14
international
construction
october 2014
New head at Volvo
INTERVIEW
“Ours is a cyclical industry,” said Mr Weissburg. “I have had
the opportunity to work through different business cycles inmy
career and different industry, so you never take it as a surprise
when certain regions have their ups and their downs. But again,
I’ve been pleasedwith how the team, including distribution, has
respond to thechanges in themarket, andhowwehavecontinued
to standby our customers.”
Terex trucks acquisition
Despite the difficult times, growth clearly remains important
for Volvo, as witnessed by its acquisition of Terex’s rigid and
articulated hauler business earlier this year. The deal was
announced inDecember just beforeMrWeissburg took over at
the headof the company, and reached its financial close in June.
It gets Volvo back into the rigid hauler business for the first
time since 1998when it sold its share in Euclid to its partner in
the business, Hitachi. But whereas the Euclidmachines were by
and large bigger trucks for mining applications, the Terex range
is more in the construction and quarrying space, with payload
capacities from32 to91 tonnes.
The range is an obvious fit withVolvo’s excavators andwheeled
loaders, but
iC
wondered if it was exposing Volvo to new
customers, or simply allowing the company to offer more to
buyers it knew already.
“I’d say both,” saidMrWeissburg. “There is an existing Volvo
CE, and SDLG customers who are already using rigids of that
size, so we can sell to them now as well, and there will also be
new customerswe canbring in. So it’s aportfolio expansion that’s
been inourplans for awhile. It scratches an itch for some existing
customers and it allows us an entrée to thoseTerex customers for
theVolvo andSDLGbrands.”
But a less clear-cut part of the rationale to the outside world
was that the deal alsobrought a range of articulateddump trucks
(ADTs) into theVolvoportfolio thatmirroredmachines thathave
long been a mainstay of its business. So why did Volvo buy the
TerexADT range?
MrWeissburg said, “As the industry leader inarticulatedhaulers,
we feelweknow thebusinessprettywell. So itwas verypurposeful
that our acquisitionofTerex truckswasnot just the rigids, but the
articulatedhaulers too.
“It is a sizeablemarket, and there is plenty of room for both of
our brands, and one is not cannibalising the other. They didn’t
overlap that much from a customer standpoint prior to the
acquisition and they don’t today. We are quite happy with the
product positioning.”
And an important focus forVolvoCE these days is its different
brands. In 2006 the company signed an agreement to acquire a
70% stake in one of China’s major equipment manufacturers,
ShandongLingongConstructionMachinery–best knownby the
SDLGbrand.
At the time the relatively smallCNY328million (aboutUS$55
million at today’s exchange rates) investment didn’t seem all that
significant – Volvo was making big acquisitions like Ingersoll-
Rand’s roadbuilding equipment business around the same time–
andmany questionedwhy, high growthmarket or not, it would
want to get into the cut-throatChinese domesticmarket.
M
artin Weissburg took over as CEO of Volvo
Construction Equipment at the start of this year from
Volvo Financial Services (VFS). He joined the group
in 2005 to head-up the North American arm of VFS – Volvo’s
captive finance division – andmoved up to become president of
the business in2010, aswell as amember of the group’s executive
team. In November last year he was named president of Volvo
Construction Equipment, to take over from Pat Olney on his
departure from the company at the endof 2013.
So he brings an interesting mix to the role in that he is from
withinVolvo, but is not a construction equipment insider.
And he has joined the company at a challenging time, with
economic growth in many developing world markets slowing
downandthecontinuedsofteningof theglobalminingequipment
businesses impacting onVolvo and others in the industry.These
things are a fact of life he seems to acknowledge.
In his first interview since becoming CEO of Volvo
Construction Equipment,
MartinWeissburg
talks
about the company’s acquisition of Terex trucks, its
development of multiple brands and its approach to
equipment rental.
Chris Sleight
reports.
New head at Volvo
I
n the years following the economic collapse of 2008, it was the emergingmarkets that
drove economic growth and kept volumes up in the construction equipment industry.
However, the last year or two has seenmany of those countries falter, whilemoremature
regions of theworldhave takenup the slack.
The undoubtedhighpoint at themoment isNorthAmerica according toMrWeissburg. “North
America has come back, it’s not just that’s it’s comingback. Itmight flatten out a little bit next
year, but I thinkNorthAmerica is seeing a terrific period of growth and economic stability.
“Europe is a tale ofmany different Europes.With some of the political turmoil and challenges
going on, it’s hard to forecast. Parts of Europe remain extremely strong, other parts are still
working theirway out of the global recession, and there has evenbeen some softening since
the summermonths. So there’s amixed story there, but generally I’d say quite good.”
“Then the emergingmarkets, aftermany yearswithmany countries –not all of them
–having strong continuous growth, they are growing atmuch lower levels and some are
contracting. Brazil is not growing as quickly as it hadbeen, but it is still a very robust and
dynamicmarket. Russia–we know the challenges there, but there are some interesting
opportunities still and it is amarket we are extremely committed to, as is our distribution there.
“China has really been the bigger story from the emergingmarkets, and you could say that
China had such a longperiod of very strong and rapidgrowth from2009, 2010, 2011 and
even into2012. Therewas a lot of government stimulus and strong availability of credit for
distribution and customers. You could argue that it was over-stimulated and over-supplied.
“Likemostmarkets that go through a cycle, China is experiencing this down-cycle, and it’s
probably the deepest andmost severe corrections that theChinese construction equipment
market has seen. This is part of the naturalmaturationprocess, inmy opinion, of any
geographicmarket.”
Market outlook
Developed countries are leading as emerging economies falter
