Liebherr: “Neither price cuts nor product jugglery, we'll resort for sales build-up”
You have been reporting improved off-take of fresh units of mobile and crawler cranes. What are your mid-and long-term demand expectations?
Yes, we have reported positive sales in the past two years. Sizeable off-take has been from the growing windmill sector. We expect demand to grow as rental agencies involved in the sector continue to show interest for newer cranes based on planned expansion by wind turbine manufacturers. Cement industry has also contributed towards our sales. We are positive towards future demand led by gradual improvement in the rental rates, especially in the medium and heavier capacities. Future demand is expected to come from couple of strategic refinery expansion projects identified by the government as well. Demand is also expected from power projects, precisely nuclear power sector. However, we will see what can be the extent of demand. This is while not undermining the fact that good number of units in the medium and heavier capacity, will be soon released in the market following completion of two major ongoing refinery expansion jobs in the private and government sectors. Actual demand of fresh cranes will be based on the level of engagement of the existing units released in the market. It will also be determined by the pace of execution of the proposed projects.
How do you see your market position in this forecasted positive scenario although based on some vital determinants?
What is the reason behind it?
Though the market is improving but will continue to remain highly price sensitive with customers getting attracted to cheaper products compromising safety and productivity. This is coupled with banks showing reservations towards financing new products. Taking advantage of the situation, some competitors have chosen to free finance the products. This is so as to have a quicker market penetration and build up their brand. Many of the products, promoted through free financing, are releasing their products without proper trail run at their plant with prototype, posing severe safety risk to the cranes during the course of their operation. This could be in terms of failure of booms, tracks and links or even complete breakdown of the structure. This was exhibited in the recent past in refinery projects where there was complete structural failure of the crawler cranes deployed in the projects. Yet, leaving aside the past failures, only to promote the products without adequate trials and tests, these manufacturers have gone on to placing the existing cranes with a newer load chart very frequently. Windmill is the major sector where the competitors have resorted to these means to make headway.
How can you justify the claim?
How do you propose to counter this?
We will neither resort to price cuts nor product jugglery to build up sales. Reduction in price through stripping down the advanced technology, raising questions about safety and productivity will create a dent in the customer's loyalty towards our well established brand. We cannot afford to do that.
However, given the fact that the market continues to remain price sensitive and hiring rates are yet to see higher appreciation. How will you justify that customers go on to make higher initial investments?
The justification towards making higher initial investments is based on two grounds. First, is the high level of productivity based on the load chart and assured levels of safety of our premium products. The second logic is backed by European certification CE; our cranes come with a high resale value. We can strongly claim that at least, 70% of the initial investment made by the owner can be recovered as resale amount. With European Union certification, Liebherr cranes can be sold in European, Australian, USA, Middle East, South African, Singapore or any other markets.
Published on:
26 August 2016
Published in: Lifting & Specialized Transport July-September 2016
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