LiuGong testimonial

[CEwriter]

Here's a story in the latest Associated Equipment Distributors' magazine about a small Arizona materials firm that is crediting their survival in today's tough market to a pair of Chinese LiuGong loaders and the local dealer that convinced him to buy them:


“Our business is all about loading material into trucks, getting it to the wash plant and then out to wholesale companies,” he said. “We load maybe 30 trucks a day. Without loaders we would be dead. And we just couldn’t function under the high payments on some of the bigger name brand loaders. I don’t see $100,000 worth of difference between the different loaders out there.”

Another key factor in deciding to purchase the LiuGong loaders from Earhart was the dealership’s willingness to work with Combs Materials to determine affordable financing terms, explains Combs.

“We would not be in business right now if Earhart had not stepped up to the plate as a dealer and gave us terms that could keep us in business,” he said.

There's a lot in the story worth reading, but I think these two points sum up the company's motivation for going with the Chinese brand:

'For Combs Materials, it’s all about the bottom line. By purchasing the LiuGong loaders, Combs says his company has been able to save between $2,000 and $3,000 on the monthly payment, plus an additional amount on fuel costs.'

'Combs says dealers who aren’t willing to send him replacement equipment when his breaks down aren’t worth his time.'

No short-term risk.

Of course the cost per hour has to be awfully difficult to estimate when you got no idea what the loader's economic life or residual value might be.

L

 

[mowzall]

Totally agree, all machine manufacturers are somewhat at the mercy of their representation, I think a lot of the "fast buck" types get involved with "off brand" equipment manufacturers and are enough to put a downer on the brand.

“We would not be in business right now if Earhart had not stepped up to the plate as a dealer and gave us terms that could keep us in business,” he said.

Well done Earhart they are in the Hero's column in the Hero's and Zero's list!:notworthy

errr, does HEF have a hero's and zero's dealers list?

 

[Steve Frazier]

I will be interested to hear Combs opinion of the machine after a year or so service from it. The machine's reliability (or lack of) and dealer support will play a big part in overall expense.

Was this from an article in your magazine? If so, can you make a note to do a follow up report? That would be just as interesting.

 

[CEwriter]

Steve,

This story is in AED's magazine, Construction Equipment Distribution.

They don't own the guy, though. I can follow up early next year. Thanks for the suggestion.

Larry

 

[qball]

30 trucks a day is not exactly hitting it too hard. all iron is nice when it is new, lets see in a year. or, lets hit it with 20 trucks an hour.
i saw on up close at a local dealer. not impressed at all.

 

[Hendrik]

That's the thing with China, they don't spend up big on R&D but rather copy an existing machine. Funny old thing, the Chinese want to be a big player on the world stage but do not respect the rules of the game, in particular relating to patent/design rights.
This is something to factor into it as well, by buying a cheap copy you are ahead in the short term but when your kids can't find a job because there are none, you might look at that Chinese machine and wonder if it was worth it.

 

[Tigerotor77W]

I think the concept of "buying for the long-term" is perhaps something that's more intrinsic to the wealthier nations. I would argue that to someone with limited (but ever increasing) funding, it's far more lucrative to buy the cheaper option, even if it means earlier replacement. I know from a friend that his Asian mother would prefer to buy 5 $100 bicycles, each one lasting one year, than to buy one $500 bicycle that lasts five years.

This is a fundamental difference in culture that the western manufacturers (European and American) need to understand before doing business in Asia. I don't think Cat or Liebherr will be successful if they wander into China thinking that using Chinese suppliers and parts will be 100% sufficient to win over the Chinese population. The peoples' mindsets are inherently different, and without this understanding built into the product line, simply trying to sell "value" isn't going to work immediately. Give the burgeoning Chinese construction equipment industry another twenty years and I'm sure "LCC" will begin to mean something, but at the moment, the goal is to build, and any piece of (*&# will work for the duration of a project. Time to go to the next project? Buy another machine for two years and scrap it. And so on.

I think the Chinese auto industry shows this, too... only recently have some of the more prestigious brands began to make an impact in the Chinese auto market.

 

[joispoi]

30 trucks a day is not exactly hitting it too hard. all iron is nice when it is new, lets see in a year. or, lets hit it with 20 trucks an hour.
i saw on up close at a local dealer. not impressed at all.

My thoughts exactly. 30 trucks a day can be serviced by just about any old dinosaur. New equipment financing will kill anyone who isn´t moving enough material to justify the cost of new equipment.

 

[John C.]

All equipment manufacturers buy their way into a market. The concept from a buyer's standpoint is I know what it cost me to operate a specific unit. For me to purchase the new import unit I will need a premiun before I will take the risk. Apparently the Chinese are paying the premium now. I'm sure they won't for long.

I worked for a Komatsu dealer some years back when Komatsu was doing the same thing. They provided a better initial price, free 30, 60 and 90 day revisits to make sure all was well. Parts prices were reasonable and dealers would work with you on down time. Now that they have established a place in our market their initial prices are comparable to Cat, parts prices are as high as anyone's in the industry and the revisit policy is no longer paid for by the factory.

The Chinese are only copying a marketing strategy that has been done and redone since the beginning of the industrial revolution. It remains to be seen if they are successful.

 

[digger242j]

That's the thing with China, they don't spend up big on R&D but rather copy an existing machine.

And wasn't Komatsu guilty of the same thing 30-some years ago?

I think the concept of "buying for the long-term" is perhaps something that's more intrinsic to the wealthier nations.

I'd qualify that opinion by saying it's more intrinsic to the businesses of the wealthier nations. How much second and third rate stuff does the American consumer buy each year, instead of the first rate stuff? The big box stores and Wally World know all about what buying habits are intrinsic to us...

 

[Tigerotor77W]

I'd qualify that opinion by saying it's more intrinsic to the businesses of the wealthier nations. How much second and third rate stuff does the American consumer buy each year, instead of the first rate stuff? The big box stores and Wally World know all about what buying habits are intrinsic to us...

This is true. There are definitely certain items that we buy that are disposable, and, frankly, cheap. However, I think we've begun to demand more "quality." There's a perception (note this isn't reality -- perception frequently matters more than reality!) that Apple computers are "better-built" than their Windows counterparts, for instance. When we buy expensive stuff, one thing that sets the more-expensive models from the cheaper models is build quality. My claim is that this is a luxury that lesser-developed countries can't afford to consider yet... and yes, in certain products, but especially in mechanized or specialized equipment.

 

[sultan]

This is true. There are definitely certain items that we buy that are disposable, and, frankly, cheap. However, I think we've begun to demand more "quality." There's a perception (note this isn't reality -- perception frequently matters more than reality!) that Apple computers are "better-built" than their Windows counterparts, for instance. When we buy expensive stuff, one thing that sets the more-expensive models from the cheaper models is build quality. My claim is that this is a luxury that lesser-developed countries can't afford to consider yet... and yes, in certain products, but especially in mechanized or specialized equipment.

My and many others experiences with 'premium' products like Apple computer, Cat machines, and BMW cars have been better than with cheaper PCs, Komatsus, and chevys. The premium companies certainly make more money, but there's usually a good reason why people buy their products over cheaper alternatives, especially with machinery that costs 6 or 7 figure numbers. The third world would benefit too from long term investments in things like better machinery, but they just don't have the money to get the better stuff. They have enough money to buy new cats with the cash on hand, and the banks cut makes the fancier machines end up costing them more in the long run too.

P.S. My experience with CAT vs. Komatsu is that a 2 year old Komatsu is more reliable than a 2 year old CAT. However the komatsu parts start failing all together around 10-12 years of age. Thus, a 15 year old CAT will keep on chugging on reasonably reliably, while the Komatsu will be long dead. I must note though that over the last 30 years, Komatsu equipment has gone from trash to something quite competitive. CAT's quality has gone down slightly compared to 10 years ago (mainly due to computers and their failiures).

I have no experience with Chinese machines like LiuGongs, but they are probably rather junky right now. However, 20 years down I bet that they'll be up there with Komatsu, or even CAT.

Its similar to the Camera market 50 years ago. In the 50s, real photographers used German cameras such as Leicas and all. Then in the sizties, the Japanese started producing technologically 'superior' cameras for much less money, nearly bankrupting Leica, Zeiss and the like. Jump ahead 50 years to today, and the Japanese camera makers such as Nikon and Canon dominate the market - with their now Chinese made cameras.

In the used Camera market, the people who chose Leica over the japanese cameras have come out winners. Even a banged up Leica M3 is worth $1200 used, while even a perfect Nikon SP (that cost half the Leica new) is worth just $100. They both work fine, and were both good quality, but the Leica just feels better built.

If CAT stays American, it'll probably eventually become the Leica of the machinery world. If it goes Chinese, it will slowly bleed market share and drop in quality, but remain a dominant player. We'll all consider chinese machines seriously in the future, and used chinese machines will be great buys for people who want a cheap machine to start out or do part time work. I don't know what'll happen to used prices for CAT if they stay American. They'll probably hold a premium, but they cant be anything like Leica, as there isn't that much of a vintage excavator collectors market .

Anyways, that's just my 2 cent guess about the future. :beatsme