China keeps OEMs looking East for growth

China’s continuing status as the world’s biggest single country consumer of aggregates will always make it a key focus of the quarrying and construction equipment manufacturing industry. The years of highly impressive Chinese double-digit economic growth may not be returning any time soon, but it was interesting to hear 395 Caterpillar CEO Doug Oberhelman tell CNN that a few years of more sustainable growth of 3-5% will still create a “fantastic” market for leading OEMs to trade in.

The reassuring message from the CEO of the world’s biggest selling construction equipment manufacturer is sure to have been noted by rival OEM’s and comes despite, as CNN reported, China’s slowing economy playing a significant part in Caterpillar’s Asia-Pacific revenue dropping 16% to US$2.6 billion in Q4 2014, compared to the same period of 2013.

While non-Chinese construction equipment manufacturers are targeting sales into China, ambitious leading Chinese manufacturers are increasingly looking to exports. The likes of 441 LiuGong, 4334 Sany, 7340 XCMG, 7995 Zoomlion, 8013 Shantui and Lonking are always eager to speak about their plans to ramp up their export capabilities, with increasingly sophisticated products in the earthmoving and other equipment categories now sitting proudly alongside those of household European and North American brands at major industry shows such as 432 INTERMAT, being staged in Paris 20-25 April 2015.

In keeping with what I’ve just discussed above, the Quarry Profile within this issue of Aggregates Business International takes a close look at how one longstanding and successful Chinese quarry contractor has become known as the ‘God of Wealth’ by construction equipment manufacturers keen to sell him their new and proven models. However, despite their best attempts, Guo Zhongjin only has eyes for LiuGong, purchasing 200 of the company’s wheeled loaders and more than 100 of its excavators over the last 12 years. He explains why he has stuck with LiuGong and how he uses their equipment to best effect.

As well as Doug Oberhelman, this issue of ABI includes the views of another senior Caterpillar figure, Paolo Fellin, the US giant’s Global Vice President of Sales & Marketing. The subject of our Interview article, Fellin discusses Caterpillar’s offer to quarry-related customers, including the growing importance of telematics across its quarrying and heavy construction lines, and where the key regional markets for quarry and heavy construction sales growth are likely to be in the next few years.

Due to its need for raw construction materials for huge transport and sporting infrastructure projects, the Middle East is a sales region of great interest to the likes of Caterpillar and its fellow leading OEMs. It’s also the region focused on in this issue’s Market Report.

Turning the spotlight on Africa, I was very interested to hear that 674 HeidelbergCement, one of the world’s biggest cement makers, is considering adding South African and Mozambique production capacity as the German company seeks to tap growing demand for construction material in Africa.

“Africa is an important part of our emerging markets exposure,” chief executive Bernd Scheifele said in a recent interview with Bloomberg, the business news reporting agency.

As well as recently inaugurating a new US$250 million clinker plant in Togo, HeidelbergCement also recently inaugurated a new cement grinding plant in neighbouring Burkina Faso. We eagerly await news of the company’s next African adventure.