2004 equipment sales topped $US100bn

British company Off Highway Research, has estimated that world construction equipment sales plus sales of replacement components, topped $US100bn last year.

Company principal David Phillips, said at a Conexpo press conference promoting next year's Intermat exhibition in Paris, that North America topped the list with $28 billion of sales and was followed by Europe on $22bn, Japan at $14bn, China with $8bn and others worth about $8bn.

He said 10 manufacturers controlled 75% of global sales by value and tipped that there would be continuing consolidation among manufacturers. Recent examples were Ingersoll Rand incorporating Sambron, Caterpillar accumulating Perkins and Claas, Terex sweeping up Powerscreen, O&K Mining, Fermec, Schaeff, Atlas and others and Volvo taking over Zettelmeyer and Pel-Job.

Other global trends included:

More companies becoming assemblers of machines as they continued to outsource components;

Growth of compact equipment or machines developing less than 100hp(75kW);

Moves away from purchasing equipment to renting them; and

A shift of demand and manufacturing to China.

Phillips said the move to assembly only, was prompted by the need to be more efficient in quality, technical ability and pricing. “No company can afford to lead in technical expertise in all sectors,” he said.

Regarding the growth of compact equipment, he said sales have grown by more than 50% in major developed markets. There is still room for future growth although the concept had been slow to develop in China, but will come in two to three years.

In the rental field, Phillips said 75% of British sales were to rental companies with France and Germany each on 30% and North America on 25%. “This activity has doubled in the last five years,” he said.

Advantages for customers were that cash flow was not tied up, precise matching of machines to jobs could be achieved and there was great timing and flexibility options.

However he cautioned that the move probably put too much power in the hands of a few rental companies, bypassed dealers and threatened long term customer support.

Concerning the Chinese market, Phillips said major international companies like Caterpillar, Komatsu, Volvo, Hitachi, Daewoo, IR, Hyundai and Kobelco, all had big plants in China.

“Also, China is now attracting international component manufacturers and the country will be the world equipment source for up to half the big manufacturers by 2007-08.”

Looking at each region, Phillips predicts China will be slow in 2005 but will experience a sales upturn next year and in 2007. “Along with India, it has enormous future potential.”

The new Europe, that is the new countries coming into the EU from January 1, 2006, has a bright outlook for sales but in the long term.

In Asia, we should expect sales growth of 10 to 15% in the next three to four years and in “old” Europe and North America, there will be continued sustained growth this year and next, because of strong economies and fairly widespread replacement of machines bought in 1999-2000.

However he predicted minimal merger and acquisition activity in these two biggest markets.

More information: Off-Highway Research, +4420 7404 1128, mail@offhighway.co.uk