Market expansion

Sales of Construction Equipment in Western European reached 164000 units in 2005 (see CE April 2006). Good news for OEMs and component suppliers alike, according to Mikko Mattila, export marketing director, Robit Rocktools.

Mr Mattila told CE that the rise in sales has seen a corresponding rise in activity throughout the region, with Northern and Eastern Europe, particularly the Baltic States, and Russia enjoying a considerable boom in recent years.

“All these areas have seen a rise in activity over the last 12 months. We've seen the road building sector increase dramatically, alongside high activity in piling works, steel casing and foundations. High-rise construction in Russia also seems to be extremely popular at the moment,” added Mr Mattila. While acknowledging the peculiarities of doing business in the country - “It's a big market, you really need to speak the language and the purchasing system is a little bit different!” - Mr Mattila said there was so much potential in the country that it was the only territory outside Finland where it maintains an office. (Its distribution network handles Sales in other countries.)

According to Mr Matilla the rise in activity throughout the region has had a positive affect on the bottom line too. “In 2005 [we] enjoyed sales of € 6,3 million, a +30% rise on 2004. While our main area of activity is in the mining sector, I would say that where we're doing business reflects where most of the major construction drilling work is happening around the world today,” said Mr Mattila.

Sales at Robit for 2005 can be divided up into three distinct areas: Scandinavia; the Americas; and the rest of the world. “Each of these three segments accounts for about 30% of our turnover, however, we've seen a huge increase in activity in Scandinavia and North America in the last 12 months,” said Mr Mattila.

While the price rise in raw materials has “helped sales” it has not been without its headaches. Mr Mattila told CE that as far as price rises to the customer go Robit has followed the market price very closely, but the margins are “very tight indeed”.

“Steel prices are a big problem for the industry, as is the high price of tungsten carbide. To overcome this we've used a high degree of automation in the production process, and made a significant investment in the buttonhole drilling line and heat treatment, which has helped double our production capacity.

“Our price rises have therefore been modest, even though the actual need from the contractors could have pushed them much higher. However, it's important to remember that the consumables business is a global business so there are no major differences regionally, all the suppliers are in the same boat,” said Mr Mattila.

Staying ahead of the game is also important. “Automation saves money. I expect we will continue to invest in this area; we are doing so already in Finland, alongside further development of our distribution network.

“There is also the possibility of having a manufacturing base abroad. However, any expansion means you have to focus on marketing and sales in old and new channels, which is what we intend to do,” said Mr Mattila.