Sany’s acquisition of Putzmeister may have taken the industry by surprise, but CMME catches up with the German manufacturer’s Middle East operation and finds a team ready to take concrete pumping to the next level. Literally.
It starts with a waist-high scale drawing of the Burj Al Arab and ends at eye-level with the Burj Khalifa and Kingdom Tower – Putzmeister Middle East’s wall of honour, extending as it does down one side of its office, is an impressive way to great visitors.
And it makes its point. When developer ambitions in the region have pushed to take ceilings sky higher, Putzmeister has been invariably called upon to make those dreams a reality. If like CMME, you point out that the Kingdom Tower hasn’t actually been built yet, regional director Jens Bawidamann is happy to greet you with an affirmative: “No, but we are ready.”
Truth be told Bawidamann and his team at Putzmeister have been working on the project from the moment it was announced, appointing specialist project manager Bastian Dreher to crunch the numbers and work the permutations. While it is barely out of the piling phase, he has already racked up thousands of air miles between the German concrete manufacturer’s Dubai base and Jeddah.
When the concrete pumping comes up for tender, Putzmeister and its dealer Medco will be ready to serve.
Being prepared for every possibility is in the Putzmeister DNA. An approach that has proven essential considering the turbulent few years the company has endured with, first the fallout from the crash in the market and then this year’s announcement that it was to be bought by Chinese manufacturer Sany (and while the sale may not have seemed like it at the time, it was much more to do with the company taking its destiny into its own hands, than may seem obvious at first glance – more on that later).
Like tower cranes, the fortunes of concrete technology providers – so often only specialised in the sector – are tied closely to the purse strings of governments and developers.
As budgets shrunk so did their profits placing pressure on the manufacturers in the sector. A Terex or a Liebherr can re-focus their efforts to other lines that may be performing better. If people stop building houses and towers, maybe they’ll focus on roads and sell more earthmoving equipment. There is no such luxury for specialists like Putzmeister, and so it proved in the months following the short sharp drop of the downturn.
“2008 was one of our best years ever. We had our 50th anniversary as well; in fact 2008 was a big party. It was excellent, a crazy year. We were really on top,” Bawidamann recalls. “The next year, boom! We went from heaven to hell direct. We made 1 billion Euros in 2007 to half that in 2009. It was like someone had switched off the light. And it was like that with most companies.”
During the boom, the market was obsessed with (a) delivery times. Contractors needed equipment and they needed it fast, he explains.
“Delivery time was key,” he makes a phone with his fist and puts it to his ear. “I was always asked, ‘when can I get this machine?’. We really were not selling on price or machine functions. We were selling on delivery time.”
He continues his train or thought, “We always had to have stock as the lead times for trucks were six months. That meant when the crisis came we were struggling with our stock.”
Meanwhile production at Putzmeister’s factories was continuing apace with a rapid turnover of raw materials, trucks and steel to fulfil a seemingly endless demand. When the orders evaporated (almost) overnight, Putzmeister had a massive problem.
“You can think of it as a big wave behind you. Somebody may turn off the light, but that wave is still coming behind you,” he says.
Like many other companies, Putzmeister had to re-structure production as key markets collapsed.
“After the crisis we had two ‘interesting’ and tough years. Spain, America were completely down. Spain was consuming 200 pumps per year and that went,” he clicks his fingers. “down to zero.”
“But,” he adds, “the Middle East helped us a lot.”
During this critical period he says that the Saudi market especially proved to be a welcome safe harbour for its truck-mounted pumps.
“2011 was the first year where we were back on track with no stock. We are now thinner, slimmer – we went from 3,900 to 2,800 employees. And now we also have new products.”
Putzmeister continued to developed its ranges during the crisis choosing to focus on many of its most popular and important lines. Among them are newly updated models of its 36m, 42m, 49m pumps and it will soon introduce a 56m pump, newly designed during the crisis. Concentrating on 4-axel ranges was a deliberate move to meet a shift in demand from delivery to price.
“The difference between a 4-axel truck and a 5-axel truck is between 50-100,000 Euros,” he explains. “When you launch a product with less axels, it means big savings.”
Mid-flow he gets up and brings over a model of the new Putzmeister M42-5 truck mounted concrete pump. A five boom section is now standard, he says as he points to the red arm on the truck.
“We were forced to bring in a new 42m because road regulations changed in Europe and the existing machines (like the 42-4) were too heavy. The target was to make the best 42m in the market; we have reduced the weight below 32t. We now get standard trucks (common Euro II or Euro III trucks for the Middle East include Mercedes, Volvo, MAN) so that saves costs. From my point of view, we now have a really super machine; it’s easy to service, the coolers are integrated into the support legs, less oil is needed. It’s really something. ”
The machine also features bolts for the pipe holders. A small detail that could extend the usefulness of the machine.
“In the past the pipe holders were welded to the boom. Customers were welding themselves which is a safety issue as welders need to be certified to weld on the boom. If someone does not know what they’re doing they can destroy the structure of the steel – and one day that boom is going to come down and hurt somebody.”
Testing of the machine was completed at a two-month trial in Qatar with Ready Mix Qatar (Lafarge).
“We said take it, and really abuse it every day. Leave it park outside every day, whatever. And I’m not trying to advertise it now, but we only had positive feedback. You cannot compare testing in Europe to doing it in Saudi Arabia or Qatar.”
He says that this testing has served as a way of launching into the market, giving potential customers a reference to judge whether it is the machine for them. As Bawidamann admits, Putzmeister machines remain a premium product in a price conscious market. Proving that the machine can run up to eight weeks at a time could be an invaluable argument when it is compared to cheaper alternatives.
“Last year when market demand jumped from delivery time to price, we entered into a price war. We are in a situation where you cannot afford to lose a deal and if you compare to some Asian manufacturers we are more than double (the price). So doing this is important. We cannot fight them on price but there are others that are producing good quality pumps and they are the ones that we need to compete and fight with.
“If I lose a deal to some sixth quality producer from China, it’s ok. People understand that. But if I lose against a manufacturer at more or less the same price level then it’s not so funny. That’s why we work hard to keep our customers. We educate them, we say look this is a premium product, it costs more than the others, but we are offering the full package, parts, service and training.”
While the Putzmeister Middle East’s home UAE market has declined, the company has happily progressed in other markets. Some Bawidamann says like Oman may have been neglected in the past but have progressed since 2007.
“Now you can call it a Putzmeister country,” he says. “In 2006 our old dealer sold one pump, with International Heavy Equipment we are now selling between 20-25 truck model pumps and growing every year. I learnt in the boom times you need to focus on the small guys as well as the big guys as a small country today maybe the big-shot tomorrow.
“Now you see all the UAE companies jumping to Oman when they were laughing at it in the past. Family companies there were like islands in the pacific, the competition was the local neighbour or friend. Now due to the crisis it’s like hungry wolves coming to Oman to catch the sheep there. Like the pumps, the competition gets tougher and again it’s a price war.”
Being part of Sany
While it is no sheep itself, Putzmeister’s acquisition by Sany has been portrayed in the media as an opportunistic strike by the Chinese company to snap up German know-how before the market and the company recovers its strength. Bawidamann says this view is quite far from the reality.
“I’ll be honest, given that last year saw us become thin, fast, earning money again and back on track, I never had in mind that we would jump to Sany. It really came out of the blue.
“Call it something to do with pride, but the first few days were not easy. But then thinking about the whole picture, I realised it was a really good decision from our management to approach Sany. It came from our side,” he affirms.
He is careful not to name names but he says that Putzmeister had been worried that a certain struggling other German concrete manufacturer’s financial difficulties (as CMME doesn’t have to worry about such things, we’ll say it: Schwing-Stetter) could have gone to Sany instead.
Placing its major rival with China’s number one company would have had serious repercussions for Putzmeister. It would be a question of when and not if it would be squeezed out of the market.
“If the number two company outside of China had combined with the number one in China, we would have had to try and compete with them over the long-run. We could have done it for 4 or 5 years but there would have come a day where they would have been too big and too powerful. There would be a day where we could not fight.”
In his opinion, going with Sany was the best decision. “If you look at global production, 7,000 truck-mounted pumps per year are produced worldwide and 5,000 are going to China.
“Sany is the number one in China, but outside the world we are number one. Take the Middle East, we have been here for over 32 years, we have the dealer network and know the market; and understand you have to be flexible and know the people.
“Sany tried it but in the Chinese style. It worked but it was not that successful. Sany had a product, but the rest, well; there was still room for improvement. Sany have seen that somehow that it is not working and yet have looked at us, like Asterix and Obelix, and wondered ‘how are these little guys doing it’,” he jokes. “Now it is like this Putzmeister is owned by Sany, but we remain independent, with our own management, engineering and production.”
Other companies like Zoomlion and CIFA have taken another approach he points out and says, “you can see it is not working that well.”
“There are some markets like the Sudan where Sany might take the lead, but in the key markets outside of China, such as the US, Europe and the Middle East, Putzmeister is doing the business.”
For the Middle East, that means Putzmeister will handle the aftersales and service of the existing Sany equipment but he says they will concentrate on selling Putzmeister.
“I’m not having a two-brand strategy, it’s one brand. Putzmeister.”