LiuGong Announces Acquisition of HSW

LiuGong  Machinery Corp., the global, China-based construction equipment manufacturer, is finalizing plans to acquire HSW (Huta Stalowa Wola) Construction Equipment Division and its distribution subsidiary, Dressta Co, Ltd., company executives announced at ConExpo.

The acquisition is another bold step in LiuGong’s global growth strategy said LiuGong Vice Chairman and President, Zeng Guang’an. “We are pleased to partner in this agreement with HSW as this provides an excellent opportunity for LiuGong to acquire manufacturing capacity in Europe, as well as technology that will supplement our machine lines,” said Zeng. “This acquisition helps us continue success with our five year strategy to become a top 10 construction equipment manufacturer.”   

When concluded, the acquisition will be LiuGong’s first outright purchase of manufacturing facilities and distribution outside of its domestic market, Zeng said.  Currently LiuGong is one of the largest wheel loader manufacturers in the world with 15% global market share and is the 15th largest construction equipment manufacturer in the world in 2010.  

LiuGong has 12 product lines, including wheel loaders, bulldozers, backhoes, skid steers, forklifts, graders, excavators, rollers, truck mounted and crawler cranes, and pavers. Last year, LiuGong produced and sold more than 56,500 machines worldwide with production from 16 manufacturing facilities inside and outside of China.  

Established in 1937, HSW is well-known for its manufacturing of high-quality crawler dozers at its plant in the Podkarpackie province in southwestern Poland. HSW also produces wheel loaders, side boom pipe layers, and machines customized for landfill applications and logging operations.  Dressta Co. Ltd. is the exclusive marketer of HSW equipment with offices around the world. Machines are sold under the HSW brand in parts of Eastern Europe, but are sold under the Dressta brand throughout the rest of the world. 

With HSW Dressta, LiuGong will acquire a well-respected and high quality brand with a strong bulldozer line complimentary to LiuGong’s product mix, said David W. Beatenbough, Vice President of Research and Development for LiuGong, and a leader in the acquisition effort. He notes the purchase accomplishes several strategic goals for LiuGong.   “

With HSW Dressta, LiuGong acquires proven technology within the bulldozer segment,” said Beatenbough, adding that LiuGong will acquire all the patents for technology and designs, for complete machines as well as component technology including undercarriages and driveline components such as axles, transmissions and torque converters.”  

“HSW is one of only seven manufacturers in the world with a full line of bulldozers. And the machines have a long design history that reaches back to International Harvester, which was an early developer of track-type undercarriages that led to true construction machinery as we know it today.   LiuGong will benefit from HSW’s world class engineering expertise and we’ll gain access to some large, high horsepower machines and advanced driveline component technology,” he added.  

Beatenbough observed that like LiuGong with its 750 engineers working in R&D, HSW has an emphasis on innovation with a sophisticated research and development center. Both companies have an intense focus on quality. “We’ll quickly be sending teams back and forth between Poland and China so we’ll be able to share innovations,” Beatenbough said. “We will continue production in Europe of HSW’s current product range, and supplement this with production in Poland of some of LiuGong’s core models to serve the European markets.”  

LiuGong will also benefit from the reach of HSW Dressta’s distributor and dealer network. This will help Liugong continue to penetrate important markets, Beatenbough added.  

LiuGong has already located a plant outside its domestic market, having opened a wheel loader factory in India two years ago. The HSW acquisition gives LiuGong a plant already in operation in Europe close to its customers, with a highly skilled workforce, Beatenbough said.  

LiuGong Ready to Take on North American Market

LiuGong is driving for major expansion into the North American market with new products, new dealer programs, a refined pricing strategy, and plans to grow to more than 60 dealer outlets in the next two years, the company announced.

LiuGong Construction Machinery North America President, Curt Unger, said the company is unveiling these efforts at this year’s ConExpo show. Unger said that LiuGong Construction Machinery North America was a new company on the scene in 2008. Now, just three years later, LiuGong arrives at ConExpo as a global competitor with the products, parts support, service support, financing and sales programs in place to compete in one of the world’s largest machine markets.

LiuGong has twelve product lines. Wheel loaders, excavators, rollers, motor graders, bulldozers, loader backhoes, skid steer loaders, mini excavators, forklifts and pavers are available globally, while truck mounted cranes currently available in the domestic market, will be launched to the global market in the next year. The company has nine subsidiaries, each with a sophisticated parts depot strategically located to provide expert support close to important markets. The North American subsidiary operations are located in Katy, T.X., right outside of Houston.  

Unger said LiuGong is unveiling a new line up of attractive programs for dealers. “We have reviewed all of our pricing and recently adjusted it to ensure we are competitive across the board with our entire line” he said. “We have put together a dealer financing program which is really important as dealers recover from the tough business climate.” Unger noted they will be displaying their newest machines. This includes the new 842 tier IV wheel loader, and machines with optimized hydraulics that can increase productivity by up to 15% and reduce fuel consumption by up to 10%. We are also introducing forklifts to North America, but these will be sold through a separate division in a separate dealership network.”  

Unger said LiuGong’s marketing efforts in coming months will focus on dealer recruitment. LiuGong signed five dealers in 2010. It now has 13 dealers with a total of 17 outlets, but has plans to have more than 60 dealers when fully expanded. Unger said LiuGong will focus first on penetrating East Coast markets, as the company believes the economic recovery is happening there first. He said LiuGong is pursuing the rental market and the general contractor segment and he believes LiuGong’s wheel loaders, excavators, skid-steers and backhoes mesh well with market demands.  

“We believe the rental market will be good for us. In the past three years, customers have not been able to buy anything, and they’re renting now instead of purchasing. General contractors have lost a lot of money, so they will rent. Our machines are easy to operate and incredibly durable, so this is a great fit.  

Unger said LiuGong machines are appealing because they are easy to acquire and easy to operate and maintain. “Our goal is to make everything as easy as possible, from purchase, to operating the machine, to service and maintenance. Buyers will just get a lot of up time with LiuGong,” he said. “People are impressed by the power of the machine, but also like the fact there aren’t too many bells and whistles which drive the price up, and make maintenance expensive and time consuming,” he said. “Anyone who wants to do some of their own servicing can do that on our machines. We believe the market is in a value-oriented mindset right now and this is where LiuGong can excel.”  

LiuGong North America Chairman, Jim Donoghue, has been the architect of LiuGong’s assault on North and Latin America as well as global markets. He notes LiuGong is poised for success in the U.S. saying he expects to more than double sales in 2011. Globally, momentum is on LiuGong’s side, as the company posted sales records –more than doubling profits in 2010 with reported total profits of US$280.44 million, up 79.9% from US$151 million reported in 2009. Total sales revenue of US$2.32 billion increased 50.9% over 2009, from US$1.49 billion, setting new company records, executives said.  

Industry recognition has followed the company’s success. Donoghue noted LiuGong has earned its way into a coveted show locale at ConExpo -- a first for LiuGong, and a first for any China-based machine manufacturer. “We’re in the North Hall next to Caterpillar, Case, Volvo and John Deere,” he noted. “You have to earn your way. The larger sized companies tend to group themselves together. This is the first time we’ve been next to these companies, but it’s not by accident.”  

He sums it up: “We’re starting to take our position on the global stage because we have earned it by making LiuGong customers successful.”