Suppliers to the Indian mining industry should be on notice: many customers plan on switching.
LONDON – 26 February 2015
In a recent survey of over 100 key decision makers at operating Asian mines by Timetric’s Mining Intelligence Center (MIC), respondents were asked if they anticipate switching suppliers in the next five years. Sixty percent of respondents nominated that they are likely to switch to a different supplier. A further 20% of respondents indicated they were not sure if they would switch or remain with the same company.
The results contrasted with the high satisfaction ratings that respondents gave to Indian suppliers such as Larsen & Toubro Ltd (L&T) and Bharat Earth Movers Ltd (BEML). In fact L&T received the highest satisfaction ratings in 10 of the 16 factors measured, including all cost-related factors and the ‘availability of replacement parts’. In general respondents were satisfied with their choice, but expressed that improvements were necessary, such as ‘better quality’ and ‘broader product range’ to suit different mining conditions.
This should be a warning to Indian-based suppliers not to be complacent in the market, with only 20% of one supplier’s customers intending to stay with them within the next five years. Respondents were given the five year time frame because this is a typical lifecycle for the majority of mining equipment, since companies tend to depreciate equipment over five years, at that point making the decision on whether to rebuild, replace or upgrade.
Cliff Smee, Mining Lead Analyst at Timetric MIC, says, “The results of the survey suggest that although Indian miners seem highly satisfied with their suppliers, customers are looking to upgrade to those providers, particularly the multinationals, who can offer a broader product range, with greater customisation and considerably higher quality.”