Investing for the future

Road machinery specialist Wirtgen is enjoying strong growth and is using the opportunity to invest heavily in its manufacturing operations.

The company''s presidents, brothers Stefan Wirtgen and Jürgen Wirtgen, said that they are ensuring that the firm has a strong future in the world market.

Expansion is being made in the three German plants. Wirtgen has six manufacturing operations on four continents, the latest of which is in China and this produces the company''s milling machines, pavers and asphalt rollers. Stefan Wirtgen said: "We have products from all three lines."

However, Stefan Wirtgen explained that the company has made a careful choice not to build simpler units for China. "They are the same models and have the same quality and the same innovations," he said.

Building the same machines for worldwide distribution is simpler, as it reduces the parts holding and ensures that resale &#118alues are maximised.

At the moment Wirtgen''s Chinese facility assembles the milling, paving and compaction machines from kits that are sent over from Germany. But Jürgen Wirtgen said: "Right now we are increasing local manufacturing."

He explained that Wirtgen is looking at potential Chinese suppliers for steel frames and steelwork. Critical components such as engines or drive motors for example would continue to be supplied by Western suppliers.

In the Chinese market for compaction machines, Jürgen Wirtgen said that there is tough competition due to the high number of local manufacturers.

Many of these locally made units are simpler deadweight types but he added: "They have made progress with the more sophisticated machines."

But Jürgen Wirtgen feels that by offering the Hamm rollers as premium products, this will in time develop Chinese demand for such quality machines. Stefan Wirtgen said: "We believe in quality and high level products and we will not change our strategy."

Wirtgen is also expecting business development in India, where the company has already had a significant presence for 10 years in mining and is a leading importer of asphalt and concrete pavers. Stefan Wirtgen said: "As in China, we believe the Indian market will grow and this market is very interesting for us. We have our set-up in India based in Bangalore."

This is not a manufacturing operation and it is the local headquarters for several offices and service centres across India. Jürgen Wirtgen said: "At this time the milling market is not too developed in India but in time it will grow."

Wirtgen has long been the outright world market leader in milling machines and presently fields a 16 model range, though it is now facing increased competition from rivals.

Jürgen Wirtgen said he does not under-estimate the rivals in this sector and added: "Our desire is to continue to be a good partner for our customers and we try to serve them and improve our machines continuously. We work very hard on our customer relations with the milling machines."

Jürgen Wirtgen said that the company is also ensuring that it does not rely on the milling market, having developed cold recycling, soil stabilisation, hot recycling and slipform paving machines.

Wirtgen bought paver manufacturer Vögele and compaction equipment firm Hamm some years ago and has considerably increased market share for both of these lines, as well as continuously investing in new model development.

Stefan Wirtgen said: "The progress that has been made in the paving and compaction business has changed the strength of the group as a whole. We have never been as strong as we are today."

While Wirtgen does not rule out the possibility of another acquisition at some point, Stefan Wirtgen said: "We do not want to buy a product just to get bigger. It doesn"t mean we wouldn"t buy something, but it"d have to be a quality product."

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