Stephan Wirtgen, President, Wirtgen Group.

It is not just about a machine, more importantly, it?s about optimal use of scant resources and how recycling can help achieve the objective of deve?lopment with more economical and environment-friendly methods. It is here the Wirtgen Group gets in with a high quality package which no one can provide, says Stephan Wirtgen, President, Wirtgen Group. In an exclusive chat with Equipment India, Stephan Wirtgen and Ramesh Palagiri, Managing Director and CEO, talk about the importance of milling and recycling technology, and Wirtgen?s expertise in the field. Excerpts from the interview.

What is the impact of the financial crisis on Wirtgen, globally? Do you see a recovery soon?
Wirtgen is very active in the major markets over the world, and actually we are in a quite good situation as even if one market is down, the performance in the other market is up and that has balanced our performance. We had a very good year in 2011 because most of the emerging markets like India and Russia performed very well. Europe overall was good, though southern Europe was a little down; generally, the world market performed well.

Does the shift towards BRIC nations put additional pressure in terms of shifting production facilities and logistics, etc?
Rather, we look at it as a splendid opportunity for us because when most countries in Europe are growing at one to one-and-a-half per cent, countries like India have grown much faster. So it?s really an opportunity to grow in such a situation and for us, it?s not pressure. We look for?ward to such opportunities and we are building infras?tructure, effective sales and service force, and employing more people in the engineering side.

What is the kind of investment that you have made so far and is there any more capex on the anvil?
We are investing quite heavily. Last year, we invested Euro 120 million the world over, and in India we invested Euro eight million for the new facility. Irrespective of what has happened in the global arena, we haven?t held back investment; our growth plans are quite clear in that we need to invest in India to be a major partner in the growth story.

What is your vision for India? Brief us on your India-specific strategies.
India is a growing market, and the country needs good infrastructure which means an excellent road network. So our vision for India is to provide a whole, high quality package for road construction, backed by an excellent service to our customers. We want to be a one-stop-shop for our customers, which means that you can buy the milling machine, the recycling equipment, the paving machines whether it is for concrete or asphalt pavers, and a quality range of compaction equipment.

Given the fact that there is intense competition and many OEMs are diversifying to provide a complete solution to the customer, what makes you stand apart?
First of all, the competition keeps us alive and moving. And this is something positive to keep us focused on the customers and their needs. Our approach, as I have men?tioned, is to have a high quality package and we leverage our combined strength of high degree of engineering from Germany, and high quality production opportunities in India. We provide the complete solution to the customer, which includes a well-trained operator. It?s a win-win situ?a?tion. We are completely transparent with our cus?tomers and our application engineers will be on-site, we closely work with the project managers on the site to see that our customers achieve the right quality on the road and the right finish. As far as our machines are concerned, those are really fuel-efficient.

What are the other products that you are planning to manufacture in India?
We have started with the soil compactors, and our next step is to launch 9-tonne asphalt roller. We are wor?king together with engineers from India and Germany on this project, and we are also coming up with a small paver project.

How do you view the potential for milling and recycling machines/equipment we have not yet started using in a big way?
I personally believe the potential for milling is huge. Over a decade, India has been expanding its road network, mostly flexible roads, which mean you need to repair these after a period. There has been too much to depend on overlaying which is not a right solution any more, not just from the quality point of view but also for environmental and economical reasons. We believe that there is no alter?native to milling. Globally, milling has become imperative; and we are more than happy not only to bring the tech?nology but also to bring in the application-oriented ma?chines. It?s not just only about a machine, but more impor?tantly, it?s the optimal use of scant resources and how re?cy??cling can help to achieve the objective development with more economical and environment-friendly me?thods. It is here that we get in with a high quality package which no one else can provide.

As the concept of milling and recycling has still not caught up, what are steps Wirtgen has initiated to spread awareness?
As far as milling is concerned, it is already accepted by the government but recycling is something which needs a push. We are in discussion stages with major contractors, NHAI, IRC, CRRI and also with the committee on fle?xible paving. We are closely working with IITs telling them what the whole concept is. We are conducting semi?nars on a regular basis and our next objective is to work with universities and design institutes and contractors. So I think with all these efforts and the seminars, it will take off. In China it has already taken of, we have already started working ten years ago there.

What is the potential in terms of units for milling machines?
In Germany, we sell around a hundred machines, in France we sold a hundred machines, in China we have sold 300 milling machines, whereas in the US, it is 350 units. As far as India is concerned, the milling concept has been accepted and we have sold 25 units last year. I am sure it will be a hundred units in the next couple of years. It?s definite that sales will improve as it is more economical and helps to get better quality roads.

There is a lot of talk about environment-friendly machines. Is it just a strategy to add on the brand value or is it a genuine social initiative?
Let me put it this way. Our expertise is in the road- building equipment sector. From the application point of view our products help to a great extent to conserve resources. If you need to build a minimum of 15 km of road in a day, it means there is tremendous pressure on the supply of material which needs to come from somewhere. So the methodology we adopt should be environment-friendly, and should be economical. One thing is looking at the application side, and the other thing is looking at the machines, how fuel-efficient they are. We at Wirtgen try to develop machines which do not use too much fuel, for example, our new soil compactors are fitted with a Cummins engine and thus, we could reduce fuel consu?mption. So our task is to be innovative, both economically and environmentally.

As knowledge and skills level of an operator is very critical, how do you address the training aspects, especially for operators for pavers?
As far as pavers are concerned, they are critical machines which will decide the quality of the road you get. We have opened an operating school in Pune and the fresh batch of operators has just passed out. We select students from ITIs, provide them a stipend and impart thorough training for three months, theoretically and practically on pavers. We provide them with application-training and give a good insight into the materials. We assure they get a job once they finish the three-month course. After two years, we give a refresher course and certify them which helps them to get a better package.

What is the potential in the compactors segment?
It looks good. The size of the market for compactors is around 3,000 rollers a year but the segment we operate in, which is soil compactors, is 1,500 rollers. We just started this year, and we have been able to achieve seven to eight per cent of the market share. Our target is to reach 40 per cent in the next two years.

Tell us something about your R&D and the investment for it.
We are here in India for the long term, and worldwide we are a reputed company. We invest quite a lot in research and development, plants and products and innovations. We invested 20 million euro in our plants last year. We are working towards employing more engi?neers and every year, we come up with six to eight new products worldwide.

Any new products on the line?
At Excon 2011, we showcased a few new products. We have showcased the Spray Jet which is a new technology and I don?t think any company in the world has it. In milling, we have introduced new models like the W35 DC, W 50; also in pavers, we have new models like SP 15 and SP 25.

What is you plan of action for 2012?
Honestly speaking, it is not just one big step. We have to take many little steps of innovation and continue to be professional in our plan; continue to expand our net?work and sales service network. We have to be close to our customers and do good service and do a good spare parts line, step up the training school and work with the design institutes to come out with new technologies. So it's all these small steps that we have to take.