Volvo plans expansion amid slowdown

By Du Juan in Brussels (China Daily) Updated: 2012-09-13 10:46

A contestant operates Volvo excavator to build blocks at the first excavator contest in Jinan, Shandong province, on Aug 9, 2011. [Photo/China Daily]

Heavy equipment arm of Swedish giant grows Chinese market share as nation becomes part of company's DNA

Born to a blue-collar family, Patrick Olney, president and chief executive officer of Volvo Construction Equipment, a subsidiary of Volvo Group, said he likes seeing the process of machines being produced.

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"You see some metal go on the start of the line. You hear some noise. People put things together and at the end there comes a machine that can do something that adds value to customers," he said during an exclusive interview with China Daily in the company's headquarter in Belgium.

"I love that because it's very visual," he added.

In fact, the company's current performance is also eye-catching. Under the gloomy and uncertain global economy, Volvo CE saw its sales rise 15 percent to 19.7 billion Swedish krona ($2.98 billion) and operating income increase 35 percent in the second quarter of this year.

Many other companies in the construction machinery industry are suffering from reduced orders and falling prices caused by the economic slowdown in China and the Eurozone debt crisis.

In the first half of the year, sales revenue in the construction machinery industry in China dropped about 20 percent year-on-year in the shrinking market.

The average price of machinery products fell in the first six months, with prices in 61 out of 142 product categories down compared with a year ago in China, according to data from the China Machinery Industry Federation.

Meanwhile, orders received by major companies in the industry declined 0.95 percent year-on-year, compared with 20 percent growth last year, the federation said.

"This year will be the toughest for China's machinery industry since the financial crisis in 2009," said Cai Weici, vice-president of the federation, during an earlier interview with China Daily.

Despite this background to the industry in China, Volvo CE's market share in China of its major products, wheel loaders and excavators, grew from 13.7 percent from April 2011 to March 2012, and by 14.7 percent from July 2011 to June 2012, a statistic that satisfies Olney.

Patrick Olney, President and Chief Executive Officer of Volvo Construction Equipment, a subsidiary of volvo Group.

"Considering the general economic background, I am satisfied with the growth in such a huge market," he said. "We have seen steady growth and it continues to go in the correct direction."

Canada-born Olney said the company's diversified products made a great contribution to the good performance. Volvo CE produces machines that cross many segments including mining, oil and gas, infrastructure, dams and railways.

Thanks to the diversification, the Chinese government's tight policy on the real estate industry has not brought too much worry to him.

"We managed to avoid that," he said. "The market comes down but our customers remain busy and we found new customers for our brands."

He said the rapid development of China's high-speed railway construction will bring good opportunities for the company.

While most investors are worrying about China's economic slowdown and trying to adjust to the changes in the market and economy, Olney has given a clear signal that the company will continue to invest in China.

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