Liebherr-Australia may have started remanufacturing components to bolster its aftersales offering, but the capability is now providing benefits that extend beyond the original purpose.
The Liebherr Reman Program was launched in Australia during the challenges of the last mining downturn in 2014 to support the largest Liebherr mining equipment fleet in the world.
Liebherr’s global management team had realised that the company needed to diversify its Australian aftersales service to help protect the mining business against the cyclical nature of the industry.
Six years on, the industry is in a stronger place and the remanufacturing program has grown exponentially to become a key capability for the company in Australia.
In 2015, Liebherr-Australia remanufactured 660 mining components with a small team of about 25, before expanding the program to recondition 950 components the following year.
The number of remanufactured components has continued to grow by between 15 and 20 percent year on year since then, hitting more than 1300 in 2019.
Liebherr-Australia expects that number to rise to around 1800 components this year, with 2021 shaping as the year the program breaks through 2000 components.
Marius Pretorius, general manager – production at Liebherr-Australia, joined the company as the foundations of the program were being put in place in 2014.
He says Liebherr’s $60 million investment in the program’s facility in Adelaide has paid off as its customers have identified the advantages remanufacturing offers.
“The Liebherr mining division started to think that we needed to buffer ourselves against the downturns in the mining industry in 2014,” Pretorius tells Australian Mining.
“If we are tied to capital sales and that drops off, and as we know the mining industry is cyclical, revenue dries up for the business too. A good way to mitigate this is to have a stronger footprint in the aftersales business once the machines are sold to the customers.
“The most typical avenue is servicing the machines and supplying spare parts, but a more beneficial one is to have a remanufacturing business: especially when you are the ones who made those components in the first place.”
The program has served its initial purpose by successfully diversifying Liebherr-Australia’s operations, but it has also delivered notable benefits on two fronts beyond the company’s bottom line.
Firstly, it has helped Liebherr’s Australian mining customers to better manage their maintenance budgets by giving them an alternative to ordering new components or parts.
The Liebherr Reman Program aims to provide an economic solution for all of the company’s machines, remanufacturing components as new while providing the same warranty as a part straight out of one of its factories.
As an original equipment manufacturer (OEM), Liebherr brings its latest technical developments to the Reman Program and tests every remanufactured component to the same standard as original factory produced parts.
There is also no major threat of machine downtime when components are being remanufactured, as Liebherr replaces the unit in machines with one in stock from a company branch while it is being reconditioned.
“Customers have gravitated to this model because of the advantages of using an OEM remanufactured component versus a component from a third-party supplier,” Pretorius says.
“We draw on our manufacturing capabilities and our vertically integrated business with the majority of components in mining equipment designed and manufactured by Liebherr.
“The remanufactured components are always manufactured using the most up to date technical specifications, taking advantage of the new technologies in the business, and the feedback from field experiences of our engineers and technical support teams.”
The second benefit, and increasingly the one having the broadest impact, is the advantage remanufacturing provides to the environment by developing a circular economy for the OEM’s components.
Pretorius says more than 1500 tonnes of steel are being reclaimed through the program each year at its current size.
“It is a great story that Liebherr is reclaiming so much steel each year with the remanufacturing program,” Pretorius says.
“It saves energy, is better for the environment, and it keeps people employed. We currently employ almost 90 tradespeople directly within our remanufacturing business in Australia, in addition to being a significant employer indirectly through our engineering service supply base of over 20 Australian SMEs.”
As the social expectations of mining grow, the industry’s supply chain has responded by developing initiatives that make it more sustainable.
The Liebherr Reman Program is an example of an initiative that has a two-fold effect by not only benefitting the environment but also positively impacting the budgets of its customers.
“It is smart business and just the right thing to do. Liebherr-Australia is committed to being a valuable and sustainable partner in the mining supply chain, and the Reman Program is just one of the many activities that enables us to demonstrate this,” Pretorius concludes.
This article will appear in the July issue of Australian Mining.