Excavators: Regulations split market in two

Visitors to construction equipment exhibitions like Samoter, Smopyc and ConExpo earlier this year would have seen the first in a new range of excavators from many of the sector's leading players. These have been launched in response to the new US Interim Tier 4 regulations on exhaust emissions, and the equivalent European legislation, Stage IIIB.
The key change from the previous laws (Tier 3/Stage IIIA) is that manufacturers have had to make a massive cut in the amount of particulate matter (PM) emissions - the visible black soot that comes out of a machine's exhaust pipe. To achieve this, manufacturers have added to emissions reductions systems they already had in place, with aftertreatment modules into the exhaust system - devices like diesel particulate filters (DPFs) that physically trap and burn-off the soot.
But the on-board technology is only part of the story. In order to work properly, engines must be fuelled with ultra low sulphur diesel (ULSD), which means around 15 parts per million (ppm) of sulphur or less. The amount of PM formed is directly linked to the fuel's sulphur content, and if anything other than USLD is used in a Stage IIIB/ Interim Tier 4 engine, it will clog the filter, leading to an increase in backpressure on the engine and causing it to break down.
Unfortunately, ULSD is not widely available for off-highway vehicles outside the US and Europe, and this means that, even if they wanted to use low emission machines, contractors and rental companies outside these regions would be ill-advised to buy an Interim Tier 4/Stage IIIB excavator.
At the moment, the legislation only affects larger machines. The first wave of laws that came into force at the start of the year applied to 130 kW to 560 kW engines, which translates to excavators from about 25 to 100 tonnes operating weight. However, subsequent introductions over the next two years will see engines as small as 37 kW affected, which will cover anything larger than about a 5 tonne mini excavator.

Two markets

One of the effects of these laws is that they have divided the global excavator market in two, with highly regulated markets like Europe, Japan and the US requiring machines with low emission engines, and the rest of the world requiring less exacting technology. In fact some manufacturers say there are three markets - the highly regulated countries, the lesser regulated countries (including China) and the countries with no emission laws at all.
A question that no-one is prepared to answer at the moment is what happens to Interim Tier 4/Stage IIIB machines when they are sold by their original owners after a few years. The used equipment market is an international one, particularly when it comes to popular machines like excavators. So will it affect a machine's residual value if it cannot be sold from Europe, Japan or the US to a less regulated country, because it will break down due to poorer fuel?
Some manufacturers say they have a technical solution to 'de-tier' engines and remove these sensitive aftertreatment systems, but that it is not clear how this would fit in with legislation around the world. For example, if an engine were de-tiered for a lesser regulated market, would it then have to go through a costly re-certification procedure to prove it met the standards in this new country?
Chris Rees, president of European operations at Volvo Construction Equipment said, "We have a technical solution, because we realise Stage IIIB machines could be sold outside Europe. Now we need a legislative solution to find agreement with European authorities and the EPA [Environmental Protection Agency] in the US to de-tier machines. It's a work in progress."
With Stage IIIB/Interim Tier 4 machines only just coming onto the market, this problem is a few years away. However, it is something to consider for buyers in Europe, Japan and the US if they have traditionally sold their used excavators outside those regions.
But in terms of new machines, manufacturers have been forced into the position of building at least two different models of each machine for different markets around the world. According to Off-Highway Research, 195375 crawler excavators were sold in the major markets of China, Europe, India, Japan and the US last year - 75% of them in China.
What's more, with 11450 excavators sold in India, this market edged ahead of the US as the world's third biggest market, and looks poised to take the no. 2 spot from Japan over the next year or two.
Brazilian trade association Sobratema meanwhile said some 5500 excavators were sold in the country last year, making it probably the world's fifth largest excavator market, below the US, but well ahead of Germany.
This all goes to show the importance of the various developing markets around the world. It also explains why manufacturers are putting in such effort to target these countries with machines that are designed for their specific needs.
One of the more interesting approaches is from Volvo. The Swedish manufacturer has a majority stake in Chinese manufacturer Lingong, which produces excavators and other machines under the SDLG brand.
Speaking at last year's Bauma China exhibition, the then-president & CEO of Volvo Construction Equipment, Olof Persson, said the company will use machines manufactured by Lingong to appeal to what it describes as the "mass market".
"We have set a strategic target to be number one, two or three in the BRIC [Brazil, Russia, India, China] countries. If you look at revenues, the BRIC countries account for about half of what we achieved this year."
"Volvo is a premium international brand and SDLG is a strong Chinese brand for the mass customer market. This is not a contradiction. It is a logical way to address a very large market with different customer needs. The dual brand gives us a unique opportunity," said Mr Persson.

New machines

But despite the importance of emerging markets, most major manufacturers are putting a strong emphasis on the new Stage IIIB/Interim Tier 4 machines they need to introduce in the US and Europe to stay in the game. These were certainly the major launches at the various industry exhibitions in these territories in the first quarter of the year.
Caterpillar has been perhaps the most ambitious in its new launches, with its stand at the ConExpo featuring six new tracked excavators. Caterpillar hydraulic excavator product and application specialist Kent Pellegrini described it as, "One of the most comprehensive excavator launches for Europe and North America in Caterpillar history."
The new equipment on display included a pre-production version of the 16 tonne class 316E, the 20 tonne 320E, the 36 tonne 336E, the 50 tonne class 349E, the 74 tonne 374D and the 90 tonne 390E, which will replace the 385D.
The new, more efficient Stage IIIB/Interim Tier 4 engines have been combined with higher pressure hydraulics and a regeneration valve on the boom hydraulics to increase both performance and fuel efficiency. The 336E for example is said to burn -6% less fuel than its predecessor.
Volvo's first Stage IIIB/Interim Tier 4 machines are the EC380D and EC480D, which between them cover the 38 to 50 tonne classes. Features include an automatic idling system that cuts engine revs to save fuel and reduce noise when the machine's controls aren't being used. There are also five different work modes - idle, fine, heavy, general and power-max - and the ability to customise the machines' performance for up to 18 different attachments.
Volvo describes both the undercarriage and booms on the machines as "heavy duty", and there is also a boom float option, which lowers the boom by gravity, freeing up hydraulic flow for other functions.
Komatsu meanwhile used ConExpo to take the wraps off the PC240LC-10, a 25 tonne machine, and the company's first Interim Tier 4/Stage IIIB machine. Operators will notice the new high resolution 7 in (178 mm) display, which is used to select one of five working modes, as well as provide information on operating parameters. The monitor can also display features from the rear-view camera, which is a standard piece of equipment.
Komatsu also highlights the machine's new load sensing hydraulic system, which it says has taken hydraulic efficiency to a new level. This is based on a new system called variable speed matching, which adjusts the engine speed based on the loads from the hydraulic system. Komatsu says that this, combined with other improvements, reduces losses in the hydraulic system, makes for better efficiency and lowers fuel consumption.
Case's first Stage IIIB/Interim Tier 4 excavator offering comprises four machines, the CX250C, CX300C, CX350C and CX370C, which cover the 25 to 37 tonne weight classes. Case says the new engines make the C series machines as much as +10% more fuel efficient than the B series they replace, while the company's intelligent hydraulic system has improved performance.
This hydraulics system has various energy saving features, including an engine idle function, which cuts revs when the boom is not in use. However, Case has also increased performance, with the C series offering +5% faster cycle times than the previous generation and about +7% more lifting capacity, depending on the model.
A new cab, +5% larger than on the B-series is a feature many operators will appreciate, as is the new 7'' (178 mm) in-cab LCD display.
Case's excavator partner is Sumitomo, based in Japan. In the US Sumitomo excavators are sold under the Link-Belt brand, and unsurprisingly, similar enhancements to Case's are apparent in the company's new X3 series of excavators.
Launched at ConExpo, the 250 X3, 300 X3 and 350 X3 from Link-Belt cover the 25 to 37 tonne classes, and feature the same improvements in operator comfort, performance and fuel efficiency as Case's machines. Link-Belt says it will also be adding a 47 tonne class model this year as well as a variant of the 250 X3 with a longer boom and stick package.
Parent company Sumitomo meanwhile is investing in its Chinese excavator plant. This year will see its factory in Tangshan, Hebei province increase in capacity from 3000 units per year to 5000, and a 36 tonne machine will be added to the company's current 20 and 24 tonne excavator offering in China.
Meanwhile, Case's sister company within the CNH group, New Holland, has unveiled the first of two Stage IIIB/Interim Tier 4 excavators in its C series. Unlike most other excavators, new Holland is using a Selective Catalytic Reduction (SCR) system to reduce emissions.
This relies on a high combustion temperature in the engine to limit the formation of PM, and the SCR handles the high levels of nitrous oxide (NOx) - the other main pollutant covered by emissions legislation - that is created as a result of this hot combustion.
The downside to this technology is that it works by injecting a stream of urea into the exhaust gasses, which means another fluid for excavator operators to monitor and keep topped-up. However, many manufacturers will have to move to this system to meet the forthcoming Stage IV/Tier 4 final legislation, so it is something the industry will have to get used to.
New Holland's new machines are the 27.9 tonne E265C and 31.6 tonne E305C. The company says a complete re-design of the hydraulic system, encompassing the main pumps, spool, solenoid and return valves, has significantly increased the machines' controllability and hydraulic efficiency.
The cab meanwhile features a new colour monitor and more responsive joysticks than on the previous model. The vibration experienced by the operator has also been reduced thanks to new dampers. These machines are marketed under the Kobelco brand in the US.
John Deere's first Interim Tier 4 excavators are the 250G, 290G and 350G, spanning the 25 to 35 tonne weight classes.
"We've increased power and hydraulic flow while also adding the IT4 engine," said Mark Wall, John Deere's excavator product marketing manager. "The end result is +8% more productivity for our customers."
The new G-Series also retains a number of key features from the previous D-Series, such as the Powerwise III management system that balances engine and hydraulic performance.
The next models to be launched in the range will be the larger 470G, 670G and 870G, from 47 to 87 tonnes.

More to come

Like John Deere, all of the manufacturers in the excavator sector will be rolling out additional models over the coming months to meet the new emissions laws in Europe and the US. As these machines come out, it will be crucial that manufacturers and law makers find a way of addressing the issues that will arise if these excavators are sold as used equipment to regions where ULSD is not available. Once used Stage IIIB/Interim Tier 4 excavators start going up for sale, there are going to be plenty of buyers in developing countries that will need to 'de-tier' them.