Capital Equipment News September 2018

customer needs. Our acquisition of Terex Trucks in 2014 was a strategic decision that allowed Volvo to offer customers a rigid hauler option. Since then, we have been working to design a completely new rigid hauler that builds on Terex Trucks’ 84-year heritage, while also incorporating Volvo CE’s industry-leading technology and core values of quality, safety and environmental care. However, it doesn’t necessarily change the product development strategy of the company; we remain Volvo Construction Equipment. If you look at the past two years, we have put a lot of focus on the launch of new products, not only the larger ranges, but everything from compact excavators, short swing crawler excavators, to a totally new range of wheel loaders with a lock-up function and new drivelines, as well as the heavy ranges, the A60H articulated hauler and the R100E rigid hauler. You will agree that it has been a massive product launching period, especially the known technologies. However, we have also spent time, money and effort on technologies of the future to balance the equation. MS: But there has been an apparent focus on going bigger, especially if you look at the recent trend of launches, from the EC950E excavator, to the A60H and now the R100E? MJ: As equipment users pay increased attention to their costs, they are striving to maximise productivity, and one of the trends we have seen in recent years is the move towards larger pieces of equipment in some applications where productivity is justifiably much higher with big machines. It’s those segments, such as large-scale mining and quarrying, that we want to cater for. However, that doesn’t mean that we will lose focus on the smaller ranges, as they are also important. It all varies from region to region. For example, in Africa the big ranges are more relevant given the sizes of mining operations there. So, the A60H, EC950E and R100E will definitely find more application in Africa than in some of the developed markets where compact equipment is the preferred choice. With mining looking up, it’s an opportune moment for us to be there with these products. We have high hopes for these big machines in South Africa and Africa at large. South Africa is an extremely important market for us; we have already sold in excess of 50 A60H trucks since the local launch last year. In Babcock, we have a fantastic partner in southern Africa, which is very professional and has great

relationships with its customers. MS: You mentioned the significance of Africa. Just how important is this market to Volvo CE? MJ: Africa forms part of our largest sales region, EMEA (Europe, Middle East & Africa), which contributes about 40% of our business in terms of revenue. The region is very important to our business. The market conditions, driven by mining, are seemingly good this time around, but I believe the market still has a lot of untapped potential. MS: You had a very important focus on Total Cost of Ownership (TCO) and Uptime at this year’s Volvo Days. How important are those parameters in today’s operating conditions? MJ: There are a host of operational elements that determine whether our customers are profitable or not, and Uptime and TCO are the cornerstones of customer profitability. It is for this reason that we have developed some innovative tools aimed at helping customers reduce their TCO and maximise their machine uptime. As far as TCO is concerned, we have launched three novel tools that – alone or in a combination – can help to considerably lower customers’ total cost of ownership. These are Insight Reports, SiteSim with 3D Drone Photography and Realistic Simulator Training. Through these tools, the customer is able to see where the money is going and know where to focus time and resources to fix issues and reduce cost. Volvo CE’s focus on uptime is based on our understanding that customers only make money when their machines are running. That’s why we are working closely with our dealers to further improve common processes and systems that will provide service technicians with more efficient access to information and support than before – ensuring shorter resolution times for the customer. We have placed uptime at the heart of our latest strategy in Sales Region EMEA. Using digitalisation tools, such as telematics, as one enabler of improving efficiency and waste, the company is adopting an extended enterprise view to be even more proactive in the support to customers. We have embarked on two specific projects – First Time Fix and One information and support when they need it. In today’s tough business climate, Volvo CE and its dealers have to further strengthen their common approach. We have to collaborate on everything we do – with common processes and systems – to deliver the slickest service imaginable for our customers. b Communication Platform – to ensure mechanics have access to the right

JERNBERG’S BACKGROUND

Born in 1968, Melker Jern- berg assumed his new po- sition as President of Volvo CE on January 1, 2018. Be- fore that, he was President and CEO of Sweden-based powder metallurgy company Höganäs AB. Prior to that, he held the position of Executive Vice President and Head of Business Area EMEA at Swedish-based steel manufacturer SSAB.

MS: I see the focus has been mostly on getting to know your dealer network across the globe. Why is this so important? MJ: Our dealer network holds the key to our business success. You can produce the best product in the world, but without proper support, which is supplied by the dealer network, it doesn’t mean anything. Our dealers are involved in the daily operations of our customers. About 80% of all customer needs are met through dealer interface. Our dealers are very important in the value chain to help increase machine uptime for our customers. My immediate objective for the remainder of the year is to continue with the journey to meet some of the remaining dealers, customers and employees across the world. I want to be on the ground, not only be based at the headquarters. So that is my priority at this stage, but at the same time not losing focus on the overall business, especially considering the hectic nature of my schedule. We have had a hectic first half of the year, juggling new developments, new product launches, exhibitions and day- to-day operations. MS: Speaking of product launches, one of the major talking points is Volvo CE’s entrance into the rigid hauler market with a complete Volvo-branded range. There is seemingly a trend towards the development of larger mining-focused pieces of equipment. Tell me more about your product development strategy moving forward. MJ: The development of larger equipment ranges has largely been informed by

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