MACIG Connect Series
Scania actively engages with customers to solve their transport equipment needs, giving the company a competitive edge.
Could you provide an overview of Scania’s regional and South African operations? How important is South Africa for Scania?
Ruben Govender (RG) and Charnie-Lee Kruger (CL): Scania has eight focus markets around the world and is truly global and shares expertise between the regions it operates in. In South Africa, specifically, there are 1,800 mines and we try to see around 10% of them every year. We have vast experience in mining, and this is important because our vehicles are very specific; we need to understand the conditions our customers are mining in, the methods they are using, the types of ore and tonnages they are extracting, and the road systems around their mines. We do not only sell vehicles, but offer service solutions that ensure maximum up-time and productivity. The vehicles may look the same, but their internal systems are quite different. We often sell customers a range of different vehicles, but traditionally our business is focused on tipper and side tipper trucks.
Southern Africa is a very important market for Scania Mining and although we have traditionally been known for the long-haulage business, there are extensive opportunities for us to grow our revenue and profitability in this sector. We offer transport solutions across the entire mining cycle, from exploration to port.
How difficult has it been for Scania to maintain a constant fleet of vehicles in such tough times for the industry?
RG & CL: There is no denying that it has definitely been an up-hill battle over the past few years due to the many challenges that the mining industry has been dealt. We have, in the meantime, been putting a lot of focus on creating more of an awareness in the market about our offering to the mining industry as well as up-skilling our services network to effectively service this segment.
In terms of maintaining a constant fleet of vehicles, our mining vehicles are steadily increasing, with our side-tippers and in-pit tippers growing more rapidly. We are definitely seeing an increase in the number of mining companies and contractors that are starting to see us as an alternative to Bell and Cat. Scania initially costs about 40-50% less than Bell or Cat, and is also about 40% more cost effective on repair and maintenance.
You work with most of the big miners in South Africa. How has business this year compared to previous years?
RG & CL: The last three years in the mining sector have been a bit sluggish, with low commodity prices. All over the world, big mining houses have cut down on capital expenditure and operating costs have been decreasing. In the last six months, however, we have seen an upswing. People are excited; we have had quite a few requests for quotations. Companies who have kept the same assets for a long time are becoming less reliable and operating costs are rising. These companies need to start changing their strategy; they are looking at smaller, quicker and more flexible units, rather than the traditional articulated dump trucks or rock dumpers. In mining, bigger has been better for the last hundred years, but this is changing now. As with most other industries, technology is also playing a key role. For instance, our global Site Optimization project is investigating the mining operation holistically, looking for ways to improve little pieces of the puzzle. Perhaps the customer’s loader is not correctly specified for its vehicle, or its offloading point is wrong for maximizing the plant’s throughput. Expertise in these areas is in high demand at the moment.
Do you see increasing competition from local providers of trucks and services? What is your strategy for dealing with the competition?
RG & CL: We first develop our products and test them out in different regions to check if they are sufficiently robust. We invest continuously in R&D; our products really stand out in the market in terms of quality, reliability and robustness. Mining customers make very good money, and relative to other industries they are willing to spend on the extra value we add. With our Global focus on mining, we are continually gathering information about the common challenges our customers are facing, best practices, and lessons learned. This allows us to proactively influence our focus and investment in R&D and ensures that our product and service development is in line with our customer’s requirements and keeping us highly competitive. (i.e. autonomous vehicles).
Over the years we have built up a good service reputation in Southern Africa. Most of our customers measure us on how quickly you can repair a truck and get it back into operation. It is difficult to find skilled workers here, so the mining houses now want repair, maintenance and service contracts, which make our responsibility when looking after the vehicles. As part of the package we include driver training so they best utilize the assets. We have 95% availability on spare parts – and, to reduce the size of customers’ inventories, we hold stock on their behalf which they do not need on a daily basis.
Our 24/7 Scania Assist service line helps customers when they encounter a breakdown. The call center staff arranges the earliest fully equipped service vehicle to the customer’s site arrive timeously. We have 18 Scania Dealerships/Workshops across Southern Africa including some independent dealers in remote areas. All of our dealerships operate on the same global standards to ensure a consistent level of quality and service regardless of where are customers are located.
And lastly, we provide extensive training for our sales, service, and workshop employees to help ensure that we have the knowledge, skills, and attitude required to deliver professional service and support. This also helps us remain highly competitive in the industry.
What are your expectations for 2017?
RG & CL: The last five years have seen a steady decline in commodity prices, because the market was flooded from the 2006-2008 boom. However, gold will always have value, and the surplus in copper is now reduced so it is steadily rising in price. In the last six months, a lot of calls have come in from Zambia’s Copper belt, where there is an upswing. The telltale signs are there that the market will definitely improve – there will not be a price rush like in 2006-08, as global investors are more wary now, but there will still be an acceptable increase. It is a given fact that there are more human beings on earth, living for longer and consuming more. Scania is ready to deal with the increased demand from customers. We spend the majority of our time in face-to-face interactions with our customers with the aim to help solve problems to their mobile/transport equipment that may be costing them more money than they realize. Also, with South Africa introducing a carbon tax in 2017, it is important to note that all our vehicles already use biodiesel, which will save customers up to 60% on taxes, giving us a competitive edge.