NCE skipped the volcanic ash cloud by driving across Europe to get to the Bauma construction equipment extravaganza in Germany last month. Over the next six pages plant editor Margo Cole takes you through the highlights of the show and brings you interviews with industry movers and shakers who managed to make it to Munich. Here, she talks to Jim McCullough, president of CNH Construction Equipment. He explains why new imperatives are driving construction equipment product design.
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Construction equipment manufacturers have had a tough two years, but things are startingto look up, according to CNH Construction Equipment president and chief executive Jim McCullough. CNH owns the Case brand, well known in the UK for its range of excavators.
“Order books are firmer than a year ago, and we’ve called workers back to the factories,” he told NCE at Bauma. “I think we’ve started the walk back to normalcy.”
The recession hit at a bad time for firms like CNH, which had invested heavily in making sure new machines would comply with the new emissions standards for Europe -Euro 5 - and the United States - Tier 4.
“One of the toughest things for all manufacturers was that we weren’t able to walk away from Tier 4, so the money had to be spent for compliance,” said McCullough.
“Some of the regulatory aspects of Tier 4 are not just about installing a new engine - it’s forcing you to rethink everything from the transmission to the use of computers in the machines.”
However, he hopes that, in the long term, the investment will pay off. “We took the time to upgrade our products at the same time, so we should be in a position to make the most of it when the market improves,” he said.
“In previous recessions, construction and maintenance of infrastructure has helped bring things back”
In the US, the construction sector had high hopes that President Obama’s stimulus package - designed to beat the recession - would result in increased public spending on infrastructure projects, but according to McCullough there has been little evidence of that.
And with the UK election just two weeks away at the time of the interview, McCullough expressed the opinion shared by many in the industry that political expediency often has a detrimental effect on construction.
“There’s too much focus on two and four-year elections rather than aiming at a vision for infrastructure over the long term,” he said. “In the US, the equipment manufacturers’ association has been preparing a brief around decaying infrastructure and how, if we improved it, that would make the economy more effective, because it would reduce the cost of moving goods and services.
“In most of these big recessionary cycles in the past it’s been construction and maintenance of infrastructure that’s helped bring things back, but the stimulus package hasn’t really worked yet.”
The competitive environment has given companies like CNH a new challenge, because, according to McCullough: “What the contractor wants from the manufacturer has altered.”
“There’s too much focus on two and four year elections rather than aiming at a vision for infrastructure over the long term”
Instead of the “automobile concept” of simply buying a new piece of equipment off the shelf, contractors are now looking more closely at how the different machines on offer compare in terms of variables like productivity, waste and maintenance requirements.
This, in turn, has led CNH to “change dramatically how we put these machines together”. “Each year this stuff gets a little more sophisticated, with the inter-relation between all the different technologies,” he said. “With all the technology that’s coming into play, this has been a pretty exciting time to be in the business.”
Traditionally construction equipment manufacturers have been engineering-led, developing new products and bringing them to market as and when their engineers have refined or improved the technology. Now, however, CNH is switching its product development focus to respond more to customers’ concerns.
“We’re being given strategic imperatives, like noise, safety and fuel economy, and our customers are telling us they want better productivity and lower cost cycles,” said McCullough. “A lot of times they tell you what their frustrations are, so we find what’s common, and try to develop a solution.”
CNH is part of the Fiat group, and McCullough feels this gives the company an advantage over some of its competitors.
“There’s a lot of collaborative effort, and we can benefit from other parts of the group, like trucks and cars,” he said.
“There’s the ability for more creative solutions than other companies who just buy their engines from a big supplier.”
The firm’s new vice president for construction equipment in Europe, Henrik Starup-Hansen, has moved over from Fiat’s truck business and is hoping to capitalise on his prior experience.
But first he must see out the recession. “These are very difficult times for the industry, so my first challenge is to make sure we keep things going through the bad times and look at the product requirements from our customers,” he said.