During the last 10 years the South African hydraulic hose and fittings market may have marginally grown by a few percentage points, but the increase of companies offering hose assemblies to our markets has increased substantially - So says Dave Michelle, a director of Genflex Hydraulics. He states that while the principal players have remained, some small and even medium sized companies have closed their doors. Michelle explains why this has happened...
"The price of hose and fittings has not really increased during the last 10 years, in fact prices have fallen. An example of this would be that a basket of hoses sold in 1995 for R85,80, can now be purchased for R71,55. However, a basket of fittings in 1995 would cost R18,53, and today can be purchased for R22,22 which equates to an increase of only 20% in 10 years. Add to this the hose cost at 60% of the value of the hose assembly and the fittings at 40% of the hose assembly - the 2005 hose assembly price is now down to R51,81 compared with the 1995 price of R58,89. This equates to a 12% drop in price.
The drop in prices can be attributed to new technologies being utilised, specifically in Asia and Eastern Europe, labour sourced at a cheaper rate along with a longer lasting, and a better designed and more reliable product overall. However, it is my view that prices in the hydraulic hose sector have now bottomed out and increases will follow shortly. The key to market development is to supply products that are good value for money, offering competitive quality and competitive standards. If the industry does not require a 'Rolls-Royce' product, why supply it? Is it not stifling industry growth when cheaper and equally competitive products can be supplied?'
Self-regulation for protection?
I would like to see the formation of an hydraulic hose association not only to protect the image of the industry from unscrupulous players, but also as a form of self-regulation. I see it creating a forum for the development of new technologies and debate within the industry. It would be the perfect vehicle to carry forward new training opportunities and skills upliftment in conjunction with MERSETA. This industry at source is worth some R300-R350 million. It would also go a long way in creating a positive and professional image of the industry."
The future of the industry
Asked where he saw the industry in 5-10 years time in terms of source of supplies and competition, Michelle said "In five years time there will be a world shortage of hydraulic hose, due to the natural sources of today not having been able to grow their market at current costs. China, currently not sufficiently sophisticated, but soon to be with the transfer of technologies from the West, will be supplying up to 10 times more worldwide than today at a better pricing structure and a competitive quality that will ensure continued market development. In 10 years time, China will undoubtedly be able to supply 50% of the world's hydraulic hose and fitting requirements. My company Genflex Hydraulics has already established a trading relationship with China and will be quite suitably placed in the supply of hydraulic hose and fittings, and this will bode well for Genflex's continued growth in business with sub-Saharan Africa as well as further north."
In the picture: RT Binnie Contractors have been using Genflex Hydraulics as a source of supply for their earth moving excavators for over 15 years, due to its 24-hour service, good supply and pricing structures.
For more information contact Dave Michelle, Genflex Hydraulics, +27 (0) 11 900 3235, [email protected]
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