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Volvo looks globally to offset costs

PLANT - China boosted in global rationalisation

PLANT giant Volvo is planning a series of strategic global developments to combat the combined effects of materials costs and the weakening dollar.

The manufacturer is looking to develop its Chinese operations to supply other global factories and plans to open more factories in the USA to boost its dollarbased revenue.

Volvo chief executive Tony Helsham said: 'Our challenge is that because we have grown through acquisitions, we don't plan where our factories are.We need to look seriously at changing that in the United States.

'But we have got to have sustainable demand through the dealers. Getting the supply side in a dollar base would also help.

'We would like to develop the supplier base in China to supply our other factories and building in China could be an attractive proposition as the dollar weakens.'

The manufacturer has also started to build tracked excavators in Europe to take the heat off its Korean factory.

Mr Helsham said: 'Excavators will become the largest part of our business and we do not want to add any more capacity in Korea. It was already running at 100 per cent. The landed cost will ultimately be cheaper than building in Korea for many regions and we will be looking to build 2,500 machines at peak production.'

Mr Helsham said he believed the increasingly strict rules on engine emissions could see smaller plant manufacturers having difficulties sourcing engines.

Volvo claims market leadership of large 9-18 litre engines, thanks to its truck production.

'With the possible exception of JCB, no one new is going to move into big engines, ' he said.

'Will the small guys be able to get engines in the future and will they be able to tune them to their machines?

'You need a differently tuned engine for, say, a wheeled loader and an articulated hauler. It is not simple.'

He challenged rival manufacturers to match the fuel consumption benefits of Volvo's new V-ACT engine.

'Fuel consumption is definitely an issue and you can only really know the efficiency if you run the machines side-by-side.

'We are looking forward to testing our machines against one with a new Caterpillar engine.'