Stronger construction activity and demand from emerging markets will support growth
Los Angeles, CA (PRWEB) May 08, 2012
The Construction Machinery Manufacturing industry produces machinery and equipment for residential, non-residential, highway, street and other infrastructure construction. Demand for industry products depends on the level of spending on housing and non-residential construction as well as government funding for infrastructure projects. The industry is highly globalized, with major companies Caterpiller Inc., Deere & Company and others operating across the Americas, Europe, Australia, India and Asia. As such, exports account for a significant amount of revenue, says IBISWorld industry analyst Andrea Alegria, “which makes the industry very susceptible to global economic conditions and the cyclical fluctuations in construction markets abroad.”
The Construction Machinery Manufacturing industry experienced strong growth in the years leading up to 2007. Then, as the economy sank into a recession and unemployment rose, businesses shelved new construction projects, the credit markets tightened and discouraged real estate investors and rising foreclosure rates caused demand for new residential developments to drop. Weakened demand for equipment across all construction sectors resulted in revenue declining at an average rate of 0.8% each year from 2007 to 2012. According to Alegria, “The industry experienced the steepest decline in 2009, when revenue plummeted 32.8%.” Nonetheless, revenue rebounded 27.8% in 2010. Although domestic demand remained weak in 2010, dealers restocked inventory to meet growing demand for products abroad, as many emerging markets experienced faster economic recovery. Exports to China and other emerging markets jumped as population growth boosted the need for large infrastructure projects and housing and commercial developments. In 2011, the positive restocking and exporting trend continued, pushing revenue up 4.1%.
The industry will experience continued growth in the coming years. As consumer spending and consumer confidence grow, businesses will continue to experience improved profit and will start to hire more employees and expand operations. This business growth will drive demand for new construction of commercial spaces, such as warehouses, manufacturing facilities, shops and retail centers, boosting demand for construction equipment. Growing demand from developing countries will also continue to support the industry. For more information, visit IBISWorld’s Construction Machinery Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Industry firms manufacture construction machinery and equipment for use in residential, non-residential, highway, street and other infrastructure construction.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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