Searching for a relief drop

News October 16, 2001
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Construction equipment manufacturers expect overall industry business to continue to decline through year-end 2001 and show lit

Construction equipment manufacturers expect overall industry business to continue to decline through year-end 2001 and show little growth in 2002, according to an annual forecast by the Construction Industry Manufacturers Association (CIMA).

Construction manchinery manufacturers participating in CIMA's annual Outlook survey predict year-end business in the U.S. will drop 12.8% and record a 0.5% growth in 2002. For Canada, construction machinery shipments are anticipated to drop 11.3% by year-end 2001 and decline 0.7% in 2002. Industry worldwide business is anticipated to drop 2.7% for 2001 followed by a 1.1% decline for 2002.

CIMA conducted its Outlook report in third quarter 2001 with a majority of the responses recorded prior to the Sept. 11 terroist attacks, so estimates may go lower in the next few months.

"Construction equipment manufacturers have been affected by the general economic slowdown, after enjoying record growth for eight straight years," noted Robert J. Fien, 2001 CIMA chairman and CEO of Stone Construction Equipment, Honeoye, N.Y. "Our industry has been in the midst of a slowdown, and we had hoped for markets to begin stabilizing in the next few quarters. However, recent world events and their further dampening effect on business have caused us to be less optimistic about a quick turnaround. Our outlook is guarded, as it's still too early to tell with the current political uncertainties."

The state of the general economy is the overriding concern of equipment manufacturers across all product lines, especially the impact of a faltering stock market and the uncertainty of continued consumer confidence.

"Dealer and contractor purchasing is still conservative as they take a wait-and-see attitude on the future of the economy, despite the past strength in housing markets and infrastructure pent-up demand," Fien said.

U.S. public works spending and lower interest rates were cited as positive factors that would impact future business volume. Manufacturers called continued excess inventories a significant factor that would negatively impact future sales. Changes in distribution channels, paricularly in rentals, also will play a role in the demand for machinery.

"Rental markets are oversaturated. Rental firms have cut new equipment purchases and flooded the market with quality late-model equipment, further depressing sales of new machines," Fien added.

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