Volvo 2001 Annual Report Download - page 43

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39
Construction
Equipment
Volvo Construction Equipment (Volvo CE)
is one of the world’s leading manufacturers
of construction equipment, with production
on four continents and sales in more than
100 countries. The company has held strong
positions in North America and Europe for
many years and is now extending its pres-
ence in Asia, South America and Eastern
Europe. Volvo CE’s products are used in a
number of applications, such as construc-
tion, forest industry, demolition, waste hand-
ling and mining.
The product range comprises wheel load-
ers, excavators, motor graders and articulated
haulers. In addition, Volvo CE manufactures
compact wheel loaders and compact excava-
tors. Volvo CE also offers solutions for
financing and leasing, renting and sales of
used machines.
Total market
The total combined world market for heavy
construction equipment and compact equip-
ment declined by 7% during 2001, com-
pared with the preceding year. In North
America the downturn was 7% and in both
Europe and international markets the
decrease was 7%.
The market for heavy construction equip-
ment declined by about 8% in 2001, of
which North America showed a decline of
10%, Europe approximately 6% and other
markets about 8%.
For compact equipment, the market fell
about 6% during the year, of which Europe
represented a decline of 6% and other mar-
kets 7% in part offset by an increase of 1% in
North America.
Business environment
As a result of a flattening-out in demand and
decreasing volumes there has been increas-
ing price pressure throughout the industry.
Another factor affecting the industry is the
shift in product mix, since the compact mar-
ket is growing more than the heavy equip-
ment market. Consolidation within the con-
struction equipment industry started later
than in the truck business but has picked up
in recent years and this is expected to con-
tinue. Volvo has been part of this consolida-
tion and will continue to play an active role
when opportunities arise. In 2001, Volvo CE
acquired the telehandler business from
UpRight Inc. and the skidsteer loader busi-
ness from Textron’s subsidiary OmniQuip.
Discussions regarding future cooperation
between Volvo and Komatsu in the produc-
tion and development of construction equip-
ment components was also initiated in 2001.
Also during 2001, CaseNewHolland (71%
owned by Fiat) entered a global alliance with
Kobelco of Japan. Deere and Hitachi inte-
grated its marketing operations in North,
Central and South America and also estab-
lished a joint venture for wheel loaders in
Japan and Asia.
97 98 99 00 01
Net sales, SEK bn
16.7 19.4 18.9 20.0 21.1
97 98 99 00 01
Operating income,
SEK bn
1.4 1.5 1.7 1.6 0.9
97 98 99 00 01
Operating margin, %
8.6 7.9 9.1 8.0 4.2
Net sales as percentage
of Volvo Group sales
12 %
In December, Volvo CE announced the devel-
opment of its own and completely new range
of backhoe loaders.