IBISWorld Market Research
Although activity in downstream mining industries is set to remain at healthy levels, weaker capital expenditure on mining equipment is projected to contribute to declining industry revenue.
Melbourne, Australia (PRWEB) April 08, 2015
The Mining and Construction Machinery Manufacturing industry has grown at a moderate pace over the past five years. According to IBISWorld industry analyst Spencer Little, “the first phase of Australia's mining investment boom drove demand for mining machinery and equipment, until mining firms began to shift to resource extraction.” This reduced investment weakened demand for mining machinery and subsequently constrained revenue growth. Demand for other industry products from downstream industries has been more subdued, highlighted by stagnant growth in building construction and modest public investment in infrastructure projects. Overall, revenue is estimated to grow at a compound annual rate of 3.2% over the five years through 2014-15. Weaker expenditure on local mining activities is expected to contribute to a 6.4% drop in revenue in 2014-15, with revenue falling to $5.2 billion.
The mining investment boom has also driven import penetration over the past five years, with imports peaking at nearly three quarters of total domestic demand in 2011-12. However, as investment dwindled and mining firms began to focus on mineral and commodity extraction, import competition also declined. Imports are expected to account for just over 55.0% of domestic demand in 2014-15. Exports also account for a large share of total industry revenue, as the high-quality and specialised machinery produced by the industry is well regarded in overseas markets. “Although activity in downstream mining industries is set to remain at healthy levels, weaker capital expenditure on mining equipment is projected to contribute to declining industry revenue,” says Little. However, the anticipated modest growth in construction markets may cushion the decline of industry manufacturers. In addition, oil and gas extraction is expected to increase over the next five years, boosting demand for industry products. Projected depreciation of the Australian dollar over this period is set to benefit industry exports by making Australian machinery comparatively more affordable overseas. A weaker Australian dollar is also set to reduce competition from imports.
The Mining and Construction Machinery Manufacturing industry has a medium level of concentration. The major players tend to be large multinational corporations that benefit from having global supply chains. Operating manufacturing capabilities locally has traditionally allowed firms to effectively service domestic mining sites and provide technical support. Over the past five years, market share concentration has grown slightly, with major players Joy Global and Bradken outperforming the overall industry over this period. Aside from the industry's major players, many small-scale operators also manufacture mining and construction machinery. According to ABS counts of business data, in 2012-13 over 75.0% of industry enterprises generated less than $2.0 million in revenue and only 13 firms had more than 200 employees. These trends demonstrate the prevalence of smaller scale industry manufacturers that likely cater to niche and specialised markets.
For more information, visit IBISWorld’s Mining and Construction Machinery Manufacturing industry in Australia report page.
Companies in the industry primarily manufacture construction, earthmoving and mining machinery, equipment and specialised parts. Firms that mainly manufacture tractors for construction or earthmoving purposes are also included in the industry.
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