The Indian construction equipment (CE) industry needs to play catch-up to global trends on a number of aspects.
The Indian CE industry has witnessed substantial growth in the last two decades, albeit fluctuating between highs and lows. The reasons are not hard to find - prevailing uncertainties in the global economy and slowing down of infrastructure projects. The global scenario is no different either. Amidst repeated economic downturns in Western Europe, North America and Japan, the CE industry that had contracted by over 23 per cent in 2009, has been rising and falling alternately. Even China, the largest single market in the world recorded a decline in CE sales in 2012. However, the current phase between 2014-2016 is considered the recovery time. The global CE market estimated at Rs.5,551 billion ($90.5 billion) in 2013 is expected to reach `7,310 billion by 2016, representing CAGR of 7.7 per cent.
The Indian CE industry which witnessed substantial growth between 2002 - 2006, has slowed down since 2008 . While China has recovered faster and is marching ahead, the Indian industry has not been growing as anticipated.
´The Indian CE market is not growing as expected,´ confirms Ajay Kumar Somani, Director , Mobile Crane Division, Liebherr India Pvt. Ltd. The company offers all terrain tyre-mounted cranes from 35 tonne to 1,200 tonne capacity and crawler cranes from 350 tonne to 3,000 tonne capacity. ´In China, it is very tough to get the actual picture of companies´ internal conditions due to the financial support provided by the Government to salvage the situation. In India, things are in the open and hence we are able to see the true situation. The market slowdown in India is mainly due to financing, which is not available easily. Secondly, the CE industry depends on the growth of the infrastructure sector, where many projects have slowed down for various reasons. In China, the problems get resolved quickly whereas in India they take a long time,´ Somani elaborates.
However, with the new government´s inclination to boost infrastructure projects, industry stakeholders are hopeful of a quick revival and growth.
A major share of the equipment manufactured in the country are for domestic market and only around three per cent is exported. Rigid dump trucks are an exception, where exports accounted for over 50 perc ent of the production in 2011. Other major contributors to exports are backhoe loaders, compaction equipment, mobile compressors and mobile cranes. There is, however, a huge potential for exports, say industry professionals.
´India is now fast emerging as a manufacturing and export hub with global manufacturers setting up their production plants in India. Moreover, when it comes to product design, safety and performance, products manufactured in India are at par with machines manufactured in other developed markets,´says Jasmeet Singh, Head, Corporate Communications, JCB India Ltd. JCB machines which are being exported to over 60 countries, include backhoe loaders to excavators and wheeled loaders to compaction equipment and skid steer loaders.
Today, a wide variety of equipment with advanced technology are available in India that lay specific emphasis on efficiency, productivity and safety. ´There has been an enormous advancement in fuel efficiency, productivity, performance and operational cost. Each year, we invest a substantial amount to improve technology and drive the development of new innovations to increase machine productivity,´ states Dimitrov Krishnan, President, Volvo Construction Equipments India which offers a broad range of equipment including excavators, wheel loaders, articulated haulers and compactors. Krishnan adds, ´Articulated haulers and wheel loaders are original Volvo innovations and we have been continuously upgrading them with new technologies. For instance, the OptiShift technology, a technical advancement in wheel loaders, delivers up to 15 per cent improved fuel efficiency and increased performance. OptiShift uses two innovative design features - its torque converter with LockUp function and a free wheel stator delivers the power in the most efficient way; its Reverse By Braking function, that makes use of the wheel loader´s standard service brake, rather than the torque converter to assist in deceleration. This intelligent system delivers fuel savings by no longer relying on the torque converter for reversing, which puts less strain on the engine and requires less energy.´
JCB recently introduced two new product lines in the material handling segment - the Telehandlers known as JCB Loadall and the Skid Steer Loaders known as JCB Robot. ´These products are now being manufactured in India and have become extremely popular in the Indian market. As the material handling industry evolves, demand for these machines would considerably rise,´ states Singh.
Fuel plays a crucial role in the CE industry with diesel being the fuel in most of construction equipment operations. It accounts for about 30 per cent of operational costs . The high cost of fuel, combined with a growing interest in environmental issues, has led to many companies focusing on ways to improve the fuel utilisation of their equipment with in-built features.
Alternative fuel vehicles, including those powered by bio-fuels, natural gas, electricity, that have a lower cost per energy unit are growing in popularity. They perform well in specific applications, while reducing the greenhouse gas emissions. But there are limitations to using equipment with high emission standards in India, points out Somani. He says, ´For our equipment, All Terrain Tyre mounted mobile cranes and High capacity Crawler cranes from 350 tonne to 3,000 tonne, fuel consumption is not so important. More important is the emission standard. We are producing cranes with higher emission standards but are unable to offer them in India as suitable fuel is not available in remote locations where these equipment are often used. Hence, we are offering emission standards suitable to Indian conditions.´ Machine to Machine (M2M) technology to ensure intelligent machines that can work remotely, predictive diagnostics using sensory gadgets to ensure higher asset uptime are some of the emerging technologies abroad. However, Indian manufacturing companies are behind in terms of R&D and technology and many Indian companies are entering into technical collaborations with international companies to overcome this lacuna.
With construction equipment requiring large one-time capital investment, financing is a good way for the CE industry to spark demand and acquire new customers. Several international construction equipment manufacturers are offering financing solutions in India.
´Competitive financing solutions are a vital part of the total construction equipment offering. Equipment financing provides customers a wide range of advantages, including cash flow benefits, risk management and allows them to focus on their core operations,´ explains Krishnan. The Volvo Group´s financing company Volvo Financial Services began operations in India recently. Working with seven to eight banks and non-banking financial companies, Volvo offers both retail and dealer financing solutions.
Financing accounts for about 80 per cent of the equipment purchased. Most financing is through loans. Rental penetration in India is around eight per cent, as compared to 50 to 80 per cent globally. A robust rental market enables reduction in investments in projects by outsourcing the equipment requirement and improving their capacity utilisation. Given the industry´s opportunities for growth , better access to financing will help broaden the market, opine industry pundits.
Despite several site accidents, particularly due to construction equipment, the safety aspect has not yet received the required attention in India. The factors that need a look into are in-built safety features in the equipment, setting up uniform safety standards and ensuring their implementation, creating awareness among equipment handlers on safety measures, hazards, risk control, etc.
The American Society of Safety Engineers (ASSE) which aims to create safer work environment had recently organised a conference on this issue in Mumbai to acquaint the Indian industry with the global best practices. Suresh P. Tanwar, Founding Member ASSE India Chapter and Chief - Group Safety & Health, Tata Group elaborates on the hazardous situation in India. ´The exact number of injuries at construction sites due to construction equipment as a percentage of total number of injuries is unknown. However, as compared to the manufacturing and service industries (which are better organised and within controlled environments), construction related injuries are four to five times higher, according to some data. This is because the hazards at construction sites are far more serious and the hazards and risks are also dynamic. We see a lot of crane related serious accidents at sites when not operated properly and maintained regularly. It is estimated that approximately 30 to 40 per cent of all construction accidents involve construction equipment.´
Despite the slow down, the industry is optimistic about future growth. ´I see more opportunities than challenges for the CE industry in India, which is home to some of the most sophisticated equipment buyers in the world, where price is far from the most important factor. They are focused on performance, productivity and fuel efficiency. One of the challenges is to have the financial strength to continue to develop products that meet these requirements,´ says Krishnan. Singh adds, ´Opportunities are plenty for equipment manufacturers as India has a huge infrastructure deficit. Government´s strong focus on infra development, reforms and policies announced and proposed investments in various sectors will help demand for construction equipment.´
Evidently, investments in infrastructure will be the growth drivers of the CE industry. With several infra projects in progress and in the pipeline it is expected the CE industry will exhibit robust growth in future.
´Govt must enforce end user safety training´
Suresh Tanwar, Founding Member - American Society of Safety Engineers -India Chapter and Chief - Group Safety & Health, TATA Group, speaks to Janaki Krishnamoorthi on the hazards and safety aspects of equipment usage at site.
What are the common hazards faced while using construction equipment in infrastructure projects in India? In which segments are the hazards higher and why? Some of the common hazards are workers getting hit by equipment, mostly in reverse, as also in forward strikes, in strikes in dark tunnels, due to tip-overs, electrocution by overhead power lines, getting crushed while resting under or around the vehicles, fire, overloading, etc.
The accident-wise statistics with falling intensity are ports, jetty, underwater construction, power plant, petroleum refinery and petrochemical plants, followed by infrastructure projects like airports, roadways, railways and pipeline distribution network projects.
As considerable work goes on simultaneously at construction sites, methods to manage such operations and minimize the hazards through a permit to work system, etc., should be adopted. Contractor management also requires more attention. Many times, untrained or unskilled workers end up as equipment operators, which increases the accident rate manifold.
What measures are required to be taken by the Indian equipment manufacturers, users and the government to ensure safety while operating equipment at a construction site?
The measures required here are robust built-in safety features, such as safety belts/ safety balloons/ABS systems in vehicles/ roll-over protective structures (ROPS)/ hazard lights/ reversing lights and signals, etc. All the safety features should be an important component of the equipment manual; mandatory training on safety features for the end user; proper maintenance of the equipment as many accidents occur due to lack of adequate maintenance; and barricading the area where critical operations are underway.
Also, at times, in order to keep the price competitive, many safety devices originally provided by the manufacturer, are not chosen by Indian buyers as they are not preferred to be a part of optional provisions in the supply list. This also poses a safety threat.
The guidelines outlined in the Building and Other Construction Workers Act and those covered under the National Building Code 2005 (India) should be followed. What is also important is ensuring that the safety regulations that are applicable are followed, which, among others, should include testing and certification of equipment (which in themselves are control measures). Specifically, the government must enforce end user safety training, ensure that the workforce is not fatigued due to extended work hours; adequate rest time should be monitored and enforced for the equipment operators as well.
What are the global practices in this regard?
The construction industry is one of the most dangerous industries in the world. In the last few years, the ILO has adopted some important standards and published guidance materials for hazardous sectors and operations. In particular, two new Codes of Practice have recently been adopted including one on the Safety and Health in the Use of Machinery (International Labour Office, 2013). Both documents cover a very wide range of activities and provide practical guidelines in these areas to governments, employers and workers alike.
In the US and in many other countries, ANSI A10 standard is applied. It is a voluntary consensus standard developed by the industry subject matter experts. It is utilised and referenced by more than 70 countries around the world. In addition, US´s OSHA (safety clauses under each category of equipment/s) and Hazard Identification and risk assessment under OHSAS 18001 are applicable to companies implementing and practicing safety management systems.
- Janaki Krishnamoorthi