Construction machinery manufacturers predict smaller gains in overall business in 2007, following expected double-digit growth in 2006, according to the annual outlook forecast conducted by the Association of Equipment Manufacturers (AEM). Growth is expected for U.S., Canadian and worldwide markets, with the strongest 2007 gains anticipated in global markets.
Machinery manufacturers participating in the annual AEM outlook survey expect overall construction equipment business in the U.S. to close out 2006 with increases of 11.2% compared with the previous year, and that business volume to Canada will gain 12.7% by year-end 2006. Sales to other worldwide markets for 2006 are anticipated to grow 10.9%.
Looking to 2007, survey participants forecast increases of 3.9% for the U.S. and expect business volume to Canada to increase by 5%. They anticipate growth of 6.4% in other worldwide markets in 2007.
Each year, the AEM North-American based international trade group polls its construction equipment manufacturer members on expected industry-wide performance of this multibillion-dollar industry. Member companies' machines and equipment build and repair America's and the world's roads, bridges, dams, houses, offices, schools and other public and private infrastructure.
"Although the U.S. economy is starting to show signs of slowing down, it has displayed surprising resilience," said Gerry Shaheen, 2006 AEM chairman and group president for Caterpillar Inc. "For construction-equipment manufacturing, the U.S. housing market has leveled off, but this has been offset by strength in non-residential construction, road building and sales to global markets. We are cautiously optimistic that machinery sales will continue to grow through 2007, although at a more moderate pace than 2006. To put this in perspective, 2004 and 2005 sales were among the highest in recent years for the U.S. construction machinery manufacturing industry."
The AEM survey asks respondents to rank the influence of several factors on future construction equipment sales. Not surprisingly, the state of the general economy, including interest-rate levels and consumer confidence, are top factors. Housing starts and highway funding also will have a major impact on the continued strength of the industry, according to AEM survey respondents. Other key issues are steel prices and energy costs.
"The strong U.S. economy--coupled with the strength of the global economy--has kept construction machinery sales on the upswing over the past few years," Shaheen said. "There was pent-up demand for equipment, since many customers had delayed purchases through the earlier business slowdown.
"The construction and repair of highways bridges and other public works is also a major contributor to overall construction activity, which makes it of primary importance to many construction equipment manufacturers," said Shaheen.
Rental markets account for a substantial share of equipment sales, and AEM outlook survey respondents cited rental company situations as a significant factor affecting future business. The construction equipment industry is traditionally export-intensive, and survey respondents also noted the strength of the U.S. dollar and export demand as factors.
"Exports of construction equipment have increased as overall business has expanded. The demand from emerging markets such as China, with its boom in infrastructure building, has particularly fueled equipment purchases," Shaheen said. "The major rental companies have made significant investments in modernizing their equipment fleets during the last several years, and this has been very positive for our industry."
The AEM annual outlook forecast covers 71 whole machine product types and 24 types of attachments and components, grouped into seven general categories. The survey is conducted in the third quarter of the year and summarizes manufacturers' estimates of year-end business volume for the current and next year. All percentages reported represent change in unit sales. The complete survey is available online at www.aem.org.
For the year-end 2006, earthmoving equipment sales are anticipated to increase 3.9% in the U.S. and 5.7% for Canada. Other worldwide markets for earthmoving equipment sales are expected to decline 0.3% for the U.S., while increasing 0.7% for Canada and 2.7% for other export markets.
Sales of lifting equipment by year-end 2006 are predicted to gain 32% for the U.S. and 28.5% for Canada, while increasing 13.8% for other worldwide markets, according to the AEM annual outlook report. For 2007, sales are expected to increase 10.4% in the U.S. anticipated to grow 10.4% for Canada and predicted to gain 12.3% for other worldwide markets.
Year-end 2006 business in the light equipment market is expected to increase 8.9% for the U.S., 10% for Canada and 9.2% for other worldwide markets. Light equipment business for 2007 is predicted to gain 3.5% for the U.S., 4.8% for Canada and 5.5% for other worldwide markets.
Sales of concrete and aggregate equipment are anticipated to increase 8.8% in the U.S. by year-end 2006, and show gains of 7% for Canada and 13.5% for other worldwide markets. Shipments in 2007 are expected to grow by 8.4% in the U.S., 7.7% for Canada and 10.3% for other worldwide markets.
Sales of miscellaneous equipment for year-end 2006 are anticipated to increase 11.7% for the U.S., 10.5% in Canada and 6.5% in other worldwide markets. For 2007, U.S. sales are expected to rise 3.6%, sales in Canada are predicted to increase 4.4% and other worldwide sales are forecast to rise 4.5%.
