"A niche player" is how Sandvik construction president Thomas Schulz describes the company and said recent acquisitions reinforce this claim. Claire Symes reports
Sweden's
Under the deal, Sandvik Mining and Construction bought the 51% of shares it did not already own in
Sandvik construction president Thomas Schulz said that the industry should not have been surprised by the move as the two companies fit well within Sandvik with minimal overlap. "Sandvik's crushing and screening competence in the mobile sector lies in the 50 to 60tonne weight class machines," he said. "Acquisition of Fintec and Extec adds experience in the medium to small mobile machines and offers us access to a different customer base through contractors and the growing recycling industry. In essence, the acquisitions enable us to be a full provider of equipment to the market." According to Schulz, Sandvik considers itself to be a niche player in the construction sector with equipment lines developed specifically for the quarrying, civil engineering, tunnelling and demolition and recycling sectors. "We are one of the top two companies in Europe for supplying drilling and construction tools," he said. "To maintain that position we need to identify trends in the industry and adapt and grow our business to meet these changes.
Going mobile
"We believe that the world is going mobile and the trend towards this seen so far is just the start. Sandvik is very successful in the static crushing and screening market. But we are also one of the market leaders in mobile drilling applications, so it makes sense for us to improve our mobile capabilities for crushing and screening.
"Also our existing customer base wanted us to offer a wider range of equipment and it was those demands that really drove the acquisitions." Take over of Fintec was a natural progression for Sandvik, according to Schulz. "We already owned 49% of the shares in Fintec, so to gain full control of the company was a logical step in our aim to increase our position in the mobile market."
But the acquisition of Fintec alone was not enough to meet Sandvik's aim to be a full line provider, which is why the company has also bought out Extec. "We looked at other manufacturers but none of them were a suitable for us as Extec," explained Schulz. "Both Extec and Fintec have a good history of bringing innovative products to the market and working closely with its customers. Both companies also have strong research and development operations."
Transition
Sandvik has just undergone a radical rebranding exercise to bring around 20 of its divisions under one name and one corporate colour. Well known names such as Tamrock and Rammer are now relegated to model names and numbers, which begs the question of what will happen to the Fintec and Extec brands.
"There will be a transitional period, maybe up to a year, while we review how the two companies will be integrated into the Sandvik family in terms of branding, production, sales and service," said Schulz. "We will not be rushing into changing the way the companies operate or their branding - the priority will be customer service and supply." Kukko Jurri appointed to head up Sandvik's crushing and screening division and will also oversee the transition of Fintec and Extec.
Schulz would not been drawn on what the outcome of the transition period would be but said that the rebranding of the rest of the company offers customers one face and big benefits. "Many customers want solutions rather than just a new machine and the rebranding has helped to simplify the sales structure," said Schulz. "Although none of our sales staff are specialist in every area of the business, customers can now deal with their regular contact and quickly access services from the rest of the company.
"Bauma was the first showing of all of our equipment lines under one name and one colour and the reception from our customers was very positive."
Growth targets
With a stronger brand and wider product line, Schulz is confident that Sandvik Mining and Construction is well placed to achieve its target of 8% growth each year for the next five years.
"Prospects in the quarrying industry over the next few years are good and our latest acquisitions will position us well to capitalise on this growth," said Schulz.
According to Schulz, the strongest growth is currently being seen in the Eastern European markets, especially in Poland and the Ukraine. "Accession to the EU in the region is opening up new funding options," he said. "This is helping to drive construction growth and demand for quarried materials "The situation in Eastern Europe is similar to China - there is lots of talk about the rate of growth and many companies are really focusing on the region but we should not forget about the mature markets. While the growth rates in Eastern Europe are large compared to the rest of Europe, the volume of sales cannot be compared with those in the developed market in Western Europe where there is still huge potential." Schulz said that while he expects the European quarrying sector to continue booming for another two to three years, he believes it will then enter a period of consolidation rather than recession. "The quarrying industry in Europe is generally fragmented with many smaller customers," he said. "While the basic function of both large and small quarry operators is to produce aggregate, the actual requirements will be quite different." The acquisition of Fintec and Extec means that Sandvik is well placed to cater for the needs of the market, as well as the growing trend towards contract crushing in Europe.
But when asked about SMC's plans for further acquisitions, Schulz said that the company wants to grow organically and not through mergers and acquisitions. "That is not to say that we are not looking at the market to see what's available, but we are looking it in terms of meeting our strategies for our customer groups," he said. "Any acquisition will be because we want to buy that company based on its culture, competencies and knowledge rather than take over a facility. The customer benefit will always be key."
