Managing editor Ben Creagh travelled through Europe with Liebherr ahead of Bauma 2019 in Germany to discover the origins and future direction of the equipment manufacturer.
The Bauma trade fair in Munich is a big deal for Liebherr.
It is easy to miss a company name or two at a fair that covers around 614,000 square metres, or close to the size of 90 soccer pitches, but it is impossible to miss Liebherr’s brand at Bauma.
No company goes all out at the event like Liebherr, which puts on the largest exhibition of all at the world’s biggest construction and mining machinery show, in the country where it originates.
Liebherr spends tens of millions of dollars on a mammoth display and 14,000-square-metre three-storey pavilion that takes six months to setup at the Messe München grounds.
The company squeezes in hundreds of products from several of its divisions, including mining, earthmoving, cranes and even domestic appliances.
It takes until the Liebherr exhibition is experienced firsthand to realise that simply calling Bauma a ‘big deal’ is, in fact, an understatement of the company’s efforts.
For its global offices, too, Bauma is clearly more than just a seven-day trade fair for Liebherr, as a touring party of Australian and international mining professionals found out in April during the company’s factory tours that accompany the event.
In the days leading up to and then during Bauma, Liebherr hosted six factory tours that rolled the touring party through four neighbouring European countries – Switzerland, France, Germany and Austria.
The tours provide insights into the global direction of Liebherr’s mining division. They also give the travellers an in-depth look at the company’s cranes, engines and components areas, while bringing them up close with the history of the family-owned company.
Liebherr-Australia managing director – mining Trent Wehr says the tours offer an opportunity to strengthen the link between the company’s European origins and the Australian market.
“The focus was really about building the depth of relationship, instead of having just a relationship based purely on business transactions,” Wehr tells Australian Mining.
“I think it is important for when these companies make large capital transactions that they know there is a bit more substance behind the deal.”
Liebherr’s mining expansion
Liebherr has become a well-known supplier of excavators, haul trucks and crawler tractors in the Australian mining industry since it started building a presence in the country in 1981.
For a company founded in 1949, however, Liebherr’s growth as a mining equipment manufacturer remains a relatively new venture on a global scale in comparison with other divisions.
For example, Liebherr has only manufactured large mining trucks at Newport News in Virginia, United States since the 1990s. To parts of the world, Liebherr remains primarily recognised as a manufacturer of earthmoving and construction equipment, such as cranes.
Liebherr’s latest annual results, released during the tour, provide a reminder of where the mining division sits in the broader company picture alongside its various divisions.
The Liebherr Group’s annual turnover reached €10.551 billion ($16.8 billion) in 2018 to push the company through the €10 billion barrier for the first time in its 69-year history.
Liebherr’s mining division achieved sales revenues of just over 10 per cent of this total with €1.07 billion, less than half the turnover of the earthmoving (€2.772 billion) and mobile cranes (€2.243 billion) business units.
Despite this, Liebherr’s mining division contributed the most growth of any division compared with 2017 at 16.1 per cent, as demand in Asia and Oceania, Africa, and Central and South America increased.
Liebherr’s growth in Australia was represented in the touring party, which included equipment suppliers, mining services companies and even an international copper miner.
Most of these companies have started working with Liebherr in the past two or three years, according to executive general manager – sales and marketing Tom Juric.
“If you look at the mix of companies there is not much crossover in terms of what they are competing for,” Juric says.
“There might be some competition here and there, but they are quite a diverse group. All of the companies are slightly different across the board with their own unique value drivers.
“It is about being sensitive to what it is that they are working for. Ultimately our machines and services are only as good as what they can demonstrate or return to the client and their business.”
Liebherr’s mining equipment has most often been found at bulk commodity sites in iron ore and coal, something its Australian team has focused on diversifying in the past two years.
The emerging line-up of mining partners on the tour reflected this strategy with their exposure to precious and base metals.
The Liebherr Mining Equipment Colmar SAS and Liebherr Components Colmar SAS factories in France drew the most direct interest from the mining-focused touring party.
It is, however, Liebherr’s company-wide approach to vertical integration that emerged as the key theme in not only Colmar, but also at the facilities in Bulle (Switzerland), Biberach (Germany), Ehingen (Germany) and Telfs (Austria).
Liebherr focuses on designing and manufacturing a significant percentage of its components in house to ensure the high levels of safety, performance and reliability it targets.
The company’s personnel spoke of Liebherr’s aspirations to produce up to 90 per cent of its own components in the coming years to consolidate the model.
Liebherr plans to achieve this while continuously developing new equipment that increases performance, facilitates ease of maintenance and lowers operating costs for the end user.
For mining and other industries, Liebherr’s vertical integration practice promotes the company’s willingness to design and build components that meet specific requirements for customers.
“In Australia, we can say Liebherr has this vertical integration model, but it doesn’t become a reality until you tangibly see it and touch it,” Wehr says.
“It’s about being able to understand how that dovetails into their businesses but more importantly how that affects and makes a positive spin on the productivity of their machines.
“They know if there is an issue with the machine, we can contact our brother and sister companies in Europe to influence that in a much timelier fashion.”
Liebherr is convinced the vertical integration model also gives the company a competitive advantage over third party suppliers from a customer support perspective. The model generated positive feedback from the touring party in this regard.
First Quantum Minerals consultant – group procurement Steve Poulter says Liebherr’s plan to produce a high percentage of its components supports the modular designs it develops for equipment. He questions why the modular practice isn’t more common amongst original equipment manufacturers (OEMs).
“The idea of modularisation is absolutely first class and why someone hasn’t done it before like this I have no idea,” Poulter says.
“It makes good sense to me. You will have spare parts and inventories that are going to be highly reduced because cylinder one is the same as cylinder 12, for example.”
Liebherr’s current and future developments at the Colmar factories are prime examples of the commitment to vertical integration.
For almost six decades, the company has been regarded as a major driver of the local economy in Colmar, a quaint French city that also relies heavily on tourism.
Liebherr has manufactured hydraulic excavators in Colmar since 1961, including mining diggers for more than 30 years.
It bolstered this presence when the Liebherr Mining Equipment Colmar SAS factory was established in 2011 to cater specifically for the requirements of surface mining operations.
The OEM develops, produces and services its hydraulic mining excavators at the site, ranging from the R 9100 up to the R 9800.
Liebherr’s tour party included owners of excavators across the range, from Blue Cap Mining’s two R 9150 diggers at gold sites, to MacKellar Mining’s R 996 excavators and up to the R 9800 excavator that National Group supplied to a New South Wales coal mine last year.
The company also developed the 100-tonne T 236 mining truck at Colmar, a product it launched in 2017 after a concept first appeared at the 2016 Minexpo in Las Vegas.
Liebherr’s T 236 truck, also one of the key mining products at Bauma, highlights the vertical integration model by heavily featuring the company’s own components and technology.
The rigid-frame dump truck, Liebherr’s entry into the 100-tonne class, includes a diesel-electric drive system that takes advantage of the company’s vertically integrated Litronic Plus Generation 2 technology.
Wehr believes the unique electric-diesel truck will find its place in a competitive 100-tonne truck marketplace as mining continues to move towards becoming a more socially responsible industry.
Next door to the mining factory is the Liebherr Components Colmar SAS facility, a plant built in 2014 to develop, design, assemble and test large diesel engines.
Liebherr has developed the D98 diesel engine series at the components factory, a range that will include three cylinder variants – V12, V16 and V20.
The D98, which first premiered in Australia in late 2017 and is in the testing phase, is designed to meet the needs of the mining industry, but is also planned for use in other industries.
Liebherr claims the D98 diesel engine will provide the best specific power ever, reaching up to 43.5 kilowatts per litre displacement across the range.
The company revealed details of how the D98 engine will be tested in Australia, including in a R 9400 hydraulic excavator at a Pilbara iron ore mine and in a mining truck at an east coast coal operation.
“Those are two bits of equipment we are hoping will help prove that we know what we are doing with a high horsepower engine product,” Juric says.
“The trials will last a couple of years – we want to get to the first mid-life at least. As a conservatively-driven engineering company we have conservative targets even though we know deep down that our products will be able to go for longer.”
The D9812 engine has already been tested over the past 18 months in excavators and trucks in France and the United States, respectively. The testing of the D9816 will start during 2019, before trials of the D9820 begin in the following years.
“It is still early days for the engine and like anything we need runs on the board,” Juric continues. “We’re progressing with some forward-looking clients that are prepared to take risks. If everything goes to plan there is no reason why we won’t progress the engine further with them.”
The D98 engines, which are built from start to finish on a single assembly line by the same personnel, typify Liebherr’s modular mindset.
Liebherr is taking this approach with the engines so it can develop them exactly to the requirements of mining companies. Depending on the application, the engine consists of scaled components to provide machines with optimised power when it is required.
Liebherr’s modular approach, combined with the focus on vertical integration, has emerged as a key focus of how its customer service division in Australia will develop.
In the same way Liebherr has pushed for diversification of its Australian client base in the past two years, the company has also prioritised establishing a stronger service model.
Liebherr continuously improves the capabilities of its Australian service people by having them visit the European factories for training on new or updated equipment and components.
The D98 engine, for example, is expected be a major part of this training in the coming years as the product evolves and is eventually rolled out across mine sites.
Liebherr Australia executive general manager, customer service Tony Johnstone regards the vertical integration model as a positive opportunity, but is under no illusions about what it means from a customer support perspective.
“I think that vertical integration is of great value to the organisation, but it also comes with challenges because you essentially only have one supplier,” Johnstone says.
“When we need improvement in component life or have some sort of technical problem, we need to have close relationships with the components division and the supplier for what goes into the equipment so we can have that resolved.”
The Liebherr factory tours do, however, importantly educate the OEM’s customers about the supply chain that extends from Europe to their mine sites in a way not possible in Australia.
“It gives them a view of our capability as a manufacturer and what goes into manufacturing components and machines,” Johnstone says.
“When we take customers from an operational point of view what it gives them is a sense of comfort that we are a professional manufacturer.”
The reassurance and focus on aftermarket service didn’t go unnoticed by the touring party. Poulter says having that direct link with customer support in Australia, which in turn communicates directly back to the factories, is an advantage for mining organisations.
“If the machine has been on the market for a few years, and is proven, it will sell itself,” Poulter says. “But what you can’t buy these days is the service that goes with it.
“The service component, as in technical assist, spare parts inventories, managing modifications and upgrades for software, that is paramount. Without that don’t even bother talking to us.”
Strengthen mining together
The relationships that developed during the tours, and into Bauma, demonstrate the growing collaboration between mining companies and OEMs.
Liebherr is challenging OEM norms with its vertical integration model and latest mining solutions. Blue Cap Mining general manager Paul Allen believes OEMs also have an opportunity to work closely with mining partners to challenge the impact of industry volatility to help guide sustained prosperity.
“Collectively, you look at OEMs and us, and say, how are we challenging paradigms in the industry? We have got to make it a sustainable industry economically despite commodity price variation in the markets,” Allen says
“We employ people, we want people to have security and we want people to come into mining.
“Conversely, in the Australian context, mining is the biggest contributor to the GDP, we have got a responsibility to ensure the future success of the industry.
“We would like to see that consistently delivered through us and the OEMs; and look closely at how we can do that together.”
From the Colmar factories, to the magnitude of the Ehingen crane facility and complexities of the components supply chain, Liebherr portrayed a bigger picture view of how its operations will be sustained.
Wehr hopes the experience of bringing each of these facilities together translates into the potential for Liebherr to work with each company in the tour party on a deeper level to benefit the industry.
He says Liebherr’s wrap-up meetings with the mining organisations at Bauma indicate that a more personal relationship has been achieved.
“If they can understand the depth and capabilities of our business better then hopefully that augers well for future opportunities,” Wehr concludes.
This article also appears in the June edition of Australian Mining.