Tag Archives: 2015

Volvo is likely to stick to its old plan for the year 2015

It seems the construction and the mining industry is the worst hit industries in 2014, which is why they are finding it tougher to recuperate in the forthcoming year. It has been seen that many companies saw a huge decline in their sales due to which they are forced to take some real tough decisions. Undoubtedly, these decisions also had an impact on the industry as a whole. Not only the sales figure dipped but also there were jobs cut throughout the industry which became a matter of concern for many. Hiring were the lowest across sectors and many people who completed their studies in civil engineering or learnt about machines were finding hard to get to a job.

Many heavy equipment manufacturing companies were of the view that they should be calling off their overseas markets, shrink their business to a certain extent and focus more on home turf. Others were of the view to pay more attention in countries that was giving them profits. It means that they were ready to take risks to produce more equipment for countries that showed them opportunities and by doing that, they were able to keep afloat in turbulent tides.

Volvo also gained success internationally but in some countries, it did not do well and that resulted in forcing them to cut jobs of its employees. Volvo is world’s 2nd biggest truck manufacturer and has a reputation of producing world-class trucks and delivering them all over the world. Many countries in Asia, Middle East, Africa, and Europe and in the America uses their products to cater the needs of the customer. However, the year 2014 was not at all good for them. They experienced a severe fall of demand for trucks and were finding it difficult to sustain. It became important for them to take some stringent decisions and they decided to lay off few people from the company. They are of the view to eliminate around 2000 jobs by 2015 which will happen in a phased manner. By that time, if the business picks up, they might reconsider their decision. Or else, they might have to stick to the old plan. It is assumed that the reorganization costs will be around $766 million and the annual savings is estimated to be lower than that.

Company biggies are worried about the reaction that their decision will have on the stock exchange. They were optimistic and feel that the market will react positively to their decisions as they understand the need of the situation. Volvo’s mission is to attain highest operating margins in the entire industry. They have planned to liquidate a North American unit. It is estimated to be over by the end of January. Volvo is also focusing on paying the same amount of dividends that will help a little to keep the prices of their shares intact.

Volvo feels that the year 2015 will be the year of efficient machines and cost reduction. If the company is able to attain these things, they will be able to sustain for now.

Terex has big plans for China in 2015

The year 2014 may have not been so pleasant for many but some companies just know how to make fortune out of nothing. The overall construction segment has seen a decline in the year 2014. Right from heavy equipment manufacturing companies to the big construction houses, most of them have suffered losses. In general, it has not been the year that passed away pleasantly. It indeed gave lot of losses to big as well as small companies. Many companies saw a sharp decline in the sale of heavy equipment, something that was not experienced by many for the last many years. However, this was the year when almost all the companies have experienced the same issue and are struggling hard to get over it.

Some companies found 2014 to be more difficult because they did not foresee the issue in advance. They relied more on domestic markets giving less importance to other global emerging markets. They were of the opinion that it may be difficult for them to conduct business in other countries and they may lose their share of hold in the domestic markets. Therefore, they paid less attention on international markets where there were more opportunities and took a hit on their sales. Simultaneously, there were few companies like Terex that made a smart call and took the plunge to overseas markets. They made some real big plans for countries like China. They have planned to increase their annual revenue to $1 billion from $300 million in the next 3 to 5 years. This means that they have taken far better calculated risk which is likely to pay huge dividends to them in the future. Ron DeFeo, the chairman and the chief executive officer of Terex feels that China plays a significant role in making Terex a $10 billion revenue company by the end of 2015. The CEO sees China as an important player that has plenty of demand. Terex in return has a lot to offer to China. They see immense business opportunity in that country and also in other South East and Middle East countries.

According to the CEO, in the year 2014, China has single handedly contributed around 8 percent of the $4.4 billion revenue generation in the year 2014 and they forecast that it is expected to enhance its contribution to 20 percent. They see immense investment opportunities in China. Terex will be working on their aerial work platform and agrees that the government in China gives a lot of importance to safety and efficiency. The company will therefore pay a lot of attention to the safety and efficiency part and ensure that it abides by the rules and regulations of the country. Slowly and steadily, they may work to create a safety aerial work which will not be restricted only to the business but will be relevant to the whole society. They are in talks with the government to make something of this kind possible.

Terex sees the overseas market as the market with potential and feels confident in doing business away from home.

Komatsu has a lot of expectation from the year 2015

The slowdown of the global economy has put many big as well as small companies in the worry zone and many say it will perhaps take a couple of more years for them to see the glory days. So till then they have to do is to conduct business in the normal fashion without taking more risks. Taking risk at this juncture is only going to tarnish the reputation of the company because it is highly unlikely that you may get any high returns by taking unnecessary risks. Therefore, it is prudent that one carry on their businesses with caution as that will help them to conduct their business with impunity. Many big companies have seen a decline in their sales volume and they feel that the global slowdown is the major reason why they have such a low sales figure. Other than this, businesses in some countries have taken the major hit which has impacted the overall sales figure. Many are even pondering if it will be wise enough to wrap up their businesses in countries where they have suffered maximum losses. That will in a way help them cut off some of their losses in the future. They may also consider to lay off few employees for the time being as that will be a way in which they can save some money for taking major financial decisions.

China which has lately emerged as the world leader as far as its economy is concerned has also seen a fall in the construction and mining sector. Komatsu which is one of the largest producers of heavy equipment feels that China is no longer the market leader. Their sales of equipment in China have fallen drastically than they could have ever thought of giving them a shock of their lifetime. Companies like CAT have similar views. Tetsuji Ohashi, the chief Executive Officer of Komatsu, has said in an interview that China is losing its sheen as far as the construction and mining sector is concerned. He even went on to say that China is losing its hold from the economic growth and it is finally scaling down. The sale of Komatsu equipment has dropped noticeably between April and May and there has high chances that it will miss the annual sales target. He also felt that China is experiencing huge delays in the commencement of some construction projects. Alternatively, he also feels that the demand for mining machinery is also declining. This all attributes to the total mess that is happening in that country affecting the business of the company.

He feels that the impact of the situation in China is big and they have to closely monitor the situation before coming down to a conclusion. They just can’t take a decision without forecasting few very important aspects and are optimistic that things will get back to normal in that country. Komatsu sales have declined to almost 20 percent but they have high hopes for 2015. They feel that the year 2015 will at least heal some of their wounds if not turn the table for them.

John Deere business plans for the Year 2015

The year 2014 may have a wonderful year for many and not so wonderful year for some. But it was definitely not a very happening year for the heavy equipment manufacturing industry. They had to struggle a lot of factors for the entire year; out of which competition was the biggest factor. Other than this, there were factors like global economic slowdown, unrest in the Middle East nations, the overall business slowdown that has largely affected the mining, oil and gas and construction sector and many more reasons that has slow paced the overall industry. Overall, it has not been a great year for the overall industry and the forecast is also not so pleasant. Big and small equipment manufacturing companies are affected alike by the slowdown in the global economy. The sales of the equipment have gone for a toss and there are not much takers available in the market. This is perhaps the reason why many companies have suffered losses and their sales graph shows a massive decline which they have not seen for years.

Talking especially about John Deere, it has not remained unaffected by the impact of the slow paced market conditions. John Deere is known for producing agricultural and heavy equipment machines had to take the beating of the market. Deer’s outlook gave the news that for the new fiscal year the situation will be grimmer and they do not see any major improvement in the market situation. The outlook suggests that the sales of the equipment is estimated to take a dip of more than 15 percent for the current year and may further scale down to 21 percent during the first fiscal quarter. They also estimated that the net income of the company will be around $2 billion compared to $3.16 billion in the year 2014. Things were much better in the year 2013 with earnings of $3.54 billion. The fall in the number of earnings only suggest the performance of the company. It will not be superficial to express that the company needs to take some time out to think and revamp its strategies. May be they need to make some changes here and there and need to focus on few very important issues that may kick off the sales number from where it is now.

The news of poor sales has already affected the price of their shares in the stock market making it more difficult for the company. The company’s earnings were totaled at around $35 billion in the year 2013 which has now come down to $32.9 billion. This dismal performance has not brought down the morale of the employees of the company. The CEO of the company is positive that the company will bounce back and this time with a bang. Though there has been a global pullback in the agricultural sector, still the company will show profits in the year 2015. They have intended to prepare a more resilient model of growth that will help John Deere to turn the table to their favor.

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Case sees the year 2015 as the year of development

The year 2014 has not been a great year for many heavy equipment manufacturer and many have struggled hard to keep their business at bay. It is not that they see a possibility of shutting their business altogether, but they definitely see a hard time ahead. Few equipment manufacturing companies feel that the forthcoming year will bring joy and prosperity to their business. However, others do not support this view point. Some are also of the opinion to wrap up their businesses from the country they do not see much happening in the future and may focus in only those countries where they anticipate good business. This is the case with almost all the big companies. However, there are also some companies who keep a different perspective. They believe that it will make more sense to simply wait and watch how the overall market performs. Especially, for companies who are located in developing countries are more willing to sit tight and monitor the happenings. It is only after intensely pondering the situation that they might come to some conclusion. They just simply do not want to pull the trigger and later remorse on what they did.

Companies like Case sees this moment as a great opportunity. They feel that the year 2015 is the year of development for them and they have chalked out plans which suggest that they are determined to achieve growth consistently for the entire year. Having said that, they also assume that the forthcoming year will also be a year of immense challenges and it will not be easy for anyone to do business. They feel the reason for poor sales is because of falling demand. It does not have to do much with producing innovative machineries but has to do more with the fall of demand in the overall market.

Case has come with a not so unique way but definitely effective. They do not want any of their employees to do overtime and they feel that working for extra hours is not required in a market condition where the demand is low. For the time being, they do not intend to lay off any of their employees but are giving strong indication that they are certainly not hiring any additional labor force.  They are also working on the plan to reduce higher weekend salaries for its workers and will also significantly reduce their dependence on outsourced sections that will help them a long way to keep the cost in tack.

In order to protect the segment margins, the company has already started to act on its cost structure by bringing it in line with its inventory positions. As far as the agricultural equipment are concerned, it is estimated that they will see a fall in its sale volume for the entire year. Farmers who require machine with higher horsepower will shy away from buying due to weak crop prices. Nevertheless, they also feel that the situation may turn good at the end of 2015 and they will pick it from there.

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JCB sees 2015 as the year of improvement and possibilities

With the overall economic slowdown, not many heavy equipment manufacturing companies are optimistic about any positive opportunities in the year 2015. They feel that the economic slowdown has to do more with the unrest in the middle east, rise in oil price, government norms which are not so business friendly etc. that has led to a decline in the demand of heavy equipment. Even the equipment that is required for agriculture is also seeing a downward trend as far as its sales is concerned. Therefore, this suggests that the entire market is suffering because of the economic downturn.

If we see how it is going to be in US, the picture is not so pleasant. US economy is not in good order and it requires lot of work to put it back on track. Other than that, many government policies are not so business friendly. So there is a need for the government to ponder on such matters. Overall, not many believe that the year 2015 will bring any significant change in the current situation and things will more or less remain the way it is. However, there are few companies that shares slightly different opinion. Out of these companies, JCB is one. JCB being an UK company sees 2015 as the year of improvement and opportunities. They see hopes of possibilities that will flow in somewhere from the mid of this year. They feel that their company will welcome the New Year with a bang by launching the entry-level backhoe loader. According to JCB sources, they are launching the 3CXG backhoe loader in the Middle East and they also believe that this machine will save a lot on operational costs for its customers. The letter “G” in 3CXG means global which means that the company is looking to cater international markets and especially markets that have huge potential. Though there are problems in the Middle East but that does not stop them for entering the market with the entry-level loader. This clearly suggests that JCB is pretty determined to make it big in the year 2015.

If we talk about JCB 3CX, we get to know that the machine has a very good reputation providing great quality service to customers all over the globe. The chief innovation officer of JCB, Mr. Tim Burnhope says that the company is determined to offer solutions to different customer requirements and JCB works very hard to attain that reputation. According to him, the backhoe loader has been specifically designed to cater to emerging economies. It is a tough machine and can work under tremendous arduous conditions.

Most of the Middle East region is hard to dig area and it requires something stronger to penetrate the ground. Therefore, a machine like JCB 3CXG will be fairly compatible and can get the desired work done. The phenomenal part is that they have stuck to the basics and this is why they feel that they can sustain the horrendous tide that has made living difficult for other companies.

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Strategies of Caterpillar for the year 2015

Whether big or small all companies have to draw a strategy to increase their sales volume for the upcoming year. Some companies go for acquisitions and some have other plans that they adopt to give a new dimension to this business. In some way or the other, every company usually set up some kind of strategy for their business and adheres to that plan. It is quite imperative to establish strategies for the upcoming year and also declare them to the investors, stake holders or else they may leave people in a very ambiguous state which will deter them to invest in that particular company. This will be very harmful for the financial health of the company.

Normally, big companies tend to spend good deal of money on advertising their strategy to others. This also gives a clear set of message to their competitors that they are entering the New Year with a bang. Some companies play quiet till the last moment and when the New Year is about to begin, they start speaking about their plans to the media and general public. They also write about them on their web sites. These kinds of advertisements become very helpful to the company and also attract the attention of domestic as well as global customers.

Caterpillar one of the leading brands in the field of manufacturing mining and construction equipment does not leave any chance to promote their achievements and inform others about the sort of strategies they have set-up for the forthcoming year. Caterpillar being a very old company and a huge brand always comes out with something new that makes other patiently wait for. They basically concentrate on market acquisitions and try to increase their sales by bringing in innovative products in the market. They use this strategy as their Unique Selling Point (USP). They believe that innovation is key to any business and they apply this of thought of theirs entirely to flourish their business. Doug Oberhelman, the chairman and chief executive officer of Caterpillar says that they have good sum of money lying with them and he would like to utilize that money by pumping it in the business.

Many business heads have the same opinion. They struggle hard for the entire year to increase their sales and make good chunk of money. The money is then reinvested in the business and various financial problems are sorted with this investment. Doug Oberhelman sees the opportunity is not huge. They need to lay their focus on small growth opportunities as he see very less chance in doing something big. They are primarily focusing on mining, oil and gas an electric power. They see good business opportunity particularly in these sectors.

Caterpillar was shy of entering into the oil and gas sector as it felt the prices of oil were high. However, things have changed now and they see this moment as the right junction to enter the market. They feel the prices of oil have dropped and it makes more sense to get in the market at this juncture.

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Plans of Hyundai for the year 2015

The year 2014 has been a big pain for all the heavy equipment manufacturing companies. They were all left complaining about slow growth rate and decline in the sales volume. Due to unrest in the Middle East and other parts of the globe, customers were reluctant to make further purchases. Another reason that adds to the misery is delay in starting a project. Due to many reasons, projects are unable to take off and that results in decline in the demand for heavy equipment. Therefore, it also does not make any sense to produce innovative machine as it makes no difference in a stagnant market. Like all other companies, Hyundai is also going through the same rough phase and is struggling hard to come out of it. The think tankers are working hard to find a solution to this issue and are also waiting for the market to correct. If the issues in the Middle East are put to rest, then things might start catching speed from there. However, that is just a matter of some time and needs patience. It is therefore important for companies to find an alternative and check other potential markets rather than simply sticking to countries that are of not much importance for the time being.

Having said that, it does not imply that construction equipment manufacturing companies should simply wind up their businesses from such countries. They can reduce their labor force and ensure that they do not end up spending their capital in units that may not yield much to them. If we check the last few years’ performance of Hyundai, we find that there has been a consistent fall in their sales volume. It is simply not picking up. In this way, they are only lowering their performance bar and are expecting that it will get to see some green pasture sooner.

Hyundai is in no mood to continue with its sick units or the units that are not performing. The year 2015 will be the year of corrections for them. They have to identify the units that is not performing and then also need to check the possibility of it remaining in that condition for the next few months. If they are convinced that there are no signs of revival, then it will be prudent to close such units and save the company from incurring further financial loses. The next thing that they can do is lay off few employees from units that are performing but not as per the company’s projections. It makes no sense to have a workforce that is not delivering. Other than this, they can also move their back office staff to sales department or can cross train them to perform duties at various levels.

Cross training people will keep the resources intact and will also enable them to perform various duties at different situations. By following few simple things can bring them back in business. However, for the time being the ground situation is grim and it will bounce back only if corrective actions are taken.

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