It’s been 18 months since Doosan Infracore split its interests into distinct heavy and compact business units and a few weeks since Doosan sold France’s Montabert to Joy Global. Now, Gaby Rhayem, an old hand in the region, and Woohyun Kim, a fresh pair of eyes, are the respective heads for the heavy and compact divisions, tasked with relaying these changes to Doosan’s partners in the region.
“It was an exchange of business territories,” they explain. “Before, the heavy side of the business for the Middle East and North Africa was reporting to Europe, while Russia and CIS countries were reporting to Korea — as part of our Asia-Pacific emerging markets region. Then we had the split.
“The aim is to provide focus: All of the machines for the heavy business are produced in Korea, so we said, ‘let’s have the entity for heavy reporting to Korea’; while the compact is built in the US and Europe, so we said, ‘let’s have the entity for compact reporting to Europe’.”
Rhayem has been handling Bobcat’s business in the Middle East for the best part of a decade. He joined Doosan with its $5bn acquisition of Bobcat in 2008, and since then he has also adopted Doosan Portable Power. He notes: “We’re not going in different directions, but the company has two babies, heavy and compact, and the dynamics and the customers in the two businesses are not the same.
“For the heavy, the customers are the big contractors looking for 70t excavators, big wheel loaders, and articulated dump trucks; for the compact, it is small contractors looking for machines for small construction, telescopic handlers for small buildings, and specialised equipment for landscaping.”
Kim, in the immediate aftermath of the Bobcat acquisition, spent three years integrating Doosan and Bobcat in the US, before returning to South Korea. He adds: “Territory-wise it’s a little bit different, because of the size of the market. The Dubai office for heavy is focused more on the Middle East, and there is a separate representative in North Africa; but for Bobcat, Rhayem is handling business for the whole Middle East and North Africa.
“But we’re covering both divisions in both regions, and I am taking steps to develop the service and aftercare in North Africa markets.”
Both sides of the business also have units that they’re particularly proud of. For Doosan Heavy, it is the DX480 and DX520 excavators, which were introduced into the market in 2013. “Saudi Arabia is one of the biggest markets in the GCC, and it’s leading in terms of heavy equipment — representing 60% to 70% of our turnover,” says Kim.
“Saudi Arabia used to be like the Kingdom of the Caterpillar, but it has changed totally — in 2014, we had over 25% market share in excavators, wheel loaders and articulated dump trucks, placing us first in the Kingdom.
“The market for large-scale excavators was not that big before, but it is growing quickly, and the DX480/520 excavators are now acquiring market share quite rapidly — we’re shifting double the number of excavators as before.
“In Qatar, the market hasn’t picked up as expected — it’s 2015 and there are only seven years to complete the stadiums, rail, hotels and everything — but we are starting to see some movement, and we think that if everything continues in the right direction for Qatar, the country will lead the market.”
For Rhayem, on the compact side, the major dynamic remains Bobcat’s transition from K to M series, a process that the brand currently goes through approximately once every seven to eight years. The latest model, the S450 skid-steer loader, replaced the SL130 in late 2014.
He explains: “We changed all the models, except the S130, one year back — so we now have the 510, replacing the S150; the 530, 550 and 590; and the 630 — which is very popular here in the Middle East, and which is being used with wheel saws to make trenches for telecommunications, particularly in Saudi Arabia.
“Instead of using a back-hoe for trenching, the wheel saw will cut you a clean trench precisely 60cm–80cm deep and 20cm–30cm wide, and put the material on the side, so you can just lay the cables and push the material back in.
“But it’s not just a question of it being easier; it’s the fact that if you are using a big machine like a back-hoe loader, you need to stop the circulation, stop the traffic — but you can put a Bobcat wherever you want, and it’s clean.
“Coming back to the S450, when you change a model that’s your biggest seller, it’s like Toyota trying to change the Camry. It is not very easy. It’s no secret that we have 50% market share in skid-steer loaders in the Middle East, and the S130 is our bread. When you change a model that makes up 80% of your sales, you have to be careful, because any issues can affect a lot of sales.”
To prepare itself, Doosan tested the machine for two years in the Middle East, bringing customers to the factory and taking the S450 to the Empty Quarter in Saudi Arabia to test it again in the humidity and extreme temperatures.
“Everyone was asking when we were going to introduce the new machine,” says Rhayem. “Because the S130 was so popular, people were saying: ‘Don’t change the S130 until you are 100% sure that the replacement is good.’ Nine months later, we completed the M series and replace the S130 with the S450.”
Rhayem continues: “We made a very good transition between the S130 and the S450. It is not easy when a customer of seven years comes to you and says, ‘I want an S130’, and you reply: ‘Now it’s the S450, and there are some significant changes to the machine, operationally and aesthetically,’ but we did a good job.
“It’s important, because Doosan is a big company, and it put a lot of money on the table when it bought Bobcat, and 90% of that value was in the Bobcat skid-steers; not the Bobcat portable power or Montabert.”
Rhayem adds that the resale value of Bobcat machines is so high — and they are sold so swiftly from business to business — that they rarely, if ever, appear at auction.
“You will never see Bobcat, and if you do it will be one that is 10-years- or 15-years-old; never three or five years, because you can resell these at 75% of the original value.
“I heard of one customer who after three years was selling his machines at 95% of the original price. He exclaimed: ‘I’m not losing.’ You get this high resale value when you have the population in the market.”
The other segment in which Bobcat is active is telehandlers, and such is Doosan’s confidence in the Bobcat range that it dropped its own Doosan-branded telehandlers. This includes the DT160, which was only launched in 2010.
Kim notes: “Doosan stopped the production of the Doosan heavy telehandlers and skid-steer loaders last year, while Bobcat stopped making its 12t loaders. It’s like how Doosan has an OEM agreement with Terex to stop making 8t, 10t and 12t excavators, and to focus instead on Doosan’s larger range. We have just closed the border between Bobcat and Doosan; the bridge between is broken.”
Rhayem continues: “We brought in the T40 140 and T40 180 Bobcat telehandlers last year. We previously had all sorts of generations and we were losing share in the market — because we had a very good position in the market from 2007 to 2008.
“So we decided to completely change the models and to introduce a lot of technology into the machines to differentiate them from the competition and really attack the market. Now we have had a very successful two years again: we are back on track, and back to double-digit market share.
“It was a big challenge with telehandlers because there are big names dominating the market, but we are grabbing market share slowly, and the customers are happy, because the machines are registering 4,000 hours to 5,000 hours of uptime over spans of two years.
“Today, for me, if you need to buy a skid-steer loader, you will buy a Bobcat — our competitors will admit that the customer came to them and said they want to buy a Bobcat.
The real challenge for Doosan today is in the aftersales market, says Rhayem — having the right distributor to serve its customers.
He says: “It’s become a name — but if you want that to continue, you need to feed it and think about how to keep the customer happy.”
Rhayem notes that high resale value is no guarantee of custom, and that it is the whole aftersales package that makes the difference.
“The day you have a problem and it’s not 100% perfect, the customer is immediately going to come back to the dealer to see if the party has the parts and can repair the machine.
“In Algeria, it’s a big issue, because for the last two months and for the next two months the government has stopped all shipments.
“They’ve issued an edict preventing all shipments with wheels, so for four months there will be no machinery entering Algeria. I think the idea is to protect the Algerian companies, but it is also time for us to change the distributor.”
According to Rhayem, Algeria is a “very big country” for Doosan, and as the number one construction market in Africa at present, a big opportunity for the equipment maker.
Kim contrasts: “While in many other countries we are just starting out with a new dealership; in Saudi Arabia we have been working together with one dealer, Saudi Diesel Equipment, for some 20 years.
For Doosan across the region, he notes: “The challenge is the fluctuations in oil price and the developments in Iran, which could affect the construction market from the outside. From the inside, where we have started good relationships with dealers five or six years ago, we are more focused on training them and growing them to be reliable partners for our customers. As with Bobcat, we are focusing more on customer reliability and customer care, and that’s something that we need to make sure we train all of our dealers to focus on as well.”
In late 2013, Doosan Infracore opened a parts distribution centre (PDC) with Agility in Dubai, to help to reduce the delivery times on stock orders to the 27 countries deemed part of Doosan’s Middle East and Africa coverage.
Doosan’s Middle East dealers were previously served by the manufacturer’s Belgium PDC, and Doosan Infracore historically used an air cargo service to fulfil urgent orders across the region. However, even parts delivered by air cargo could take seven days to arrive, whereas the Dubai facility is aimed at delivering parts to 90% of the region within 24 hours.
Rhayem says: “Our dealers are really very happy to have this PDC here in Dubai. It’s a cost for us, because we are stocking all these parts, but it means the dealers have to stock less, and have the cash flow to carry out more business — so it’s a big service for the dealers.
“Outside of the GCC, Pakistan is one of the opportunities — given that the Chinese are investing in big infrastructure projects, including roads and bridges — but Central Asia and Iran could also present big opportunities.
Indeed, prior to Western sanctions, which in the coming months we may see disappear, Iran was a major market for Doosan. Rhayem explains: “Everybody is looking to see what will happened in Iran. For Doosan, it used to be the number two market after Saudi Arabia, but it stopped from one day to the next.
“When we tried to compensate with other countries, the Arab Spring came, and now there is also this war in Syria and Iraq — so everybody is looking to see what will happen in Iran, because it is a big window for business.”
Kim adds: “Having a strong communications network is also an important factor in success. We implemented an information management project in Saudi Arabia, which sends a signal when a dealer has a shortage that then goes directly to our Korean parts centre and prompts an automatic delivery — to ensure that the parts will always be there, and the dealer can meet the customer’s demands.”
Rhayem concurs: “Coverage is important. Imagine a guy in Abu Dhabi: if you do not have a facility in Abu Dhabi, he will not buy from you. Saudi Arabia is the same, and it is very big.
“One of our successes there is that we have pushed the dealers to open, not just in Riyadh, Jeddah, Damman; but everywhere — even far south, right up to the border with Yemen. We pushed them for good coverage.”
