Slowing growth in the Mining division is constraining the industry.
Melbourne, Australia (PRWEB) March 08, 2014
Slowing growth in the Mining division has adversely affected demand for industry products, and has prompted local players to decrease operating costs in light of shrinking sales. The Mining and Construction Machinery Manufacturing industry's revenue is forecast to decrease by 2.3% over 2013-14 to reach $4.9 billion. This is in contrast to the preceding period, with revenue estimated to grow at an annualised 1.7% over the five years through 2013-14. The mining boom drove growth earlier in the period. IBISWorld industry analyst Nick Flores states “the industry's performance reflects developments in downstream industries, including the mining, construction, and oil and gas sectors.” Weak construction activity and volatile consumer sentiment have reduced demand for machinery. Consumers have opted to save more, reducing demand for residential property and lowering retail sales. This has caused demand for retail building construction to ease. A strong Australian dollar for the majority of the past five years has boosted imports, which account for a higher share of industry revenue in 2013-14 than in 2008-09. The highly technical nature of industry products has aided import penetration. The United States, Germany and Japan, which have high levels of research development and highly skilled workforces, account for 62.6% of industry imports. This emphasises that firms need to be innovative to successfully compete within the industry. According to Flores, “the growth in imports, combined with weak downstream activity, has translated to shrinking profit margins, as firms have curbed operating costs to remain competitive.”
Over the next five years, consumer sentiment is expected to improve, enhancing prospects for the Construction division. This, along with planned increases in government spending on infrastructure, is expected to lead to higher demand for mining and construction machinery. Oil and gas extraction is also forecast to increase over the next five years, further boosting demand for industry products. The number of enterprises is projected to decline in the next five years, as local players unable to carve out a niche exit the industry.
The Mining and Construction Machinery Manufacturing industry has a moderate level of market share concentration. Major players in the mining segment increased their market share through a number of acquisitions and expansions. Large players acquired smaller companies to diversify their respective operations when demand for Australian mineral and energy resources was soaring. As the growth in mining expenditure cooled down, acquisitions stalled as the focus turned to improving operational efficiencies. Major industry players include Sandvick Australia, Joy Global Australia, Atlas Copco South Pacific, Boart Longyear, Bradkin Limited and Caterpillar. For more information, visit IBISWorld’s Mining and Construction Machinery Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry primarily manufacture construction, earthmoving and mining machinery along with specialised parts for such equipment. Products range from concrete mixers, front-end loaders, jackhammers to steamrollers. It excludes agricultural tractors and cranes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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