Interview: Bomag's Jörg Unger
By Helen Wright12 December 2011
Based in Boppard, Germany, Bomag is one of the world-wide household names in road building equipment, with 11 sales subsidiaries and over 500 dealers representing it in more than 120 countries worldwide. Although the company enjoys a 55-year history, the last few years have seen it look more comfortable under the ownership of family-owned road building equipment maker and contractor Fayat Group, compared to its previous life as part of investment companies SPX and United Dominion.
Jörg Unger, president of Bomag since 2009 and part of the company's management since 2005, clearly shares this view.
"Fayat is not just an investor that is solely interested in turning a profit, it is personally involved in the business. This doesn't mean that Fayat occupies itself with the day to day operative side of the business, but when Bomag delivers proposals for investments to Fayat, the discussions that follow are between experts - which has distinct advantages.
"In my opinion, Fayat is much better than the previous owner of Bomag, SPX, where the discussion was purely financial - totally orientated towards profit, but not in developing the business," he said.
Today Bomag generates about 60% of its sales outside Europe, and there is heavy investment in the international business.
"We will continue to invest in developing the business, and are targeting particularly strong investment in China, where we have just bought our dealer out," Mr Unger said.
"This means Bomag will have both a factory and a service and sales organisation in China. In fact, we are now onto the third extension of our Chinese factory and the customer service centre will open in February, 2012."
"We are targeting facilities for sales, services, customer and operator training at China and I'm absolutely sure that this model will be accepted. The discussion is moving and customers are not just focussing on price, we need to communicate the value of our equipment.
"In terms of the machinery, standards should be high. I'm not talking about over-engineering, but creating value - Bomag has to find its Chinese standard. High tech for the Chinese market is different from high tech in Europe. We have to be careful to fulfil Chinese demand, not sell European machines in China."
But while Bomag has to meet the needs of its growing developing world customer base on the one hand, legislation on diesel engine emissions in Europe and the US is driving research and product development in another direction. The latest step has been this year's introduction of Stage IIIB laws in Europe and Interim Tier 4 in the US.
"Environmental development is absolutely necessary - everybody understands this, and we believe that we are able to find solutions and answers at Bomag. Instead of resisting the process, we are committed to leading, to having the top position.
"The change to IIIB is a big step for the industry, and of course the question of the future resale of these machines into emerging markets gives us a headache for the future. Used machines from Europe will not be able to be resold outside of Europe - into Latin America, India etc. - because the fuel quality is simply not there. We have already seen this happen with commercial cars, of course," said Mr Unger.
But green developments cost money, and the cost of the machines must rise to reflect the complex engine technology that is being integrated. How should the industry tackle this?
"Customers have to understand that they must pay for this," Mr Unger started, adding, "But also, governments must invest more money in return for this green way of thinking. Governments must pay more for a new stretch of road if it is expected that only expensive green machines will be used to construct it, for example.
"VDMA [the German Engineering Federation] is lobbying for this kind of action already, and we support this, as does CECE [the Committee for European Construction Equipment]. Politicians have to make laws that are completely environmentally friendly, we're not against it, but they have to make this process manageable.
Next year, Mr Unger said Bomag was looking forward to the Intermat show, which takes place from 16th to 21st April in Paris. The company will be unveiling a new tandem roller - the 4.5 tonne BW 138 AD-5 - at the event. A new BM600/15 milling machine will also be showcased, together and a new telematics system for fleet management.
And Mr Unger was optimistic on global market prospects. "At the moment, we are looking at a decision for another assembly plant, but that really is for the future. Currently we are focussed on growing our capacities in China, and we are also strongly investing in our Boppard facilities, too.
"The global market is growing, and Bomag is intelligent enough to grow faster than the market. And while we will continue to pursue the organic growth strategy that has served us well in the past, we are also not closed to the idea of acquisitions - but you can only buy what is for sale. If something comes up, Fayat is always willing and able to buy for external growth, but will not pay stupid prices."