Ambitious product renewal program puts Volvo in strong position in improving global market, says new president

In a presentation entitled ‘Product renewal key to success in strengthening market’ the new president and chief executive of Volvo Construction Equipment, Pat Olney, has used his first speech to the global press to state that the company is well positioned to benefit from buoyant markets, thanks to a massive product renewal program and significant investments in its industrial structure.

Mr. Olney, speaking in Sweden on May 24th to an audience of 100 leading international trade press journalists, said: “With recoveries now gaining speed in our traditional markets of Europe & North America and continued strong growth in BRIC markets, the prospects for the industry are brightening for those equipment companies with a global industrial and distribution footprint. But although necessary,” he continued, “good distribution alone is insufficient to succeed in the new-look construction industry. To prosper you have to offer customers products that are much closer suited to their local needs, resources and applications – and this requires a significant rethink of the traditional product offering.”

To emphasize the point, along with outlining an investment program that runs into hundreds of millions of dollars, Mr. Olney also highlighted more than 50 innovative new products that are being introduced in 2011. “It is this combination of reliable, fuel efficient and appropriate products, high production quality and strong aftermarket support that are customers’ order winning criteria today. With these in place Mr. Olney said he believed that Volvo CE was ‘particularly well positioned’ to capitalize on the continued growth in the major markets.

Strategy development

Volvo Construction Equipment, the third largest manufacturer in the industry, has enjoyed strong growth in recent quarters. In the three months January to March 2011 the company’s sales increased by 53% (SEK 15,759 M) and profitability by 70% (SEK 1,708 M). In addition, the first quarter also saw Volvo become the market leader in wheel loaders and excavators in China – by far the world’s largest construction equipment market. The company has also introduced in recent months a widespread product renewal program, with the introduction of Tier 4i/Stage IIIB emission compliant machines that not only emit lower emissions but offer higher productivity and improved fuel economy.

“In addition to developing fuel efficient products, we will continue to capitalize on our strong position in Europe and North America, while at the same time expanding our industrial footprint in the BRIC markets,” concluded Mr. Olney. “It’s good to remember that we remain in a cyclical industry – so we will also concentrate on maintaining a high level of flexibility in the production system.”