Chinese construction equipment maker LiuGong opened a 4000 square metre spare parts facility in Australia mid May. Our reporter Caroline Falls went to the grand opening and a few days later recorded this interview with LiuGong Australia’s marketing manager Shannon Bethe.
Caroline Falls: LiuGong first entered the Australian market in 2004, apparently one of the first markets it entered outside of China. Can you tell me what the 2004 presence was and how it’s blossomed, and of course, about your opening of a 4000 square metre facility in one Australia’s biggest cities — Melbourne?
Shannon Bethe: So in 2003 LiuGong announced its globalisation strategy. For the next five years, rolling on from that, the globalisation strategy was to take the LiuGong brand global, to capture global markets and further develop the products. As part of this the first penetration into a Western market was in the Australian and Oceania region with the establishment of a sales and support organisation outside of China in Australia, and with the sales of our first machines to the region. So from 2004, LiuGong was supported locally. In 2014, LiuGong went to a regional system with regional subsidiaries based in Asia Pacific for the Australian and Oceania market, culminating in 2023, where we have opened a subsidiary specifically for the Oceania market going directly to to LiuGong machinery head office in Liuzhuo, China.
Caroline Falls: Apart from opening the spare part facility, you also just introduced LiuGong’s electric machinery range to Australia. Can you tell us what equipment is in that range generally, and which items are available in Australia now?
Shannon Bethe: LiuGong has comprehensively invested in the electrical path to the market. We have a range of electric forklifts and a range of electric access equipment — AWPs, or elevated work platforms, the 856H-E wheel loader which was launched at our grand opening, and a 9027F 2.7 tonne limited swing excavator. That is currently what’s available for sale as of this date, which is May 16, 2023. During the year, a greater range of products will be rolled out — from an electric skid steer, larger electric excavators 15 tonne and a 25 tonner, and probably some more later on this year depending on production paths. A full range of electric wheel loaders from, let’s put it in bucket sizes, one cubic metre bucket machine right up to a five cubic metre bucket machine, a quarry loading machine, as well as an electric grader and electric compaction equipment. By the end of 2023, the profile for electric machines supported and launched by LiuGong will be wide and expansive across basically all product lines in the construction industry.
Caroline Falls: I asked you on the side of the event, what is LiuGong’s category killer? And I’m going to ask you again now, what is it? And can you tell us not only about its specs and sales trajectory, but also about the level of inquiry and why you think it’s triggered so much interest?
Shannon Bethe: It’s really a hard question to quantify because as a company with 65 years history in the earthmoving industry, large partnerships with all the major components brands, and now we’re fast approaching 20 years in the Australian market, it’s hard to quantify just one product as a category killer. We have multiple products across multiple product lines that are category killers. We recently relaunched, at the start of this year, our 915 excavators — in the 13 to 17 tonne class limited swing excavators. It’s one of the most powerful machines on the market. It’s one of the most fuel efficient machines on the market. It has the automotive quality finish inside the cab, and all the specs and features that a civil construction contractor would require. When moving to the wheel loaders, our category killer would probably be the 856H-E electric wheel loader. Predominantly, wheel loaders are used on a fixed site. So a site that has access to charging facilities in one location, whether it be waste, agriculture, organics, recycling, sales, loading, or quarry facilities, we obviously have the first to market. We’re ticking over about 2000 machines produced in the electric model operating in the world. As far as killing a category goes, we can offer a value proposition on that machine, which most other manufacturers in our industry are still some time off.
Some have launched products, some even have some products in the market, but we have over 100,000 hours of data on that machine working in the operations. Basically, you’re talking about an ROI [return on investment] to the owner significantly better over a five-to-10-year course of life, than a diesel product, which we also make and which is one of the best wheel loaders in the market given our global position as number one wheel loader manufacturer in the world and our top five position of wheel loader retail sales in the Australian market. But then we go into things like our grader. We have a Red Dot design award winning grader with full multi joystick functions, controls, all the bells and whistles. If you move to our dozer range, we just launched the LD range of dozers, which really will challenge anything that the majors can manufacture in the dozer range, even to the rollers, where we have autonomous vehicles just about to be launched, including electric vehicles. So it’s very hard to quantify what the number-one category killer is. But if you have a need to stick a pin on it, it would probably be the hero product — as of today, it would be the 856H-E electric wheel loader.
Caroline Falls: Talking about electric battery powered machines, I noted at the opening people talking about how much more comfortable they were for the operators to use, especially those doing long shifts on them. They don’t have the fatigue problems they had with traditional diesel powered machines. Just quickly do you want to talk about that?
Shannon Bethe: There are some offshoots from the electric development. Obviously, the electric development comes from the idea of offering a sustainable future away from oil production and the burning of fossil fuels to create the energy that drives the machine. The idea is that sustainable energies will be sourced to power the historically diesel machines. Some of the advantages that have been seen from launching a range of electric machines is not only the reduced carbon output of running a machine on site to do an application, but also the significant reduction in maintenance costs. The significant increase in I guess the comfortable environment that an operator can work in given we take out one of the most fatiguing factors being the noise and a lot of the vibration that comes along with a diesel running system. So, some of the offshoots to an electric product which was designed for sustainability and the protection of the environment, the offshoots are they are providing a better cost base for the owner operator, or the owner of the machine, and they’re actually providing a more comfortable workplace for the operators who are spending eight to 12 hours in a machine per day.
Caroline Falls: At the opening, Luo Guobing, LiuGong Vice President and Head of Global Sales, talked about Oceania offering a lot of promise for LiuGong’s expansion. Can you tell us what you mean by Oceania and how you’re going to sell into and service that large geographic market?
Shannon Bethe: Well, for us, Oceania is very much covered as part of the traditional clarification of Oceania. So including PNG, Papua New Guinea, it’s the island nations of the South Pacific, including New Zealand and Australia. It’s a crucial market for us given that the development and learnings we’ve had for last 20 years have really given us a sure base for greater penetration against the traditional brands of a globally engineered Chinese product for a global engineered market. So basically, countries like Papua New Guinea, where we have one of the largest dealers available to the market, generates the ability for growth, the island nations which are diversifying in their output of and manufacturing skills in different product sets, with the support of Chinese investment gives us opportunity there. And then, the traditional markets of Australia and New Zealand that have significantly shifted into Chinese manufactured and sourced products across the range. In 2022, it was the first year that Chinese cars outsold German cars in the Australian market. We’re seeing a similar push into Chinese machines. So it provides significant opportunity for LiuGong to continue to capture sales and market share against major brands. What it does provide is also a learning platform for global penetration.
The last 20 years in the Australian market has provided fantastic specification design and development opportunities for LiuGong, which have then spread out into markets like Europe and the North American market. And from that, we can further develop our product. How do we plan to support the region? Well, we’ve basically established a support facility in Melbourne; to call it just a PDC (parts distribution centre) would probably be a little light. In that facility, yes, we will hold an amount of parts to support our dealers and distributors’ penetration into the Australian market and further penetration mainly around the slow moving parts that we want in country to swiftly react to customers’ needs. Our dealers have done a fantastic job over 20 years supporting our customers in the market. This is an increase from that. What the facility in Laverton [a suburb in north Melbourne] also provides is a base for the LiuGong Oceania team to springboard from to capture market information to develop individual customer needs, and to provide a base for our travelling representatives for longer market studies and market development, as well as different market research opportunities. Of the 4000 square metres of space in Victoria, outside of the 500 square metres of office space, there’s about 500 square metres that’s dedicated to transmission research and development. It’s not just a parts facility, it really is a local market development centre.
Caroline Falls: Yes, it’s also got a transmission reconditioning Bay, is that right?
Shannon Bethe: Correct. Any of the learnings that we have in our local subsidiary go straight back to our partner, ZF, and our LiuGong facility in China. And, work on developing not only that, but also with our joint venture partner Cummins and some of our other components partners.