Strong performance in the Mining and Construction Divisions have promoted industry growth
Melbourne, Australia (PRWEB) March 20, 2013
The Material Handling Equipment Distributors industry has been performing commendably over the five years through 2012-13, mainly due to a strong performance from several key downstream markets such as the Mining and Construction divisions. According to IBISWorld industry analyst Ricky Willanto, “a strong Mining division has helped operators in this industry weather the effects of the global financial crisis.” The division consumes large quantities of material handling equipment, bolstering demand and encouraging growth in the industry over the past five years. A large proportion of industry products are purchased through leasing, which helps stabilise income stream into the industry. This has helped the industry tremendously, especially during a period of volatile interest rates.
The top four firms in the Material Handling Equipment Distributors industry are estimated to account for a small percentage of overall industry revenue. As a result, concentration is estimated to be at a low level for the industry. The industry's leading player, WesTrac (owned by Seven Group Holdings Limited), has been increasing its market share rapidly over the past five years due to large investments in a booming Western Australia. Hastings Deering has also increased market share over the period, “which has a slight upward effect on industry concentration,” says Willanto. However, the industry is in its growth life cycle and it is expected that new enterprises will enter the market over the next five years, possibly segmenting the industry further.
Compared with the past five years, IBISWorld expects the Material Handling Equipment Distributors industry to grow much faster over the five years through 2017-18 as operators can expect the Construction division to grow as a market. Infrastructure construction projects such as rail and port construction activities will continue to bolster demand for material handling equipment. Cost-conscious operators are also expected to increasingly favour second-hand machineries in the next five years as prices of used equipment continue to plummet.