Analysis

Road warriors: Volvo CE and FAMCO

Partners make steady in-roads with their asphalt pavers and road-construction equipment

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In early 2013, Volvo CE head of EMEA Thomas Kuta and then-president Pat Olney toured the FAMCO premises in the UAE and Saudi Arabia. There was a special focus on road construction equipment, a segment of the market receiving more attention and support from Volvo and from FAMCO. Two years later, that strategy seems to have borne fruit.

Speaking with CMME, Kuta says there is a simple answer to the question of how this has gone: “Very good. FAMCO made an investment plan for Saudi Arabia – the engine of the Gulf – and they are implementing it exactly according to plan. Our position in Saudi has strengthened in the past two years.”

Back-up and support is especially important for the paving business, says Kuta, and Volvo CE has provided support via application specialists and a major parts centre in Dubai.

Kuta says new buyers of pavers are both existing buyers of the Volvo CE earthmoving range and entirely new customers. Existing customers are naturally easier to sell to, but the brand is increasing its market share across the Gulf.

In the last year, the strength of the markets in the Gulf has made it one of the two engines of growth in Kuta’s EMEA region, along with traditional markets of northern Europe. In that time, the market in Russia has collapsed and Africa’s overall sales are dropping, since its major buying sector, mining, is in a downward cycle. Sales in southern Europe remain far below their pre-GFC highs.

CMME caught up with Ahmad Halwani, FAMCO’s regional head for construction and agricultural equipment, at a recent product day in Abu Dhabi. Focused on road construction products, it followed on from similar events in Dubai and Saudi Arabia. Halwani says the event is a chance to connect with local contractors. “We felt that particularly Abu Dhabi contractors prefer to have an event that is done here.”

The Abu Dhabi emirate has a number of major road construction projects, with plenty more in the pipeline as part of the larger 2030 Vision. Halwani says there are a number of developments underway and planned which will require new roads to be built. “If you want to build a residential area, or a commercial area, or an industrial area in the Western Region, definitely you need the roads and the infrastructure.”

With experts from FAMCO and Volvo CE on hand for demonstrations and discussion of key product features and applications, the event was designed to refamiliarise contractors with the product’s features and benefits.

“Customers feel more confident when a good distributor is supporting them. They also get reconfirmation on the latest updates and features of the machines and what makes our machines better than the competition in terms of productivity, ease of operation, ease of service and total cost of ownership.”

Halwani says they’re confident about their paving product, both its performance and its after-sales support. The company has sold a number of its flagship ABG7820B models, including to customers in Abu Dhabi. There are also plans for Volvo CE to launch a new paver product in the region later this year.

“To optimise the paving job, we always advise contractors about the advantages of having a complete set of Volvo Road Machinery working on their sites, including Volvo Rollers. Efficient compaction is equally important as laying the mat, in order to have the best finishing quality in terms of density and smoothness. Contractors can save time and money, as Volvo machines operate at their best together. Besides this, they benefit from having a single point of contact when seeking support for their equipment.”

Their focus is on understanding the customer’s business, and so recommending the right machines. “We understand very well the customer’s business in contracting, we understand that margins are very, very slim and it can be make or break. So we need to really understand a customer’s application and select the right machine, so that when he does a job he does it in the most optimised and most cost-efficient way so he can make money at the end. We want our customers to make money, because if they make money, they will definitely come back to us and buy more machines.”

After-sales is also a strong point, and as a mass manufacturer of construction equipment and a dealer with large volumes, economies of scale guarantee a high level of support for specialised road construction products. “As long as you own a Volvo machine, you will get fully professional support to keep your machine running in the best possible way.”

FAMCO is able to support customers who run their own maintenance operations, completing additional inspections and advising them if there are any issues which require them to take corrective measures. Alternatively, they can offer a preventive maintenance package for the machine, or go even further and offer a complete solution, with an extended warranty and a maintenance package including preventive maintenance and repairs.

In Saudi Arabia, where FAMCO acquired the Volvo CE dealer in 2012, the business has developed steadily, says Halwani. He expects the number of road projects in the Kingdom to remain steady, both with new road projects and refurbishment of existing roads.

On top of new product offerings, another area where Volvo CE is quite active and advanced is its programme for the buy-back and refurbishment of used machines. It offers a full refurbishment programme through its paver factory in Germany, an option currently under development in the Middle East. In this scenario, the paver is shipped to the factory and fully overhauled, and then offered for sale as an approved used machine.

Halwani says the total cost depends on the age and condition of the machine. “A 10-year-old machine can be fully refurbished at roughly 60-65% – maybe less – of the cost of a new machine. So there is real saving. And you can get a machine which is almost as good as new.”

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