Sumitomo agent eyes higher sales in excavators

Construction News Laos Myanmar

LEADWAY, IN cooperation with Japanese-based Sumitomo Construction Machinery, is leaving no stone unturned in adopting “aggressive business strategies” to capture a larger market share in an attempt to become one of the top three companies in the excavator markets of Thailand, Myanmar and Laos in five years.
Chakart Seanchan, managing director of Leadway Heavy Machinery, Thailand’s exclusive distributor of Sumitomo heavy construction machines from Japan, said the company is set to scoop up sales of 200 excavators this year, or 500 excavators since entering the market three years ago.

Leadway’s sales turnover ending March this year hit Bt1.3 billion and expects to rise to Bt2 billion next year. The company aims to sell 250 excavators and 25 pavers in 2016.

“Operating in Thailand for only three years and currently holding a 7-per-cent market share, we have moved up to become one of the top five players in this market, thanks to Sumitomo for its support in service, marketing and finance,” Chakart said.

Leadway sees the Kingdom’s falling exports and baht depreciation against the US dollar as two major threats that can affect its business, but the company’s plan for significant growth is being mapped out at a time when Thailand is launching urgent infrastructure projects with a planned investment totalling Bt1.7 trillion that will drive the growth of the construction industry.

The projects include three motorways, a sea port, a rail transport centre, Suvarnabhumi International Airport expansion, a one-metre-wide dual track rail project, a 1.435-metre-wide dual track project and as many as five mass transit lines in the capital and its suburbs. Besides this, construction projects in special economic zones will also contribute to growth.

The government aims to invest Bt550 billion in infrastructure development next year, with 20 mega projects getting off the ground in 2016. “All these projects are being processed at a fast pace, thanks to political stability,” said Leadway general manager Peera Pornpanich, who before joining the company notched up more than 20 years experience selling excavators of another brand.

Peera said the strength of Sumitomo’s excavators lie in their low energy consumption, but the firm has yet to manufacture excavators of less than 8 tonnes, which are widely used for construction of real estate projects.

The market trend is for smaller-sized excavators, which are selling more. Chakart said Sumitomo’s excavators are powered by Isuzu engines with an “effective” hydraulic system. “They are easy to maintain, highly dependable and not gas guzzling,” he said.

With four existing service branches – in Bangkok, Lampang, Nakhon Si Thammarat and Khon Kaen – Leadway plans to unearth 20 branches in the near future, with three more to be opened before the year ends in Surat Thani and Ubonratchatani, plus branches in Nakhon Pathom, Nakhon Sawan, Udon Thani and Phuket next year.

Chakart said there is a lot of scope for Thailand to “develop, expand and restore”, especially in water management, which is vital for the government to tackle.

Kazuhiko Sasaki of PT Sumitomo SHI Construction Machinery Southeast Asia said Thailand is Sumitomo’s second largest market in Asean, after Indonesia. Malaysia and Myanmar are the third and fourth in market size, with the rest of Southeast Asian countries following close behind. But Thailand is a relatively smaller market than Indonesia because the latter is driven by demand related to natural resources, mining, logging and coal mining, which needs large excavators.

However, Indonesia – which exports coal to China that has a massive appetite for the resource to fuel its industries – has seen its huge market decrease due to China’s falling growth. Malaysia too has been negatively affected this year due to its exports of palm oil to China plunging.

“The negative market situation for these two countries has been severe this year and will continue next year. But we are optimistic Asean will continue to grow because of a combined population [of more than 600 million], after all the region’s infrastructure is not enough. So there is much more opportunity for us,” Sasaki said.

There’s also a huge business opportunity in underdeveloped Myanmar. Aung San Suu Kyi’s National League for Democracy has now won a majority in historic elections, and though the victory has not been made official yet, Chakart said Myanmar has come too far down the democratic path to go back.

Chakart is familiar with the business environment in the country as he has been selling used Sumitomo excavators to Myanmar since 1997. Sumitomo president and CEO Mikio Ide said the company sells as many as 10,000 excavators per year worldwide, with the large markets being China, Japan, North America, Europe, Africa and Latin American. Asean is responsible for less than 10 per cent of Sumitomo’s global sales. In Japan, the company holds a 12-per-cent share of the market.

Sumitomo four years ago established a production plant in Indonesia, offering various models to Thailand and other Southeast Asian countries. Its SH130-5 MaCan, for example, is specifically designed for use in the region, especially in Indonesia, Thailand and East Malaysia, where the palm oil industry is growing.

Second-hand Sumitomo hydraulic excavators have been used in Thailand for more than 40 years, having been shipped from Japan to serve the gemstone mining industry in Kanchanaburi. Sumitomo excavators have also been widely accepted in the shrimp industry in Krabi and Phuket.

Leadway offers a product guarantee of 2,500 hours for use or one year as well as free maintenance of 7,000 hours and free labour and free part.