Placing value on ROI

Amid rising costs of operation in a low growth environment, quarry owners should re-evaluate their procurement strategies. This is the view of Marcus du Toit, Equipment Sales manager at Handax Machinery, the Shantui distributor in southern Africa, who stresses that, now more than ever, fleet owners must emphasise price competitiveness, coupled with quality, sufficient functionality, reliability and sound backup support, in order to achieve a quick and high return on investment (ROI), writes Munesu Shoko.
Handax Machinery offers a wide range of Shantui crawler excavators to the local quarrying market.

Buying heavy equipment for quarrying operations represents a significant capital investment. Given that quarrying is a capital-intensive business with razor-thin margins, quarry owners should therefore make informed decisions when it is time to replace or expand their fleets of yellow metal equipment. According to Du Toit, ROI should be at the centre of every procurement decision when it comes to mission-critical and big-ticket purchases such as earthmoving equipment.

For Du Toit, it is about finding the balance between quality and cost. “It is about procuring equipment with the reliability and availability needed to execute the required work as efficiently and safely as possible. The balance between quality and price must be a key consideration in every procurement decision and that is where brands such as Shantui offer great value,” he says.

The rise of value solutions

Once dismissed as low-end ‘upstarts’, Chinese equipment brands have built up their capabilities and now compete head-to-head with multinational companies across many global markets. The ascent of these products has been fuelled in part by the rise of the ‘value’ market in rapidly developing economies, where customers have boosted demand for ‘good enough’ products that emphasise price competitiveness and sufficient functionality rather than supporting the most advanced technologies.

Customers, says Du Toit, are becoming more open-minded about trying non-premium products in search of the right balance between cost and productivity. Consequently, the trend has given rise to a global shift towards competitively priced yellow metal equipment solutions, better known as value brands.

In fact, available industry statistics show that value brands currently constitute about 80% of global construction machine sales. However, this is more prevalent in developing markets. To give context, Chinese brands now have a 60% share of the African wheel loader market.

This, says Du Toit, is a clear indication that non-sophisticated offerings are evolving. “Innovation is traditionally defined by sophisticated technologies, but in these challenging economic conditions, it shouldn’t always be the case. Some of the best ideas, especially in today’s designs of yellow metal equipment, are very simple, based on a clear and deep understanding of customers’ needs – finding balance between price and productivity,” he says.

Shantui is one of the leading brands in the dozer market.

Extensive offering

Quarrying customers seeking a quick and high return on their equipment investments can take advantage of Shantui’s extensive excavator, dozer, grader and wheel loader ranges. “Our competitive edge is that these offerings are affordable and are built to last. Coupled with a growing support footprint, the resale value of the units is incredibly competitive,” says Du Toit.

Since its arrival in the southern African market back in 2007, the Chinese maker has particularly proved its mettle in the dozer market which has traditionally been dominated by premium OEMs. In fact, Shantui is a force to be reckoned with in the global dozer market. With a whopping 60% share of its domestic Chinese dozer market, the company holds a 15-20% share of the global dozer market, confirms Du Toit.

In 2010, Shantui went on to become the largest producer by volume of bulldozers globally, making over 10 000 units that year, thus representing two in five crawler-type dozers produced in the world. Currently, the company produces in excess of 15 000 units a year. Apart from dozers, over the years Shantui has grown its excavator and wheel loader market share, both locally and in the global market, further reinforcing its competitiveness in the global earthmoving equipment market.

“Locally, our market share continues to grow at a rapid pace. Key to the growth of the product are the competitiveness of our pricing, quality of machinery and aftermarket support,” says Du Toit.

To further boost its aftermarket regime, Handax Machinery will embark on an aggressive rollout of service dealerships in the next 24 months. These will be established across South Africa and neighbouring countries, including Namibia, Botswana and Zimbabwe, as well as Zambia and the DRC.

“In addition, we will continue to increase our stock holding of machines and parts across our dealer network and at the head office. Shantui will become a brand for the smart, the visionaries who know that ROI is what makes their business work, thus offering customers the value that works,” he says.

The Shantui wheel loader range is known for its productive and efficient operation.

Single stable

In the decision-making process, Du Toit says one of the critical considerations should be the ability to source all of the end user’s equipment needs from a single supplier. One of Shantui’s key strengths is the ability to offer a total yellow metal solution from one stable, all the way from graders and bulldozers to wheel loaders and excavators.

“It’s much simpler in the long run to deal with a single equipment provider. Having to purchase equipment that drives your business from different suppliers and being serviced by all the different dealers can be time-consuming and costly. Working with an established supplier means you will have access to reliable support, as well as the parts and equipment you depend on for maximum uptime,” concludes Du Toit.

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