Challenging Changes: what's new in the European utility market

Manufacturers of equipment used to construct underground utilities are developing new machines and techniques in order to meet the changing needs of the market.

The European utility market has seen good growth in the last year but due to an unstable economic climate in some territories, forecasting what will happen next is a challenging task.

Speaking to CE, Rob Verwilligen, sales manager in Europe and Russia for Astec Undergound and American Augers, said, "If you had asked me how this market was four weeks ago, I would have had a pretty clear answer for you, but it's pretty hard to predict what will happen because there seems to be so much going on in the market that's affecting our business - right now it could go either way."

He added whether the sector will suffer a downturn would depend very much on how governments deal with the current financial turmoil.

"In this specific part of the construction business things might have decreased but there certainly isn't a downturn yet," he said.

Market change

Joe Smith Jr, European sales manager for Ditch Witch, said all markets have been hit by the recent bank crisis but this should only affect the company in the short term.

He added, "We are just starting to see a small decline in most of Northern Europe - it is still too early to know the affects - but the same can't be said about the Southern part of Europe. Spain and the UK have been hit the hardest due to the depressed construction and housing markets."

Meanwhile, André Hoondert, trenchless solutions specialist for Vermeer in Europe, the Middle East and Africa (EMEA) and the Commonwealth of Independent States (CIS), said the company is still seeing good growth across Europe. Growth has been particularly buoyant in Eastern European countries such as Poland, Bulgaria, Czech Republic and Serbia, he added. New developments driving the utility market forwards he said include the construction of energy sources like windfarms, geothermal and biomass plants.

"The current economic situation in the US is not that positive, but looking at the wide range of products we have in a lot of different segments and also looking at the world coverage we have we see that we will be fairly comfortable in the coming years," Mr Hoondert said.

Growth in Eastern Europe is spurred on by a stronger economy and with EU funding, some projects in these countries are subsidised, he added. Astec also sees opportunities for growth in Eastern Europe, "but even there we are starting to hear some market information that could potentially be negative," Mr Verwilligen said.

He added once the financial crisis is resolved opportunities for future growth may lie in Asia. "The Middle East right now is big business as well as Russia and China and India - if you are looking for opportunities they will probably be in that part of the world," he said.

According to Mr Smith because of EU requirements there are added pressures to increase infrastructure within the Eastern territories.

"The Western territories will react to the slowdown in the global economies quicker, therefore slowing our business there over the next six to 12 months."

Applications

The type of utility construction that takes place depends on the location of the project.

In Western Europe most utilities have been installed so manufacturers concentrate on maintaining and extending these systems, whereas in Eastern Europe there is still potential for new utility installation.

Mr Smith said, "There is still room for growth in Central and Eastern Europe as many projects have been approved for EU funding. We are also seeing a lot of investment in the Middle East because of extensive infrastructure projects in the region."

However, the European housing market has almost come to a complete standstill, he added, meaning there will be less street-to-house connections made in 2009.

"There will still be public works carried out, since the public budgets were less affected by the current crisis. The local governments will take advantage of the current low prices and commence public utility works," Mr Smith said.

Trenchless techniques have seen healthy growth in line with the installation of utilities in the last year according to Mr Hoondert. Although the installation of electricity infrastructure has stalled a little he said wind farm projects are on the increase.

Vermeer has also seen growth in EU-subsidised sewage and water projects in South East European countries, while in South West Europe the company has adapted its products, to include larger diameters, to meet the growth in larger-sized gas pipelines.

Stephan Oppelaar, track and utility solutions specialist for Vermeer in EMEA and CIS, said the company has seen similar growth for its trenching equipment but more opportunities exist for telecommunications installation in Eastern European countries.

"This is why we have come up with the RTX 1250 quad track machine - for working on or beside roads to install fibre optic or trenching cable. It's a versatile machine that works in and around cities."

Mr Verwilligen said Astec's utility equipment is mostly used in the construction of water, electricity and gas systems whereas most telecommunications work was carried out seven years ago during the telecom boom. He echoed Mr Oppelaar's sentiments saying that today, growth for telecommunications installation is in Eastern Europe.

Product development

As utility projects become more challenging, often taking place in cramped city centres, manufacturers look for new ways to improve machine productivity and operator comfort.

Mr Hoondert said Vermeer looks for flexible solutions that fit both the current and new markets. The company has extended its trenchless horizontal directional drill (HDD) line with the D500x500, the D750x900 and the D1000x900 models, to adapt to larger pipelines and is also looking at improving on-grade and sewage installation systems.

With regards to trenchers, Vermeer said customers are looking for multi-functional units such as the RTX 1250 with vibratory plow, rockwheel, trencherboom, backhoe and reel carrier attachments.

Mr Oppelaar said the RTX 1250 quad track system is the most significant product development in his sector of the business. He added improving operator comfort in the machines is vital because of the difficulty of sourcing skilled machine operators in Europe. He said most machines offer options such as cabins, air-ride seats as well as noise and vibration reduction for enhanced operator comfort and ultimately improved productivity.

Mr Verwilligen said on the trencher side operator controls are simpler and more ergonomic and on the drilling side there will be more specialist tools for working in specialist soil conditions. He added the company will focus on making more compact equipment, which is better suited to working in urban areas and is re-designing its trencher line.

Future market

Despite uncertain market conditions, utility construction equipment manufacturers must continue to update their products in order that they can establish themselves in emerging territories and re-affirm business in traditional markets once the global economy stabilises.

According to Vermeer the global financial situation has not presented a problem for the company although it said next year would be a bigger challenge. Mr Hoondert said the European market would slowly grow or at least stay stable in the near future.

Mr Verwilligen said, "The last 12 months have been good and although I think we have seen some dark clouds on the horizon they have not yet given our industry a real storm. My fear is that those clouds are now really closing in and I don't know what will happen."