Russia: Racing ahead?

Have you noticed the press articles about how many other economies are doing better than the Euro zone countries and even the UK? We certainly have.

It has been part of our strategy even to investigate these large growing markets. Last week I attended a Russian Aerospace and Automotive sector event organised by the UKTI.  Although this did focus on the passenger car market and commercial aircraft market, it was clear that the expectation of Russian indigenous manufacturers are intending to compete with foreign imports, as the impending admission of Russia to the World Trade Organisation, will open up this market to foreign manufacturers imports. The standards being adopted are akin to those in Europe and equivalent to ISO or DIN, and in some cases almost copied. We were however warned that it is essential to check that we meet necessary legislative requirements which are and will remain local, even if the requirements are the same, approvals still need to be sought.

I have seen reports for also that suggest that the Russian Government has to invest heavily in transport, and that Truck builders need to make 1000’s more trucks, just to be able to deliver the ever increasing amount of construction and agricultural vehicles that this market will be demanding over the next 5 years.

With events such as the Winter Olympic Games in 2014 at Sochi, and the World Cup after Qatar, there is a huge investment in infrastructure. This is driving the demand for new construction equipment, and the manufacturers are quick to react, designing new vehicles to compete for their slice of the market.

The Bus market too is on the rise, and according to Truck and Bus Builder, the Russian Bus market is up by 9.3% overall with some builders reporting a 47% increase in sales. And these vehicles are no longer the stereo typical old fashioned vehicles years behind the west in terms of technology and design. They are up to date, modern looking vehicles, packed with the latest technology in transmissions, retarders, and even Hybrid vehicles. This is one of the reasons that we are exhibiting at Busworld Russia this year. We believe that the Russian builders have advanced so much in the last few years, that foreign imports will find it hard to compete, and the fact that so many manufacturers are putting out new vehicles, means that the opportunities for companies such as ours that can offer design as well as rapid turnaround, will definitely have an advantage over some of the home grown competition.

We are very excited about the opportunity to enter this market. Are you thinking about Russia as a target? What are your fears or concerns?

Extending Vehicle Life

There has been in the last 12 months a trend towards extending vehicle life, in particular in the bus industry. The bus industry in the UK and across Europe was not affected as quickly as the car industry as far as reductions in orders was concerned, when everyone else was feeling the economic crisis bite. It took longer before operators reigned in their spending on new vehicles, but consequentially it bit harder and deeper and will take longer to recover. With extra orders for London 2012 bolstering the bus industry in the early part of the year, hopes are high for a continuation of the recovery. However, during the economic down turn, a burgeoning refurbishment industry grew up, and is now an attractive alternative to new vehicles. Bus operators are extending the life of their vehicles buy refurbishing the interiors with new seats, ceilings and even LED lighting, and repainting the outside with new livery. To the customers using the bus they look like new buses. What lurks underneath however? We have noticed an increase in aftermarket sales over the last 18 months, which bears out the extension of the vehicle life, but along with a demand, come profit opportunities, and we are aware that there are many imported products from low cost countries floating around the aftermarket. Purchasing OE spares may seem a bit against the grain as we all know they are expensive right? OE parts however, have been tested specifically for that application, and in some, in fact many applications especially from us, have even been designed specifically for the loads the part is expected to carry. The same cannot always be said for some imported pattern parts, which may look the same in size and shape, but the material specification and design of the internal components may be nothing like the same.

As our products are safety critical, we spend a lot of time making sure they are fit for purpose, and stand by our products performance. If a ball joint were to collapse due to fatigue, it could literally be fatal. If you are extending the life of your vehicles, be sure to continue to fit OE parts for safety critical items, you won’t regret it.

Design your own products?

Here is an interesting idea from Agco Design the Tractor of your Dreams.
They are running a competition whereby you design either the whole tractor or elements of it, and the winner gets to go to the Valtra factory, meet the designers, and take part in a customer clinic to help develop the next generation of tractors.
You could take this one of two ways, the Agco designers are all out of ideas, or it is a very clever way of inviting the end user to offer up ideas that they would pay extra for.
I am not so sure we could do the same for steering. I wonder how often our customers (vehicle builders), talk to the end users about what they would like to see. What if we were to ask Bus drivers what they find most infuriating about the steering on the buses they drive every day, or tractor drivers what adjustments they would like to see on the steering column to make their life easier, then design products around those requirements, instead of those that our direct customers tell they want. I guess a lot of businesses just assume that their customers will do that work, but what if they did it instead?
The Chartered Institute of Marketers will tell you that the most successful companies are those that make and sell what the customer wants. B2B companies regard their customers as other companies, because that is who they sell to. But at the end of the day, they are not the end user. Someone told me once that if Henry Ford had asked his potential customers what they wanted, they may well have told him, a faster horse that doesn't need to eat, sleep or go to the toilet. Not that they wanted a car. His solution was to develop a way to make cars as cheap as horses to own, with all the benefits outlined above. For B2B companies, the hard bit would be to sell the fact that the customer is willing to pay more for the benefits. I think that this is a great way of testing the market to gain competitive advantage. Does anyone know of any other such schemes where companies are asking their customers to design their products, or know of any in the past that were successful?