Broaching the subject of excavators this month with the manufacturers and distributors active in the region revealed a definite upswing in the market, with many parties proclaiming double digit growth in their respective niches.
While not every industry expert was quite so cavalier, there wasn’t a single dissenter against the prevailing notion that the Middle East is exhibiting growth that’s above and beyond the global average, as it continues to be fuelled by activity within the GCC.
Qatar’s excavator market in particular is exhibiting a startling rise, according to Ayman Ahmed, MD of Jaidah Equipment, who notes that: “Due to the growth of the infrastructure projects, the excavator market has shown a tremendous growth — approximately 40% in Qatar in 2015.” Ahmed, who heads the distribution of Komatsu and Bobcat machines through Jaidah Heavy Equipment, and rental services through Al Maysan Equipment and Rental, adds that “almost 75% of demand is for 18t-27t excavators”.
Such is the demand that Jaidah is relying on both local stock and Komatsu’s central stock in the Jebel Ali Free Zone to help fulfil snap orders from its customers, particularly for Komatsu’s 23t PC220 excavator, for infrastructure projects like Doha’s Metro and orbital roads projects.
Alexandre Favero, excavator application specialist at Caterpillar, supports Ahmed’s claims, noting that Qatar’s “demand for skilled excavator operators has gone up tenfold”.
Meanwhile Al-Bahar, Caterpillar’s exclusive dealer in the Gulf (except in Saudi Arabia), has taken to conducting on-site training for operators who hold “operators who hold basic operating skills so they can become skilled”, in an effort to keep up with the rapaciously high production rates demanded by its customers.
Caterpillar’s excavator sales in the Gulf in 2014 were up 13% on the 2011-2013 average, and the trend for 2015 remains positive. Favero notes: “Across the Gulf, the 31t-35t class size is increasing, while in Saudi, the huge 20t segment keeps growing and the 40t-50t segment is also growing at a lower volume but at a faster pace.” Caterpillar also recently bolstered its product line with the new D2-Series, including the 330D2L (formerly 329D2L), the 320D2L and the 349D2L.
In Qatar, Cat is looking at most projects one by one, and, relating back to the challenge of skilled operators, is suggesting larger models are possible to reduce the number of required operators.
Across the Gulf, JCB is experiencing 15% year-to-date growth compared with 2014 — a rate that it expects to hold for the rest of the year, but matching Jaidah’s estimate for Qatar, Steve Ryder, JCB’s Middle East regional manager, concurs that “the popular 18t-22t classes of machines still account for over 70% of the market demand — the same as last year — while the 40t-50t class remains at 12.5%. In the last 12 months we have also introduced the JS205LC, a simple but extremely rugged 20t machine.”
Samer Khalid, general manager of Galadari Trucks and Heavy Equipment, which distributes Komatsu machines in the UAE, says: “When it comes to 20t excavators the demand is still there, but we are number one when it comes to the 40t PC400-8 — one of the best machines ever made by Komastsu. It is like a piece of art. While the 40t segment was a little slow at the beginning of the year, it started picking up in June. “When it comes to the big tonnage of excavators — 80t and above — I think the market will pick up in the second half of the year because the UAE crusher business is also picking up.
“The demand for aggregates in Qatar, Iraq and India is going to increase, but there will be less supply, and that is why the UAE crusher business will boom in the coming two years. The requirement for quarrying is going to be huge, and I think we will exceed availability for certain products as the demand will be so big.”
Hitachi is also experiencing growth, according to Takuro Wada, sales manager for Hitachi Construction Machinery Middle East, and is selling over 8,000 units a year in the region, with half of that demand coming from Saudi Arabia — a market where he corroborates with Favero in noting 85% of the demand is for 20t machines. Working to this brief, Hitachi has launched the 20t ZX220LC-GI in Saudi Arabia alongside the existing ZX200-5G model in the market.
Kurt Deleu, EMEA strategy director for excavators at Volvo CE, adds: “There is increased demand for more mobile machines like wheeled excavators, and we have created a lot of interest.
“As the cities grow and expand, wheeled machines limit damage to the roads during movement between jobsites. Customers who try our EW205D wheeled excavator are delighted with its performance and flexibility so we expect this to grow further in the next few years.
He adds: “The main models for Volvo CE in the Gulf are the EC210BLC and EC480DL crawler excavators, but we see a lot of potential for the EC350D crawler excavator that is positioned between the EC300D and EC380D, allowing us to capture applications that do not necessarily need EC380D capacity. We also expect strong sales for the EC750D that replaces the EC700C this year.”
For Case New Holland, the 20t class is also key, according to Franco Invernizzi, business director for Africa & Middle East at CNH Industrial Construction Equipment: “Our best-selling model in the Gulf is the 20t CX210BLC, while the 25t and 35t models have shown positive growth, with the CX240B, CX370B and CX470B proving themselves successful in all operational conditions. In the Middle East, the 10t-15t segment is showing slower growth, with demand focused on value for money, regardless of productivity.
“The challenge is generally about cost, and first and foremost the purchasing cost, so Case is continuously improving its cost offering.
“Second is the operating cost, which for excavators means the lowest fuel consumption, lower maintenance costs and long service intervals.”
Ahmed notes that with the tight project schedules, excavator productivity has become especially important, while service agreements and buyback options are critical.
“Excavators exceeding 4,000hr in annual uptime need effective aftersales support, and Jaidah is investing heavily in offering repair contracts to manage our customers’ operational costs — this allows them to focus on their construction work, while we take care of their machines.”
In a similar vein, Favero notes that the key to the success of Caterpillar’s D2-Series is the customers’ confidence that these machines work well over time, and that, “when maintenance or repairs are needed, customers can rely on the responsiveness and expertise of their local dealer”.
“Unplanned downtime and servicing that takes too long can bring an entire jobsite to a halt and have a real impact on the cost of a project. When a dealer has well-located local branches, that company is better positioned to offer a fast response to minimise downtime, and this has become a critical consideration for most contractors — as they are being required to be completed with ever greater rapidity.”
Invernizzi concurs that “the major factor affecting the operational cost in the region is aftersales: the service and parts costs needed to avoid costly downtime in the field. These costs are kept low in Case excavators because of their durability, as they have been designed to have robust structure”.
Deleu similarly emphasises Volvo’s success in providing its machines with good local dealer support, ensuring parts availability from its Dubai warehouse and thus minimising downtime for the customers.
Khalid concurs: “When our customers come, they want a quality product, and the PC400-8 is one of the best among excavators, and aftersales services.”
Fuel efficiency is another key focus at Caterpillar, as every machine gets through several thousand dollars in fuel a year, and Favero asserts that “contractors should always ask their dealer to provide fuel consumption figures”.
CNH’s Invernizzi is also keen to stress that fuel consumption shouldn’t be ignored, saying: “Even though the price of fuel in the Middle East is lower, the cumulative fuel savings for fuel-efficient systems, as in Case excavators, make a big difference to overall operating costs.
“Financing is an essential requirement for customers in Middle East, an especially in GCC when it comes to financing a fleet. When the customer thinks of renewing an old fleet, the buyback option also frequently crops up.
“CNH Industrial Capital, the financing arm of our group, facilitates custom finance plans for the market and customer’s requirements.”
Ahmed agrees that, “buyback options are especially essential for companies working on short- to medium-term projects in the region, because knowing the resale value upfront helps them manage the operational cost of excavators. Komatsu provides great value when it comes to buyback options.”
Deleu similarly notes that since Volvo excavators are well established, their demand and price on second-hand markets in the Gulf remains high. “Volvo machines retain good value in the market, so we do not see a big demand for buyback options,” he explains.
Invernizzi also emphasises the pre-emptive influence of high build quality on the total cost of ownership, noting that Case excavators, which are designed, developed and built in Japan to have a most robust structure, using the highest quality components.
Adrian Grigorita, MEA sales manager for Caterpillar, notes: “For our current business, the subject of financing is present in almost all deals, but especially for new projects, where the time to mobilise resources is very short — leaving little time for the customer to carry out internal financial planning.”
Grigorita adds that finance began to “develop and grow with the ‘first wave’ of infrastructure development in the Middle East from 2003 to 2009, as customers realised that financing gives them a lot of flexibility in equipment purchase and also improves their balance sheet”.
