The Chinese machines are here; why aren’t U.S. contractors buying more of them? The up to 40 percent price differential between these machines and established brands would turn most buyer’s heads, especially since quality issues seem to be diminishing.
The answer lies in continuing, if not universal, aftersales uncertainties; it’s all fine to get a great deal on a machine, but if you can’t get parts or service in a timely manner, that value can quickly evaporate. And so when Volvo Construction Equipment announced it would bring its Chinese-made SDLG loaders into the United States last year, it made sure everyone knew they would be supported by Volvo dealers.
This aftermarket disconnect has prompted two equipment veterans to form a company aimed at calming contractor fears over buying Chinese-made equipment.
International Construction Products, led by former Sany America president Tim Frank and Wes Lee, previously with Volvo Construction Equipment, has a basic premise: Chinese manufacturers are offering good quality machines, they just don’t know how meet North American support expectations.
“Our goal is to get this thing right,” said Tim Frank, in an interview with Equipment World on the eve of ConExpo. “These prices always get someone’s attention, but frankly, there’s been a great disappointment after that. Now a customer can buy this low cost product with the confidence of support.”
ICP has partnered with its first signed manufacturer, Lonking, which is offering wheel loaders, excavators, dozers and rollers at its ConExpo booth, Silver Lot, 4154.
What American contractors need when considering Chinese-made equipment is comfort, and lots of it, says ICP. It proposes to ease the way in a number of ways:
“We’re going to break the mold on how these products come to market,” Lee says, noting that while contractors like using dealers, they’ve also grown more comfortable with buying online. So ICP is giving users a choice: work through an ICP dealer partner, or buy online through IronPlanet. The price will be the same – for example, $137,000 for a 4.5-cubic-yard wheel loader — whichever route you choose. “While we obviously make more money with the direct sale,” Frank says, “we know we need dealers in the mix to make this work.” To entice dealers to sign up, ICP says it’s offering the “highest warranty reimbursement in the industry.” Frank expects to have 20 to 30 retail dealers by the end of the year.
“IronPlanet will be the engine that drives our online sales, with pricing, warranty, financing, etc., on to the shopping cart and check out,” Lee says. “It’s like buying a sweater, only a really expensive, hydraulically powered sweater.”
Buyers can select their local dealer to perform their warranty work, with ICP offering dealers 110 percent of shop retail labor rate and published retail parts prices. ICP’s service dealer network – soon with more than 350 locations, Frank says — will also be available for this work. And if you’ve got an extensive in-house service operation, you may qualify to do your own warranty work.
Each machine comes with three years of free telematics and Bluetooth-enabled hands-free calling.
Noting not all Chinese manufacturers are equal, nor are all products made by one company quality machines, ICP vets each manufacturer, looking for repeatable quality and consistency. “We make sure the product meets the expectations of the North American market,” Frank says, “especially in terms of productivity and aftermarket support.”
Although many Chinese manufacturers are vertically integrated, producing their own engines, transmissions, etc., these components are not known here. Machines imported by ICP will have components, such as Cummins engines and Kawasaki pumps, widely accepted and serviced in North America, a common tactic for firms wanting entrée into the United States.
Including a three-year, 3,000-hour warranty, 48-hour machine-down parts guarantee, and 100-point inspection on incoming machines. “Chinese machines are not always great on a consistent fit and finish,” Frank says, “so we inspect wire connections, hose routings, look for leakage, etc., and then give the inspection report to the buyer.” ICP ups the ante with a 30-day money back guarantee (you pay for hours run and transport), and a payback promise of rental machine costs – wherever you rent it — if the parts guarantee isn’t met.
Frank and Lee have high expectations. “There are hundreds of manufacturers who want to expand in the prime market here,” Lee says, “but they fail because they don’t know how. This gives them an avenue to market.” They’ve also will have some heavy hitters on their advisory board, including Bob Hall, president of Bechtel’s equipment operations; Chris Arnold, global vice president of Ameco Fluor; Chuck Yengst, president Yengst Associates; and Steve Zagar, a 35-year equipment manufacturer and dealer veteran, including experience with Volvo dealer Rudd Equipment.
“We deliver more profit to end users in an immediate way by lowering capital costs on equipment by up to 40 percent; that has a huge impact on their bottom line profit,” Frank says. “By the end of the year, we may have the fullest product line of perhaps anyone but Caterpillar.”