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Machinery rebuilds are an intriguing option in tough times.
France’s construction sector is facing hardship. The overall economic crisis has meant that fewer projects are getting the green light. At the end of 2015, the French market declined by an estimated 22% compared to the previous year, while labor shortages and higher construction costs have left unfinished projects across France.
For vendors of construction equipment, the slowdown has been particularly tough. When clients need less equipment, sales drop. So what can a customer do when the time comes to replenish stock, but the orders do not justify the expenditure?
This was the dilemma facing Solomat Location, a medium-sized rental company based outside Orléans, which rents out all types of construction machines from 17 depots in central France. Solomat had recently ordered a number of new machines, including two new Volvo excavators – an EC300E and an EC380E, both with extended warranties. But four of the company’s Volvo articulated haulers, models A30D and A30E, came to the end of their lifespan last year and also had to be replaced.
Given the economic situation, the purchase of four more construction vehicles was going to be hard to justify, even though the existing equipment was no longer working.
Solomat shopped around a few dealers for competitive quotes. But when they came to Kléber Malécot, a medium-sized family-owned Volvo CE French dealer the company had worked with for three decades, they were presented with an intriguing proposal.
“It is a tough time for our customers, obviously, so we knew that we needed to propose a new kind of offer,” says Stéphane Malécot, the owner of the dealership. “So we offered them a rebuild.”
Solomat accepted the offer, and work began.
The rebuild is part of a new program Volvo CE has put together to enable dealers to completely restore an old machine, making it as good as new by rebuilding it from the inside out. Intended as a complementary offering, it is an attractive alternative to buying a new machine during hard market conditions. Unlike a repair job, a rebuild completely replaces the engine and other essential parts. And, if the customer chooses the most complete rebuild package, the dealer can also restore the interior and exterior cosmetics of the machine as well as the mechanical components to make it look like new.
“This program started in the French market a few years ago, and now we are consolidating it and making it available worldwide with the Volvo stamp of approval,” says Yasser Oweida, global manager of the Volvo Certified Rebuild Program. “Our unique selling proposition is to offer our customers a saving of at least 40% on the price of a new machine.”
Kléber Malécot will rebuild four machines for Solomat, with the first three expected to have been completed by January 2016, and the fourth ready by March – just in time for the start of the spring construction season.
A dismantled articulated hauler certainly shows signs of a long and arduous life, especially compared to shiny new vehicles. But once rebuilt, it will look as good as new. Solomat opted for the complete package, including cosmetic rejuvenation. The choice was between the basic machine performance package, the Volvo Certified Powertrain Rebuild, or a fully-fledged Complete Rebuild, which includes overhauling the cab and restoring the exterior as well as the powertrain rebuild.
Marc Botin, the manager at Solomat’s main facility near the town of Sens, can see the many machines waiting to be rented from his office. “We decided to go with the more complete package because we want our machines to look nice,” he says. “It’s for the workers as much as for the clients.” Vehicle operators get excited about having a new machine, or in this case, a new-looking machine. And yet, the machine will keep the same controls and operation, so there is no need for operators to learn a whole new system.
The machines are worked on an hour away at Kléber Malécot headquarters. The rebuild starts with an empty shell, stripped of the engine. The practical hardware is worked on first, followed by the cosmetic work which will probably start a month or so later.
Although the articulated haulers due for rebuild sit among machines that are in for regular repairs, the plans for these machine are much more involved. Laurent Pesty, Kléber Malécot’s technical director who handles the rebuild process, says they have developed a standardized process. “First we check the machine to estimate the work required,” he says. “We’ve done 12 rebuilds and now have a real evaluation procedure to see how we can optimize the process.”
Of course, it is not always easy to convince customers that a rebuild is the best option. Customers have concerns about insurance validity, and about their machines being out of commission for several months. Pesty says these issues can be overcome by offering insurance specific to the rebuild, and by doing the work in the winter when there are fewer construction orders.
The dealers, too, can have some concerns, Pesty admits. After all, if they start offering attractive rebuilds, customers might not want to buy new equipment any longer. However, given the current economic climate, their choice may be somewhat limited.
Malécot says he thinks that offers such as these are ideal during what is a difficult time for the construction sector. “It is a perfect product in times of crisis,” he says. “If I was a customer, and I had a look at my total cost of ownership, I would do rebuilds.”
By early 2016, Solomat was due to have ‘as-new’ machines, freshly painted with new safety improvements such as orange safety bars and rear-view video cameras. Yet, because they are not actually new machines, they do not have to comply with new regulations that might involve further costs for the customer.
Malécot says he is hopeful that he will sign a new deal with Solomat next year to rebuild four more vehicles. For his part, Solomat’s Botin is optimistic about future collaboration. He acknowledges that trust is essential for such a big project – and he feels that trust with Kléber Malécot and Volvo CE. “Something like this needs confidence,” he says.
As Volvo CE looks to replicate these big rebuild contracts worldwide, fostering this trust between dealers and clients is key to making more deals happen.
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