Volvo construction equipment - total commitment to the Middle East market

By Volvo

Delivering international quality expertise, service and support through the Volvo Regional Parts Distribution & Competence Development Centre in Dubai.

The countries of the Middle East are highly dynamic states - ones that are making multi-billion dollar investments in essential infrastructure projects that, given their long-term strategic importance, will progress regardless of the current global economic climate. That’s why Volvo Construction Equipment saw it as a crucial move to establish a meaningful and highly professional presence in the market.

“Setting up a dedicated Middle East base was a shrewd move on the part of Volvo, and demonstrated the future vision that the company is renowned for,” says Jan Magnusson, Regional Volvo Parts Director. “And we moved really fast - from recognising the market potential and deciding to go ahead to completion of the project took just three years - the construction took just 16 months!”

The number of Volvo Construction Equipment machines in the region today is very high. Given the strong competition that Volvo faces across the region, that’s proof positive of the quality of the brand, products, distributors and service.

The population of the UAE is just 4 million, 80% of whom are expatriates - yet it is the driving force in the region. Dubai, with 1.3 million residents, is only the size of Stockholm, but the amount of business generated there is incredible. While the UAE, Saudi Arabia and Oman are Volvo’s biggest markets, the growth rate in every country across the Middle East region is remarkable. And the company sees further potential in the future, being ideally located to also capitalise on the huge opportunities in Iran when the situation there is less volatile.

The strategic location of the Volvo Regional Parts Distribution & Competence Development Centre in Dubai’s Jebel Ali Freezone, with a well-established and progressive business infrastructure, gives the company a real competitive edge.

“The close proximity of a highly efficient port made Jebel Ali the natural choice for our distribution centre,” says Magnusson. “The new international airport and container terminal, just 2kms from our doorstep, will be the largest in the world - add to that the fact that Emirates Airlines’ Airbus 380’s and Boeing 777’s can now reach any global destination non-stop, and it’s obvious that we made our move at exactly the right time.

Even the weather is on our side - apart from the heat, there is no other extreme weather to contend with, so logistics continuity is very good.”

In terms of customer perception, Volvo Construction Equipment’s high-level presence in the region confirms its status as a serious player - one that’s looking at the long term.

The unique combination of quality Volvo Construction Equipment (which, as a result of the recent acquisition of Ingersoll Rand’s Road Machinery operation is greatly expanded to meet every customer requirement), a warehouse, training centre and parts distribution centre gives customers and business partners real peace of mind. And apart from the obvious functional advantages, it also helps Volvo combat the threat of counterfeit parts. Availability is the biggest benefit - better stocks mean faster delivery, and if the original Volvo parts are available, then customers will buy them rather than a fake. The best illustration of this is the fact that Volvo’s parts sales have grown by 350% compared to 2006.

“Originally, 50% of our total equipment sales were for one market - the UAE,” says Magnusson. “But today we are far less reliant on one market, so the Regional Parts Distribution & Competence Development Centre has clearly had a very positive effect on our business, having widened our reach extensively.

Whilst there is a slow down in the Middle East construction market as a result of the current global economic situation, the significant investment in essential infrastructural projects will not be affected, so the outlook is still positive.”

While Dubai is the place that everyone talks about, Abu Dhabi, the wealthiest of the Emirates, also has very ambitious plans that are now coming on-stream. Other markets such as Saudi Arabia, Iran and Oman are also showing remarkable growth and are pushing ahead with their development plans.

Given the current growth rate, Volvo is already developing plans to expand the Jebel Ali facility, particularly given the fact that it now serves, in addition to Volvo Trucks and Volvo Construction Equipment, an extended family that also includes Renault and Mack Trucks, with discussions also underway with other business partners.

Looking forwards, Volvo sees its relationship with its front line distributors continuing to be a core part of its overall business ethics. “We always try to make our business in the region a real partnership with them,” says Magnusson. “The Regional Parts Distribution & Competence Development Centre helps in that respect as well, as it is far easier to involve and engage them. If you’re close to the market, you can adapt to challenges far better and far quicker.”

The Volvo Regional Parts Distribution Centre & Competence Development Centre
FACTS AT A GLANCE

Land area: 47, 583 sqm
Warehouse: 8,000 sqm
Competence Centre: 2,400 sqm
Stockyard for VCE: 1,200 sqm
Possible extension: 12,500 sqm
Volvo Parts staff: 27

Markets served: UAE, Saudi Arabia, Oman, Pakistan, Iran, Yemen, Egypt, Lebanon, Syria, Jordan, Afghanistan.

From words to action!
Warehouse RPDC (Regional Parts Distribution Centre) Dubai completed in 16 Months (approval to first order executed)
Pre-study: February 2004
Project approval: May 2004
Project kick-off: September 2004
Building completion - PDC : 20th December 2005

Business Areas:
Volvo Trucks - Volvo Bus (VTC/VBC)
Volvo Construction Equipment (VCE)
Mack Trucks
Volvo Aero Services    
Renault Trucks

Parts Number: Total 2008: 41,764 (2006: 21,500)
VTC/VBC 2008: 12,064 (2006: 10,400)
VCE 2008: 19,277 (2006: 10,000)
Mack 2008: 2,093 (2006: 1,100)
Renault 2008: 8,330

Paving The Way
Volvo is one of only a few manufacturers to offer a full range of road building equipment. What’s more, the company’s global support network of subsidiaries, distributors and dealers means customers benefit from some of the best service, back up and after sales care in the business.

May 2007 saw Volvo Construction Equipment acquire Ingersoll Rand’s road building equipment portfolio, adding pavers and compaction equipment to its existing grader range. Not only did this give the company a full-line portfolio of road building equipment, it also brought Volvo’s extensive global distribution, support and service network to the former Ingersoll Rand range.

The result for customers has been that there is far greater access to road building equipment. In addition, it has meant a supplier that comes with the full package of trusted support services for which Volvo is renowned.

Being part of the Volvo family – now the third biggest construction equipment manufacturer in the world – has many benefits for road building equipment customers, opening up a vast range of additional services such as the excellent customer support provided by Volvo dealers.

The expanded Volvo range also means customers benefit from the convenience of a one-stop-shop. Rather than working with different suppliers for different machines, Volvo can offer just about every machine that could be needed for a road building job.

Volvo excavators, haulers and loaders can be supplied for bulk earthmoving, while graders establish the route, self-propelled rollers compact the sub-base and pavers and tandem rollers lay and compact the asphalt or concrete. In addition a wide range of ancillary equipment, from mini excavators to tools and attachments can also be supplied from the Volvo portfolio.

Overseeing Volvo’s road machinery business is Pat Olney. Based in Shippensburg, Pennsylvania, USA, Pat moved from the company’s motor grader business line – now part of the road machinery division – to head-up the latest addition to the family.

Besides Shippensburg, the road machinery business manufactures in Hameln, Germany; Bangalore, India; Goderich, Canada; Pederneiras, Brazil and Lin Yi, China.

Pat is enthusiastic about the opportunities opened up by the addition of pavers and compactors to the Volvo range. “I’ve been interested in the road industry for some time. For me it’s an exciting and important area of the business. It fits with the strategic desire and ambition for Volvo Construction Equipment, which makes it an exciting opportunity in itself. I’ve long been a fan of the idea that the road industry side of Ingersoll Rand would be a good fit with our business,” he said.

But as well as seeing the opportunities of the marriage between the Volvo and former Ingersoll Rand ranges, he sees other factors as being more important in the success of the acquisition.

“In areas such as paving, customer support and trust are essential. Support and trust rely on people. Our way of working is built upon the importance of the individual and their contribution, and I think if we demonstrate that behaviour our people will feel good about what they do, and that’s the best way to bring them into the culture of wanting to provide the high level of service and care that our customers are entitled to.”

Through its broad range, Pat thinks Volvo can make a real difference to its customers in many ways. The right machines and the right relationships are the foundations, but also important is the expertise that can be built up, and the value this can have for road building contractors. “We aim to be the model of care and excellence in the road business and the experts worldwide. We should be the pre-eminent source of knowledge about the right way to build roads,” he concluded.

At the forefront of product development - Volvo Group introduces fourth-generation hybrid solution
The Volvo Group is now introducing the fourth-generation hybrid solution on a broad front in buses, trucks and construction equipment. “Our hybrid solution for heavy vehicles is completely different from anything that has existed in the market to date,” says Leif Johansson, President and Chief Executive Officer of Volvo Group. “As a result of our volumes and resources, we have succeeded in developing a more standardised platform solution - a prerequisite for the hybrid technology’s ability to have a widespread commercial impact in the market for heavy vehicles.”

Volvo has been testing various types of hybrid solutions since the 1980s and unveiled the first commercially viable hybrid solution for heavy vehicles in March 2006. Volvo’s solution is based on a concept known as I-SAM (Integrated Starter, Alternator Motor), with an electric motor and diesel engine working in parallel, so that each of them can be used in the areas where they are most effective. This increases capacity compared with series hybrids, while reducing fuel consumption and improving driving characteristics.

In a few years’ time, hybrid technology will no longer be a special solution but a technology found in most new city buses and distribution trucks. The fourth-generation hybrid technology has the potential to make such a development possible. “Volvo believes that the prospects are favorable for developing hybrid technology for all heavy vehicle segments - everything from buses and construction equipment to trucks for distribution and long-haul traffic,” added the Volvo President and CEO.

Volvo Construction Equipment is also at the leading edge of development in the field of hybrid technology. At the Conexpo trade show in Las Vegas in March last year, Volvo Construction Equipment scored a success with its hybrid wheel loader, the first of its kind in the world. Up to 10% lower fuel consumption is one of the advantages this hybrid system can offer in the market for construction equipment. Volvo Construction Equipment also expects to be able to develop the hybrid solution and thus further reduce fuel consumption. Deliveries of hybrid L220F wheel loaders are scheduled to begin in 2010, with some production expected during 2009.

Contact details:
Carin Ekström, Regional Business Co-ordinator
T: +46 16 541 42 03, E: carin.ekstrom@volvo.com, W: www.volvoce.com