Volvo Construction Equipment expects a flat year in 2013, president Pat Olney told journalists at the recent grand opening of the company’s wheel loader manufacturing facility in Shippensburg, Pa. Olney said he expects 2013 to be “a year that’s probably flat, or minus or plus 5 percent.” For North America, Olney said there are “many reasons to be optimistic but also reasons to be concerned.”
Olney said the past couple of years brought a lot of growth as rental fleets were being replenished and the market was picking up. “We see that sort of leveling off this year and we see basically a sideways movement in the North America market for 2013.”
Olney said the market in China, which declined significantly in 2012, is still down “but at an ever-decreasing rate of reduction.”
However, Olney said he was optimistic because the company reduced inventories every month since May 2012 “to the point where we’re now sitting in a very healthy position with our pipeline, which leaves us quite flexible to adapt to the market where many competitors are now faced with serious overstock positions, not only in China but in other parts of the globe. So we’re actually in a quite healthy position but we took our medicine in Q3 and Q4 as we reduced production to get those inventories down.”
Olney emphasized the investments the company has continued to make, with the wheel loader factory being only a portion of Volvo CE’s $130 million commitment to the North American market, including research and development, and a customer service center the company recently broke ground on in Shippensburg. Volvo has also continued to augment its position in the road construction industry, investing in a paver-focused factory.
Volvo CE has also concentrated on localizing its production. “It’s for a number of reasons,” Olney said. “You start with the customer and it’s [an issue of] lead time. To get a product here from Korea or Sweden takes four to six weeks on the water. That also ties up capital. It’s flexibility, so we can make changes rapidly for customers and give them that short lead time. It also helps us develop the supply chain so we have more suppliers to work with around the world. And one of the benefits of this localized focus is that we’re going to be creating jobs not only here in this factory but throughout the supply chain in Pennsylvania and other parts of the United States.”
