BACKHOE LOADERS:FLAT GROWTH

Backhoe loaders are passing through a challenging time for the past few years. Market is

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Backhoe Loader

registering a flat growth with some indications that it is shrinking.However, now there is optimism among the leading players in the backhoe industry on the back of the government initiatives on infrastructure projects. But how far this will help this segment to regain its glory is difficult to predict.

Backhoe loader has led the sales in construction equipment industry in India, for the past several decades. As an extremely versatile product, it has proved its importance and utility over the years. It is usually the first machine to enter a site at the start of the project and remains engaged with a variety of activities throughout its life cycle. Over the years the contribution of the backhoe to Indian infrastructure development is immense. But the recent industry slowdown has severely affected this segment. Manufacturers are contemplating new strategies to recover.

Market scenario & demand
Major players in the backhoe loader market predict a flat market this year with annual sales in the range of 18,000-21,000 units. The market in this segment is highly competitive with all the big players fighting with the leader. This sentiment is reflected in the recently announced downsizing of staff and officers by some of the manufacturers to enable them sustain their operations by cutting costs.

According to Jasmeet Singh, Head – Corporate Communications, JCB India, the industry has been going through a challenging time over the past 3-4 years. ¨As per ICEMA estimates, the market for backhoes in 2015 was approximately 21,500 units. This year has been equally challenging and we expect a more or less similar outlook,¨ he explains.

Neeraj Bhatia, Business Head, ACE, expects a sale of 18,000-20,000 backhoe loaders in FY 2015-16 in which, 50 per cent will be captive users, 20 per cent hirers, another 20 per cent mine owners, 10 per cent institutions like municipal corporations. Rajinder Raina, General Manager – Marketing, Escorts, feels, ¨During the current calendar year, the annual addition will be 18,000-19,000 units which in next five years time would be around 25,000 units per annum.¨ He sees challenge in the financing of the equipment as most of the customers are first-time buyers/users. Vijay Sharma, Executive Director, Terex Equipment, says, ¨We expect the backhoe loader market to be around 22,000 units in 2015-16. Over this base, we expect the market to grow by 3-4 per cent in FY 16-17, after which the growth rate is expected to surge to up to 7-8 per cent once the Indian infrastructure growth story engulfs most part of the country.¨ At the same time, he cautions, saying, ¨For the above to happen, we need peace, law and order (no mindless agitations), quick passage of important business legislation like land acquisition, GST, and improvement in ease of doing business, not amongst businesses but simplification in doing business with the government which essentially including permits, clearances, taxation reforms through IT enablement of government services, tenders, payments of dues/bills etc.¨

The market demand is model-specific. Sharma says, ¨Customers go for models which provide cost-effective solution and are high in terms of quality and performance which are technologically reliable.¨ Bhatia says, ¨More than 90 per cent of backhoe loaders are sold with 76 hp engine, 1 cu m loader and 0.24 cu m backhoe bucket. This is an established combination with huge population.¨
Ajay Aneja, National Head – Sales, CASE India, says, ¨From its peak in 2011 at about 33,500 units, the loader backhoe market has shrunk in line with the overall industry size since then to reach around 22,500 units. While the decline in volume has been witnessed in 2015 as well, the rate of decline is flattening and a revival is expected in the industry from 2016 onwards.¨

Growth prospects & challenges
According to Sharma, on an average about 24,000 new backhoes are being added every year. This makes it the largest selling CE product category. ¨Globally, backhoe is a utility machine, however, in India, it is positioned as a productive machine, which has to turn out profits and payback the cash used to fund it. This product category will continue to thrive for a long time as it accurately represents the great Indian entrepreneur, who is very actively engaged in the process of nation building.¨ Says Singh, ¨We feel that there will always be a strong demand for backhoes, in the Indian market, mainly due to the variety of tasks and applications that the product can accomplish. As new projects get announced, the demand is also expected to rise and in the coming years a minimum of 10 per cent growth may be expected.¨ Bhatia expects low growth for backhoes as he says, ¨Backhoe loader market is maturing and a 7-8 per cent annual growth is expected in the next five years. It is a support machine, not a mass production machine, so growth is feeble.¨

The key challenges in its growth path are the availability of funding options and innovative financing products for buyers wanting to own and operate their first backhoe loader, according to Sharma. ¨The rationalising of on road prices across different states in India will also give a fillip to demand as taxes and taxes over taxes make this product unviable in certain states. A GST regime will help this product category grow at 200-400 bps.

Source: Equipment India

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A variety of heavy equipment machinery is in operation today

Heavy equipment generally falls into one of three main categories:

excavator
Excavator

Earth-moving machines – Earth-moving machines – these are what most people think of when heavy equipment is mentioned. Some of the most common earth-moving machines are excavators, bulldozers, wheel loaders and backhoes. Excavators are incredibly important to the construction trades because they enable a single operator to do the work of dozens of workers. Excavators are generally used to dig trenches for utility lines, irrigation systems, or foundation footings. The ability to dig a trench through hard, packed soil with minimal effort makes these machines indispensable for any construction crew.

Even those in the landscaping industry have found that excavators provide a quick and efficient means of digging irrigation trenches, like those used for irrigation lines. In the hard-packed, clay soils of the American southwest, an excavator is a necessity for any construction firm that values productivity and efficiency.

Bulldozers and backhoes are other earthmovers that are quite common on the construction site, as they enable a single operator to move massive amounts of dirt and loose materials with ease. A large bulldozer can frequently move more than twenty cubic yards of loose material in one pass, and a cubic yard alone may weigh more than a ton in some cases! The Caterpillar D6 is one of the most popular bulldozers on the market today, with the Komatsu D65 its only real competitor in the mid-sized market.

Wheel loaders are incredibly popular pieces of heavy equipment in that their front-mounted scoop buckets are able to transport heavy loads of loose fill and materials in an efficient manner. Some of these units are able to handle several tons of material in one pass, and are adept at depositing their load onto a conveyor belt, into a dump truck bed, or simply moving the product around a construction or mining site.

Backhoes combine the best of both worlds, as they sport a loading bucket in front with an excavating boom arm in the rear. The excavating arm is generally used for trenching, though it can be used for light demolition duties. The loading bucket in the front is perfect for moving and transporting loose fill.

Agricultural Machinery – During the turn of the 20th that one farmer could produce enough food to feed twenty-five people. Today, that number has expanded to one hundred-thirty people. The main difference is in the heavy equipment that is used on a daily basis by our hardworking farming communities.

Some of the most commonly used pieces of heavy agricultural equipment are tractors, tillers, seeders, and irrigation rigs. Tractors have been in use for years, and have grown increasingly efficient through the use of quick detachable implements and accessories. Tillers are commonly used to prep seedbeds and do an admirable job of churning the ground and prepping the soil base to ensure a hospitable environment for plant and fruit seeds.

Seeders are designed to insert seeds into the ground at pre-determined intervals, and make the life of the agricultural worker much easier than previously imagined. Irrigation rigs provide much needed water in bulk quantities, and in a much quicker manner than compared to other watering processes. Agricultural machinery may be more specifically geared toward one task versus a construction-biased heavy machine, but the fundamentals are similar. Leveraging the power of hydraulics, powerful diesel motors, and heavy-duty steel frames, these machines are designed to work.

Material moving/handling – Heavy equipment like cranes, forklifts, and aerial work platforms represent some of the machines that comprise the material moving and handling category. These machines are designed to move bulky, heavy, and otherwise difficult to move cargo over short to moderate distances, and are built with power and safety in mind.

Commonly used cranes in the construction industry include crawler cranes and truck mounted cranes. Crawler cranes utilize tracked wheels to permit a mobile platform, and can move around while holding a load. They are able to do this without outriggers and are able to navigate a job site easily. Truck mounted cranes are not quite as maneuverable around the job site, and do require outriggers for stability, but they can drive between multiple job sites under their own power. Crawler cranes must be broken down and hauled to a new job site on a flatbed trailer.

Forklifts are seen in areas as diverse as marine loading docks, large warehouses, and in agricultural applications. These can operate on liquid propane, diesel, natural gas, or electricity. Aerial work platforms are seen in the construction trades and are perfect for use as temporary scaffolding platforms, as well as to transport materials from the ground level to a higher elevation – and vice versa.