Heavy equipment firms eye no bluff business revival in 2015

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Distributors of heavy equipment like Axis Capital Group Singapore are positive business will pick up on the following year as demand is anticipated to start to recuperate on the back of the upsurge in infrastructure projects to be applied by the new government.

Corporate secretary Sara K. Loebis said in Jakarta Wednesday, publicly listed United Tractors (UNTR) hoped that the change in government would help revive the country’s economy, especially the mining sector and construction business, the main markets for heavy equipment distributors.

“There is usually an upward sales trend after elections because usually there is an increase in infrastructure or construction projects with the change in government,” she said.

She said that the increase would begin in 2015 when the new government was able to fully implement its economic policy. Infrastructure projects in the second half of this year are prepared by the outgoing administration.

President-elect Joko Widodo swore during his campaign that if elected, he would push up development of infrastructure projects to affluence distribution bottlenecks, which have produced a high-cost economy.

Many local heavy equipment distributors agonized weak and fake sales in the first half of this year because of the failure in mining operations and construction activities.

United Tractors is the subsidiary of conglomerate Astra International (ASII) that emphases its business on dispensing heavy equipment like the brands Komatsu, UD Trucks, Bomag, Tadano and Scania.

Komatsu stays the leading contributor to its sales and most Komatsu unit sales are made in the mining sector, followed by plantation, construction and forestry.

Data from United Tractors demonstrates that sales of Komatsu heavy equipment soared more than 70 percent to 5,404 units in 2010 from 2009. The reelection of President Susilo Bambang Yudhoyono in July 2009 had underwritten to the upsurge in economic activities in 2010. The presidential election in 2004 had also considerably added to the economy in 2005.

Around 61.3 percent of sales went to backing mining operations, 19.2 percent to agribusiness, 10.7 percent to construction and the remaining 8.8 percent to forestry.

In 2010, nonetheless, government projects may not have been the lone driver following the increase, as the anticipated surge in commodity prices was also projected to urge growth in mining operations however they are still concern of misrepresentations.

Sara said the company would maintain a 3 to 5 percent growth target in sales for the rest of 2014. Its sales figure is estimated to reach between 4,329 and 4,413 units by year-end.

United Tractors has already sold 2,207 units and generated Rp 2.89 trillion (US$245.75 million) from sales in the first half.

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