(Image Credit : Golden Energy)

JAKARTA (TheInsiderStories) – The heavy equipment industry has been hit hard in the past three years, driven by the fall of commodity prices, in particular that of coal, which led to a sharp fall in heavy equipment demand.

As a result, a number mining contracting companies suffered losses and rising debts. Some of them were forced them to downsize operational scale, sell assets or restructure their debts.

Some players, however, found a way out to diversify their business, including supplying heavy equipment to industry players engaging in the infrastructure projects.

However, that ‘dark period’ may have passed: industry data shows that there are signs of recovery on the back of the rebound of coal price and increasing demand for heavy equipment from the non-mining sector, such as infrastructure, plantation and agricultural sectors.

According to data provided by the Heavy Equipment Manufacturer Association of Indonesia (Hinabi), national heavy equipment sales have begun to show signs of recovery. In the first quarter of 2017, heavy equipment production reached 1,153 units, increased 87 per cent from the 619 units recorded for the same period last year.

The association has announced that heavy equipment sales in the first half of this year reached 2,467 units and are expected to further increase through to the end of this year. Hinabi Jamaludin, Head of the grouping, is confident that heavy equipment sales will reach 4,400 units this year, increased 10 per cent from 4,000 units last year.

PT Komatsu Indonesia, a heavy equipment producer, said the company has seen an increase in heavy equipment demand from the agriculture sector, in particular for tractors. The demand was also in line with the call by the industry ministry for heavy equipment producers to make products used in the agricultural sector.

Industry Minister Airlangga Hartarto said heavy equipment industry is needed by the government as it supports the activities of the real economic sectors.

“We are encouraging the heavy-equipment industry to continue innovation including making products that can support agriculture sector. Going forward, the agriculture sector will be increasingly modern, in particular in the outer islands,” Industry Minister Airlangga Hartarto said.

A number of companies engaged in heavy-equipment industry, such as PT United Tractors, have reported an increase in heavy equipment sales. The company recorded heavy equipment sales of 2, 411 units in the period of January-August, increase of 74.07 per cent from the same period last year (1,385 units). The company projects heavy equipment sales to rise to 3,200 units this year.

The biggest heavy equipment sales were to mining, representing 51 per cent of total sales, followed by construction at 23 per cent, agro industry 18 per cent and forestry 8 per cent.

Another heavy equipment provider, PT Hexindo Adiperkasa Tbk, recorded an increase of revenues in the first nine months to US$157.03 million, or up 30.03 per cent from the same period last year, supported by a rise in heavy equipment sales and rental as well as spare part sales.

Hexindo recorded a 51.5-per cent increase in heavy equipment sales and rentals to third party in the nine month period to US$87.93 million, while sales to affiliated parties surged 477 per cent to $1.36 million. Sales of heavy equipment spare parts increased 14.5 per cent to $37.64 million.

PT Intraco Penta Tbk, also a heavy equipment provider, recorded a 61-per cent increase in heavy equipment sales to 452 units, compared to 280 units in the same period last year.

Heavy equipment’s biggest markets are the mining industry, agro-industry, forestry and construction.

In terms of competition, heavy equipment industry players are facing intense competition. Four major brands — Komatsu, Caterpillar, Kobelco and Hitachi are still the dominant players in the heavy equipment industry; however, new players are penetrating the market in an aggressive way, in particular from China heavy equipment brands.

As the industry enters the New Year, industry players believe that if the current commodity price maintains its upward trend, including coal, the heavy equipment industry should continue to rebound until next year.

Written by Roffie Kurniawan, email: roffie.kurniawan@gmail.com

 

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