Jongseon Ahn, executive vice-president, Doosan Infracore

Doosan Infracore’s "Powered by Innovation" slogan serves as a declaration of intent of its vision for the future of the construction equipment and machinery sector. With an ever-increasing focus on technology, the group’s strategy is to use innovation to add value for its clients, as Doosan Infracore executive vice-president Jongseon Ahn explains. In this interview, he sets out this philosophy, put into practice recently in the form of the “Concept-X” project, and takes stock of the general situation within the industry.

How has the Doosan Group evolved and how has its market positioning changed over the last few years?

We currently have around 40,000 employees across 36 countries. Between 2016 and 2018, we recorded revenue of € 12 billion, € 13 billion and € 14 billion. In the case of Doosan Infracore, our revenue came in at € 4 billion, € 5 billion and € 6 billion in the same period. In terms of our position in the global rankings for the construction machinery and equipment industry, in 2016 we were eighth, rising to sixth in 2017. We dropped to seventh in 2018 because some local companies in China improved their ranking thanks to the growth of the Chinese market.

What are Doosan's objectives and what do you see as the group’s main strengths?

After starting out as the first large-scale machinery producer in Korea in 1937, Doosan Infracore became the first Korean manufacturer to begin producing marine diesel engines in 1958, before moving into the manufacture of construction equipment in 1977. In 2007, Doosan acquired Bobcat, the global leader in the compact construction equipment, becoming the undisputed world leader in the construction machinery business.

In the light of this progression, our aim is to be one of the world's top five construction equipment manufacturers. In terms of our strengths, I would say that our biggest asset is having two complementary brands like Doosan and Bobcat within the same group. This enables us to specialize in the compact sector, with a strong presence in North America and Europe, as well as offering a comprehensive range of equipment thanks to Doosan, which is very strong in Europe and in emerging markets. We also have a global R&D network thanks to the two companies.

Let's focus on Doosan Infracore Europe (DIEU). What role does it play within the Doosan Group and how pleased are you with its achievements in Europe?

"In Spain, we’ve grown by 11% and increased our market share by 0.3%p. Generally speaking, the industry has experienced significant growth, but we’re dealing with strong competition on price." 

At the end of 2017, the European heavy and compact machinery divisions were separate. Now, DIEU is a wholly owned subsidiary of Doosan Infracore focusing on the sale of construction equipment produced by Doosan.

DIEU has been selling construction equipment to European clients since 1987. It has registered constant growth in terms of sales and market share in the last five years. In 2019, the company recorded sales growth of 12% and market share growth of 0.2%p. Traditionally, DIEU has strategically focused on selling machinery to the distribution network instead of selling directly to large rental clients or major account clients.

However, since 2018 we’ve focused on sales to big clients, achieving some excellent results, such as in the case of CEMEX, one of the leaders in the global building materials industry. The Doosan brand is also improving as sales volume increases. DIEU has achieved an increase market share in countries such as the UK, Italy and the Iberian peninsula, as well as securing a significant increase in the French market, with sales up by 53% year on year and an increase of 1.1%p in market share.

Despite that, we still believe we need to grow in the German market. Moreover, our market share for wheel loaders is relatively lower than the excavator sector, which has traditionally had a strong presence in the EU market.

What's the short- and medium-term strategy for Europe?

In the short term, we want to improve our presence in the European market by focusing on the following basic strategies: increasing sales of wheel loaders; launching the new Generation -7 of Stage V machinery; introducing a new line of compact excavators; strengthening the coverage of our distribution network in Germany and France; and improving our key accounts business.

In terms of the medium and long term, we want to strengthen our presence on the market by offering innovative products and technology. In the case of electrification, we want to develop eco-friendly excavators and wheel loaders. And as regards to automation and autonomous equipment, we want to develop unmanned excavators and wheel loaders that include a control center designed to guarantee a safer, more productive experience for our clients.

Doosan is increasingly focusing on technological innovation in order to differentiate from standard products in the construction sector every time. Could you tell us a bit more about the Concept-X project and the choice of “Powered by Innovation” for the new slogan?

Our new brand slogan is the embodiment of our strategic direction: Doosan is committed to producing innovative products and services for our clients and delivering added value through innovation. We're transforming from an equipment manufacturer into a provider of innovative solutions.

Concept-X is our way of visualizing our future technological development. It refers to integrated hardware and software solutions which we believe will form the basis for the future of the construction industry. It began as an internal focus in Doosan Infracore, as a way of pre-empting and implementing future construction technology and allowing us to offer solutions to client problems that couldn’t be resolved using conventional equipment.

Given the prominence of information and communication technology in the main technological stream, we expect the construction industry to adapt to the trend as well. The aim of the Concept-X project is to visualize the role of cutting-edge technology in the future of the construction industry and to implement it before anyone else, in accordance with the Doosan style.

“Another key focus for Doosan is the expansion of our mining range. In 2020, Doosan will launch its biggest excavator, the DX800LC-7, on the Europe market."

The "X" in the name is a nod to excavators, but it’s also a reference to the X used to express the concept of an unknown variable in maths. The first port of call for Concept-X is to identify valuable solutions for the future of the industry by tapping into general tech trends such as AI, big data and so on. We also consider client recommendations when it comes to improving production efficiency and safety. Concept-X must also be a solution that improves productivity and safety in the workplace, while taking environmental impact into account, too.

In order to implement this vision of the future of construction, we needed a process both to help us maintain internal push and to share our vision for the future with the various participating stakeholders, throughout the development process. Thankfully, many stakeholders were in agreement with our concepts and the scenarios envisaged by Concept-X and were able to collaborate on the development and completion of the process.

How have clients responded to the project?

Last November, we invited tech partners, government representatives and leading clients from all over the world to an event at which we successfully demonstrated how autonomous machinery can operate in real-world settings.

Concept-X is a vision of the technology of the future, so we’re not expecting it to equate to immediate profit. That said, Doosan Infracore is positioning itself as a leading company developing technology for the future of the construction industry. Doosan Infracore will launch a series of new solutions which can be sold with the associated Concept-X technology.

Moreover, some of the technologies are currently being integrated with current construction equipment, in order to differentiate it from other products. We’re also preparing to launch a new on-site management solution for current manually operated equipment.

Doosan Infracore has rapidly transformed itself from a manufacturer focusing on construction equipment to a software company offering services and solutions. To sum up, Concept-X technology will provide clients with increased productivity, improved safety and eco-friendly solutions.

Can you tell us about any other initiatives that are on the cards?

Over the next few years, Doosan will commercialize some of the technology we’re developing as part of the Concept-X project. This will include a complete electronic hydraulic system, MG/MC solutions, digitalization and scanning solutions for the workplace, a connected machinery monitoring center and 5G-based remote operation, to name just a few of the solutions we’re working on. There will be new machinery, but also software solutions.

How has 2019 been for the company in southern Europe and Spain in particular? What are the targets for 2020?

2019 was a very positive year for Doosan in Europe, particularly southern Europe. In general, retail sales were up 12% in the continent in comparison with 2018. In southern Europe, this growth increased to 25%, thanks to the Italian market in particular. In Spain, we grew by 11% and increased our market share by 0.3%p. Generally speaking, the industry has experienced significant growth, but we’re dealing with strong competition on price.

In terms of forecasts for 2020, we’re still hoping for market growth, but we’re expecting the push behind the growth to ease off and competitive pressures to further increase.

What conclusions can be drawn two years after the relocation of the EMEA headquarters to the Czech Republic and the reorganization of the production centers?

The relocation of the EMEA headquarters was a difficult decision, but it was a risk worth taking. We were able to become more efficient as an organization and improve our internal communication by having all departments in the same location.

The decision to separate the heavy and compact machinery businesses has also generated additional benefits in terms of increased focus, improved internal communication and strong synergy within respective product groups. For example, Doosan’s business in Europe is now benefiting from even stronger support from the headquarters in Korea in terms of R&D, after sales, product support and quality. The integration of the European Customization Center has just been finalized, so it’s too soon to assess the effect of that. Having said that, in general terms, we’re expecting plenty of benefits in terms of improved delivery times, product availability and logistical support for our distributors.

What role does digitalization play in the design of new mining equipment solutions? What tangible action is being taken in this area?

Doosan is working on digitalization solutions in the mining sector to bring about tangible benefits, just like we've seen with Concept-X  In terms of productivity, we're working on autonomous solutions which make it possible to have unmanned operations running 24 hours a day, as well as on using connectivity to create an optimized fleet, on top of the health and security benefits of this type of technology.

In the field of production and inventory management, we’ll be introducing drone-based visual scanning. Health and safety in unmanned operations is another key focus. Furthermore, we’ll see precautionary maintenance based on digitalized diagnostics introduced.

With regard to the mining sector, what are the company’s short-term plans?

Another key focus for Doosan is the expansion of our mining range. In 2020, the company will launch its biggest excavator, the DX800LC-7, on the European market.

"Doosan is transforming from an equipment manufacturer into a provider of innovative solutions."

One of the company’s most successful models in emerging markets, the DX800 has a proven track record in terms of durability, productivity and total cost of ownership in harsh working environments. The new model will be available in Q2 of 2020. The company is also developing its bigger model, which will be available on the European market in a few years.

Product(s):

DA30-7

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DA45-7

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DL420-7

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DX300LC-7

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DX350LC-7

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DX380LC-7

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DX490LC-7

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DX530LC-7

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