Construction equipments: Safety, localization & growth

The construction equipment industry is witnessing renewed growth due to the increased focus on infrastructure development nationwide. While construction equipment industry’s growth is inevitable, Sandeep Menezes looks at subtle but important issues like safety and localization.

 

With the new government putting huge emphasis on infrastructure development, the need for high technology equipments will be felt. This will lead to huge growth across the construction equipment market nationwide. This growth will also give Indian manufacturers an opportunity to invest in technology and build next-generation equipments.

But while the construction equipment industry’s growth is assured there is need for manufacturers to concentrate on safety which always used to be on the backburner with pricing or keeping prices lower being the priority.

Even many global manufacturers who entered India would sell low cost versions of their equipment to ensure higher sales volumes, keeping in mind the price sensitivity of Indian buyers. Few of these equipments would incorporate only bare minimum features to keep prices affordable.

Equipment Safety

Project construction sites are a risky place to work if the equipment being used does not meet the highest safety standards. At such project sites, the speed at which events happen, mixed with the sum of possible safety hazards, make heavy construction equipment safety a top priority.

Often the safety of actual equipment is intertwined with the safety of the construction site itself. It is hard to separate the two variables because unsafe equipment tantamounts to unsafe site.

Unlike EU and US, the equipment safety standards are lax and not clearly defined in India. Also, there is an issue with implementation and monitoring of safety norms.

But with increased awareness amongst buyers about equipment safety norms there has been more priority being laid on safety features by various manufacturers.

P.Ravishankar – CEO at Ashok Leyland John Deere felt that equipment safety norms should be strengthened in India with features like ROPS, FOPS Cab, etc., on which regulatory bodies like ICEMA & ARAI working to improve safety norms.

S Manjunath, General Manager – Sales, Doosan Infracore India stated that with the fast changing business scenarios, customers today demand equipment that focuses not just on making better profitability but also to feature on safety characteristics. Even OEMs who are upgrading their existing range of equipment need to emphasize towards such technologies besides government imposing strict safety norms.

Technology:

Today’s construction equipment is highly cutting-edge compared to conventional systems that prevailed a few decades ago. Like automotive industry, there is constant shift towards advanced, feature packed solution to offer better performance and productivity to customers.

As specialized products are slowly gaining acceptance compared to products with general applications, the gap in technology between Indian made products and imported equipment are becoming narrower. As we could now witness the mechanization becoming inevitable with respect to precision of improvement in product, the need of specialized high-capacity equipment is catching up.

Localisation:

Earlier most equipment manufacturers felt it better to import and sell in the Indian market and even wherein the company had local manufacturing operations most of the components were imported. But last few years witnessed the Indian Rupee weakening, thereby making imports more expensive. This was the first big push for equipment manufacturers to source components locally and manufacture in India.

Through its ‘Make in India’ campaign, the new government has pushed for the need to raise global competitiveness of the Indian manufacturing sector and its being imperative for the country’s long term-growth. The National Manufacturing Policy is by far the most comprehensive and significant policy initiative taken by the government. The policy is the first of its kind for the manufacturing sector as it addresses areas of regulation, infrastructure, skill development, technology, availability of finance, exit mechanism and other pertinent factors related to the growth of the sector.

In the last few years, the construction equipment market did not have growth therefore the manufacturers were hesitant to make huge investments on setting up local manufacturing capability. But now with the economy picking-up and construction equipment industry showing signs of revival, the hesitation has given way to opportunity.

Growth Prospects

An investment of $1 trillion has been projected for the infrastructure sector until 2017, around 40 per cent of which is to be funded by the private sector. Around 45 per cent of infrastructure investment will be funneled into construction activity and 20 per cent set to modernise the construction industry. These huge investments into infrastructure development will be the main drivers for growth in the construction equipment industry.

According to Anand Sundaresan, Vice-Chairman & Managing Director, SCHWING Stetter India the investment in NHAI Projects, Port Connectivity, Smart City Development, North East Road Development Project and the 16 new Port Projects & port connectivity, are some of the initiatives which will definitely create market for the construction equipment industry. This was something which everyone was eagerly waiting for quite some time. These projects should be implemented quickly so that the construction equipment industry will benefit quickly.

India has the potential to become the 4th largest global market for heavy Equipment and is expected to be one of the biggest emerging markets going forward.

Moreover, if India has to successfully constitute 10 per cent of the global market by 2018, the construction equipment players also need to take key strategic actions such as design and build equipment suitable to the Indian market apart from looking at a unique export business approach. Thus, India is expected to see more competition among the existing players in the construction & mining equipment industry with such aggressive growth strategies.

Need of the hour

The nation has witnessed around 5-6 per cent GDP growth for many years; the government recognizes that and now we are moving towards 9 – 10 per cent of the GDP to be invested in infrastructure. Apart from government investment lot of private investment is needed as well. The more the government invests; more the private players will do so, which is a good sign for equipment manufacturers. Also, there has to be a business model for the contractors to execute and complete projects faster and hand it over back to the government and implement time bound projects.

If the market has to grow then the PPP, BOT policies, R&R, land acquisition with special reference to irrigation projects have to be immediately tackled by the new central Government. Going forward, we will need to go in for technology agreements with the changing scenario.

Conclusion:

There is very obvious need of further infrastructural development plans in view of the country’s general need to improve the current situation. The growth of the construction equipment industry is almost assured; the rate of itself will depend on streamlining different issues, such as government clearances and approvals, administrative and procedural reforms or generally on the pace of project executions.

After the decrease in units in 2013 there should be a slight increase in 2014 unit numbers. As it most probable will pick up only from 2015 onwards after the new government’s recent initiatives start taking root.

Quotes:

 

S Manjunath, General Manager – Sales, Doosan Infracore India

In India, workers at site face several risks during their day-to-day work and safety here becomes a very important aspect that cannot be neglected. There are many cases where customers have started realizing the need to focus on safety aspects to which, equipment manufacturers are also taking this facet to global standards. Particularly in critical applications such as construction and mining sites, safety plays a major role and a small accident is enough to lead to downtime of the equipment. While the downtime is a huge loss to customers, safety plays a very important role in overall profitability of businesses too.

 

P.Ravishankar – CEO at Ashok Leyland John Deere

Yes, Equipment safety norms should be strengthened in India with features like ROPS, FOPS Cab, etc., on which regulatory bodies like ICEMA & ARAI working to improve safety norms. Leyland Deere is the only backhoe loader manufacturer in the country with ROPS (Roll Over Protective Structure) and FOPS (Falling Object Protection System) cabin. This provides operators the confidence to operate the machine and will enhance productivity.

 

Anand Sundaresan, Vice-Chairman & Managing Director, SCHWING Stetter India

Investment in NHAI Projects, Port Connectivity, Smart City Development, North East Road Development Project and the 16 new Port Projects & port connectivity, are some of the initiatives which will definitely create market for the construction equipment industry. This was something which we were eagerly waiting for quite some time. We only hope that these projects are implemented quickly so that the construction equipment industry will be benefited fast.

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