JCB – another tough 12 months
By Chris Sleight22 July 2009
JCB expects the current weakness in the construction equipment market to continue for another year. The company's CEO, Mathew Taylor, has also been critical of the slow speed in which stimulus packages have been put into action in developed countries.
Speaking to CE, Mr Taylor said, "My working assumption is that it will look no better in a year than it does now. If it does, fantastic, but I see no signs it will."
He described the last year as "pretty horrible" but added that markets and JCB's production levels had now stabilised. "We're stable and we see ourselves being stable at a low level. Excluding India we've been down to the same sort of volume every month, which is down about -60% on the start of last year."
India now accounts for about one third of JCB's production by volume, and in the last year the company has expanded its manufacturing base there. It now boasts the biggest backhoe loader plant in the world, near Delhi.
According to Mr Taylor, the market in India is showing month-on-month growth. "India is picking up and the election results were good for us," he said.
He also singled out Brazil as a country that is riding out the current crisis well. "Brazil within Latin America is a shining star. They've never been very stable (in the past) but they've come through this relatively easily," he said.
But while there is growth for JCB in Brazil and India, as well as in China, which is a relatively small market for the company, European and North American markets remain weak. In fact, on the US Mr Taylor said, "I'd say the US at the moment is still going down."
In contrast to China, where the government's stimulus package is clearly giving the construction industry a massive boost, Mr Taylor was critical of the slow pace of implementation in developed markets. "If you look at the economic stimulus packages here in the UK or in the US, what evidence do you see of that happening on the ground today?" he said.
Commenting on the outlook for the next year, Mr Taylor reiterated the difficulties in the global market. "I think we'll see something of a W-recession," he said "Things may pick up towards the end of the year - Russia has to pick up an the Middle East too."
"Then you'll have the impact of the stimulus packages. The question is whether private spending will come back quick enough as governments cut back because of the spending cuts they will have to make. I'm not sure it will."