Al Cervero, VP of construction, utility, and mining at the Association of Equipment Manufacturers, explains how construction equipment manufacturers and distributors can meet growing expectations in 2016 by prioritizing service and investing in the right technologies.
Speaking with the Association of Equipment Manufacturers’ (AEM) VP of construction, utility, and mining, Al Cervero, I was struck by his enthusiasm for the equipment manufacturing industry and for AEM’s role in advancing it. For example, AEM is in the process of developing a telematics API platform to help manufacturers and equipment end-users manage mixed fleets.
“Come this spring,” said Cervero, “there is going to be a mixed-fleet standard for telematics. Working with AEM and AEMP should begin to move the industry in a direction of extreme efficiency by having a contractor able to monitor all equipment in one space.”
AEM’s mixed-fleet standard is just one of many strategies they’re taking to advocate for construction equipment manufacturers. AEM is a central place for OEMs to learn about the latest in industry news and best practices for how to run effective businesses.
As the construction expert at AEM, Al works with the construction board to define and manage services related to the equipment manufacturers and service providers for construction equipment. A keen observer and respected voice in the industry, here’s what Al says are key topics for construction equipment manufacturers heading into 2016.
Challenges Facing Construction Equipment Manufacturers in 2016
During our conversation, Al had plenty of positive things to say about the state of equipment manufacturing and optimistic predictions to make for 2016, but he didn’t sugar coat things. At the start of another new year, construction OEMs face a number of challenges, some familiar, some new:
Top Construction Equipment Manufacturing Challenges
- Uncertainty: “The biggest challenge is the uncertainty in the market. There is uncertainty in almost every aspect of the construction equipment business. The housing market is good now, but there’s still uncertainty. There’s uncertainty in the oil and energy business, which affect building and construction.”
- Hiring: The struggle to find fresh talent in the manufacturing industry is a struggle carried over from previous years and one that will continue into the foreseeable future.
- Product Support/ Increasing Efficiencies: “Efficiency is a challenge; everyone’s looking for ways to be more efficient. The use of technology in product and customer support is a big way manufacturers can increase efficiency for themselves and their customers. For example, if contractors can monitor a mixed fleet in one location rather than on each manufacturer’s website, they’ll be able to operate more efficiently.”
- Keeping up with Tier 4: “You can’t talk about technology and challenges in equipment manufacturing without talking about Tier 4. For one thing, it’s tremendously expensive. It’s a big training issue within the industry and it’s really just getting started. The reality is, because it adds 20% cost to the machine, it’s been deferred, but it’s still a primary item that a lot of contractors are trying to deal with.”
In addition, strong product support programs strengthen the equipment triangle: the mutually beneficial relationship among contractors, distributors, and manufacturers. Contractors look to distributors and manufacturers for more efficiencies, which will drive a better operating fleet, which should provide profits back to all three parties.
Technology Trends Shaping the Industry
Construction equipment manufacturers’ number one goal is to help the customer. By embedding sensors to monitor equipment in the field and guide product support programs, OEMs are able to make sure their equipment is helping customers meet their goals.
The biggest advantage equipment manufacturers and dealers can provide to their customers through the following technologies is helping them understand the full cost of what they’re doing, not just with maintenance, but with actual operation of the project.
- Telematics: “Step one in getting manufacturers’ up to speed with technology is telematics and the ability to monitor and utilize a more efficient fleet. Start by measuring what the machine is actually doing. For examples, telematics in equipment account for the exact cost for every yard of dirt moved, and for every lift the equipment makes. With access to this type of detailed insight, manufacturers and dealers can be much closer advocates for and advisors to the customer.”
- Data-backed service initiatives: “With all the data being driven off machines comes a better service experience. By providing customers with machine performance information, manufacturers have the opportunity to predict maintenance. They’re able to say, for example, ‘within 100 hours, you’re going to require this kind of a change because the data shows it’s experiencing this kind of stress.’”
Today, this data can account for idle time, which it couldn’t do in the past. So manufacturers can predict whether a machine will experience a failure earlier or later than they predicted based on actual operating time.”
- 3D Modeling: “ If all aspects of a project are being analyzed with sensors, contractors can create a 3D model of future projects so that when they bid, they know the actual cost of that project based on historical data they’ve collected. They go into a project with a much higher understanding of profitability.”
- Autonomous machines: “Autonomous use in equipment is driven by a pre-programmed set of materials inside the machine. For example, rollers for paving an asphalt road are given a pattern to follow, or they can be tracked off another piece of equipment or controlled remotely. Two or three rollers could be tracking behind each other all autonomously. That use of technology makes contractors more efficient and drives more continuous use.”
Customer Expectations Continue to Rise in 2016
Customers today need more than a quality product. They expect the machine will be quality. Today, they want everything. They want information about the machines they purchase and they’re relying on manufacturers to supply that information to their dealers who use machine data to provide a better service experience.
Contractors who purchase expensive, high-tech equipment are looking to dealers to provide the high-end service. Because, just like with automobiles, they used to be able to do work on the equipment themselves; now there’s too much technology involved, so many people just take it in. Service expertise is in high demand due to the increasing complexity of equipment, and manufacturers and dealers are going to need to be prepared to provide the service experience customers demand.
Most distributor’s value to the manufacturer is how well they work with the customer. So if the manufacturer can provide additional information, work with the dealer on their preventive maintenance, that ultimately improves the customer-dealer relationship and the construction equipment manufacturers’ brand.
What Industries Equipment Manufacturers Can Learn from
Equipment manufacturing does not exist in a vacuum, and neither does construction. The manufacturers that want to excel and grow are looking to tactics and technologies other industries are using to collaborate and grow their businesses.
“For years there’s been a lot of discussion as far as where the construction industry falls in the line of technology, equipment advancements, and service.” Here are some of the key industries construction equipment manufacturers are looking to as models:
- Automotive: “At AEM, we’re always looking to the automobile industry, which might be a decade advanced when it comes to creative uses for technology.” Things like convergence with mobile and advanced fleet tracking capabilities are automobile updates construction equipment manufacturers can learn from.
- Airline: Airlines are doing some really interesting things with parts sharing and collaboration. For example, if a plane goes down in Denver and United doesn’t have a part for the 737 Boeing, they share information with Southwest who might have the part they need.
- On-road Trucking: The on-road trucking industry is a great model for service. They’ve figured out how to keep trucks moving, both with advanced sensors and maintenance.
Conclusion – Room to Grow with Data Analytics and Telematics
There’s a huge potential for construction equipment manufacturers in using buried machine data and having the right technology to collect and analyze information coming from machines.
“Think about it, if you have 50-100 thousand machines going into the field every year and you’re pulling data from those machines daily, to be able to analyze and understand how it’s going to help the customer is an extreme technological advantage.”
As equipment manufacturing evolves and becomes more service and technology driven, keep an eye out for more construction manufacturing trends from Al and the rest of the AEM team!
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