Coronavirus pandemic has impacted every industry in an unprecedented way. The Indian Construction Equipment Industry has not been spared by it as well. With every sector in lockdown creating a major fall in demand and sales falling to almost zero in the 1st month of FY 2021, the Indian CE industry has seen one of the worst phases in its history. The silver lining is that the construction activity remains to be the first one to start with support from all the governments. This should help bring back some momentum in the demand of equipment of all sorts. We may, however, see some changes that will remain till we find a permanent cure to the disease.
1. Rise in Rental of equipment – Rental industry in India has been unorganized with most of the contribution from individual contractors and few equipment manufacturers. With the change in cash flow dynamics, liquidity crisis and uncertainty in project execution, we may see more and more OEMs (Original Equipment Manufacturers) renting out their machines to the end users. Although this will help maintain demand, it is equally important for laws to be stringent to protect OEMs and rental machine suppliers from delayed payments so that they don’t suffocate on their cash flows.
2. Increased demand for refurbished machines – With companies looking to generate immediate liquidity and the presence of idle machines in stalled projects, we may see an increase in the demand for used and refurbished machines. This will help streamline and organize the Used Equipment Industry, while creating an opportunity for equipment service and parts suppliers.
3. Rise in compact and automated machines – The threat of Coronavirus may remain in the ecosystem for some more time, and we may see construction companies reducing their dependency on unskilled and extra labour. In such a scenario, we will see a rise in automated machines like robot excavators and compact equipment. This of course will be an area to watch since spending is also going to be a challenge. Customers and OEMs need to innovate with limited resources in hand.
4. Mobile technology for tracking equipment performance – We have already seen many manufacturers dive in this domain and enabling their machines to provide real time data to the machine owners. With restricted movement of people, the mobile technology is bound to pick up with almost every user insisting on real time mobile based data of their machines.
5. Increased dependency on local supply chain – With costlier sea and air freight almost certain, equipment manufacturers will be keeping an open eye on increasing localization of their products and parts stocking. This will create macro changes in the system and will demand efficient logistical support. Simultaneously, this will also help create lot of opportunities for companies involved in providing engineering design services and parts manufacturers.
With some of the above changes bound to happen, it is those companies that are reinventing their strategies, innovating with new tools and technologies yet remaining true to their core values who will not only survive, but excel through this period of uncertainty.
