Schwing's concrete strategy

Despite the downturn in the US market and increasing competition from the Far East, concrete machinery manufacturer Schwing remains confident about its global market position.

Schwing is expecting overall growth this year despite a weakened US market, according to the managing director of the German-based company, Gerhard Schwing.

Speaking from the headquarters of Schwing-Stetter in Herne, Germany - which celebrates its 75^th anniversary next year - Mr Schwing told iC sales from the Herne site have continued to grow during 2008, albeit at a slower rate.

"The financial and housing crisis started in the US market two years ago and our orders and sales started to go down at the same time," Mr Schwing said. "Every manufacturer is feeling this sharp downturn and in 2007 demand decreased by -25% and it has continued to fall during 2008.

"We expect a +10% (overall) growth in 2008 but this is a smaller growth - a big portion of sales is missing because of the weakness in demand from the US," he added.

However, Mr Schwing remains optimistic about the current market attributing this partly to the company's established global market position and their equipment manufacturing processes, adding, "We design and produce most things, if not all, in our factories all over the world."

Opportunities

A particularly positive area of development for the company according to Mr Schwing is its continued success in India and Brazil where it has been present for 10 and 30 years respectively.

"India is a booming market and is expected to grow by +20 to +30% every year for the next two to three years, while in Brazil growth increased by +20% in 2007," he said.

The company has a 65% stake in the Indian concrete equipment market and has eight service, sales and training customer centres across the country. The biggest selling concrete machines from Schwing in India are stationary pumps and Schwing-Stetter is also the market leader for concrete batch plants and truck mixers. Mr Schwing added the market is now starting to demand more truck mounted boom pumps.

"This year and next the demand for truck pumps will explode," he added.

He attributes the company's success especially in the emerging markets due to sales expertise and product quality, including producing machines with less fuel consumption and less downtime, and the highest resale value.

Schwing also has an established local supplier structure in India and Brazil allowing for easier sourcing of components.

"We adopt a strategy of maximising local production in these countries - you can't cover these markets by selling a 100% European-manufactured unit - you have to be a local producer," Mr Schwing said.

This, he added helps with customers' acceptance of the product and with practicalities like delivery times.

"You cannot establish a business in India without the infrastructure - without the relationships with the vendors, with government and harbour authorities. I am happy that we started this process as an Indian company, not as a European conqueror."

Challenges

Competition from other European manufacturers setting up business in India is increasing, but Mr Schwing said he is not overly concerned. This is because Schwing is well placed in the market and is regarded by its Indian customers as "the serious concrete advisor," he explained.

However, he added the company faces the challenge of continually keeping pace with technology, management and purchasing as well as ensuring products are ahead in terms of fuel consumption, durability and maintenance and repair costs.

Another reason Mr Schwing said he is "somewhat relaxed" about competitors who are now discovering India is because Schwing developed a workforce some 10 years ago and has kept the loyalty of its staff.

"We have to do our utmost to keep our advantage and I am happy that we have not made too many mistakes."