Civil engineers are missing out on huge savings because they are not using construction machinery properly, says JCB chairman Sir Anthony Bamford. There can be few people better placed than him to cast such comment, given his company's size and intimate involvement with the construction industry over the last 23 years.
'I would say to civil engineers, 'please look at what the machine is capable of doing'. Frequently machinery is under-utilised,' he says.
'We make machines that are more efficient than the ones we made 10 years ago. The output is greater, fuel consumption is less. Machines can do more than people imagine but there is a familiarity which has not taken into account what has happened to the product in the last 15years.
'That galls me about the construction industry. An example is the backhoe loader. You can use it to do so many different things, yet frequently you find that all it is doing is digging,' he says.
Sir Anthony believes that an awareness of machine capability is particularly important as increased time and cost sensitivity in the industry has led to a demand for high utilisation machines.
'At one time most contractors had big plant departments. Now they will rent. This has altered the types of machinery used. Work is becoming more specialised, which has resulted in a growth in derivatives and attachments to existing machinery.'
Sir Anthony has a clear idea of the role that civil engineers should be playing in the development of new plant. 'I would like to know about customer needs from civil engineers. In Britain the civil engineer might specify a 20t excavator whereas in Germany they go into exactly what type of boom to have on it, what type of dipper stick, what the job is, what type of bucket to have. We could help civil engineers more if they would get more involved with us in the specification of machinery on their particular job.'
Knowing what the market wants is central to JCB's success. The company's ability to spot a need in the market and to respond with innovative products has made it Europe's biggest earthmoving equipment manufacturer.
'We are very conscious that our daily bread depends on selling to customers, so we talk to customers a lot,' says Sir Anthony. He maintains that even if customers do not know exactly what they want in terms of equipment, they can set JCB the challenge of providing solutions to problems they identify.
'I think an attitude to new products is something we have that others do not. We talk about new products all the time,' says Sir Anthony. 'Various people help us with market research. A number of engineering colleges help us with things like electronics and hydraulics, mainly telling us about the future. But more than anything there is a gut feeling that comes from experience and from an evolution of ideas. Being close to the marketplace is terribly important.'
Innovation is an important watchword at JCB, although Sir Anthony is keen to stress that the company does not innovate just for innovation's sake.' We do it because there is a need. For example, there have been a lot of fatalities with skidsteers. In our machine you can get in from the side. It is a lot safer. Safety is a big technology driver.' It is a testimony to JCB's research and development policy that its revolutionary one-armed skidsteer was recently awarded Millennium Product status by the Design Council (NCE 2 April).
Considering the seemingly ubiquitous nature of the classic JCB 3CX backhoe loader on British building sites, it is perhaps surprising to learn that the vast majority of JCB's new products are for export. 'The UK is only about 20% of our business. Some 80% is export, therefore exports are terribly important to us.'
So it is inevitable that the company's business has been hit hard by the strong pound. While this has affected the company's profitability dramatically, volume sales have held up. 'We think it is better to keep our volume going and sell into markets competitively than it is to withdraw from the market place altogether. That means dropping our prices and doing whatever is necessary to maintain market share,' says Sir Anthony.
The company has also been affected by the economic collapse in Asia. 'The collapse has affected everybody selling into that part of the world. That market is dramatically down. But I do not see it as a long term crisis. The biggest real problem is Japan. If Japan gets going then the rest of the Far East will get going again.'
Sir Anthony believes that JCB is well placed to get through an economic downturn. 'We
sell everywhere in the world. That is a buffer. Also, we are continually looking at every aspect of our business to identify ways of making it more efficient. That is where a strong currency is a good thing. It makes you constantly look at your business.'
The company is also looking to expand in new markets. 'China is a market that could grow enormously and we are selling machines in China through our own dealership. A lot of our competitors have gone into joint venture with Chinese companies but we have not. So far we have not found the right company to have a partnership with. We have concentrated more on India. India has more than a billion people. It is a democracy and it has a common language with us. I think India is a far more exciting market place than China. There are about 340M middle class in India. They are the ones with the money.'
Sir Anthony also says South America has great potential. 'For construction machinery you need two ingredients. You need money and you need people. South America is getting richer and there are a lot of people. Inflation is under control and money is being spent on infrastructure.'
As if to underline the global nature of JCB today the company has recently announced that it is to open a backhoe loader factory in the US. 'At least 20% of what we sell goes to North America. If you add the rest of the Americas it is more like 30%. And the machines we are shipping there are different to the machines we ship to most other markets in the world. So it makes sense to be in America.'
With Sir Anthony at the wheel JCB will continue to innovate to meet the needs of the construction industry. Ultimately, survival is his main driving instinct. 'The thing that worries me every day is the fear of going out of business. This means not resting on our laurels.'