Conexpo-Con/Agg 2005

Communications consultant Heikki Harri reports on North America’s triennial construction equipment trade show, which took place in Las Vegas from 15–19 March 2005.

Despite mixed feelings about the American economy, the Conexpo-Con/Agg trade show clearly demonstrated that equipment manufacturers, service providers and customers alike are eagerly awaiting a significant boom in the construction and earthmoving industries. The level of anticipation was evident from the all-time record number of visitors at the show — 125,000 people in total. Moreover, 17% of attendees were from outside the US, another all-time record.

The single most important factor behind these expectations is the outcome of TEA-21, the US government’s special programme for the improvement of the country’s highway and transportation systems. In total, approximately $280 billion is going to be spent within the next six years, and Congress is expected to finalize the programme — and the monies — later this month. If and when this happens, it will result in a record boom period across the entire road-construction sector.

Naturally, the big global, European and Asian manufacturers showed their latest product offerings in Las Vegas, although not surprisingly the bulk of the exhibitors were from the US. In particular, the paving equipment companies had invested a great deal of time, effort and money to show the best and newest machinery in clear anticipation of TEA-21.

As with so many former Conexpo shows, most of the non-American manufacturers exhibited equipment that was ‘new’ to the North American audience but had already been shown at earlier events such as Bauma in Germany. Perhaps the biggest exception to this rule was Volvo Construction Equipment. They unveiled a new 70-tonne excavator that has moved the company into a bigger excavator class. The machine on display was the prototype version; commercialization of the 70-tonne class machine will begin later this year.

One general theme of the show was the environment, in particular the US government’s new and more stringent emission control measures, which appear to be making the engine manufacturers a little uneasy. All of them were keen to explain how much they will be investing in R&D to cope with the new rules and the manufacture of more environmentally friendly engines.

Another noticeable trend was the emergence of track-mounted crushing plants. While these have been an industry standard for at least 10 years in Europe, it is only very recently that they have finally been accepted in the US. Little wonder then that this Conexpo event demonstrated more track-mounted crushing and screening plants than all the former Conexpo shows put together.

But while Metso and so many other European companies are confident manufacturers of track-mounted units, Jouni Salo, president of Metso Minerals’ crushing and screening business area, does not foresee the arrival of many potential American competitors. ‘In Europe the design and manufacturing skills and traditions of this type of equipment date back at least a decade.

I would be very surprised to see any American companies emerging in this area. They are already 10 years behind and it would be a great challenge for them to close this gap. Some smaller manufacturers might emerge, but they will remain mostly local,’ he said.

As already mentioned, future prospects seem to be good but 2004 was not a bad year either. At the manufacturers’ press conferences, most excavator and earthmoving machinery manufacturers reported on two things: increased sales in 2004 and increased market shares in their respective product offerings.

Tony Helsham, president of Volvo Construction Equipment, said sales volumes from 2003 to 2004 had shown 20% growth. He added that sales had increased in all regions of the world, in some areas by up to 50%.

However, Mr Helsham was satisfied by the decision of the Chinese government to cool off the construction market in the country. ‘The situation in China was completely out of control. Now we can work in a much more steady market, which is good for China and also for manufacturers,’ he said.

Volvo’s measures for improving the company’s performance this year include: new engines with stricter emission control; the launch of the new EC700B 70-tonne excavator; and the start of track-mounted excavator manufacturing in Europe.

Among the many international manufacturers present, there was an obvious trend of brand consolidation. Many companies have noticed that their trade name portfolio is both confusing and difficult to manage.

John Deere informed visitors about their new co-operation and partnership plans. Bob Brock, senior vice-president of worldwide construction sales and marketing, provided the details: ‘We plan to consolidate our co-operation with Bell of South Africa and with Liebherr of Germany, and to market their products in North America. On the other hand, we will market more Hitachi products in Europe and South Africa,’ he explained. He also forecast a 10–12% increase in worldwide sales in 2005.

Terex are probably the one company in the earthmoving and construction sector that have seen the most growth in recent years as a result of their multiple acquisitions. The latest acquisition was concluded in December 2004, when the company acquired Reedrill, a Texan manufacturer of drilling machinery, from Metso.

Ron DeFeo, president and chief executive officer of Terex, reported that this deal would probably be the last one for the time being. ‘During the past 10 years Terex have grown annually by 29%. However, last year our organic growth was 28%, so it seems that we are on the right track. Now we continue the consolidation of our operations and also our brands and trademarks,’ he said.

On behalf of Ingersoll-Rand, marketing director Terry Dolan mentioned that I-R were the only paving equipment manufacturers with plants in both Europe and the US. In addition, I-R have started their branding process. All equipment in the paving line will be painted beige, the company’s prime colour, and badged I-R, with two exceptions; Blaw-Knox will remain the American brand and ABG will stay in Germany, although the beige colour will be introduced.

Caterpillar’s focus for the near future is on distinguishing the company and its products from the competition. Jim Owens, chairman and chief executive officer, summed up the company’s objectives as: established strength in products and services; technology leadership in the industry; a well established global footprint; a unique level of market strength; and governance and financial integrity.

Group president Gerry Shaheen emphasised Caterpillar’s commitment to strong customer relationships. Caterpillar can help the customer, for instance by assisting in solving customer questions, such as: How do we control costs?; How do we boost productivity?; How do we address the shortage of skilled workers?; How do we make the job site a safer place?; How do we deal with today’s and tomorrow’s regulatory issues?

In terms of technical improvements, Caterpillar presented their new AccuGrade monitoring system, which has already extended equipment life by up to 50% in some cases.