The middle market is the future says Doosan’s Tony Helsham

After 25 years at Volvo Construction Equipment, including stints heading hauler manufacturer Euclid in the 1990s, the company's Korean excavator business following its acquisition from Samsung in 1998, and then president from 2000 to 2008, you would think Tony Helsham would be ready for a rest. But not a bit of it.

His promotion two years ago to a senior vice president role on the board of parent company Volvo AB seemed a curious move for someone who was clearly very engaged in the construction equipment business, and so it proved when he left the post and Volvo this February, just 18 months later.

Taking up the story, Mr Helsham said, "I figured I wasn't really cut out to be a staff guy, having been heavily involved all my life in the operations side. So I decided it was time to move on. Despite the economic conditions, a couple of interesting opportunities came up."

According to Mr Helsham, one of the attractions of Doosan was its strong position in the Chinese market. The company has had a wholly-owned manufacturing base there since the mid-1990s, and its plant in Yantai, Shandong province now has the capacity to manufacture 25500 excavators per year.

"I watched Doosan - Daewoo then - when they got in as a first mover, and I thought they were extremely gutsy. Now we're producing about 100 excavators per day, which is a lot of excavators - there's nowhere else in the world where that happens.

"So part of what attracted me to this company and influencing where it goes when it grows up? One of the attractions was getting back into the Chinese market and actively participating here," he said.

A study by specialist consultant Off-Highway Research has shown that by about 2012, the capacity to manufacture excavators in China could be as high as 425000 machines per year, compared to about 250000 today.

Middle market

Given that the capacity to build excavators in the rest of the world combined is only about 50000 machines per year, this development clearly represents a sea change in the equipment industry's dynamics. It is a controversial point, but one that Mr Helsham not only accepts, but relishes.

"This is the future battle ground - the middle market. You've got a premium market which is shrinking, you've got a low end market which is all about price, but the bulk of the market is in the middle, and that's the future battle ground for us all. That's open to all comers, because it's a price, quality, value and support proposition, and it's something the western manufacturers have never had to deal with before.

"In the past in emerging economies, all western companies have said, 'Take our premium western product, and we'll force it in because there's no competition.' That dynamic has completely changed - not just in construction equipment. That's what makes it so exciting, because it's a sea change and there are no winners and losers yet."

The full interview with Tony Helsham will be published in the November issue of International Construction. Click here to subscribe to the magazine.