The sales forecast for backhoes by Off-Highway Research is pegged at a target of 36,000 units by 2015, up from 30,000 in 2011, whereas for the crawler excavator alone, the forecast is 35,000 units, up from the 2011 figure of 14,500. Does it signify the decline of the backhoe market in times to come?

There is the school of thought that points to the visible drift from the backhoe market towards the wheel loaders market, especially in below 10T capacity. Then again, compared to the total volume of backhoes the growth in terms of numbers for loaders is a meagre 5,000 units, which is still above 80 percent growth compared to its 2011 base. And on the other hand, the growth of the mini- excavator market was successfully blocked by backhoes initially, which leads to another question: will the projected growth in the mini / crawler excavator market impact the backhoe market? Agith G Antony brings in the views from the major players in the industry.

India is the largest backhoe loader market, with unit sales crossing over 30,000 in 2011-12. With most of the global players setting up production facilities in India, the competition has become intense. One interesting thing is that the competition is not just between different players, global or Indian, rather, as the end-user community is looking more to application-oriented equipment and machinery, the competition is also between different machines. The focus seems to be on the value propositions offered by the OEMs; also, innovation has become key, whether in product offerings, back-up support, closeness to customer and suchlike offerings. As one of the new entrants in the CE market aptly puts it, ?We are here to take care of the pain points of our customers.?

First mover advantage
The enviable success of backhoes in the Indian market needs to be understood with a historic perspective. The growth of backhoe loaders in India has happened at the cost of mini-excavators and mobile excavators mainly on account of them entering the market first as a product concept. When Escorts introduced backhoe loaders to the Indian market in 1979-80, it was the first tyre-mounted excavation machine in the country as there were no mini or tyre-mounted excavators available at the time.Therefore, backhoe loaders enjoyed the first mover advantage.  Its affordability and multi- application versatility made it a popular machine for years to follow.

The first mover advantage, combined with attractive price and versatility are the main factors which gave backhoe loaders an edge over mini and tyre-mounted excavators. The first mover advantage of a product concept in a particular market is a significant one.This is quite evident when one observes what happened in countries such as Japan and South Korea where, unlike India, a reverse situation exists in favour of mini and tyre-mounted excavators; these enjoyed the first mover advantage there and hence the concept of backhoe loaders was effectively blocked in those markets.

Escorts pioneered the concept of the backhoe loader in India, in 1978. After divesting from backhoe loader manufacturing JV in 2002, Escorts re-entered in April 2010 with Escorts Digmax, and with a clear focus on work efficiency, fuel economy, power, and reliability.

Why BHL scores
Backhoe loaders are the backbone of construction and will continue to remain so, especially in emerging markets like India. From a buyer?s perspective, a backhoe is probably the best machine available from the return on investment viewpoint. Plus, the investment is not as high compared to other specialised machinery. For these reasons, the backhoe scores points with the hirer segment. Further, the contractors and sub- contractors outsource their requirement of machinery to these plant hirers instead of buying and maintaining the machines themselves. In many cases the contractors buy the machines themselves, too.

One of the major factors that add to the versatility of the backhoe loader is the number of applications it can work in, with help of attachments.Buckets at both the loader end and backhoe end can be replaced with a host of attachments like pallet forks, rock breaker, jib crane, sweeper collector, auger, six-in-one clam shovel bucket, ripper tooth, jaw bucket, ditch cleaning bucket, taper ditching bucket, bucket-mounted forklift,  etc. Hence,  a construction and earthmoving machine can be used in several other applications like solid waste management and material handling.

Among the other advantages that a backhoe has is its multipurpose application usability and its manoeuvrability. It is a construction machine that will find its way to most construction sites.The Indian market is slowly but steadily moving towards the usage of specialised equipment and attachments.This follows the global trend where specialised equipment is utilised for specialised jobs on tighter project execution timelines.However, in emerging markets like India, backhoe loaders will continue to play a vital role in construction.

Changing trends
The Indian market is slowly but steadily moving towards the usage of specialised equipment and attachments.This follows the global trend where specialised equipment is utilised for specialised jobs on tighter project execution timelines.Samir Bansal, General Manager, Off-Highway Research, explains, ?Backhoe loaders will remain the most popular type of equipment sold in the country for some time to come, though already a change in the structure of demand can be seen.  Its sales have been growing rapidly since 2000, (except for a dip during 2008-2009, and the figures would have exceeded 33,000 units in 2011.  While it will continue to remain the most popular equipment type amongst plant hirers and small contractors on account of its versatility and mobility, it is expected to be increasingly replaced by more efficient and productive machines, such as crawler excavators and wheeled loaders, particularly on large infrastructure projects.Therefore, the future growth rate of the backhoe loader industry may decline; then again, it may well see increasing applications in rural areas which will sustain its strong market presence.On the other hand, Off-Highway Research reports   that crawler excavators will witness the highest growth rate amongst construction equipment, and may catch up with the backhoe loader with annual sales of 40,000 units by 2016.?

Says Amit Gossain, Vice President Marketing & Business Development, JCB India, ?The backhoe loader has been India?s most loved construction and earthmoving machine for over 30 years now. What has led to its dominance in the Indian market is its super maneuverability and ability to multitask.Having entered into India with a bang, this model of construction equipment is much more established now compared to any other machine. The industry is now looking at using specialised machinery and attachments for completing time bound and large projects. Hence there may be a slightly higher growth rate for tracked excavators compared to backhoe loaders due to a lower base. However backhoes will continue to be extensively used in India.?

Parminder Sachdeva, GM-Sales & Marketing (Backhoe Loader), Escorts Construction Equipment, begs to differ. ?The backhoe loader is one of the most versatile pieces of equipment and its popularity in India is based on its mobility and price prepositions. Its proliferation in India has been tremendous and today it is the single largest volume equipment in the CE space, at roughly 30,000 in 2011. This is despite the fact that excavators came to India before the backhoe and we do not have any reasons to believe that the utility of the backhoe will diminish.? Talking of the supposed drift towards wheel loaders, Sachdeva says, ?The wheel loaders (articulated chassis) market, not only in India but the world over, is skewed in favour of 3 T/ 5 T and above capacities, as smaller capacity wheel loaders face price challenges. The smaller capacity requirement is catered to by the backhoe loaders, loader variants of backhoe loaders or the tractor- based loading attachment and hence the requirement of wheel loaders is not in decline, the growth in wheel loaders is coming from different a segment which requires 3T or more capacities and as such, does not indicate any impact on the backhoe loader market.?

Says Vijay Sharma, Executive Director, Terex Equipment, ?It is beyond any kind of doubt that the backhoe loader has been the flag-bearer of the construction equipment industry in India for the last decade. From the levels of 3,000 backhoes in a year to over 33,000 units in 2011, the Indian backhoe loader industry has seen phenomenal growth. During the next three to four years, we firmly believe that the backhoe loader industry will touch levels of 45,000-50,000 per annum. However, at the same time, there is more demand for higher capacity machines like crawler excavators and wheel loaders, as timely commissioning of highway projects has become a big factor in the infrastructure space. This is why the sales of excavators has grown by leaps and bounds, and is going to compete with the levels of backhoe loaders in terms of volume over the next few years.? He adds, ?We don?t think that the projected growth in case of mini-excavators is going to impact the sales of backhoe loaders in India. This is mainly because of the fact that the backhoe loader is a versatile machine and can be used for numerous applications in the field of earthmoving. Of late, there is higher awareness about the utility of this machine in rural markets and more farmers- cum- entrepreneurs are starting to own these machines.?

Kairas Vakharia, Business Head, Mahindra & Mahindra, opines, ?Crawler excavators are present over a wide range of tonnage starting from 6.1 T to 50T above and see to the needs of large-range customers who demand machines that can help them finish their projects faster. However, backhoe loaders are more versatile machines which fit a slightly different market where a customer enters the earthmoving business and then moves onto bigger things, with the help of a backhoe loader.? He further adds, ?Initially the price of mini-excavators was high in comparison to backhoe loaders. Today their price has come down to the level of the backhoe loader. This can make customers drift towards mini-excavators because of their speed in comparison to the backhoe loader; however, this shift is very slow and should not make any drastic impact on the backhoe loader market.

Arunava Ghosh Dastidar, AVP & Business Head?BCP, TIPL, points out, ?The backhoe loader in India started as multipurpose equipment with its utility cutting across various sectors, both in urban as well as rural areas. This versatile equipment with an excavator bucket on one side and loader bucket on the other has been a popular utility machine, triggering its growth over the years, primarily through the local plant hire owner operators who provide such machines on hire locally and also take up contracting jobs as and when required. However, with the focus on India?s infrastructure construction and the entry of global construction and mining majors, specialised construction equipment like excavators, wheel loaders, motor graders, soil compactors have all gained greater significance. Naturally, the accelerated growth that we had earlier seen in the backhoe loader segment may start slowing down.? He further adds, ?The backhoe loader is not a purpose built wheeled loader but a multipurpose machine that can also be used for limited loading applications. However, for specific loading and materials handling application, wheel loaders are more suitable. Then again, both these products have their own utility and can co-exist side by side.?


QUICK BITES
?India is the largest backhoe loader market in the world.
?Rental / plant hirers account for two-thirds of the market.
?There is a large pool of active machines already available in the market.
?The rental rates are stagnant.
?Machine prices, interest rates and operating costs have all gone up, making financial viability difficult for plant hirers, especially for first- time buyers (FTBs) who constitute one-third of the market.
?There is a shift towards specialist machines like excavators and wheeled loaders, which offer better returns.
?Larger and specialist machines are required for infrastructure projects, although a few backhoe loaders are required on every project for miscellaneous jobs.
?Decreasing availability of manual labour and increased mechanisation favour sales of backhoe loaders, which will remain the first choice of equipment for small contractors.
?An increasing number of suppliers will favour market expansion


There is higher awareness about the utility of this machine in rural markets and more farmers-cum-entrepreneurs are starting  to own these machines.