Category Archives: Construction

Competition in heavy equipment industry

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Today the heavy equipment industry is in great demand due to the huge growth in urban population and infrastructure projects. Heavy construction equipment is a critical tool for any construction project since they reduce the labor cost and time. A variety of these are present in market to serve different purposes of heavy construction work. Although all may not be required, it is imperative for the owner/builder to buy a sizeable amount of these equipment to ensure that work proceeds smoothly.

 

The existing heavy construction equipment market is dominated by large firms such as Caterpillar Inc. (U.S.), CNH Global N.V. (The Netherlands), Hyundai Heavy Industries Co., Ltd. (South Korea), Volvo Construction Equipment AB (Sweden), JCB Ltd. (U.K.), Komatsu Ltd. (Japan), Deere & Company (U.S). These companies provide advanced heavy construction equipment and by gaining considerable expertise and experience over the years, they have optimized their processes and practices to become even more efficient. These key players use different strategies such as expansions, agreements, contracts, joint ventures and partnerships to garner share in the market. They also focus more on the emerging markets in developing countries with inclination towards industrial growth. They also rely on regional and local distributors to increase their profits and presence in geographical markets. They also acquire companies or other business to meet the demands of heavy construction equipment.

 

There are challenges faced by these key players too. There is demand for machines which are highly efficient, safe, and reliable, with highest productivity and lowest environmental impact. Further, if fitted with the latest technology which is user friendly and with numerous applications it becomes more popular among users. In addition, there are changes in the heavy equipment industry due to advent of big data, analytics and advanced technology. Some new entrants in the market produce complex products using big data analytics which are cost effective, hence are in demand. Further competitive business analytics allows new analytics to assist in pricing, budgeting, improving management of demand and supply, minimize costs and risks and maximize profits. This has lead to a tough competition within the heavy equipment industry. Industries which are not interested in being tech-savvy will find themselves difficult to survive in such a competitive market.

 

To retain the position of a being a key player in heavy equipment industry, one has to have key strategies such as:

  1. Product and technology: Top priority of many key players is innovation of their products. Hence, they invest more in research and development activities.
  1. Improvement in operations: global expansion increases level of complexity which makes it important to improve basic capabilities and processes.
  2. A Go market Approach: to expand operations and business in the developed countries.
  3. In addition they should have winning strategies and should be prepared for the new changes in market. Although there is competition in heavy equipment industry, yet the companies which will have right business strategies, innovative products and can adapt to changing markets will survive and grow to make huge profits.
  4.  In addition they should have winning strategies and should be prepared for the new changes in market.Although there is competition in heavy equipment industry, yet the companies which will have right business strategies, innovative products and can adapt to changing markets will survive and grow to make huge profits.

Servicing of heavy equipment can become quite a profitable business

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After having bought heavy equipment, we experience the real problem when we see the need to service the machine. Though the user manual also speaks about how you should maintain your machine to lengthen its life but getting the equipment regularly serviced by a mechanic is also very crucial. It has been lately found that people possessing heavy equipment see dire need of guys who can also service their machines. Heavy equipment manufacturing companies also have their servicing department but many of the times they are full with work and one has to wait for days and even months to get their equipment serviced. Getting good mechanics has become a big problem.

Construction companies big or small are in dire need of servicing stations that are reachable and can send their mechanics to service the machine without much delay. It is understood that mechanics will always be engaged with enough work to keep them occupied for days but they expect the servicing company to have surplus men who can be sent across to service the machine. Therefore people who are intending to open up such a kind of business can be assured that they will end up making good profits in this business. It can get you a lot of clients who are ready to pay you good money for your service.

Few important things are needed before you start the business of servicing heavy equipment.

Installing right infrastructure for the business:-

When you are thinking of starting up a service center, you got to be sure that you have the infrastructure in place. Servicing of heavy equipment is a task of huge responsibility and it also requires machines that do the work for you. It is pretty obvious that you can’t use your hand to clean the dirt that has been set in the interiors of the machine. For that you may need a water spray that will flush out the dirt from the system. In the same manner, you need other equipment for different kinds of work. So you need to ensure that you have the set of equipment ready before you start advertising about your business to others.

Having the right set of men to do the job:-

Having men who know their job is a very crucial point in this business. Before you start up the business, you need to have people who are good with servicing heavy equipment. You need guys who have worked as mechanics and have repaired different types of heavy equipment. Alternatively, they should also be aware of the places from where you can get heavy equipment parts because you may get machines whose parts needs to be replaced. So you buy the parts from that place in bulk and charge the customer as per the market price. So people who are experienced in servicing machines are the type you need for your business.

You also need to make sure that you pay your men real well so that they stick with you and do not move away to some other company just because they are offered more there.

 

Construction industry is a rewarding sector. One must simply stick to it

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Not many industries can reward you with a great career and one of the industry that can really offer all that we desire is the construction sector. It can offer you with plenty of money, goodwill in the industry, job satisfaction and a career that can set you apart from others working in some other domain. There are many other industries that offers good sum of money but they lack job satisfaction. Some even lack a long lasting career but construction industry is perhaps the only industry that one can be a part of as long as he wants. So earning a lot of money, having a good reputation with your peers and being completely satisfied with your job sounds so merry but it takes a lot of pain to sustain in this industry as you do not get much help from people wanting to keep your business alive.

One has to go through tremendous pressure if he is new to this business. It is so obvious that people will not want to have much competition and therefore the new guy has to find his way on his own. He has to learn from his mistakes and then be careful to not to commit the same mistake all over again. We would be discussing what one should do to stick to the business despite of all the problems one has to encounter.

It should be your business every time in your mind:-

Handling a stiff competition where people are eying your business and are always ready to take it over if they find a slightest of chance is never an easy task. Your business got to be in your mind all the time. This actually gives a kind of impression on people how serious you are with your business and if you are the guy who will be able to take the business to the next level. People who are completely focused with their work are liked by others and then you may find guys who will come to you with good advices. You may start getting guys who would want to work with you and be a part of a growing company that seeks no height as unachievable. Having constant focus on your business will give you the strength and capacity to fight back your competitors and will also help you to get businesses from new clients.

A good strategy is all you need to keep the business running:-

Having a good strategy in place will work as a roadmap for you. You only need to follow the plan and check if you are able to attain what you have planned on a regular basis. Just having a sound strategy may not be the only thing you need to be in the business but knowing how far you have been able to attain stuffs you have planned is of huge importance.  You should be ready to face challenges that comes up your way. At times, things may not move your way and you may have to change the strategy a bit. You should not be adamant and should be ready to bend a little when the situation needs.

Heavy equipment sell by performance or by mere brand name

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One of the most important component that has the potential to keep the construction industry moving is heavy equipment. For a person who wants to buy a heavy equipment, he is often baffled with the question if he should be buying an equipment that has a history of good performance or something that simply has a good brand name to back it up. Not all the famous and big brands have produced the best of machines and not all the low market brands have manufactured vulnerable machine is a point worth noting. Though brands like CAT, John Deere, Hitachi and alike are famous for producing real good machines but there are not so famous brands that have produced some machines surpassing the ones produced by the famous brands. In other words, one must go by a brand name as that develops a kind of confidence in the minds of the buyers but simultaneously, if one gets to know that a local company has come up with a real good machine, then they should also show interest in buying that.

We will discuss how a machine with a brand name is an easier selling product than the one without the name of a famous brand.

Brand creates confidence and trust in the mind of buyers:-

What happens when somebody tries to sell you a product that you have not even heard of? The product may be exceptional in terms of quality and performance but you do not know that. This means that the product though being highly productive and excellent in quality lacks the most important feature which works as a constraint from getting it sold. The product lacks a brand and people buy things that has a brand name attached with it. The reason they go for a brand is that other have used the product of this brand and they are content with the quality which in a way suggests that this brand produces goods of high quality and one can easily lay their trust on it.

Brands give importance to the quality of equipment:-

Since brands know that people have huge expectations from their products, they will not want to play with the quality of the equipments. They will want to give the best to the clients. However, knowing the needs of the clients become a must. They can’t produce stuffs that are overtly expensive and that no one is ready to buy it.  They try to maximize the feature components in the machine and try to offer it to the buyers at a reasonable amount.

Performance is more important than just the name of the brand:-

Without a brand’s name, you will find it almost impossible to sell a heavy equipment. Similarly, one can also create a brand name by producing quality machines. It is not that the famous brands were born famous. They had to make their way in. If they stop manufacturing quality machines that gives importance to performance, you will soon find them to be history and they will be replaced by someone who sells machines based on its performance.

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Buying a trailer for hauling your heavy equipment

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A trailer is an unpowered vehicle towed by a powered vehicle. It is commonly used for the transport of goods and materials. There are different types of trailers for carrying equipment. The choice of trailer depends on the size and weight of the heavy equipment. While selecting the trailer one should also consider the purpose, type, brand, price, future maintenance and quick availability of replacement parts.

Hauling of heavy vehicles such as cars, trucks, bulldozers, excavators, and heavy equipment is not an easy task. It is necessary to choose the right type of trailer with a proper payload capacity. It requires careful planning and execution in order to be successful. If care is not taken then it will lead to accidents and loss of heavy equipment.

 

A special type of trailer called as Lowboy trailer (LT) is used in securing of heavy equipment. It is a low bed trailer or a semi trailer that has two height drops in the deck and sits very low to the ground. According to Entertainment Transportation Network Inc, a lowboy or double-drop trailer refers to a type of flatbed trailer that has a well or middle section that is of lower height. They are very low and flatter and, are legally allowed to carry load upto 12 ft in height. They are also called as Heavy Haul Trailers since carry bulldozers, industrial machines and other hefty material. They are popular in Canada, South Africa and Australia.

 

Lowboy trailer comes in several types for a wide range of tasks such as the Fixed Gooseneck (FGN), Hydraulic detachable gooseneck (HRGN), Mechanical detachable gooseneck (MRGN) and mechanical folding gooseneck (MFGN). Among these the HRGN is the fastest and easiest to detach and is most common and versatile of lowboy trailers. Thus, choosing from different types of lowboy trailers may be helpful for hauling heavy equipments. Some additional things may be also considered while purchasing a LT, such as the electronic brake controller, spare tires and tire carrier, lighting accessories, proper hitch hardware, trailer ball, taillight protector, trailer utility rack, ball mount, pin, clip, and coupler lock, and receiver tube.

 

Only trained and experienced drivers should secure load safely and operate the hauling of equipment. The load should not exceed the trailer or the truck capacity. The load should be secured and distributed properly over the trailer before it leaves the place. In US, securing of heavy equipment falls under the regulatory requirements of Federal Motor Carrier Safety Administration (FMCSA) when transporting across the borders. Hence, one needs to be familiar with regulatory requirements to allow smooth transport of the equipment.

 

Overall LTs are expensive and only fit to carry heavy cargo material. Hence rather than purchasing a new one, one can even buy a used LT. The price range for used LT is based on year of manufacture, make, size type and general condition. One should choose the right type of trailer to save money and time. It will make reliable business and lead to less of frustration in future.

Safety: Working around heavy equipment

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Just like the owner of the construction company cares a lot about this heavy equipment, in the same way he also needs to care about the people who are working all day around the those machines. The operators are the ones who remain very close to the equipment. However, there are also other people like the construction laborers, engineers, site officers, and supervisors, who also remain in close contact with these machines. Though they not have any direct relationship with the machines but they all remain around the heavy equipment for most of the time during their working hours. Hence it is very crucial to ensure the safety of these men. Accidents of any sort should be avoided and there should not be any chance for anybody to not follow the safety parameters. The safety rules are meant for everybody who is inside the construction site and particularly close to heavy equipment and it also becomes the responsibility of the individuals who goes close to the machines to follow the safety rules religiously.

We will be discussing few very basic safety parameters one must be doing to keep himself safe while he is around heavy equipment.

Operators should always wear gloves and strong boots:-

Since operators are the one who always remain in close contact with heavy equipment, they must always ensure that they wear their safety gears at all times whenever they are in close distance with the machine. They must always wear gloves and strong boots that are not too heavy. Wearing gloves will protect them from any outer substance that has gone very hot and by coming in close contact with that substance they might injure their hands. Strong boots ensure that their feet are protected with any sharp element that may be present inside the cabin of the machine or anywhere on the site. They are the ones who are more prone to hazards and hence they should keep their safety gears on while working on the site.

Various safety sessions should be given:-

There are high chances that people especially laborers working on the construction site may not be aware of the importance of wearing safety gears when they are around heavy equipment. This is why they should be given different types safety lessons at regular intervals. The sole purpose of giving such trainings is to ensure that they do not injure themselves while at work causing problems to the project as a whole. Advanced safety training lessons should be given to the operators educating them to tackle situations. Also teaching them what to do in case there is a medical emergency on the site will help them to save a life of their colleagues. These types of sessions are very important as the availability of doctors can’t be always immediate. They would be the ones who will do the first aid and easing things for the doctor.

The construction company should make every attempt to ensure that the employees are following the safety parameters. This will all lead to a healthy working atmosphere in the construction site.

 

Determination is the key when it comes to construction industry

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In almost every industry, in order to attain the highest level, a person needs to be highly determined to reach till there. Skill also plays a pivotal role in his success but it seems that determination to succeed is the key when it comes to the construction industry. Construction sector is a highly competitive sector and one may have to experience a lot of ups and downs when they are a part of this industry. Many a times they are subjugated by their competitors and at times have to work at their whims and fancies so that they can simply survive in this sector. The big players hold a major share of the market and in order to just stay in and survive, small time companies often have to comply with the orders of the big companies. Other than that, there are different kinds of lobbies that one has to get associated with, without which it will be really difficult for them to carry on in this sector.

In this midst of all these hassles, there is one thing that keeps most of them going and that is the zeal, the determination to make it big in this sector. There are few things that one must do to keep that flare on.

Always think about your goal and move in that direction:-

This is pretty tough to do. However, it really pays you off handsomely. The only think that should be there in your mind is your business. This will help you to keep getting different kind of ideas, plans in your mind that you can make use to expand your business. You will undoubtedly be experiencing many other issues that will be other than your business. However, that should not affect your business plans and your intention to grow. Having said this, you should not mix your business life and your personal life together. This is real tough to do but you got to learn this with time. People may give you some advices. You may check if any of them actually works for you and in case if any of their advice works for you, then you can follow that whenever a crisis of that sort appears. The key is to just keep your focus intact and move in the same direction. Some problems or the other will always keep on surfacing. It will be ultimately your talent how you handle them and continue to move in the path you have chosen.

Always follow the guidance of a mentor:-

The construction industry is a highly complex industry and time and again you will come across issues that you may find new and may not know how to deal with it. This is when you require a mentor, a person who will guide you all the way through, a person whom you can trust and you know that he will never give you any wrong advices. While working in such a multifaceted industry, having a mentor who will help you to be focused is very essential.

 

 

Youths making their way in the construction domain

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We all have the wish to set up a company of our own and be our own boss but very few are indeed able to fulfill this dream of theirs. It is often the level of competition that weeds out the new talent and also the lack of preparedness on the part of the youngsters before they begin with setting up their business. One such industry that has given the wings to fly is the construction sector but the sort of competition one gets to experience in this industry is enormous. There is a rat race that exists in this sector. People are expected to do everything to just get a deal. It is not that getting work is way harder. It is just that people for some reason do not have the patience to wait for the right deal to come by.

Youths in particular who aim to become a part of this industry needs to take care of many things. Firstly they should work on their knowledge on this industry. This sector is pretty vast and involves lot many things that affects it on an everyday basis. So having a fair amount of idea often helps while taking the right decision. You should not want to see yourself lost when you get to know some common stuff about the industry that you are a part of. Therefore keeping your eyes and ears open and accepting new things from others should be your mantra to learn things.

Heavy equipment play a pivotal role in the construction segment. It is said that the companies who have the best machines and backed with a better workforce can stand tall at all times. So just having modern heavy equipment is not going to help you. You also need to back it up with efficient workforce who knows well how to work on those machines or else it is futile to have them in the first place. Simultaneously, not all machines that have the modern look over it should be purchased. You may never need that stuff in your entire project work and hence there is no need to possess that in your arsenal. The better way to work it out is first know your requirements and then go for the purchase. Also, purchase of heavy equipment should be done after thoroughly scrutinizing your finances. Heavy equipment are expensive metals and you may not want to spend your money on something that you may not use for the time being.

Last but not the least; keep a tab on your finances. If you do not do that, then you will not know when you have exhausted all your resources in the spree of buying heavy equipment and stuff that you feel is important but now you do not have any money left to run the business. Many young entrepreneurs have gone through this situation and they have to ultimately take loans to run the business or simply give away the idea to continue any longer.

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Starting a construction business – start with demolition work

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It is often advised that when you start a new business do not begin with doing something difficult because you may then end up in taking enough stress to complete the job which will have a drastic effect on your job and things may go quite negative for you from there. In order to avoid such a situation you should take up something that is easy and does not take too much of effort. You may also save on your money and need not deploy more resources to get the job done. You will also make good money doing it and will start enjoying your work. However, you should not make that as your comfort zone or else it will be too difficult for you to get on from it. Though you are starting with something small and easy you should not limit yourself to that and should dare to think beyond that as well.

A business that is highly volatile in nature should be dealt with utter carefully and when we talk about a volatile venture, we can’t forego the construction domain from it. A person who is on his way to start up a construction business should keep his foot softly and understand the intricacies well before he goes full on. As every individual likes to work on a particular segment, he should stick to the simplest work in his segment. For instance, a person like to work on machines and is interested in works like road construction should stick to constructing lanes and broaden roads. He should not take up projects of building highways that connects one city to another. He may not be able to complete it as he will experience a lot of hardships coming from various angles.

Similarly, it is advised to business owners to begin with demolition work before they start taking projects like building apartments or commercial houses or things or that extent. Demolition work is considered to be the simplest by all means. He do not have to spend a big chunk of money in procuring heavy equipment as he can do his job with a dozer or any tractor and attach a wrecking ball and break structures. Well, the demolition work also has many layers where if he goes for bigger projects he needs to have modern machines to get the work done. In that case, he may not do the job using a wreck-ball.

Simultaneously, he also needs men who have experience in demolishing a 6-7 story building. He may not be able to go that work using his dozer. There he may need more than a dozer. But before he eyes for bigger projects in the demolition genre, it is important that he tries to first set his foot firm on the ground by taking up jobs that will help him to sustain for some time and help him learn from what he is doing. Once he spends few years and accumulates enough wealth and experience to take up something big, he should call it for the next round.

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Process to acquire a construction company

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The acquisition or buying of construction firms is common in construction industry. This transaction involves a buyer and seller. In terms of business it is also called as acquirer and the prospective acquiree possessing the target company. The buyer may be motivated to buy a target company due to future growth plans, diversification in market, geographic expansion, market penetration, organizational development and to increase the assets.

Construction is a risky business, hence these transactions should not be done in haste. The buyer or acquirer needs to be diligent and should have a strategic plan. The buyer must create database of the interested target companies and collect each company’s information in terms of factors such as revenue, profitability, growth rate, number of employees, and products, so forth. For the transaction to take place it follows an order as

 

1.Initial contact:

The first step in the acquisition process is the initial contact with a prospective acquiree. It can be made by different ways as

Direct call and meeting: The buyer makes a contact with owner of the target company either through a direct phone call or an email to initiate one to one discussion. The initial discussion may be followed by many more discussion before a final deal is struck.

Joint venture: Instead of direct acquisition to enter a joint venture agreements which gives the acquirer the overview of the company’s management and operation.

Third party: Instead of making a direct contact, the acquirer delegates the work of contacting target companies to the third party to make inquiry about the willingness of the owners to sell.

 

2.Non-disclosure agreement:

If the prospective seller is interested in selling his company to the acquirer then both parties sign a non-disclosure agreement (NDA). This stamped document is highly confidential and information is not be given to any other party.

 

3.Letter of intent

Post NDA, the target company should send its financial statements, summary level documents to the acquirer. Based on this information, the acquirer may proceed with the further transactions and is documented in a letter of intent (LOI)

 

4.Due Diligence

It is the process of investigating and estimating a company before buying it, a comprehensive analysis of legal, financial and management documentation. The acquirer then sends a list of information and documents as due diligence requests to the target company. As a rule, for Due Diligence is necessary requires at least the following information:

1) corporate documents; 2) entitled documents (e.g., copies of powers of attorney); 3) licenses; 4) accounting and financial documents; 5) documents relating related to the assets of the company; 6) information on the rights to intellectual property;  7) all commercial contracts and agreements;  8) information on labour relations;  insurance; about disputes and litigation, administrative proceedings;  9) other documents relating directly related to the company. Since due diligence involves a lot of research it is conducted by both legal consultant and technical specialist in construction.

 

5.Final negotiations

The results of Due diligence if not found satisfactory then the buyer may either decide to proceed by decrease in cost or may not go ahead. If everything is favourable then buyer may proceed with the transaction and present the seller with a purchase agreement. If the terms and conditions and price are agreeable to the seller than the transaction would be complete.

 

The process of acquiring a construction firm is not an easy task. One needs to be experienced and understand the market trends to be successful at it.