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SDLG’s big global ambitions

First publishedin Aggregates Business International
September October 2017
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Wang Zhizong
Wang Zhizong giving a speech at SDLG's 45th anniversary ceremony at the company's Linyi HQ

SDLG is one of China’s leading construction and quarrying machine manufacturers. Before and since its 2006 part-acquisition by Volvo Construction Equipment, the company has strived to become a notable OEM globally. Guy Woodford analyses SDLG’s impressive growth strategy, including the company’s major investment in new machines and state-of-the-art manufacturing.

SDLG’s global growth strategy is commendable in its ambition. The 70% Volvo Construction Equipment-owned, Linyi, Shandong Province, China-headquartered construction and quarrying machine manufacturer aims to be regarded as a standout Chinese construction machine maker globally. The company also intends to remain the biggest seller of wheeled loaders in China, and in the top three for domestic excavator sales. All this can be achieved, SDLG believes, within a profitable company framework.

Wang Zhizong, as SDLG chairman, is at the forefront of delivering on the strategy’s rich promise. He and his executive team’s ability to execute the strategy is benefiting greatly from the shrewd, as well as heavy,  financial investment in SDLG’s production capabilities.

“SDLG has established its own lean production system and has put in place a plan to implement smart manufacturing. The company is currently in partnership with Tsinghua University to develop the infrastructure for smart operation,” said a company spokesperson.

The spokesperson continued: “SDLG aims to become an internationally known brand, and its duo-brand policy with Volvo CE has enabled it to promote the SDLG brand and explore the construction market in North America over the years. At the same time, SDLG is also trying to raise its brand awareness in Europe by participating in different trade shows. SDLG will continue to seek to establish itself as an international brand in mature markets.”

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Linyi assembly line
The excavator assembly line at SDLG's world-class manufacturing facility at the company's Linyi HQ

SDLG is predicting a 10-15% rise in Chinese construction equipment demand in 2017, which may enable the company to sell more than 15,000 wheeled loaders and excavators.

Zhizong and fellow SDLG senior executives have noted a sharp increase in the domestic market popularity of excavators, due to their multi-application capability, coupled with their lowering in price compared to wheeled loaders. Traditionally, excavators in China sell for RMB 500-600,000 (US$75,000-$90,000) compared to RMB 200,000-250,000 (US$21,000-$37,000) for wheeled loaders. Nationally, just over 60,000 excavators were sold in 2016, compared to just under 60,000 wheeled loaders.

There is a price war going on among some Chinese brands, according to SDLG, but the company, which employs nearly 2,800 people, stresses that it is not engaging in it.

There has been a major focus on improving the quality and durability of SDLG’s excavator range to make it more appealing to wider global market customers. Currently, SDLG sells excavators to customers in China, Brazil and Russia. Getting the green light to sell its 1.5-46tonne ranging excavators to a wider global customer base is likely to be crucial to SDLG’s prospects of achieving its international ambitions.

SDLG’s product range has grown considerably since the company’s foundation in 1972. As well as the previously mentioned 1.6-46tonne excavator range, the company offers 42 1-12tonne load capacity wheeled loaders, which, SDLG says, come with the best energy-saving technology in the Chinese market. The company’s road machinery range includes 3.5-26tonne single drum road rollers, and seven 138-260kW motor graders.

To mark SDLG’s 45th anniversary year, the company, which last year estimated its ‘brand value’ at RMB 23.3 billion (US$3.49bn), has been rolling out a range of special edition equipment from its wheeled loader, excavator and motor grader portfolio. These include the L953F, L956F, L958F, L968F, LG6120E, LG6225E, LG6300E, G9138 and G9190. Each of these machines features a special coating commemorating the anniversary.

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Linyi HQ
SDLG's impressive HQ in Linyi is mirrored by its ambitious global growth strategy

Speaking about SDLG’s extensive product range, a company spokesperson said: “Research and development has always been a core part of the business. SDLG has updated its wheeled loader, excavator and motor grader models regularly over the past few years. In the future, the company will further improve the performance of its products. Equally important will be to improve the fuel efficiency and reliability of the products.

“SDLG puts great emphasis on aftermarket services, especially overseas services and its spare parts support system. We have established a large number of spare parts centres in overseas markets. In the future, the company will strengthen its efforts in providing maintenance services to key customers as well as training to the service technicians in key markets.”

SDLG also stresses that its relationship with its dealerships has improved over the years, leading to “smoother cooperation”.

SDLG’s global distribution network covers 96 dealerships across 81 countries and districts. The company has three overseas dealership training centres – in Russia, Dubai and Brazil; and dealership agencies in Russia, Laos and Vietnam.  

Domestically, SDLG’S distribution network includes 132 primary dealerships and 875 secondary dealerships, and includes a 50km radius of dealership coverage in key sales areas.

SDLG’s world-class manufacturing facility is located at its Linyi HQ. Covering a total area of 1,127,000m², it includes the main 650,000m² campus which houses metal cutting, fabrication, sheet metal, wheeled loader assembly, wheeled loader tuning and a Volvo CE Hub. The 193,000m² south campus is home to the company’s components, parts and purchasing divisions. SDLG’s new cutting-edge excavator production facility is based in the 197,000m² east campus. The R&D and Test Centre is located on an 87,000m² site.

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Wang Zhizong presentation
SDLG chairman Wang Zhizong delivers awards to model company workers

SDLG’s wheeled loader and excavator assembly lines run on the Lingong Production System (LPS) model. This ensures just-in-time production and impressive 2-3 day lead times for the domestic supply of wheeled loaders and excavators.

SDLG encourages in-house innovation. Among the most eye-catching has been the use of AGVs (Automatic Guided Vehicles) developed by company technician Qiu Feng, to deliver machine components to assembly line work stations.

Up to 110 workers can be accommodated across SDLG’s two wheeled loader and one excavator assembly lines. Just under 50 are currently deployed, reflecting current customer order levels. Assembly line workers tend to work eight-hour shifts – 8am-5pm, including a one hour break.

At its Linyi manufacturing facility, SDLG is capable of producing 40,000 wheeled loaders and tens of thousands of excavators a year.

Given its ongoing investment in product quality, manufacturing capability, dealership reach and aftermarket services, and given the company’s ability to draw on the technical knowledge and global network strength of Volvo Construction Equipment, SDLG is already comfortably positioned alongside other leading globally renowned Chinese OEMs. Now SDLG is ready for the great leap forward towards achieving the company’s international market ambitions.

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SDLG cement customer
Yizhou Cement's Zhang Yonggao has been impressed with SDLG's ability to customise his wheeled loader fleet

SDLG FOR YIZHOU CEMENT

Yizhou Cement is among SDLG’s major Chinese market customers. A subsidiary of the RMB 35 billion (US$5.24bn) annual turnover Yizhou Group, which also trades in the coal and port operations sector, Yizhou Cement deploys 60 SDLG wheeled loaders and 10 SDLG excavators across its numerous quarries and cement production plants throughout China. It is a key player within China’s 2 billion tonnes/year cement sector. One of Yizhou Cement’s production sites is situated 90 minutes north east of Linyi. There, a fleet of 18 SDLG wheeled loaders are working pretty much round-the-clock in order to meet healthy customer orders. Recently, the site took delivery of two new 18tonne LG968 wheeled loaders.

“We started using SDLG machines in 1987 and always found them to be good quality and reliable,” says site fleet manager, Zhang Yonggao. “We use four to six tonne [load capacity] models. Four tonne machines were more popular a few years ago, but we now use more six tonne models, as their back is bigger, giving us more productivity. Cement demand in China has gone up and our production needs to go up to cater for this. A lot is linked to the great progress in basic infrastructure projects over the last ten years.”

Yonggao says Yizhou Cement tends to use each of their wheeled loaders for around eight years. “The productivity and fuel efficiency of the SDLG machines is very good. The machines also offer good value for money as they have fewer problems than others, so their uptime is good.”

A number of Yonggao’s Yizhou Cement site’s wheeled loaders have also been customised by SDLG’s local dealership, following feedback from Yonggao and his team. “Their braking systems now have a cover to stop material hitting it. This had previously caused a driver safety issue. A limited slip differential has now also been added to aid turning.

“All our wheeled loader operators say the machines are easy to control. They also think the cabs are very comfortable.”

Yonggao says he hopes that his local SDLG dealership can also come and deliver more advanced training for site staff in how to best maintain their SDLG wheeled loader fleet. “This will help us to deal with not only simple but more complex maintenance issues ourselves.”

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