This is marketing research on the Construction Machinery industry and can include information on the background, market structure, definitions, competitors, trends and developments of construction machinery and is related to bulldozers, cranes, mixes and pavers.

Table of Contents

Table of Contents

1 Background 
2 Market Structure 
3 Market Metrics 
4 Industry Players 
5 Recent Trends and Developments 
6 Sources

Background

Construction machinery consists of earthmoving equipment (bulldozers, shovel loaders, and excavators), off-highway trucks, power cranes, crawlers, draglines, trenchers, compactors, mixers, pavers, graders, and scrapers as well as components, parts, and attachments. This equipment is used for the construction of residential and nonresidential buildings, for new power and manufacturing plants, and for adding to or renovating infrastructures such as sewage and water lines, roads, bridges, and tunnels.

The construction machinery industry is a very cyclical one with high sales growth during boom years and reductions in output during economic slowdowns and downturns. The industry is affected particularly by factors such as housing starts, consumer confidence, and employment. Since residential and business construction is typically debt-financed, interest rates and the availability of credit are also important factors.

Market Structure

The construction machinery industry is dependent on demand from international customers, with over one-quarter of sales in the 1990’s consisting of shipments to foreign countries. The industry has done very well since 2000 with the global economic expansion and high construction rates in many countries especially in China. Overall revenues for construction machinery mid decade totaled almost $35 billion annually. China alone has seen its purchasing of construction machinery growing at an annual rate of over 20% during this decade. Japan historically had been and continued to be the top supplier of construction machinery to the United States, with a 22 percent share of all imports in the industry in the late 1990s.

Revenue in the construction machinery industry is always heavily affected by federal, state, and local government spending. State and local government spending has also risen in response to the passage in 1998 of the Transportation Equity Act for the 21st Century (TEA-21). That legislation, which was enacted in June 1998, provides for $218 billion in expenditures for highway and other transit systems through 2003, with $175 billion earmarked for highway repair and expansion. This increase of 40 percent over previous spending levels has fueled and will continue to fuel domestic demand for construction equipment, offsetting, at least in part, the reduction in demand caused by international factors.

The numbers below do not tell the whole picture of the construction machinery industry. The numer of establishments decreased in the period leading up to 2002 but the recent boom in commodities prices as well as the general global economic expansion increased the demand for construction machinery since that time. At the same time, the American residential construction market took off and reached a peak in ther period 2005-2006, but has since slowed considerably.

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Employment is a similar picture. Although the workforce decreased in the latest five year period reported, the recent economic expansion likely increased the workforce since 2002.

This a moderate to high concentration industry. The eight largest players alone in this business account for almost 2/3rds of the industry's revenues.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              57.6%
     8 largest                              64.7%
    20 largest                              73.2%
    50 largest                              81.5%

Market Metrics

As indicated above, the revenues of the industry shot up in the past couple years as a result of the global economic expansion as well as the large increase in new residential construction in the U.S. It has almost doubled since 2002.

Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

Recent Trends and Developments

The continued preference of many customers to rent rather than purchase equipment continues to shape the distribution channels in this industry. The expansion of renting will continue not only in the United States, where the trend toward consolidation has led to an increase in the size and a reduction in the number of players in the rental market, but also in Europe and Canada as end users demand flexibility, cost reduction, and the latest technology, particularly in specialized equipment.

The outlook for the construction machinery industry indicates that the rapid expansion will not continue as the global economy cools off and the U.S. housing market continues to contract. Despite relatively low interest rates, construction on new housing may not pick up appreciably until 2009. Continuing prosperity for the industry will largely depend on more exports to overseas markets such as China and other emerging markets.

Sources

• Most current US government sources