Komatsu’s Ed Powers sees continued growth and optimism in construction industry

Ed Powers, VP and GM, Construction Equipment Division & GM NLAD

QUESTION: As we all know, the construction industry has been hit hard the past several years. Where does it stand now?

ANSWER: Many have referred to the past few years as the “Great Recession,” however, we’re optimistic that recovery is in motion. Throughout our entire 2010 business year, the construction equipment market grew an average of 32 percent in North America, compared to 2009. Another key indicator, tracked monthly, is our North American hour utilization. Our 2010 per-month utilization, tracked through our 23,000 KOMTRAX-populated machines, exceeded 2009 and 2008. In some cases we are comparing the hours to an all-time market low in 2009, but it’s positive and deals are being made. We’re expecting the same level of recovery throughout 2011 and beyond.

In speaking with contractors at CONEXPO in March, the majority were very optimistic, indicating that business had been picking up steadily and asking, ‘When can Komatsu deliver?’ There remain some lagging indicators, such as our housing market and unemployment, but the worst is behind us. We can attribute a good portion of our 2010 recovery to Uncle Sam’s tax incentives, such as the extension of the Depreciation Bonus, accompanied by Sec. 179. What’s encouraging is that this incentive is extended through 2011 with even larger matching dollars.

QUESTION: Often, as recovery happens, businesses start buying equipment. As users begin adding to their fleets or replacing older machines, why should they choose Komatsu?

ANSWER: After the recent wake-up call this industry experienced the last three years, we’ve all become much more after-market cautious. Today, the customers’ primary focus is their after-sales efficiencies, as well as their owning and operating costs. This creates a perfect opportunity for Komatsu, as the world’s most technically advanced manufacturer of earthmoving equipment, to step up, stop talking about it and prove that we manufacture the most reliable and lowest cost-per-hour products in the industry.

As most know, we don’t spend a lot of money advertising our brand. We’d rather put those dollars into research, development and being the leader in innovation. As a result, we were the first to introduce a hybrid excavator, which has been shown to be as reliable and efficient as our traditional excavators, with 25-percent to 40-percent fuel savings. We are already rolling out our next generation of hybrid models before most OEM’s even introduce their first.

When it comes to telematics, no other OEM has Komatsu’s experience with remote asset management. With more than 200,000 machines reporting globally, Komatsu knows about a customer’s technical problem before the operator does. Between Komatsu customers and our highly engaged dealer network, we are using KOMTRAX information to improve machine utilization and reduce owning and operating costs.

Komatsu’s investment in research and development has given us another opportunity to show our strength as a leader. We are excited to be launching several interim Tier 4 products this year, with engines ranging from 175 to 750 horsepower. Once again, our engineers have not only met stringent governmental emissions regulations, but also improved machine performance and fuel efficiency. As this industry continues to introduce Tier 4 technology, two key concerns lie in the marketplace — the cost of maintenance and its reliability.

How is Komatsu going to differentiate itself from the competition? We are so confident in our technology and our distributors’ service capabilities that we are going to offer a three-year complimentary maintenance care package for all Tier 4 products. A key component to the servicing and reliability of our Tier 4 products will rely on KOMTRAX, which will help customers manage required maintenance and provide constant preventive support. That is peace of mind!

QUESTION: What else is Komatsu doing to benefit customers?

ANSWER: It’s all about the relationship and the after-market support. You can’t have one without the other. Komatsu’s strongest asset is its dealer network, with more than 300 locations across North America. Of those, 70 percent have been in business for more than 50 years. As a manufacturer, our job is to provide our dealers with ongoing support, training and the tools they need to earn credibility and establish lasting relationships.

The key word is “earn.” Today it’s not only about premium parts and service, but preventive maintenance practices (KOMTRAX), financing, used equipment, resale value and overall value propositioning. It’s not just about closing the deal, but knowing customers’ short- and long-term aspirations and how Komatsu can assist in achieving those aspirations. The relationship doesn’t end when the machine is delivered. Rather, it continues to grow.

Today’s technically advanced products and our customers’ level of sophistication require a team effort between the dealer and manufacturer. The quality of the OEM is reflected in its dealers, and our customers recognize and expect it. That is what differentiates a manufacturer — its dealers, the quality of their people, and their commitment to product support. I am confident that Komatsu offers those qualities, so now instead of simply asking customers for their business, we can ask for the opportunity to earn it.

The bottom line is — we can manufacture the most technically advanced machine in the world, but if we can’t support it, it’s worthless.