Capital Equipment News October 2020

ABOUT CARL GUSTAF GÖRANSSON

A seasoned global executive, Carl Gustaf Göransson has worked in the construction equipment industry for over 25 years. Most recently, he was global president construction for CNH Industrial and a member of the CNH Global Executive Council. Prior to that he was senior vice president Sales, Markets and Services with Cargotec’s Hiab Brand, and president European Central Construction Equipment with Volvo Construction Equipment.

functionality across multi-brand job-sites. CGG: Consolidation is an attractive option, either within product segments, for example, general-purpose equipment, road building, among others, or consolidation within a geographical area, prioritising areas of strong regional presence and building distribution infrastructure to grow their businesses. In other words, clearly defining and focusing on what are ‘core’ and ‘non-core’ products for the OEM will yield greater returns. Given the high focus on digitalised services adapting the sales process and business models towards the new offerings will also be a key differenti- ator in the future. Q: How important is winning ‘the battle for talent’ in the new look construction equipment industry? CGG: The industry faces a challenge in recruiting the right people and is already suffering significant talent gaps today. Quite apart from a new generation of software programmers and engineers, modern ma- chinery increasingly requires more advanced technicians to support equipment, both remotely and on-site. There is also a gap in our ability to analyse data. As digitisation plays an ever-increasing role in tracking and maintaining equipment, the industry will have to try harder to be the employ- er-of-choice for people with these new skillsets. AB: There is an enormous talent transfor- mation that needs to happen across the industry. Much of the value in the future is going to be generated by technology/elec- tronics, so the challenge is to maintain the current product knowledge while developing deep and fully integrated electronics knowl- edge beyond the current ‘bolted-on-the-side’ approach we see in most vehicle companies .I think the real winners in the industry will be those who succeed in this challenge. b

Carl Gustaf Göransson

itive battle is played out in the technology and service arenas. CGG: Even prior to COVID-19 the industry was ripe for consolidation among manufac- turers. There is an over capacity in OEMs, in production and a lack of synergies in man- ufacturing footprint, optimisation and supply chain setup. The technology roadmap is also in need of consolidation to save costs. With so many players in the market, without some level of consolidation, there is an is- sue of market sustainability. To counter this, OEMs may become more focused on specific segments and then grow in their respective areas. On the distribution side, dealers are likely to promote more brands than they currently do, and cover larger territories. AB: The larger players already have the scope and scale they need, so there is lit- tle benefit in them buying smaller OEMs. The smaller ones, however – particularly those with broad product portfolios – will need to seek scale just to survive. Regard- ing the high technology players, I think that the most successful providers of job- site level solutions will need to (at least appear to) operate independently from the well-known equipment brands, since they need to be able to provide equivalent Q: What should OEMs focus on to capture strategic advantage and growth?

brand attractiveness and value – and that’s where the established brands have a clear advantage. CGG: As machines become more alike, we foresee buying behaviour shifting from own- ing equipment towards a pay-per-use and/ or rental business model. The established brands have been built up over decades – some are more than 100 years old. But although brand loyalties will still be important in the future, we expect the combination of commoditisation and new ownership models to loosen established brands’ hold on consumer loyalty, leading to a fiercely competitive market landscape. The packaging of new machine sales with future services based on digitalised platforms will define success, both for value and premium brands, largely driven by customer demand for more insightful data. Q: What will be the fallout from COVID-19 – do you foresee an increase in OEM consolidation? AB: I am not sure the pandemic will be a driver of structural change. But the trend towards commoditisation highlights that it is plainly inefficient for the industry to have so many manufacturers all making essentially the same investments in incremental prod- uct improvements. So, I see a longer-term trend for a) consolidation and/or b) alliances for the machinery, while the new compet-

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