The Hiab name is not just for cranes. It also goes on tailgates, truck-mounted forklifts, taillifts, demountable container attachments and forestry and recycling cranes. Hiab president Pekka Vartiainen argues that such a combination of products help each other. “It is true that every one of our products are attachments for trucks,” he says. “But really they are complementary ways of loading and unloading a truck. In some cases it should be a truck-mounted forklift instead of a crane, in some cases it’s the other way around. In some cases a combination is optimal.”
The product mix was consciously shaped, Vartiainen says. “If you look backwards through history, Hiab is built out of acquisitions of different product lines. What we got when we bought into truck-mounted forklifts and taillifts in 2000, for the existing Hiab structure, was many additional channels to market. I believe that what the market wants is not Hiab selling cranes, and other channels selling forklifts and other products, but one channel offering load handling solutions for customer needs.”
In other words, Hiab’s purchases have created a huge dealer network, but one that is messy and seemingly inconsistent. In some markets, the company sells direct, in others it relies on importers, and in other markets it is not there at all.
Over the past few years, driven by a new strategy, Hiab has started to make some cautious moves toward selling direct. “We are present in 160 countries, and we have about 30 of our own sales companies in Hiab worldwide. Our direction is to be close to the customers, through own our own sales network where it makes sense, and not where it doesn’t make sense, either because we have good partners like in Canada or Denmark, or if it is a country better covered through dealerships.
“Our Canadian importer Atlas Polar is an example of a traditional, good dealer. It has been our dealer for 60 years, and the market in Canada is good. Hiab doesn’t have any need to focus on countries where dealers are doing a good job. Let’s take Bowman Cranes in South Africa, for example. [Hiab announced its intention to buy the company in April 2008, but the deal has not yet closed.] South Africa is a potential growth market. It is better handled directly under our ownership. It is exactly the same in Eastern European countries: the Czech Republic, Slovakia, Hungary and Croatia [where Hiab bought out Austrian dealer Berger’s operations in 2007]. In these emerging markets, we need to have all the freedom to act.
“Both Hiab and [parent company] Cargotec have one area where we want to be more powerful, the services business. That is one part of the Hiab strategy, the development of service and installation and parts business.” Spares and service account for 23% of the Hiab sales revenue, according to Cargotec chief financial officer Eeva Mäkelä.
Vartiainen continues: “If we have our own sales companies in a country, it is easy to develop this. The other thing I personally believe in is that the closer you are to customers…the more direct input you get about the product, and the solutions that they need. This is vital input for new solutions. When it comes to service, whether it is load handling suppliers such as Hiab, or competitors, what is booked is mainly spare parts, and service is handled by someone else, an importer or a dealer. I believe there is an opportunity to develop service as such. But this is not a fast journey.
“The mounting of the crane is important. Before a customer can utilise the crane, it needs to be mounted on the truck. I find that this is an area of very interesting potential to increase the efficiency of the whole process. I would like Hiab to be a forerunner in that process.
“How this works depends market to market. If you take Hiab in the US market, we are installing everything we are selling. If you take some European markets, the installation part of the business is very scattered, and you can question how well coordinated it is in the whole chain of delivering load handling machinery. Nobody has concentrated on that in the business.”
CT: Might it make sense to integrate mounting at the factory? (Hiab has 16 factories around the world, and there are loader crane factories in Hudikersvall, Sweden, for medium-tonnage loaders; an assembly factory for small cranes in Meppel, the Netherlands; and a factory for high capacity cranes in Zaragoza, Spain; and one in Chungbuk, Korea, for the Asian and Korean market. The company also builds forestry and recycling cranes in Salo, Finland.)
“This is one of the options. The issue is that the installation and mounting for a big crane is far more demanding and time-consuming than a simple crane or forklift. In big cranes and more complicated installations, you need structural installations, and need a factory or other central location.”
What Vartiainen is proposing is moving loader crane installation from the dealer to regional hubs spread over Europe. “In principle these could be wholly-owned, as they are in Holland or Finland, or they could be outsourced to third parties. However, they need to work in cooperation with Hiab and the truck manufacturer. Where it makes sense, one hub could be a demountables hub [a Hiab sister company is Multilift], another a big crane hub.”
Vartiainen also wants to increase the loader crane maintenance business, but not by making drastic changes. He plans to keep this at the dealer level. Hiab currently offers a preventative maintenance service for loader cranes in many European countries, for a fixed regular fee.
“Repairs are done in the same facility. We offer service where we have the facility, and not had any thoughts of centralising this. We are secure that people in those places have the needed knowledge to make repairs. Training is run through the product lines. The loader crane line has its own service department, and its own service trainers. They visit both our, and our partners’, service departments and train people.
“This repair is mainly disassembly, replacement of components, and reassembly. If there is a broken part, we don’t repair it, we change it out. If there is a bent boom extension, we change the section. Then if there is an opportunity to repair it, we repair it afterwards. This does simplify service training. The best facilities we have for this kind of activity in Europe is in Meppel, Netherlands, which is a forerunner in service and repair.
“But service shops do not need to be owned by us. If we take Germany for example, it is a big market, and we only own one service company, and have many service partners. They are running the same programmes with the same training, and that is fine.”
Service is the second ingredient of the company’s recipe for direct sales in key markets, Vartiainen says. “History has led us to a situation where in some cases we have a stronger foothold directly, and in other countries we work with partners. The direction is, where it makes sense, to develop our own roots to market, and then offer a good installation and repair service. Bowman Cranes is an example: it is not only a sales route to market, but for service and maintenance. It is exactly the same motivation as in Australia. At the same time we are meeting a strategy to be more global, which means to be going into the parts of the world we are not in, and the areas with the most potential growth.
“There are other opportunities in China, Russia and South America, but maybe these are different markets than traditional markets. The product offering suitable there is different to what we are offering our mature markets. That means that we want to enter them, but it is a bigger challenge to us, and our product range is not supporting them, so we need to develop the product range to fulfill those needs.
“In [such] emerging markets, the strategy is the same, but the timing is different. If you take China for example, we know the Chinese market for our kind of load handling equipment is emerging. There is not so big a population of products; this is maybe not the time to build a company service network, with nothing to serve. First you have to decide, do you want to be a player in those markets, bearing in mind that the product offering and the customer needs may be different, and the competitors are different than in mature markets. Then you decide to go there, and if there is the right kind of products, you can build customer relations, and build sales on that. At the same time you can take care of spare parts, and later take care of service.”
