Backhoe Loaders - Manufacturers Think Beyond Demand

Backhoe Loaders

The existing and new entrants in backhoe loaders manufacturing in India are rechristening products offering strategy to suit the emerging demand order. P.P. Basistha finds out the details.

Projection of the economy to grow @ more than 7% during the 12th plan period and 1$ trillion ambitious investment plans of the government, seem to make the Indian CE market in general and backhoe loaders market in particular lucrative. With the demand projected to grow at 40,000 units by 2015, the market is witnessing entry of new players whereas the existing manufacturers are ramping up their production capacities. However, the demand of units are strongly characterized by emergence of multiple factors, wherein few of them are quite challenging for the equipment manufacturers to reckon with; during 2011 the market size of backhoe loaders was 33,500 units wherein JCB alone sold 24,500 units.

Though, recent positive achievement of the government is timely completion of tenders in awarding new road projects. President's directives to Coal India to sign fuel supply agreements with consumers in order to put proposed greenfield power projects on fast track, and to meet the emerging demand from remote areas (Pradhan Mantri Gram Sadak Yojana, irrigation projects), tier-I and tier-II cities and even from hamlets which will allow manufacturers to share the optimism that the demand fundamentals for the versatile equipment will remain quite firm and wide.

However, most of them also agree that the new demand will increasingly be characterized by growing liquidity crunch and stagnant rental rates. Thus making it more imperative for equipment owners to get adequate ROI with the very first deployment of the equipment at the job site with enough products support from the manufacturers. The stiff competition among product offerings in high price sensitive construction sector, dovetailed by demand distortion owing to tardy awarding of tenders, are emerging challenges where the business now need to be developed with.

However, most importantly, manufacturers point out, gelling the product with the new demand transition is equally challenging. This is as because compared to previous years, application versatility of the equipment was its sole selling proposition. The new demand trend is more on value proposition.

Demand in value is a natural phenomenon in any maturing market, which needs to be addressed by manufacturers through their products backed why necessary improvements in production line, allowing both sides to reap, honest benefits on their investment.

Considering this, JCB is on the way to the same path where the company has in place new, completely state-of-the-art 'ecoMAX' engine shop integrated with its main backhoe loaders production line at its flagship Ballabgarh plant. The tier-III engines are being fitted in JCB's Backhoe Loader range and other models of its heavy equipment range of tracked excavators, wheeled loaders and vibratory compactors.

Vipin Sondhi
According to Mr. Vipin Sondhi, MD and CEO JCB India Limited, "better filtration and fuel injection will allow JCB engines to perform well in off-highway fuel conditions minimizing equipment downtime, above all it will ensure better equipment integration." While JCB will maintain its partnership with Cummins and Kirloskar as engine suppliers for some of its machine models, powering JCB machines by JCB engines will provide customers with a one stop solution for their servicing needs.

Mr. Sondhi says, "apart from gaining through improvements in products support, our backhoe loaders are recognized as highly reliable, fuel efficient, productive and durable, characterized by faster cycle time, high digging force and less maintenance support. To ensure that our machines are reliable, we make them pass through several qualifying tests during production process that give our backhoe loaders' strong market position in turn driving sales." The company sold 27,000 units in 2011 and commands 75% share in country's backhoe loaders market.

Nonetheless, emerging competition on value proposition front and newer application areas are not altogether being discounted by the company. JCB has recently launched small capacity 2DX backhoe loader which is powered by Kirloskar 49hp, Kirloskar 4R810 engines. The machine comes with a shovel capacity of 0.55 cu‎m and bucket capacity of 0.18 cu‎m. Mr. Sondhi informs, "2DX will also be applicative for irrigation jobs; with better fuel efficiency, it will be most viable for light and small hiring jobs in agriculture and other sectors."

JCB's extended product offerings in the backhoe range include, 3DX Super, 3DX-XTRA and 4DX backhoe loaders. Stronger in its class, the 3DX Super backhoe loader comes with 92 HP turbo water cooled JCB engine with increased cooler size for better performance in hot and dusty conditions. The machine has 6-in-1 front shovel with high break out force for better loader prod- uctivity. Better visibility, improved front reach, lower turning radius and high tractive and breakout forces give 'best in class' loader performance. 4DX comes with similar engine as that of 3DX super. The machine has 1.2 cu‎m loader bucket and a 17 ft excavator, enhanced tear out forces and bigger bucket size for enhanced productivity.

On emerging competition from new entrants, Mr. Sondhi says, "we score on customers support as well, with 55 dealers across the country and 430+service outlets, we are adequately positioned in terms of equipment availability and customer support. We intend to strengthen the position further by being closer to the customers." However, with demand unfolding coming fiscal, the basis of the company's products support and expansion in portfolio will stand for test.

Sunil Tiku
Making affordable products available for customers with value propositions while calculating to enhance market share, is also a challenging job for existing acclaimed brands facing rising production costs. Terex Equipment is computing to raise its share in backhoe loaders business from 4% to 6% during 2012. According to Mr. Sunil Tiku, Senior Director – Sales & Marketing "the idea to raise market shares will be fully backed by expansion of production volumes which will also bring our production costs down. Investments are being made at large scale in robotic welding and other advanced production technologies reducing repetition in production and assembly line, consequently it will roll out high quality products in minimum time."

Terex is committed to provide low-cost products to its customers through its plant at Greater Noida near Delhi, besides retaining its business where over 30% of new orders come from the existing customers in order to avoid brand substitution. The company is aiming to increase its number of units from 1,400 + to over 2,000 this year.

Terex Equipment

Mr. Tiku says, "We will be strongly counting on rugged and reliable products to mark our presence, with fuel efficiency being in constant focus. As an ongoing marketing exercise, we are making our Dealers aware of new projects with adequate thrust on territory coverage and new demand areas which will enable them to position the equipment accordingly for the customers. Besides, we are also carrying out regular promotional activities for our backhoe loaders highlighting their productivity standards, while having regular interactions with our customers." Importantly, he finds newer application of backhoe loaders in agricultural sector, brick kiln industry, rural markets among others.

Mr. Tiku points out, "for our new market expansion, the Dealer's selection in accordance with our set standards will be much in focus, where we will evaluate eligibility criteria in order to provide requisite products support and they will also be trained by us. Terex has over 50 dealers for sales, service and parts support assisted by 600 trained engineers and technicians. The company has five regional and twelve area offices with 2 more regional offices to be added this fiscal. "With forecasted spurt in demand for our products, we are making our distribution network strong by adding new branches to existing dealerships and appointing new dealers at strategic locations," adds Mr. Tiku.

The 76 HP TLB 740S, 90 HP TLB 844S, and TXL 760S comprise Terex's new backhoe loader offerings with gross power at 2200 RPM, have loader buckets of 1.0 / 1.2 cu‎m, while the standard and optional backhoe bucket is in different capacities: 0.24, 0.09, 0.18, 0.12 and 0.3 cu‎m. The backhoe loaders are powered by Kirloskar 4R 1040 TC, BS-3, four cylinder turbo charged water cooled diesel engine. The equipment claims to have digging depth of 4.74 m which is the highest in its range. They are available with optional attachments comprising rock breakers, ditch cleaning buckets, ripper teeth, 7-in-1 Clam shovel, and trenchless buckets.

He informed "manufactured for the Indian market at our Greater Noida facility, our affordable backhoe loaders are fuel-efficient through unique 'Smart UC Hydraulics.' The machines are fitted with strong boom and dippers, heavy-duty stabilizers with adjustable wear pads for longer service life. Improved protected hose routings and other hydraulics have been designed in segments to achieve lower replacement costs and longer uninterrupted working. We are in the process of developing new variants of backhoe loaders customized for Indian construction sector."

Newer product requirement trends is making backhoe loaders manufacturers to look beyond demand, resulting the manufacturers get repeat orders from the existing customers wherein most of them constitute the rental segment. Thus, it becomes vital for the manufacturers to precisely understand the customer's needs. According to industry estimates, the rental and plant hirers account for two thirds of the market.

Rajesh Sharma
"According to Mr. Rajesh Sharma, Executive Vice President, Escorts Construction Equipment Limited (ECEL), "We have incorporated various differentiating features in our DIGMAX range of Backhoe Loaders. The technology, operational parameters and features of our machines ensure a higher productivity at a much lower operational and maintenance cost. One of such features allows the operator to choose working modes depending upon the site requirement. He can choose power mode to maximise productivity or economy mode to minimise the fuel consumption. DIGMAX range of Backhoe Loaders has the best in class Reaches, Digging forces and Payload capacities. Compared to any machines from competition, DIGMAX dig deeper, Load greater payloads at higher heights."

Mr. Sharma points out, "It is very important that machines for Indian market are designed and built to suit Indian working and environmental conditions. We take pride in stating that DIGMAX is the first Backhoe Loader which is designed especially for the Indian conditions. We leaned heavily on our 40 years of experience in Indian construction equipment industry and used every bit our learning of customers' actual requirements while designing this machine."

DIGMAX range of Backhoe Loaders

Emerging newer applications are addressed by ECEL to expand its market presence. ECEL's backhoe loaders portfolio consists of 4 models in the range of 76 to 90 hp. Mr. Sharma points out, "For enhancing versatility and value add on, we also offer various attachments to our equipment such as rock breakers, GP buckets, HD buckets, trench buckets, ditch buckets, square hole buckets, ripper attachments among others." ECEL has a strong and capable nationwide service network. ECEL is expanding it further by increasing the number of service locations from 120 to 150 this fiscal.'

To carve a niche for itself, CNH- India (popularly known as Case-India) is contriving to place its backhoe loaders for new demand areas. According to the company, its flagship backhoe loader CASE 770 driven by 76 horse power engine has got a higher breakout force and digging depth as compared to contemporary product offerings, making the machine suitable to work in Indian conditions. CASE 770 backhoe loader have also gained acceptance in the hiring segment due to its low fuel consumption and operating cost. CASE 851 the backhoe loader in 96 hp category has dual stage pump with load sensing system which results in higher productivity with fuel efficiency. The 4 wheel drive version of this model has gained good acceptance in tough hilly terrain of North East and Nepal due to higher wheel torque and force.

CASE 770 backhoe loader

To expand and retain its market presence, Case India will bank on its manufacturing facility at Pithampur, Madhya Pradesh which is fully integrated to its global manufacturing network and currently building backhoe loaders and vibratory compactors. The plant is equipped with state-of-the-art facilities, such as high precision laser and cutting machines, welding robots, CNC machine tools, a new automated powder coating system and a variable speed assembly line. It also holds ISO 9001 certifica- tion for design and manufacture of construction and road building equipment and ISO 14001 certifica- tion for environmental management to roll out quality products.

For enhanced product support, CNH is making its dealers' network strong. The company says that it will assist its 58 dealers to grow their own business and increase the value that they will have from Case brand in terms of products and services for better customer support. CNH- India marketing offices are spread over the country at 18 stategic locations and expect to have heightened presence in India's backhoe loaders market by further offering customized products backed by its engineering expertise gathered from its operational presence in major construction markets across the world.

Building Turf

Kairas Vakharia
Country's growing infrastructure sector has drawn in new entrants in the backhoe market claiming to have technically refined product positioning. However, when examined by the current colossal population of 1,76,000 existing active units present in the market, having strong brand recall, it may seem that the task of penetrating the existing players turf by the new comers could be arduous. Agrees Mr. Kairas Vakharia, VP Marketing, Mahindra & Mahindra. He says, "The power of word of mouth and visibility is very much effective in this business. Hence, existing players have an advantage in terms of customer recall. But we believe in the long run, our superior value proposition will help us not just to capture a good share of the market but also help us to build a strong Mahindra brand in the construction equipment space." The company is planning to make presence from demand infrastructure sector and from local customers. "However, higher cost of finance and increase in excise duties are likely to have a negative impact on the future sales growth," feels Mr. Vakharia.

Mahindra 'Earth master'

Mahindra has put in place, key requisite technical ingredients to roll out its newly launched Mahindra 'Earth master' backhoe loader. Manufactured at Mahindra's state-of-the-art facility at Chakan, Pune and equipped with fully automatic robotic welding unit for accuracy, superior cutting finish, and rigid quality evaluation procedures. The plant has in place checks for appearance, welding, painting, noises and leakages for proper functioning that really makes Mahindra proud of an advanced products offering that can take on competition.

According to Mr. Vakharia, "our backhoe loaders are fitted with Mahindra 3.3 litres DITEC turbocharged intercooled diesel engine delivering gross engine output power of 83 PS allowing customers to save over 10% on fuel consumption. Added features include, advanced hydraulic system, joysticks for smooth and simultaneous operation of swing, backhoe banana boom for higher productivity. Our backhoe loaders have undergone over 20,000 hours of rigorous testing in the harshest of terrains and for the toughest of applications. It has been validated on all parameters, safety and reliability."

Mr. Vahkaria informs, "Mahindra Earth Master allows operator to dig up to 7% more distance than any other backhoe loaders. This is the first backhoe loader in India which informs an operator about a warning. Products support for Earth Master is backed by a dealer network comprising over 100 sales, service and parts outlets (each equipped with a service van) in addition to 12 area offices, one central warehouse and 10 regional warehouses spread across the country which assure the availability of normal and critical parts to the customers within 24 hours." Mahindra's dealer network consists of both its existing and new dealerships.

He further says, "Demand for our debut products has been quite encouraging. We are now monitoring the market trends on the demand of new backhoe loader variants wherein the decision will be taken to roll out new products, seeing considerable demand of such variants."

Leyland Deere 435

An advanced product positioning to grab the pie is also claimed by new comer Leyland Deere. The big ticket joint venture partnership has established a brand new facility at Gummdipoondi, 50 kms from Chennai incorporating advanced manufacturing processes like robotic welding, CNC machining, state-of-the-art paint shop and international quality systems to ensure the highest standards of products reliability and durability, supported by international standard quality processes and systems. The factory produces Leyland Deere's 75 hp class 435 backhoe loaders.

P. Ravishankar
According to Mr. P. Ravishankar, CEO, Leyland Deere, "Leyland Deere 435 has been designed and engineered specifically for Indian operating conditions with a deep focus on user habits. Demand for our products has been rapidly growing due to its competitive advantage in satisfying the critical customer requirements of lower operating cost, higher productivity and higher up-time. The 435 has multiple features which give competitive advantages such as rugged & fuel-efficient engine from Ashok Leyland with mechanical inline fuel injection pump, luxurious best-in-class cabin, and enhanced safety features like ROPS and FOPS, heavy-duty drivelines with longer change intervals for lubricants." To ensure a higher uptime compared to others in the industry, our customers are supported 24x7 by the innovative Leyland Deere C.A.R.E Programme delivered through an extensive and efficient channel network."

mechanical inline fuel injection pump

Banking on Product Positioning

Entry of new players is well likely to expand the market. New potential will continue to be tapped by Caterpillar through its standard Model 424B in India, manufactured at its Building Construction Products Division's plant at Thiruvallur in Tamil Nadu.According to the company, "Cat 424B can dig deeper and faster than any of its competitors. The unique hydraulic system (variable flow, load sensing type) and design of the backhoe (banana boom) is similar to what Caterpillar uses for its Hydraulic Excavators range. The machine has the best in class digging forces even at the deepest digging point allowing the most difficult excavation to be tackled with ease. Based on the machine's high productivity, most equipment hirers demand and get a higher hourly rental for their Cat 424B BHLs as compared to other products."

Cat 424B is sold and serviced through Caterpillar's dealer network of TIL and Gmmco's 162 branches in the country. Caterpillar mentions, "our dealer branches have parts depots stocking the Cat 424B genuine parts and consumables, and also factory trained service engineers equipped with mobile service vans to reach the remotest job sites in a matter of hours. Customers also have the choice of opting for Annual Maintenance Contracts (AMCs) with the Caterpillar Dealers, these AMCs can also be customized to suit the Customers' unique needs."

Tata 315 E Backhoe Loaders

On similar lines, TELCON is planning to retain its market presence through its existing two products - 80 HP, TATA 315V and TATA 315E. The machines are fitted with BS3 compliant engine TATA 497TC IC.

According to the company, "Telcon BHLs are known for their lowest cost of operations because of the high quality of components used. Proven components like the Tata 497TCIC engine and the tough ZF axle and transmission make our products the choice of customers. Features like the Power-shift transmission offer a clutch-less operation ensuring a smoother movement, higher site productivity, comfortable drive and lesser loads on the machine components. The backhoe loaders are made available with optional attachments comprising, GP bucket, HD bucket, trench bucket, ditch bucket, square hole bucket, ripper attachment, and rock-breaker. The attachments on the loader side are 6-in-1 bucket, tilt dump bucket, forklift and jib crane." The company is planning to increase its demand for backhoe loaders from upcoming projects in real estate, urban works and roads.

Case for Evaluation

Entry of new players through strong products positioning is likely to expand backhoe loaders market owning to increasing competition. However, viewed from the long-term prospective, existing brands with wide market base will continue to connect their names with product support, an initiative which they will now be making stronger than before for higher brand recall. Existing players with their prolonged core experience in construction sector, with their requisite knowledge base, will have an edge in tailoring customer support backed by making advancements in product redesigning and reengineering, as a result of the newer value based demand trend. It is quite interesting to stand watch that how far the new entrants, subsidiaries of altogether different engineering product verticals will be able to gain by monitoring the new emerging situation and by adding value in the entire production supply chain.
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