together represent 40 percent of the world market, followed by Volvo in third position. In the North American market for wheel loaders, Volvo accounts for about 11 percent of the market.

Machinery- a Perspective Market in China

The construction equipment industry has a major bearing on China’s manufacturing industry.China’s machinery industry accounted for 17.0% and 10.6% respectively of national sales and exports. Rapid economic development in China has led to a corresponding increase in industrial machinery. Almost all leading international players have formed joint ventures in China including John-Deere, Daewoo, Hitachi, Parker, Sanyo, ABB, Emerson, Siemens and Volvo.

Chinese machine builders are also enhancing their international participation through larger exports as well as a higher degree of internationalization.In the near future, China will be an important player in the global industrial machinery marketplace.

Representative Machinery

1. Agriculture Machinery
Today China’s agriculture is a new era of historical development. In a long period of time from now on, expanding operating scope, industrialized management, sustainable development, and scientific and technical innovation in agriculture shall be the four tendencies and driving forces. The development and adjustment of economic construction in agriculture requires higher level and larger scope of mechanization.

2. Construction Machinery
Construction machinery is the largest customer of hydraulic products, which makes up about more than 40% of the total market volume of hydraulic products. The percentage shall further increase in the future. China is in an extensive developing and constructing period, thus the demand of construction machinery in the coming several decades will up, and China will be the largest market in the world.

3. Machine Tools
Along with the progress of manufacturing technique, China’s demands for high precision, high-efficiency CNC machines, is getting more and more. Now, in China there are about 3 million machine tools in use, and it is expected that about 4 million units machine tools will be in use.

4. Plastic Machinery
The demand for plastic products will increase remarkably to cater for the development in the fields of agriculture, automobile, electronics, light, foodstuff, packaging and construction industries and the improved living standard of the people as well. At present, the total output value of plastic in China has come to the forefront of the world, but the annual plastic consumption per capita is only 14.5 kg, less than the 20 kg world average annual consumption per capita and far from the 50 kg to 100 kg annual consumption per capita in developed countries.

5. Harbor Terminal Facilities
In order to meet the demand of domestic construction and enlarged export and import trade, task for building coastal port and inland port is very heavy, a great number of ship loaders, car dumpers, stacking machines and container cargo handling equipment will be additionally provided or updated.

6. Environmental Protection Equipment
In order to keep the development of economy, society and environment well coordinated, and make the ecological damages and environmental pollution well controlled, environmental quality and comprehensive utilization of resources are raised further, state will add the investment for ecological preservation and environmental protection. China is putting emphasis on developing: urban sewage and solid wastes disposal and comprehensive utilization equipment, urban and industrial noise control equipment and atmospheric pollution control equipment.