Face to Face: Jo Bamford
JCB heir has grand plans for the company in the region
Its yellow backhoe loaders are some of the most famous pieces of construction machinery in the world, but in the UAE, its company remains second in the marketplace. Heir to the company’s crown Jo Bamford tells Construction Week how he thinks that will change.
Jo Bamford is pretty pleased with the facility that he has travelled several thousand miles to see in the Mussafah Industrial area on the outskirts of Abu Dhabi.
Bamford, whose family’s fortune has been estimated by Forbes at $3.3bn, tells Construction Week at the event: “It’s brilliant, isn’t it? It’s clean, it’s friendly, it’s got my name above the door… what more can I say?”
He is almost right. It is the initials rather than the name Jo shares with his grandfather that are both displayed above the door and on all of its machinery worldwide – JCB.
And in the UAE, where his family has been working with its distributor partner Galadari Brothers for the number of years that Jo has been alive, he is visiting for the formal opening of a new, $2.7mn sales, service and support centre.
Addressing guests at the event, which also featured a ‘dancing diggers’ display, the 36 year-old says: “From small beginnings back in 1978, Galadari has helped JCB to become the second-largest construction equipment brand by volume in the UAE. I have no doubt that this great new facility will help JCB to become number one in the market, building on our well-established leadership in backhoe loaders, telescopic handlers and more recently on 20-tonne excavators.
“JCB is already No.1 in the UK, Europe, India, and Russia and CIS. It is only a matter of time before we add the United Arab Emirates to that list.”
It is currently outranked in sales terms in the local market by Caterpillar, although Doosan also claims a lead in heavy equipment sales. Either way, the UK-based company operates in an extremely competitive market, and one in which established players like JCB, Liebherr, Caterpillar, Volvo and Komatsu have come under increasing competition from a range of Chinese manufacturers like XCMG and Sany.
This has meant that businesses like JCB have not only had to adjust – in the week following Bamford’s visit it announced 150 job cuts in the UK – but it has also had to start building and tailoring models to suit different markets.
Indeed, in September the company announced the launch of the 3CXG – a version of its best-selling 3CX backhoe loader – that has been built with the Middle East region in mind, Bamford explains.
“The 3CXG is a bloody brilliant product,” he tells CW. “It’s a basic product for this part of the world. One of the problems with engine emissions [legislation] is that you end up becoming quite technical. So now, in the Western World they fix a machine with a computer.
“Here, they don’t want to fix it with a computer. They want metal engine covers, things they can bash back together with a hammer and things that will take the local fuel. The 3CXG fits that part of the world.”
He said that sales of construction machinery are up around 13% in the UAE this year, and that the rest of the Middle East has also demonstrated an increase. However, other areas of the world haven’t shown the same sort of growth.
Brazil and India – both of which have recently been through lengthy election processes – have recorded declines of 23% and 20% respectively, whereas a sanctions-impacted Russian market has seen machinery sales drop by 22%.
“India had a new leader and it has had a very quiet year this year until Mr Modi hopefully gets going next year.
“It’s going to be quite difficult to change India’s economy. I think most people have faith that he’s going to do something, but trying to sweep 1.2bn people and move them in the same direction... it takes quite a naval chief to steer that ship forwards.”
The UK, by contrast, is described by Bamford as being “on fire” with overall machinery sales up by 44% after its building sector, in particular, spent several years in the doldrums, while the North American market – the second-largest after China – has also continued to improve, with a 10% growth in 2014.
For manufacturers like JCB, which last year generated its third-highest ever earnings of just over $505mn (£313mn) on revenues of $4.3bn (£2.68bn), decisions on whether to open new factories or launch new products require a longer-term view than the current state of world stock markets (or indeed the oil price).
“The interesting thing about the construction market, I suppose, is that we’re quite a precursor. So we tend to get up much before the economy is getting going. If we slow down, potentially the world economy changes,” Bamford says.
“We have a wonderful outside director, (Sir) Ralph Robins, who built Rolls Royce. He has this term, a hesitant crouch. You always have to be ready for when the market moves one way or another.
“Manufacturing is not an easy business where you can turn investments on and off. And we are making investments in the UK in products, we’re making investments in India, we’ve made a big investment in Brazil ... that might not have been the best of timing, but we invest for 10, 15 or 20 years.
“You can’t put a big factory up and expect a market to grow exponentially for years. However, you do scale your business to the market. You have to be flexible and scale down the overhead quickly to deal with demand. But you can’t scale a factory down quickly,” he adds.
The investments made so far this year include the aforementioned 3XCG, and several new mini- excavators made in a compact machinery products plant run by Bamford in the UK. These include a 6.5-tonne, an 8-tonne and a 10-tonne model.
“It’s been a very exciting year for my little factory,” he says, adding that he believes mini-excavators can
become popular sales lines in a Middle East market where small, skid steer loaders have sold extremely
well because more sites are being built within established city areas as opposed to empty plots.
Other investments include a pair of new factories at Jaipur in India that are due to open next month which cost $100mn to build and a new, $32mn (£25mn) headquarters in Germany. It is also building a new Cab Systems plant in Uttoxeter and recently upgraded its range of telehandlers.
“Part of new products being brought out at the minute is legislation-driven around emissions. That sort-of doesn’t matter here in this part of the world, but it does drive changes. If you’re going to change the engine, you might as well change a lot of the stuff around and improve it,” says Bamford.
New emissions standards have been introduced both in the US (Tier 4) and the EU (Stage 4) this year, which have forced all manufacturers to redesign products. None of these apply in the Middle East, though, where older, cheaper and more robust engines will still be favoured.
The European standards are the strictest, and Bamford feels are also slightly misguided in concentrating so heavily on emissions as opposed to fuel consumption.
“Our excavators are 30% more efficient than our last generation on fuel consumption. The problem with emissions legislation is that you end up putting loads of filters on the back of the machine, so the machine becomes heavier, the engine becomes less efficient and therefore you use twice as much fuel,” he says
“Europe should have gone after how you can do 200 miles on a gallon of fuel rather than reducing emissions.”
JCB in numbers
- $4.3bn turnover
- $505mn Earnings
- 66,277 machines sold
- 300-plus range of machines sold
- 1mn-plus total number of machines built
- 11,000 employees worldwide
Figures for 2013/14 financial year