Case Construction Equipment’s long game in the Middle East
Franco Invernizzi of CNH Industrial on the brand’s regional rise
It was early 2013 when Construction Machinery ME first interviewed CNH Industrial’s head of Middle East and Africa, Franco Invernizzi. The occasion was the opening of a new dealer branch for Roots Group in Riyadh. Roots Group, the Binladen-owned construction equipment and materials firm, had taken over the Case brand in Saudi Arabia some 12 months previously and was making its case to potential customers: that Case machines would be well supported on job-sites across the country.
Three years later, Case’s big push in the Middle East has seen it improve its market share, not just in Saudi but across the Gulf. “The plan at the time [2012-13] was to strengthen the network, and to target open points,” explains Invernizzi during a recent interview. “Now all the focus is to reinforce the dealers, to work with them to strengthen their capacity to sell and service the machines.”
Saudi is not only the largest market in the GCC, with total sales last year of more than 12,000 units, it’s also a market where Case has a compelling story to tell, says Invernizzi. “We have a very good example in Saudi with Roots Group, who is one of the main players in Saudi. Case now is really back big-time in Saudi.”
Case’s share of the retail market in Saudi Arabia is steadily growing,. “And what is really the best part of this story is that they are growing not only in the skid steers and the backhoe loaders, but on the excavators and wheel loaders. We are getting back into the market we want to be, the market of the big stuff.”
While the brand didn’t surpass the “magic number” of 1,000 unit sales in Saudi Arabia last year, it was close, and Invernizzi believes they will make it this year – if the market holds strong and total market sales remain above 12,000.
Qatar is another market which Invernizzi singles out, as “by far the fastest growing market in the Middle East… We are working very closely with our dealer there [NBK], and trying to help them ride this wave, and grow together with the market.”
Case has a multi-pillar strategy to grow sales, with improving dealers’ ability to service customers first and foremost. From the OEM side, this has included putting extra people in an enlarged Dubai regional office, including specialists in spare parts, marketing and finance.
The second pillar is products, and with management happy with the shape of the dealer network, the brand is confident in launching new machines specifically tailored to the requirements of users in the Middle East and Africa. The most notable is the 570T backhoe loader (TLB), a machine which is not a replacement for the current model – the 580T – but rather a complementary offering, designed to cover the value segment of the market.
“[The 570T is] very competitive in terms of price, but reliable, sturdy, in order to cover that segment in the Middle East that is growing, contractors that are looking to enter the market, to get some cheap solutions at the beginning and then to grow to the next level.”
More recently, Case brought in a second machine designed to cater to a similar market segment, its 11t single drum roller the 1107 DX, which – with a Tier 3 engine – will only be launched in the MEA.
First launched in Saudi early this year, the machine, says Invernizzi, is “very competitive in terms of pricing, is very reliable and has a very low maintenance cost”.
Rollers are a new segment for Case in the Middle East, but in India CNH has been producing rollers for 20 years, and it is a market leader there for compactors.
“Once we fixed the [dealer] network, we looked at our product range around the world, we spotted this machine which is really fit for MEA, and so we launched it.”
The technology is Case, and there is also a plan to develop this technology over time, with both larger and smaller compaction models in the pipeline, along with double drums.
“It’s a new segment for us in MEA; we have never sold any compactors in this region, so it is a new world. Road building is one of the most promising construction investments in MEA, so we are targeting that,” he explains.
The brand’s skid-steer loaders – the SR 130 and 150 – are also doing well, targeting both contractors and rentals. The models have been equipped with larger engines for the MEA region, with a 2.2L displacement and bigger horsepower, while the rest of the machine architecture remains the same. “With the bigger engine, we can really appeal to a bigger segment of the market.”
The brand is looking to further capitalise on its skid steer successes with attachments, a process that includes looking at its sister company in North America, where they have a broad offering, and selecting attachments that fit market requirements here.
“It’s a matter of enlarging our value prop for the skids. Buyers want a machine ready to go to the job-site, and are not willing to wait another month to get a brush. We need to package them in at the dealer side.”
The increased exposure of the Case brand has allowed them to introduce a wider range of their large-size machines into the market, including excavators, with Invernizzi noting that for a long time Case only sold part of its excavator range in the Middle East, predominantly its 20t machine. “Now we are trying to grow bigger, targeting the quarry sector, light mining, segments that use 40-50 tonnes and sometimes even bigger machines.”
The grader line is also an area of focus; Invernizzi points out that it’s the only area of the market where the number of competitors is shrinking rather than growing. He describes the pull-out of the grader market by one premium competitor as an opportunity.
“When something like that happens, there is a movement in the industry. The people that used to buy that machine are looking for alternatives. We are knocking on doors, and our people on the ground are looking for customers who used to buy that kind of machine, and they are proposing our machine – though unfortunately we are not the only one.”
The Case grader is manufactured at their Brazilian factory and sold into Latin America, Asia Pacific and the MEA, with Invernizzi describing the machine as “extremely fit” for applications in the Middle East.
But Case doesn’t just focus on hardware and service. Earlier this year, their financing branch, CNH Capital, announced a deal in the UAE to partner with SME-finance provider Emirates Money to provide financing on purchases of all CNH Industrial brands, including Case, Iveco and Astra.
It’s a crucial development, since many of the smaller fleet owners Case targets with machines such as the 570T and 1107 DX rely on financing to buy machines.
“In Dubai, if you don’t have that kind of [financing] offering you’re out of the market,” says Invernizzi, who notes things are also trending this way in other Gulf markets.
“[This agreement] is key for the next year in the UAE, since more and more customers are looking not only for the machinery, but also for a way to finance the machinery.” The early signs are that there is a strong commitment from Emirates Money, he says, with their representatives operating out of the machinery dealerships, with CNH Capital branding, and working alongside the dealer’s sales people to close a sale.
It’s a structure they’re aiming to replicate in other countries, with a dedicated person from CNH Capital currently working out of the Dubai office, meeting banks across the region and trying to reach commercial agreements in the same vein as the one with Emirates Money. Invernizzi expects arrangements to soon be in place. Compared with Europe, where they have established a joint venture with a single bank (BNP Paribas), in the Middle East they need to establish a deal with a different bank for each territory.
Offering finance will help them establish relations with newer entrants in the market, who typically require financing, and hopefully forge life-long relationships as the businesses grow. The dynamic of smaller companies growing over time and building their fleets is an important feature of the Middle East business environment that is often not present in developed markets.
“When it comes to Europe, there are the big guys and they remain big, and the small guys, and unfortunately – especially now – they remain small. In the Middle East, you see people who start with one backhoe, and they come out after five years with a fleet of more than 10 machines. There is that kind of dynamic growth that in Europe unfortunately is not there any more.”
With the level of investment in infrastructure in the Middle East, chances are good that smaller customers will continue to grow, expanding their relationship with Case, while the network’s improved efficiency means the brand can focus on the machines it’s most proud of – the large-size earthmoving equipment.
Roots Group as pinnacle
While Saudi Arabia is by far the largest market for construction equipment in the Gulf, for a long time Case was under-represented in the market. That all turned around when Roots Group became their dealer in 2012.
Roots Group Arabia is one of the major players in the construction supply industry in Saudi Arabia, with a diverse mix of products including tower cranes, gensets and materials. Invernizzi says the appointment of Roots helped the Case brand “change gear” in KSA.
“Saudi is our success story. We struggled a lot in the past with different dealers, different partners, never found the right way to bring back Case. Roots is a powerful group, backed by an even more powerful holding company. They showed a very big and good commitment in the brand. They made a lot of investment and now are running three branches, Dammam, Riyadh and Jeddah, as well as outlets around the country.”
More than just selling equipment, Roots Group has focused on acquiring the best talent to sell, service and support the machinery, he explains. “When they needed a new service guy, they looked around the region – not only in Saudi – for the best one, and they got it. The team in place in Saudi now is one of the best for Case dealers all over the region, and also in the bigger EMEA region.”
This was proven at a recent dealer meeting in Dubai for the Middle East and Africa, attended by around 45 different dealers. Individual dealers were selected as the best in specific categories such as services and sales. Roots was one of the best in all the categories, leading to its being named a Case pinnacle dealer, which Invernizzi describes as a model dealer: “A kind of peak that everyone has to look at and try to copy, and learn. After only three years, Roots is one of our pinnacle dealers. There are only five pinnacle dealers across the region.”
Success in Saudi Arabia has led to new respect for the Case brand across the wider region, he believes. “When you have such a story to tell the people, you gain a lot of respect. Also, in the other countries, when you start talking about what you are doing in the region, and you mention Saudi, you mention what you have done – the numbers – you mention our sales in the market, you gain respect.”
