HISTORY LESSON: Smart acquisitions help Volvo CE grow into a world leader
by Nigel Griffiths
Earlier this year Volvo CE finalized the 2013 acquisition of the US hauler Terex Corporation, a manufacturer of off-highway rigid and articulated trucks. For Volvo CE President Martin Weissburg the transaction represented “an opportunity for Volvo CE to fill product gaps”, explaining that with sales in mining forecast to rise, now is a good time for the company to enter the market for rigid haulers. Described by the company as “a strategic acquisition that offers Volvo CE considerable scope for growth”, the acquisition is an example of a growth process which has helped Volvo CE expand from its modest beginnings nearly two centuries ago in a machine shop in Eskilstuna, Sweden, to become a global player, diversified across a swathe of leading business segments.
Over the years, many such strategic acquisitions have complemented the company’s in-house development and organic growth. Through this process, Volvo CE has evolved from a specialist engineering company into a total solution provider and one of the world’s largest manufacturers of construction equipment.
Alongside the market-leading construction equipment, such as wheel loaders, compact equipment, wheel-mounted and crawler excavators, motor graders, articulated haulers and road machinery, Volvo CE also offers a variety of services and after-market solutions – used equipment, rental business, parts, services, attachments and financial services. It now has production facilities in Sweden, France, Germany, China, Brazil, Mexico, South Korea, India, Poland, Russia and the United States.
In the early days, Volvo was a ‘home-grown’ engineering company built on the talents of the brilliant Swedish engineers Johan Theofron Munktell and Bolinder brothers Jean and Carl Gerhard. During the Second World War, Volvo AB – itself the product of two Swedish visionaries Assar Gabrielsson and Gustav Larson – began cooperating with Bolinder-Munktell (BM) in the production of farm tractors and other machines. In 1950, the company Bolinder-Munktell was acquired by AB Volvo, founded by Gabrielsson and Larson in 1927.
It was also during the flourishing 1950s and 1960s that pioneering construction equipment was developed – machines that, in time, came to dominate the company’s production. The first tractor with a diesel engine appeared in 1952 and, two years later, the first wheel loader forerunner of the articulated loader.
By combining the talents of the Swedish wagon-maker, Lucas Lihnell company, the world’s first serially-manufactured articulated hauler known as ‘Gravel Charlie’ was launched in 1966.
CHANGE OF FOCUS
In 1973, the company name changed to Volvo BM. In the following years, some of the best machines ever made by Volvo were put to work on construction sites worldwide.
The year 1977 saw Volvo BM concentrating solely on the development, marketing and production of construction equipment, particularly wheel loaders and articulated haulers. In 1979 it was decided to abandon the agricultural and forestry sectors, and concentrate on construction machinery.
Following a strategic refocusing by the company, the tractor manufacturing division was sold in 1985, and the acquisition trail accelerated during the 1980s and 1990s with the purchase of a number of American, European and Asian construction equipment manufacturers.
In 1985, Volvo BM made a move to open the American market allying itself with the US producer Clark Equipment through the merger of their construction-equipment subsidiaries. This brought together three brand names – Volvo BM, Michigan and hauler producer Euclid – as the VME Group.
Meanwhile, in Europe, VME set out to expand its product range and enter the market for compact loaders through the purchase, in 1991, of the majority share of the German market leader in this sector, Zettelmeyer Baumaschinen GmbH.
It also fully acquired the long-established Swedish excavator company, Åkermans Verkstad AB.
VOLVO CE EMERGES
ln 1995, the Volvo Group bought Clark’s 50% ownership of VME and the name was changed to Volvo Construction Equipment. In the same year, compact excavators were added to the product range following the purchase of leading French manufacturer, Pel-Job.
Motor graders were brought into the Volvo CE product palette through the acquisition in 1997 of the Canadian motor grader giant, Champion. In 2001, the first Volvo motor graders were introduced – destined to become an industry standard.
Volvo became the first foreign company to invest in the Korean industry when it bought the heavy construction equipment division of Samsung Industries in 1998, giving rise to Volvo Construction Equipment Korea Ltd.
The crawler excavator market had been a major target for Volvo CE and within a few years a range of new Volvo excavators emerged from the Changwon plant in South Korea.
Volvo CE made major inroads into the US road construction market through the purchase of the road division of Ingersoll Rand. The company also added a worldwide service and spare-part distribution operation in 2008 by forming ‘Volvo Construction Equipment & Services California’ and a further company ‘Mathews Machinery’ based in California and recently acquired.
This acquisition added manufacturing facilities in Pennsylvania, Germany, China and India, as well as 20 distribution and service facilities in the US and some 2,000 employees worldwide.
Volvo CE was now strongly positioned to operate in the US and other territories outside Europe selling, renting and supporting a range of products including road machinery, compact equipment, and material-handling products.
Today, Volvo CE owns and markets a tremendous range of equipment produced on four continents and distributed in more than 200 countries through dealerships and rental outlets – all built to the same high standards of quality, safety and environmental care.