With the inauguration of its first manufacturing facility in India, Doosan Bobcat has paved its way for manufacturing in India. On this occasion,<span style="font-weight: bold;"> Scott Park, Global President and CEO, and HW Park, President (Asia, Latin America and Oceania),</span> Doosan Bobcat share their views on the market, in conversation with <span style="font-weight: bold;">PRATAP PADODE, EDITOR-IN-CHIEF, EQUIPMENT INDIA. Excerpts...</span> <p></p><p> <span style="font-weight: bold;">Could you please introduce about Doosan Bobcat and its global presence?<br />Scott: </span>Doosan Bobcat is a global player in compact equipment industry and is No 1 player for the last 60 years.We invented skid-steer loaders and we hold major market share globally for three products of skid-steer loaders, compact track loaders and mini excavators. The major part of the business is in North America and Europe. Together, these three products contribute to about 90 per cent of our business. Now we are in a position to expand and go more into the global market to diversify our portfolio. Globally, we have 10 manufacturing plants and over 7,000 employees. Our overall revenue stands at $3.6 billion and this year it would reach $4 billion. This is the best performance in the history of Bobcat but this is really just the beginning of the next chapter of what Doosan Bobcat wants to do. </p><p> <span style="font-weight: bold;">Why was India chosen as the location for the new manufacturing plant?<br />Scott:</span> For India, we looked at both domestic and global implications. </p><p> From a domestic perspective, India is a market by itself having the critical mass which is quite attractive for us to build from. But from a global perspective, we are seeing India developing into a manufacturing economy. We are seeing the capabilities in manufacturing continuously improving and the export potential increasing. So we saw India as an opportunity to create an export hub initially to cater to South East Asia and then export to the Middle East, Africa and South America. </p><p> <span style="font-weight: bold;">HW:</span> From a domestic perspective, it was clearly driven by backhoe loaders. Without backhoe loader, the compact equipment market of skid-steer loader and mini excavator in India is relatively small. We could not penetrate or grow our compact equipment business here without backhoe loaders. So, backhoe loader was an important product that we did not have and that is why we decided to invest in India and make it here. </p><p> <span style="font-weight: bold;">What is the total investment? How was your experience in approvals for setting up the plant in India compared to other countries?<br />HW:</span> Until 2023, we plan to invest around $26 million. This year, an investment of $19 million would be implemented, which will include factory purchase, modernisation and backhoe loader localisation development. Most of this is already done. In comparison to China, we have been able to shorten the plant set-up time. We acquired a plant which used to be a backhoe loader facility to set up this plant. So it has been a smooth process. </p><p> <span style="font-weight: bold;">Could you explain some key technological processes and best practices which is followed in the manufacturing plant?<br />HW:</span> Our India factory follows the same practices and standards of quality which are followed in our global manufacturing facilities in North America and Europe. We want to maintain the same and want our products to have the same quality irrespective of where it is being made. </p><p> Inline with our policy of maintaining global standards, our India facility also boasts of the best technology. We have five-axis machining centre, robotic welding stations, advanced 2k auto-mix paint system with shot blasting facility, just to highlight a few important ones. </p><p> Quality process is inbuilt into the manufacturing process. We have 150 inspection check points that we test to make sure each machine coming out of the facility is best in quality. </p><p> <span style="font-weight: bold;">Scott: </span>It is not about just cheap labour, but about having a globally capable plant utilising all that India has to offer in terms of localisation and market potential. This is not just going to be for India requirement, but it has been built to export standards. Any new plant takes some time for reaching that stage and we are sure this India plant has everything to get there quickly. </p><p> <span style="font-weight: bold;">What is the extent of indigenisation for your products? How is the supply base in India?<br />HW:</span> India has an extensive supply base for construction equipment. Most of the global OEM suppliers are already present in India and have their local manufacturing facility with excellent quality components. Through these suppliers and strong local supply chain, we could achieve 100 per cent localisation with high quality and optimal cost. We are also in the process of evaluating Indian supplier base for our global models, after stabilising our domestic products. </p><p> <span style="font-weight: bold;">Scott: </span>This is a great opportunity for us. Indian customers have definitely accepted the quality and performance of these Indian source components. We will have our sourcing professionals examine the quality of these components from a global perspective which can be replaced. If they are equal or better in terms of quality and performance but at an optimal cost, then it would greatly benefit us. </p><p> <span style="font-weight: bold;">Which are the products that will be offered from the new manufacturing plant?<br />HW: </span>We will start off with the 76 hp backhoe loader, B900. We are also planning to launch a higher powered 96 hp model with four-wheel drive. This will not just be sold in India, but we also plan to export to the SAARC countries soon. Later, we also plan to make backhoe loaders from India facility targeting export markets. </p><p> <span style="font-weight: bold;">Scott: </span>Currently, the backhoe loader occupies major volume and other machines like skid-steer loaders and mini excavators are just a small portion. However, in future, as the labour rates go up, backhoe loader will likely stabilise and new requirement growth will be driven by skid-steer loaders, compact track loaders and mini excavators. We will be exploring options to bring that to India. </p><p> <span style="font-weight: bold;">What is the outlook on the global compact construction equipment market? How is Bobcat positioned?<br />Scott:</span> A few months back, for the same question, I would have replied differently. Because for the last 3-4 years, we have had an upturn; the growth for compact construction equipment market was phenomenal as every year it was double-digit growth. However, now it would be difficult to say that the same growth rate would happen. There would be still growth but comparatively there is a deceleration. This is because of certain global issues like trade war between countries. For now, we would like to say that we are cautiously optimistic. </p><p> We expect moderate growth in industry based on the construction demands in advanced markets like North America, Eastern Europe and recovery in economy in the emerging markets like India and Latin America. </p><p> <span style="font-weight: bold;">What is the outlook in emerging markets as there are fears of slowdown and recession here as well?<br />HW: </span>Currently, there is a slowdown globally which has an impact in the emerging markets also. For example, China compact market has shown rapid growth, especially in below 5T mini excavators - four times bigger than five years ago. But market growth in 2019 is slowing down to only 15 per cent due to the US-China trade war. Overall, construction equipment market is in decreasing trend due to low flow of road construction as well. However, Indian economy is fundamentally strong. Even if the growth rate reduces to 5 per cent from 7 per cent, it is still better than a lot of other developed markets where we have low growth rates of 1-2 per cent. </p><p> <span style="font-weight: bold;">Given the fact that Doosan Bobcat considers India as an important market, what are the plans for dealership or distribution expansion in India?<br />HW: </span>In order to achieve our goal of becoming No.1 compact equipment player in India, it is important for us to have a strong channel network. Currently we have 50 touch-points and our aim is to increase our dealer outlets step by step so that we can reach 200 touch-points by 2024 in India. Once we do that, we will be effectively covering 95 per cent of the market.</p><p><span style="font-weight: bold;">Scott:</span> As the market develops more and more, we want to go after penetration. For example, in North America, we have about 600 dealer outlets and in the next couple of years with introduction of new products, we want to take it to 800. Taking the same comparison to India, having 200 outlets in India is a very good position to achieve first and cater to 95 per cent of the region and success would be to increase more penetration as we attain critical mass of the products that we have to offer in India.</p><p> <span style="font-weight: bold;">On a concluding note, what would be the top three priorities for Doosan Bobcat at the global and at the Indian level?<br />Scott: </span>For us, it is about being global leader in compact equipment with growth and sustainability. It is about being aggressive to achieve that goal. The three key things to be able to achieve this are portfolio diversification, geographical diversification and innovation. We want to empower the customers to do more by providing more products through our wider portfolio, provide better technology in our products through innovation and make them available at the right locations by having our presence which is geographical diversification.</p><p><span style="font-weight: bold;">HW:</span> Firstly, it would be the successful launch of the B900 backhoe loader in India. Next with the scale of business coming from backhoe loader, we want to leverage it to improve our core business which is skid-steer loaders and mini excavators in the market. Third priority is from a global perspective. We want the India facility to be a global export hub to cater to the rest of the world.</p><p></p>