As the construction industry continues to recover from the recession, the equipment sector faces new challenges such as the implementation of recent engine legislation requirements; however, these challenges are pushing manufacturers toward creating greater innovation and value for the customer. CBO spoke with several construction equipment executives to get their take on the state of the construction equipment market.
Q: What is the most pressing challenge in the construction equipment industry right now?
Chris Giorgianni
Vice President, Product
JCB Inc.
One of the biggest challenges from a customer perspective is how to get the most out of the machine, all while minimizing the overall owning and operating costs. The industry has gone through some tough times in more recent years, and it has caused contractors to look at equipment differently. In the process, productivity has improved, because the customers are getting the most out of their machines by maximizing their machines’ versatility. On the other end, a key challenge from an OEM’s standpoint is delivering additional features and benefits to go along with the increased acquisition costs due to the Tier 4 emission legislation.
Kirk Gillette
General Manager
Hyundai Construction Equipment
The most pressing challenge in the construction equipment industry right now is implementing the Tier 4 engine changes and all of the many issues that accompany this regulation. Any new technology means added training for dealers, business owners and operators, so Tier 4 education is critical.
Maintenance on Tier 4 machines will also vastly differ from previous models with added parts and service. Because of this, there is currently a lack of qualified Tier 4 service technicians, so until more service teams become Tier 4-certified, maintenance on these machines will likely present a challenge.
Ron Hargrave
Vice President of Marketing and Sales
KOBELCO Construction Machinery U.S.A.
Tier 4 implementation will be a challenge for customers, dealers and manufacturers. A lot of preliminary work has been done, but as in most cases, there will be a learning curve in the real world of applications. Also, the ongoing roadblocks that we encounter in Washington will continue to be a challenge for the industry.
Q: What changes have been most important to the construction equipment industry in 2013?
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Randy Rupp
Director of Product Definition
Ditch Witch
Financing has become more readily available to our customers. During the past couple of years, financing has been a huge obstacle, and now that issue is not as prevalent. Following the financial crisis, many contractors found it difficult to get financing for the equipment they needed, even companies with solid credit standings. In 2013, most of those companies have shown good revenue and profit figures for the past 24 to 36 months. Financial institutions have stabilized somewhat, and these factors are opening up lines of credit for more equipment purchases.
Q: What trends in the construction equipment market do you predict for 2014?
Jim Hasler
Vice President
CASE Construction Equipment-North America
We, like many in the industry, are cautiously optimistic for growth, but we do not anticipate widespread growth across all markets. Depending on the segment, credit is still somewhat restrained, so we see operators continuing to extend machine life cycles rather than replacing equipment. As such, it becomes increasingly important that our dealer service networks work hand-in-hand with customers to help maintain current fleets and leverage aftermarket telematics packages like SiteWatch to monitor utilization and service intervals.
Tier 4 interim and Tier 4 final will continue to be primary drivers for engine and machine developments. That extends beyond the after-treatment solution to all of the other systems in a machine—including electrical, hydraulic and structural—to ensure that customers are getting equipment that is easy to operate and provides a positive overall benefit to the business.
Frederik Dresen
Vice President, Accessories-
North America
Robert Bosch Tool Corporation
Innovation is the key to 2014. There are no traditional or standard products any longer. New materials and technologies that enhance existing designs and materials are showing up on a daily basis. … The challenge for marketers is to ensure end users understand the value and to demonstrate how these new products and technologies save time and money and that they are easier to use. Best-in-class products—that’s what customers are looking for.
Kirk Gillette
General Manager
Hyundai Construction Equipment
Maintenance packages will become an important ingredient of the equipment purchase. New Tier 4 engines will require more monitoring and, while engine manufacturers have done a good job of informing owners of the new needs, operators will need more training.
I also expect that Chinese manufacturers will continue to press the current market leaders in terms of product performance and share of market. Additionally, I think we will see more mergers/acquisitions between equipment manufacturers in the near future.
Bob Mann
Vice President, Dealer Sales
Navistar Inc.
For 2014, we will see continued replacement of older vehicles. After 2006, the economy started to have a big impact on the construction industry, causing fleets to park vehicles. Today, it costs more to get those vehicles back into roadworthy shape. As a result, we expect to see used inventory decrease as lead times on new vehicles expand. Rental units will also continue to be a popular option.
Q: What pressing issues in the construction equipment market do you foresee for 2014?
Jim Hasler
Vice President
CASE Construction Equipment-North America
We are taking a close look at what needs to be done to spur infrastructure development. There is an overwhelming need to revitalize nearly all sectors of American infrastructure. The American Society of Civil Engineers (ASCE) gives our infrastructure a Grade of D+. ASCE also estimates that a $3.6 trillion investment will be needed by 2020 to bring our infrastructure to an acceptable condition.
Infrastructure development has historically proven to have a positive impact on employment and economic growth. This is also an obvious opportunity for the construction industry. CASE is currently engaged in a nationwide effort (Dire States), which kicked off earlier this year with infrastructure expert and author Dan McNichol’s tour across the U.S. In his rusty 1949 Hudson, which is a metaphor for the ailing condition of our existing infrastructure, we’re bringing awareness to this issue and highlighting alternative methods of funding, including public-private partnerships, infrastructure investment and the roles that federal, state and local governments play in the process.
Q: What do you predict the construction equipment industry landscape will look like in 2014?
Jason Feldner
Group Product Manager,
Power Tools-North America
Robert Bosch Tool Corporation
As the construction equipment industry becomes increasingly mobile, today’s professionals need to be equipped with the right resources, organization systems and training to maximize jobsite output. In 2014, we predict brands will look for ways to expand storage and transportation systems through new products and strategic partnerships.
Additionally, as new tool technology advancements continue, improved functionality and tool efficiency, updated installation or demo methods and industry-specific training will greatly improve productivity on the jobsite.
The software and technology market is continuing to evolve as the construction industry becomes increasingly connected via mobile technology. Contractors are looking for intuitive software solutions to help them run their businesses better, and construction companies are beginning to move their data into the cloud and look for ways to connect their project teams. CBO asked construction software executives about their thoughts on the evolving software industry in 2013 and what’s in store for the new year.
Q: What kinds of changes have been most important to the construction software industry in 2013?
Leigh Jasper
CEO
Aconex
The adoption of software as a service is one of the most important changes that has occurred in the industry. More and more companies are looking to software as a service for project management solutions. Contractors don’t want to worry about servers or installing software; they want someone to do that for them. Traditional software requires a lot of maintenance. Rather than spending months or years trying to deploy internal software, construction companies just subscribe to software as a service and start using it immediately.
The industry has also seen an increase in the use of tablets and smartphones. Having access to data on lots of different devices in their personal lives is driving people to think about how to get professional solutions that can handle that mobility.
Q: What is the most pressing challenge in the construction software industry right now?
Jon Witty
Vice President & General Manager
Sage Construction and Real Estate
The use of technology by our customers is increasing, and expectation for technology use and availability in the business is equal to that in our personal lives. For construction software developers, this shifts the emphasis beyond simply new functionality to the overall digital experience: mobility, connectivity, simplicity of use, to name a few. This dramatically shifts the needed skill sets, the development processes and the speed of how and when we deliver new solutions. Continuing to deliver the solid on-premises solutions our customers rely on every day while making a shift to increase mobility and connectedness is a balancing act full of new learning. Even with the challenges, it is an exciting time for construction software developers as construction companies coming out of the economic downturn are even more open to understanding how technology can help them grow their businesses.
Steve McGough
Chief Operating Officer
HCSS
The industry’s most pressing challenge is developing and maintaining software solutions across multiple devices (phones, tablets and PCs) and multiple platforms (Windows, Apple, Android, web-based and cloud). For the last decade and a half or so, we have had the luxury of basically developing for a single device and platform: PCs and Windows. This allowed us to develop high-quality, feature-rich software cost effectively. With the advent of multiple devices and platforms, we face a couple challenges. First, we must quickly develop or hire new expertise. Second, we must cost-effectively develop solutions for these devices and platforms, without sacrificing feature sets and software quality.
Q: What changes regarding the construction software industry do you predict for 2014?
Jim Flynn
President and CEO
Maxwell Systems
I think we will continue to see more mobile solutions enter the market. I also believe there will be an increased desire of contractors to measure specific aspects of their business more granularly and accurately and to tie their entire construction process together. Whether it’s the exploitation of BIM allowing you to design, estimate, build and operate your structure with one data set or the ability to implement the architect’s drawings and the engineer’s concepts for your project, contractors will be turning to information technology to provide the details. These details will be crucial in allowing contractors to look back at how they estimated the job, how they sized it or how they anticipated they were going to construct it, especially while walking the jobsite with a mobile device.
We are also seeing more interest in our complete solution among contractors. They are looking for a better way to run their businesses and are moving away from buying disparate software products that only address one aspect of their business. They want scalability, and that’s what we deliver. I think that is a trend that is going to continue.
Rob Humphreys
Vice President,
Product Management
Viewpoint Construction Software
I predict a move toward collaboration. … I see vendors opening up systems so entire project teams can collaborate on project-related documents and materials. In the past, people didn’t share much outside their organization. I think more and more companies want to be able to collaborate with all project stakeholders. They want to have tools that allow all parties to see construction documents in one place, letting engineers, architects and subs see one set of documents—as opposed to emailing these around—to avoid errors that can occur. Using collaboration is an important change we’re going to see in helping improve the efficiency of construction.
Project collaboration solutions are designed to make project management easier each step of the way, from preconstruction, to building, to continued operation and maintenance. By enabling multiple project participants to have access to the same information, or the same “version of the truth,” contractors and key stakeholders have the information they need to make faster, more accurate decisions and to identify where there might be holdups or issues on a project, possibly eliminating a waste in time, energy and resources.
Q: How do you see construction software evolving in 2014?
John Chaney
President and Co-founder
Dexter + Chaney
The move to the cloud as a platform and the accommodation of mobile devices as a primary means of access are going to continue to be the biggest drivers in construction software. As part of this evolution, the role of the mobile app is going to grow.
Today, when one thinks of an app, one thinks of a simple piece of software that performs a single task. I don’t think that this will change, but I think that more vendors will offer apps that are specifically designed to work with their enterprise software. Apps have the potential to extend the reach of a company’s business management systems and processes out into the field, improving communication and simplifying the flow of data.
Q: What is the biggest challenge that contractors face when using construction software, and what is the solution?
Fred Ode
CEO/Chairman and Founder
Foundation Software
The biggest challenge is definitely getting the right processes and personnel in place to effectively leverage available technology. So many contractors are underutilizing their current system—manually compiling reports, not job costing to their fullest capabilities, etc.—and some are even using an off-the-shelf program not built for construction. So, when they try to implement new technology such as cloud and mobile solutions, it does them no good. A focus needs to be placed on establishing processes for running their business, analyzing systems to determine what features and reports they need to fit these processes, then planning a realistic implementation based on time and resources.
Tony Pappas
CEO
ExakTime
I think the biggest challenge for contractors is figuring out how to get the most out of their software investment without overwhelming their staff. Obviously, a contractor wants the most bang for their buck. But that’s so hard to get. Let me give an example using a product nearly every office worker uses—Microsoft Excel. Take a look at each of the tabs and all the buttons inside those tabs. How many do you know how to use? People don’t have the time or energy to figure things out on their own. It’s human nature to take the path of least resistance. So, the contractor has the problem of getting their team to squeeze all the possible value out of their construction software.
Construction owners need to constantly ask if their software is helping or getting in the way; find people in the organization who will embrace this solution and be willing to dive deeper (then give them the time and training and incentive to do so); make sure they clearly communicate with their team about goals; partner with software companies who are more than “product peddlers” (make sure they have a rich and deep team to help with ongoing training, education for new users and hand-holding for those who may be fearful or less technical); make sure your software partner understands your business; and have some humility—what might be easy and obvious for you isn’t necessarily so for your team. If contractors ask these questions and find approachable, diligent, competent software partners, then everyone wins.
