Features

Ammann: Going the distance in Middle East road construction

By Stian Overdahl

Posted on July 14, 2015

Swiss group’s regional director says it is growing its Dubai office and has plans for new products

PHOTO: Credit:

Headquartered in Langenthal, Switzerland, Ammann Group is one of just a handful of industry players which effectively cover the full process of road construction, from the asphalt batching plant to pavers and rollers, as well as concrete batching plants.

While the company is best known in the Middle East for its asphalt batching plants – it has sold more than 4,000 globally, and sells more than a dozen each year into Saudi Arabia – it wants to expand its market share for pavers and compactors, and has a strategy to do so.

After all, explains Günter Tesch, the regional director for the Middle East and Africa, the company is a full-liner when it comes to compaction, from large single drum rollers, to pneumatic tyre rollers, to its comprehensive range of light equipment, which includes trench rollers, walk-behind compactors, vibratory plates and rammers.

The company is building the strength of its after-sales offerings and the ability of its dealers to respond to customer demands, in order to improve unit sales, explains Tesch. Its Dubai office in the DAFZA airport free zone is being reinforced with extra service staff, and they are building up a sizeable spare parts stock as a buffer for their dealers. The firm is also scouting larger premises so it can hold more spare parts.

The enlargement follows on from the sales and service integration of Elba Middle East within the Ammann office, after Elba was acquired in early 2014. Elba produces both smaller mobile concrete batching plants and larger static plants and has a longstanding presence in the GCC, including major sales to ready-mix companies in Oman, Qatar and Saudi Arabia, with more than 100 batching plants in the region. Tesch says the process has been successful and integration into the sales channel has helped boost sales.

However, the current effort by Ammann is part of a wider move across the group to boost its share of the road construction equipment market, namely pavers and compactors. Tesch says the investment in after-sales is one important way to help achieve this goal. “The first roller is sold by the salesman, the second is sold by the after-sales. If we want to grow – and we will grow – we have to invest in after-sales, so that is exactly what we are doing.”

In the earth-moving industry, a single machine breakdown costs companies time and money in lost production. Breakdowns in road construction can be even more critical.

Tesch says they have good experience of this with their asphalt batching plants, where a breakdown has major ramifications. “If you cannot deliver asphalt, it is a disaster, the whole chain will stop, and we know what that means.”

With the plan to build its presence in the paver market, the firm is bringing in a paver specialist for maintenance and repairs, as well as application support. On the product side, the company is focused on reliability and robustness, and Tesch says their paver products are easier to maintain, repair and operate than those of competitors.

Their current paving range is matched to road construction demands in Europe, where small to medium sized pavers are preferred since larger pavers are not able to manoeuvre on inner-city jobs; the company is continuously working to enhance its paver range to meet global needs, says Tesch.

On the compactor side, Ammann is “a real full-liner, from the smaller rammers to the largest pneumatic tyre rollers [PTR]. There is no gap,” Tesch says. The Middle East market remains relatively stable in terms of overall unit demand, but technically it is improving, with customers asking for higher specifications and more advanced machines.

A growing area of market appreciation in the Middle East is intelligent compaction, as customers want to avoid unnecessary passes, overcompaction and undercompaction. Ammann’s proprietary system, ACE, measures the stiffness of the target surface – whether asphalt or soil – and regulates the frequency and the amplitude of the roller’s vibrations. Once a surface has been correctly compacted, the roller stops.

Fuel consumption and operating costs are the major cost drivers. ACE can improve performance in both areas, where operating costs can be broken down into productivity, wearing and spare parts costs, as well as the quality of the work. ACE reduces overall fuel consumption by eliminating unnecessary passes. Fewer passes also means lowered maintenance costs and improved overall utilisation of a roller.

Nevertheless, as with any new technology, there is always a level of apprehension among potential customers, which can be overcome through production demonstrations. “Simply by doing demos and convincing customers to use the system, ACE is becoming better known. I think in the next years there will be a growing market for it.”

On some major projects, such as airports, intelligent compaction systems can be a requirement from a consultant, but Tesch says demand comes from across the sector. “The demand for high-quality work is everywhere.” The highly sensitive ACE system can also be used in a few specialist applications, such as compacting surfaces on bridges, where compaction without a control system can affect the stability of the structure.

One trend in the road construction sector is an increasing focus on pavers and rollers from a handful of major players in the earth-moving sector. This hasn’t gone unnoticed by Tesch, but he doesn’t view them as a threat.

“Road construction is a niche market, and we have been in this for many years and gained a lot of experience. It’s totally different from a mass manufacturer of graders or dozers or whatever. It’s a different approach. We focus on our know-how and we’re doing it well.”

As Ammann looks to penetrate the market for road machinery, there is one statistic in its favour: 80% of contractors who own asphalt plants use it on their own construction jobs, and 20% on-sell to paving (in Europe, the opposite is the case: 80% of paving companies buy in asphalt). That means their sales teams have already knocked on most of the doors in the region where buyers of road construction equipment can be found. “It gives us an advantage that we are able to build packages for a customer, that they have one company as a one-stop shop,” says Tesch. “It makes life easier for them.”

With the desire to grow, Ammann needs to diversify and play to its advantages, says Tesch, which is the package of product and service it provides the customer. “Service is one of the keys for our success in the future, and that is why we are investing in it.”

Expanding the Dubai operation will increase the total number of service technicians to eight. Two of these will focus on providing better after-sales for mobile equipment and supporting the Ammann dealers in the region, who will also benefit from the larger supply of spare parts, concentrated around critical parts. Having a supply in the region means they can get parts to a dealer in just hours, helping to mitigate some of the issues that lead to slower supply times, such as import barriers, restricted transport options and customs. “It is not always the fault of a dealer if he doesn’t have a part in stock,” says Tesch.

Meanwhile, it’s no surprise that a larger group of four to six technicians will concentrate on Ammann’s flourishing business selling asphalt batching plants; according to Tesch: “We are market leaders in the high technology level batching plants in the whole region.”

Technicians will focus on servicing the batching plants, as well as their wider requirements: assembly, erection, shifting plants and helping customers move them. The market demand is not only for trouble-shooting, but also for advanced maintenance works such as pre-inspections to make sure that down-time is eliminated. Service staff will check plants periodically and provide advice on what to do to keep them operating at the correct standard, and provide training for operators and maintenance.

With that comes the prospect of growing the service contracts business. When it comes to maintenance of plants, some customers simply don’t have time, explains Tesch, so service contracts allow advanced maintenance.

Nevertheless there is plenty of flexibility around a package, depending on the individual customer’s strength. A package can concentrate on the control system, the burner or the control system. “Most of the time customers have a good mechanic, but don’t have a good electrician.”

Current appetite for investment in new plants remains high in the region, and customers continue to buy premium, factoring in the possible savings over a lifetime. “An asphalt plant is not a machine, it has a lifetime of 25-30 years. Just imagine saving one litre of diesel per tonne of produced asphalt, how many millions of litres it will be in 30 years. Therefore, to compare prices with prices and values with values, it’s quite difficult.”

Ammann has a modular production system whereby all the high-tech components are produced in Switzerland with Swiss quality control and then delivered to the different world-wide manufacturing sites, where the finished plants are built using these components. “We are not doing Europe and [lower-tier] export plants. There is no quality difference between a plant made in China, Brazil or Germany.”

Tesch says that while there has been no slowdown in purchases of new plants in response to the lower oil price, forecasts for future sales have been conservative, and it will influence the release of the projects.

“We feel that some of the projects are postponed or slowed down, some have stopped completely. There has been a little bit of slowdown. But we expect the oil prices to come up again, [and] in general we are quite optimistic on the asphalt plant side for the next coming years.”

The Middle East is in effect addicted to building roads – as Tesch notes, “If you want to build up economies, you need infrastructure.” It’s not just the headline events like the World Cup in Qatar creating demand, it’s general investment in social infrastructure, such as the metro system. “Every metro station needs a service road. Asphalt is really a business for the future.”

Looking forward, Tesch sees Ammann in a much better position to support the customer, with stronger support in the field and high availability of spare parts. “For us, it’s clear that we can sell more, but this goes along with a better service. In three to five years, we want to be in a much better position.”

Growing demand for PMB and RAP

There is high demand from owners of asphalt batching plants to produce asphalt using polymer-modified bitumen (PMB). Using PMB results in a final road surface with a number of enhanced characteristics, including greater rigidity and durability, which is wanted for surfaces that experience the high summer heat of the Middle East, or heavy traffic volumes.

Tesch says Ammann is able to provide full support to customers who wish to modify the bitumen, as well as in other areas such as low-temperature recycling.

“All the equipment is needed, but the knowledge has to be conveyed to the customer to allow them to do it in the right way. It’s purely application.”

Use of reclaimed asphalt pavement (RAP) in asphalt mixes is set to increase in the GCC. Yet while many road contractors have batching plants capable of using RAP in the mix, whether it is allowed to be used (and in what quantities) differs between municipalities across the region. Levels of competence and experience also differ between contractors. Asphalt is one of the few materials that can be 100 % recycled, and while other materials lose value every time they are recycled, asphalt can be reused a number of times.

The practice has grown steadily in Europe and the United States, where much of the road construction work is rehabilitation of existing roads, which may require removal of older asphalt layers.

In the Middle East, where most projects are for the construction of new roads, the need is less acute.

Nevertheless, contractors can save money by using RAP, and even in countries where it is not allowed to be used on municipal roads, it can still be used on smaller projects that require construction of internal roads that will not support road traffic.

Getting asphalt there on time

While there are a few industry stories of paving with asphalt that has already cooled, most work in the Middle East is done to a very high standard. Mishaps do occasionally occur, says Tesch, but whether road contractors get the asphalt to the pavers in time comes down to site organisation. “Logistics are one of the key factors if you want to build a road. If the distance is too long, if you are not covering the asphalt on the truck, or the production temperature was too low or too high, [then the quality will be affected]. These are all factors, it’s job-site management. You cannot blame the plant if the guy is paving with a too-low temperature.”