Construction Machinery

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Construction Machinery

INDUSTRIAL CODES

NAICS: 33-3120 Construction Machinery Manufacturing

SIC: 3531 Construction Machinery

NAICS-Based Product Codes: 33-31201, 33-31208, 33-3120Y, 33-31209 and 33-3120W

PRODUCT OVERVIEW

Tools used in construction include hand tools powered by human muscles alone such as hammers and shovels; hand-held power tools such as electric drills and saws; various supporting structures such as scaffolding, hoists, and ladders; and finally construction machinery. This last category of tooling extends from relatively small and light tools such as small-batch concrete or mortar mixers, jackhammers, and tampers—on up to heavy duty tractors, bulldozers, rollers, trenchers, and large drag lines—culminating in all types of cranes including giants used to support the raising of skyscrapers.

Structures are always built on solid ground, even those held up by submerged foundations. The preparation of the site itself is the first activity. The construction site must be cleared. It may be a forest or a preexisting building. The forest must go. Demolition cranes must destroy the other. Not surprisingly, snow plows are included under construction equipment, as are log skidders, log splitters, and chippers intended to reduce cleared trees, branches, and brush into manageable wood wastes. Dredging equipment for preparing underwater sites and demolition machines for destroying old structures are all part of the product mix.

Cleared surfaces are almost never level. Construction companies therefore deploy earth-moving equipment of all sizes. They use bulldozers and drag lines. Drag lines are cranes atop a mobile platform. The crane positions a bucket, its teeth into the soil. A cable, the drag line itself, is attached to the bucket horizontally. Winching it in causes the bucket to bite into the soil and fill up as it is dragged. Sometimes soil conditions are such that the builder must first secure the foundation to be built by sinking supports down to the bedrock. The machinery industry makes vertical earth augurs and posthole diggers to sink the necessary holes; it also supplies pile driving equipment to drive the poles down to the rock. Sometimes supports must be sunk into vertical rock faces. The builder thus buys or rents horizontal boring machines to accomplish this end. Alternatively the structure rests on foundations deep in the ground. The builder must excavate the holes first using trenchers, digger derricks, and similar equipment, including excavating drag lines. Excess dirt removed must be lifted into dump trucks. The powered shovels that fill the trucks, indeed the heavy-duty all-terrain trucks themselves, are yet other categories of construction equipment. Construction equipment is usually self-propelled, but some pieces travel to the site on their own wheels while others, of the tracked variety, arrive on trailers.

In the preparation of foundations, typically made of reinforced concrete, builders use concrete mixing machinery. Supporting these mixers, they use machinery to prepare aggregate before it is added to cement. Such equipment takes the form of rock crushers, slag mixers, sand mixers, and pulverizing and screening machinery. Foundations are sometimes laid below grade in narrow strips which are first prepared by using powered ditching and trenching devices.

Once the foundations are in place and the structure begins to rise into the air, power cranes are used to lift all that is required to make the structure. In some applications, aerial platforms are hoisted up to serve as temporary working surfaces for the labor. Many types of cranes are used ranging from small, self-propelled units—distinguished by their crane-arm articulations and styles of movement—all the way up to the great tower cranes visible above high-rise structures. Tower cranes, incidentally, must themselves be assembled. They arrive at the construction site in large trailers. Once operational, they take the form of a capital T bolted to the foundation. The vertical bar of the T above its base is called the crane's mast. It comes in sections so that, as the building grows, the crane can grow with it. The crane's operators lift up the next section of the mast itself using the crane. The horizontal bar of the T is divided into a longer jib, which supports the load to be lifted, and a shorter machinery arm, which carries the lifting motor and a concrete counter-weight. A trolley runs along the bottom of the jib so that the lifting cable can be positioned near or far from the mast depending on the situation. A powered winch attached to the trolley actually does the lifting of the load.

Virtually all other work carried out in the raising of structures is done by laborers wielding hand-held power tools. To be sure, experimental robotic equipment for a variety of purposes (e.g., welding, roofing, plastering) has been under development in Japan and Europe since the late twentieth century, but thus far without commercial application.

Road and highway construction requires its own specialized tooling. Roads and highways are built up in layers. Very large rough stones or rubber constitute the bottom-most layer, well below the grade of the road in a deep trench. As the road surface gets higher, the material used is of ever finer size. Rock, gravel, and aggregate form successive layers finished using asphalt or reinforced concrete. Builders or suppliers employ hammermills for crushing or sizing rock and screening machines to separate stone or aggregate into different size classes. Aggregate spreaders are used to apply these surfaces. They are compacted by towed or self-propelled rollers. Asphalt mixing and application machinery rolls out the bituminous surface, asphalt sprayers to seal it. And, in road repair and maintenance, bituminous scrapers and planers are used to create an even surface, all loose material removed. Jackhammers prepare concrete surfaces for repair. Tampers and vibrators are needed to compact the material over which seals will be placed. Highway builders use automated machinery, running on temporary rails, to apply concrete to new highways and to finish its surfaces. In bridge building and maintenance specialized cranes are used. These are designed so that, resting on top of the bridge, they can be deployed to inspect the bridge's undersides or superstructures.

Machines developed for residential construction differ from their cousins used in commercial building erection, highway construction, pipeline development, underwater applications, and in underground construction (as in mining) primarily by size and power and special features required in different environments.

People in the industry usually group construction machinery into categories like earthmoving, lifting, bituminous/asphalt application, concrete and aggregate application, attachments and components, and then place those items that do not conveniently fit these categories into a "miscellaneous" bin. Attachments and components are separated in part because entire classes of producers specialize in making blades, buckets, rollers, and the like designed for attachment to power equipment that can accommodate different "working ends." Sometimes equipment is classed into light and heavy categories usually corresponding to residential and other construction applications. Some people, those at the Census Bureau, for instance, also define off-highway trucks as a special category. Figure 64 lists major equipment in this sector by type. Items in the table are drawn from the Census Bureau but arranged by categories commonly used in the construction machinery industry.

MARKET

Size and Trends

Shipments of construction machinery in the United States were valued at $30.08 billion in 2005. In 1997 the industry had total shipments of $21.7 billion; these declined to $19.1 billion by 2002 in a cycle of negative growth of 2.5 percent a year. Thereafter the industry bounced back and grew at a heady annual rate of 17.7 percent to its 2005 peak. Performance of this pattern typically indicates a cyclical industry, meaning that it responds to other cyclically growing/declining economic activities—in this case the activity of the construction industry generally. Construction machinery represents a very diverse mix of products. Many types of equipment are present at all construction sites but others are unique to the kind of building under way. Different rates of growth in types of construction affect the industry as a whole. Growth in housing stimulates small cranes, growth in office construction stimulates large tower cranes.

One way of tracking construction activity is by means of a statistical series published by the Census Bureau called construction put in place. During the 1997–2005 period, construction put in place grew at an annual rate of 7.2 percent, from $653.4 billion to $1,143.7 billion. In comparison, the machinery sector grew 4.6 percent per year—more slowly than the activity that it was serving.

Reliable data on the construction machinery industry are only availalbe for the period beginning in 1997. In 1997 the Census Bureau introduced a new style of industrial coding. As a consequence data in the earlier period could no longer be compared to the 1997 and later periods—to the woe of all analysts. The historical continuity was broken. In the most recent eight-year period, for which comparable data are available, construction machinery shipments showed a pattern already well known. They follow trends in construction. But, one might say, they do so a little nervously. This is shown by a downturn in shipments in 1998 and 1999, despite healthy growth in construction put in place. The nervous behavior of construction firms in buying new equipment is illustrated more sharply by comparing year by year the actual rates of growth (rather than actual dollars of shipments) of machinery shipments on the one hand and construction put in place on the other. Such a comparison is shown in the figure.

We have no data for construction machinery shipments for 1996 directly comparable to data for 1997, hence the change from 1996 to 1997 cannot be shown. But in the years that follow, growth patterns in machinery shipments, compared with patterns in the growth of construction activity, suggest that equipment buyers, first of all, appear to anticipate softening of the construction markets. Beginning in 1999, the growth of construction activity slowed, 2000 growth was down from 1999 growth, 2001 from 2000, 2002 down further. Nonetheless, growth was present. But machinery buyers, namely the construction industry itself, felt this slowing and responded by very weak purchases of construction machinery in 1999, 2001, and 2002—and also produced the weakest growth in machinery, in 2000, in this entire period. They became active buyers again as construction recovered its energetic growth in 2003 and then made up for delayed purchases in 2004 and 2005. The presence in this field of a large equipment rental sectors in a way aids and abets the construction industry's behavior. Builders don't have to commit to purchases. They can fill temporary needs by renting the equipment. A substantial used equipment market has the same consequence—companies have a lower-cost alternative to buying new equipment.

Sectors and Product Categories

In the 1997–2005 period, construction activity grew, albeit unevenly. Divided into private and public categories, private construction represents roughly 80 percent of the activity, and the bulk of that, approximately 70 percent, is residential construction. This very large category enjoyed the most rapid growth in the period; residential construction put in place increased at the rate of 10.5 percent per year. Home construction requires the lighter categories of equipment, unless it takes the form of apartment structures. The clearing of large residential housing tracts, of course, may require substantial earthmoving equipment, but in the lifting category smaller and usually self-propelled or towed equipment is used to lift timber and plywood to a one- and maximally a two-story height.

The private non-residential category grew at a very modest 1.3 percent per year by contrast. Within that category two sectors out-paced the total category. Office building construction advanced at a rate of 1.5 percent per year and commercial construction (e.g., warehousing, parking structures, stores, and similar facilities) saw 3.4 percent per year growth. All other sectors—utilities, manufacturing, pipelines, railroads, and others—grew at lower rates. Private construction, as a whole, thus favored the low end of construction machinery in this period.

Public construction, with 20 percent of total activity, does not have a dominant sector corresponding to the private sector's housing market. The two largest segments are educational construction and highway and street construction, each of these representing 27 percent of public construction expenditures equivalent to 6 percent of construction as a whole. In the 1997–2005 period, educational facility construction grew at 8.8 percent per year, the second highest growth in construction activity (behind housing), water supply systems (representing 1 percent of total construction) grew at 7 percent per year, and highway construction came fourth, with an annual growth of 5.5 percent.

Trends in the sector using construction machinery reflected trends in the sector supplying the equipment. In this eight-year period, tractor shovel loaders showed the strongest growth (10.8% per year); these machines are used in virtually all construction activities. Next were mixers and pavers (5% per year), reflecting both residential and highway construction. The next two categories were off-highway vehicles (3.8% per year) and graders (3.7% per year). Power cranes, draglines, and shovels lagged in growth (2.3% per year). Sluggish power crane production growth reflects the fact that large proportions of these products used in the United States are imports; slow shipments do not indicate slow demand. Two other major categories for which the Census Bureau reports detailed data, tractors, dozers, and skidders as a combined category and vehicle-mounted machinery of all kinds as another, both saw negative growth rates of 0.1 percent per year. The second of these categories, the mounted machinery, is most easily rented. Skidders, incidentally, had their origin in forestry for moving logs. Such equipment is used for land clearing.

How do these product categories relate to one another in absolute magnitude? Data for 2005, measured in shipments, show that the largest category was tractor shovel loaders (29.1% of shipments), power cranes, draglines, and shovels came next (16.5%) followed, in order, by graders (12.5%), tractors, dozers, and skidders (12%), mixers and pavers (8.4%), off-highway vehicles (7.8%), and vehicle-mounted machinery (2.4% of shipments). All other equipment and parts represented the remainder.

Exports and Imports

Construction machinery is both exported and imported in significant quantities. Precise data are not uniformly available for construction machinery across the board because the Census Bureau suppresses data as part of its policy to keep company information confidential. The dominance of Caterpillar, and its leading global share in the market (see below), in part explains data suppression. Despite this data problem, the Bureau's 2005 report on the subject, published as part of its Current Industrial Reports, still provides unambiguous data for approximately 36 percent of the total industry shipments. Based on those data, if true for the entire industry, it would appear that approximately 12 percent of total purchases of construction machinery by U.S. concerns came from abroad. Of $11.35 billion of shipments, $3.66 billion (32.3%) were exported. But $5.3 billion of the same kinds of products were imported, showing a trade deficit of $1.64 billion. The two largest import categories were hydraulically operated, tractor mounted excavators (imports equal to 114% of domestic shipments) and off-highway rear dump haulers (imports equal to 76% of domestic shipments).

Fundamental Driving Forces

The basic engine driving the market for construction machinery is gross fixed investment (GFI) expenditures. These data are similar to construction put in place—but signal commitments of capital rather than completion of building projects. GFI divides into residential housing, non-residential private investment in structures, and public investment. The latter may be further subdivided into state-and-local and federal expenditures. In 2005, the first three represented 51 percent, 22 percent, and 26 percent of gross investment nationally. And the public portion was 72 percent state-and-local and 28 percent federal. In the 1997–2005 period, residential gross investment grew at an annual rate of 10.4 percent, non-residential private investment in structures at 3.8 percent, public investment at 5.8, and all gross investment at 7.4 percent.

The construction machinery industry lagged this rate of growth, increasing at 4.6 percent a year in the 1997–2005 period. Total investment grew at an increased pace of 10.1 percent in the three-year period 2002 to 2005, and in that same period, the machinery industry grew much more rapidly at 17.7 percent. This lagging and then leading behavior of the machinery industry against the more ceremonious march of national investment decisions reflects both the changing mix of construction over time, another driving force, as well as the shifts in confidence within the highly cyclical construction industry.

KEY PRODUCERS/MANUFACTURERS

The leading producers of construction machinery in the United States, arranged here in order of their domestic market shares in this product category, are Caterpillar, Inc., Deere & Company, Ingersoll Rand Company, Case New Holland (CNH), and Komatsu Ltd. Caterpillar began as a tractor manufacturers, Deere and CNH had their origins in agricultural equipment, and Komatsu began in iron works in support of a mining company. Only Ingersoll Rand began as machinery builder. All of these leaders have their roots in the nineteenth century.

Caterpillar

This company began in 1890 as two separate companies, the first being Holt Manufacturing Co., headed by Benjamin Holt, the inventor of a steam tractor. Holt also first introduced the name Caterpillar as the brand name of one of his tractor lines. The other company, CL Best Tractor Company, was owned by another developer, of gas-driven tractors, Daniel Best. The two companies merged in 1925 to form Caterpillar. The company, with 2006 revenues of $41.5 billion, is the world's leading manufacturer of construction machinery, with 40 percent of its revenues derived from the category. Caterpillar is also dominant in mining machinery, forestry equipment, and power generation equipment. Like the other leaders in this industry, it is a global company rapidly expanding in Asia as the first decade of the twenty-first century closes. Caterpillar has approximately 23 percent of the U.S. and 20 percent of the world market.

John Deere

The founder of the Deere Company, invented the first self-scouring steel plow in 1837 and, in his early days, made them by hand in his own smithy. Deere's first self-propelled devices featured the Waterloo Boy tractors, introduced in 1918. The company became the top producer of wheeled tractors whereas Caterpillar was the leader in tracked tractors, and for some years in the past the two companies sold each other's products through their dealer chains. Deere, with revenues of $19.4 billion in 2005, realized 22 percent of its sales from construction equipment. The company's dominant business is still agricultural equipment, representing 54 percent of its sales. It also participates in forestry equipment and in lawn and garden products, including commercial equipment used in institutional and golf course maintenance. Deere's share of the U.S. construction machinery market is around 15 percent; its global share is around 4 percent.

Ingersoll Rand

This company had 2006 revenues of $11.5 billion of which about 12 percent came from construction machinery. Its three largest segments are climate control, compact vehicles, and security technologies. Ingersoll's market share in the United States was approximately 15 percent (4.4% worldwide). The company began in 1871 by introducing a rock drilling machine and continued, thereafter, as a leading producer of industrial machinery.

Case New Holland

This company is the fourth-ranked construction machinery producer in the United States with a 2005 market share of 13 percent (4.5% worldwide). Case New Holland (CNH) is itself a conglomerate of U.S., Canadian, and European companies. It began in the 1830s as the combination of Case, which made threshers, and International Harvester, which made reapers. Elements were added thereafter by acquisition. The Austrian Steyr and the Italian Fiat contributed tractor lines. Braud, of France, added a thresher line, the Canadian Flexicoil brought a line of seeders to the company. New Holland is also a producer of a variety of farm equipment. Early Case and International Harvester machines used Fordson tractors, a product of Ford Motors, the name itself derived from the fact that Henry Ford, having made his mark in automobiles, began to make tractors with his son and called the enterprise Fordson. CNH revenues from equipment in 2005 were $11.8 billion. Of that total 29 percent was derived from construction equipment, the bulk from the sale of agricultural machinery.

Komatsu Ltd.

Last but not least is Komatsu Ltd., a Japanese firm that had a 7 percent share of the U.S. market in the early 2000s. Komatsu is the second largest construction machinery manufacturer in the world and has 10 percent share of the global market. Komatsu began in 1917, then called the Komatsu Iron Works. It was established by its parent, Takeuchi Mining Industry, a company that itself began in 1894. Later, as Komatsu grew in importance, it was spun off as an independent company. It established Komatsu American Corporation in 1970. This entity later created five manufacturing operations in North America, one located in Canada and four in the United States.

Other key players in the market, part of the top ten globally, are Terex, AB Volvo, Liebherr, Hitachi, and Metso.

Terex Corporation is an American company with 2005 revenues of $6.4 billion; it has a 6 percent share of the world market. The Swedish AB Volvo, the auto and truck producer, derives a portion of its $30 billion in annual sales from construction equipment and has a 5 percent share of the global market. The German Liebherr-Holding GmbH, with revenues of €5.3 billion, has 4.7 percent of the global market and is the world's leading producer of cranes, including tower cranes. Hitachi Construction Machinery Co., Ltd., is another major Japanese supplier of construction machinery and has a 4.2 percent share of the world market. Metso Minerals, a Finish Company, is principally involved in mining machinery manufacturing but the share of its €2.17 billion revenues in 2006 came from construction machinery; the company enjoys a 3.1 percent share of the world market.

Smaller but important participants in the U.S. market are the following:

  • Astec Industries, Inc.—$616 million, road equipment
  • Bucyrus International—$738 million, primarily surface mining equipment
  • Gehl Company—$478 million, loaders
  • JLG Industries—$4.43 billion, aerial platforms, part of Oshkosh Truck
  • Joy Global Inc.—$2.4 billion, primarily in mining machinery
  • The Manitowoc Company, Inc.—$2.3 billion, 72 percent in cranes
  • NACCO Industries—$3.2 billion, lift trucks
  • Woods Equipment Company—attachments

The dollar values listed above are annual sales figures for 2005 or 2006 and, unless otherwise annotated do not necessarily represent sales to the construction machinery sector, although they include such sales.

MATERIALS & SUPPLY CHAIN LOGISTICS

Construction machinery falls into the heavy category of machinery production as a whole and is characterized by being a major consumer of iron and steel in all of its forms—plate, strip, and sheet; castings, stampings, and forgings; wire, springs, and rods. Leaders in the industry produce their own prime mover engines; others purchase these. The product category relies very heavily on fluid power for moving the working parts of its devices and manufacturers either make or buy hydraulic and pneumatic equipment. Wheeled devices require often quite massive tires that manufacturers either purchase from abroad or from the U.S. tire industry, centralized in Ohio. These fundamental inputs have caused the industry to be centered around concentrations of heavy industry, which tends to be located on or near the ocean or Great Lakes coasts or along major water ways. Substantial portions of production are exported, favoring the location of production facilities near water transport able to reach the open seas.

DISTRIBUTION CHANNEL

Construction machinery is sold using a two-tier distribution system in which producers use a network of dealers. The dealers in turn sell to the ultimate customer. Parts for construction machinery, however, may move through a third tier of distributors located in major distribution hubs across the country. Distributors specialize in componentry, maintain large inventories, and supply the dealers in turn. Servicing dealers are the common form of distribution, meaning that the seller is prepared to repair the product at its own facilities—and in turn relies on either the manufacturers wholly-owned parts distribution center(s) or uses the services of a parts distributor. Dealers routinely participate in used equipment sales and also rent such equipment. A separate rental market exists as well, its operators purchasing new and used equipment to flesh out their range of offerings.

KEY USERS

Construction companies acting on behalf of buyers of construction services (builders, developers, highway departments; federal, state, and local agencies; industry, utilities) are the principal buyers of construction machinery. Public bodies engaged in construction (e.g., the Corps of Engineers) are included here. Rental houses are another, but much smaller market. Large corporations engaged in substantial building activity with in-house construction departments are a distant third. This category includes mining companies that, alongside mining machinery (often very similar to construction equipment), buy construction machinery for activities analogous to road construction that they undertake. Utilities, railroads, refiners, pipeline companies, and ports and port authorities (that engaged in dredging activities) are other similar buyers of machinery for use in-house. Cranes have their own unique markets. They may be designed to aid construction but are widely purchased by all kinds of institutional entities for doing lifting unrelated to construction.

ADJACENT MARKETS

As the history of participants in this product category indicates, products of a very similar nature are used in three other industries, two of these being, as it were, upstream from construction and one being downstream. The farm and agricultural industry in 2005 was a $20 billion industry selling very similar products for soil clearing, preparation, chemical spreading, and harvesting of products. One might say that the same basic machines are used by agriculture and construction, but while the farmer uses tractors to pull things, the builder uses tractors to push things. The lawn and garden industry ($8.3 billion in 2005) has similar equipment especially on the higher end of professional lawn and turf care. Both of these industries are very much involved in earth-moving or earth preparation. Mining machinery is downstream from construction because it involves work deep underground or, in strip mining, major earth-moving activity over extensive terrain at a much greater scale. Mining machinery worth $10.7 billion was shipped in 2005. The largest of these industries is construction machinery with $31 billion in shipments.

Adjacent to construction equipment, in the sense that major growth in the sector would impact construction machinery negatively, is the production of manufactured homes. In 2005 this was a $7.3 billion industry entirely devoted to the manufacture of mobile homes. Throughout the twentieth and continuing into the twenty-first century, entrepreneurs and idealists have attempted to replace traditional construction methods in creating residential housing by factory-made housing placed on foundations, requiring only rapid assembly at the site. The mobile home has been the only commercialized expression of this vision. The mobile home industry has had a cyclic history. In 1989 it had shipments of $4.1 billion. It peaked in 1999 with shipments of $10.9 billion, declined again to $5.9 billion in 2003, rising slowly since. Attempts to go beyond the limited square footage of the trailer home has been attempted many times, never with commercial or lasting success. The general idea continues to be supported because substantial cost savings can be realized in mass producing homes. For this reason, efforts to achieve such an end continue, in the United States as well as in Japan and in Europe. Should they ever succeed, much of the volume of construction machinery, heavily dependent as it is on residential construction, would be transformed into industrial machine tools.

RESEARCH & DEVELOPMENT

Very substantial R&D expenditures characterize two of the leaders in this industry, Caterpillar and Deere, expending 3.2 percent and 3.1 percent respectively of their sales volume on R&D activity. These high rates are not matched by all of the participants. Much of the spending is directed toward product development aimed at improving or adding features that give the participants a marketing edge. Some of this expenditure is aimed at improving operator productivity in the field by using electronics to give the operator visual feedback on display consoles inside the operator's cab. Deere is a leader in this field. Such features are important in an industry where productivity rates can be quite low until operators acquire what might be called a sixth sense. In developing markets overseas, such features are important selling points. They permit owners to employ workers with less skill to operate expensive machinery. Other research, beyond feature development, is aimed at pollution control, particularly the control of diesel fuel emissions, which are tightening all over the world. In this industry, as in similar categories that massively employ fluid power, R&D is directed to-ward replacement of fluid-power actuation and feedback systems with electronic systems, promising greater speed at lower cost.

CURRENT TRENDS

As noted above, the driving force beneath this industry is gross investment in fixed structures. A very important trend is industrialization in parts of Asia, most notably in China and in India, in the Middle East, and in Latin America. Rapid growth in industrial production has not been matched by investment in infrastructure such as roads, ports, and office structures. As Prudential Equity Group put it, in a recent report titled Capital Goods/Machinery, "Despite continuing rapid economic expansion in most of the emerging markets, major under-investment in local infrastructure has led to shortages, bottlenecks, and other infrastructure-related obstacles that the regional players and local governments are now eager to tackle. The reality is that major infrastructure upgrades have not been done since the 1970s in Eastern Europe and Russia, while countries in the Middle East as well as China and India are building their entire infrastructure from the ground up." Prudential's analysts predict an increase in constant-dollar investments in infrastructure globally from $900 billion in the 1995–2004 period to $3 trillion in the 2005–2014 period.

This tripling of global demand from the past to the next nine-year period is the major trend in the industry. It has produced major initiatives by the leading producers to participate actively in overseas markets by developing ties with local leaders in the major hubs of expansion.

TARGET MARKETS & SEGMENTATION

The large market segments in construction machinery are machinery used in residential construction—typically smaller in size—highway and road construction equipment, and lifting equipment of the larger variety targeted at the erection of multi-story building. Many categories of machinery are used in all types of construction.

As always in the case of industrial equipment purchased by companies rather than by individuals, active demand and the economy generally drive the markets rather than impulse or novelty. Industrial buyers are almost never subject to impulse purchases, instead, they carefully look at the bottom line, and—in highly mature industries like construction—innovation on a large scale is difficult to achieve. Targeting, by producers, is therefore achieved by lowering the buyer's acquisition costs, improving efficiency and thus lowering the buyer's operating costs. Producers segment their production based on funding trends. Not surprisingly, the leading association in this industry, the Association of Equipment Manufacturers, devotes substantial effort every year to the preparation of outlook publications aimed at helping producers see more clearly through the dark glass of the unknown future.

RELATED ASSOCIATIONS & ORGANIZATIONS

Associated Equipment Distributors, http://www.aednet.org

Association of Equipment Manufacturers, http://www.aem.org/Trends/index.asp

Canadian Association of Equipment Distributors, http://www.caed.org/home.asp

Construction Equipment Association (British), http://www.fmcec.org.uk

Japanese Construction Machinery Manufacturers Association, http://www.cema.or.jp/english/index.html

BIBLIOGRAPHY

AEM Industries Outlook 2007. Association of Equipment Manufacturers. November 2006.

Capital Goods/Machinery. Prudential Equity Group LLC. 22 September 2006.

"Construction Machinery: 2005." Current Industrial Reports. U.S. Department of Commerce, Bureau of the Census. July 2006.

Darnay, Arsen J. and Joyce P. Simkin. Manufacturing & Distribution USA, 4th ed. Thomson Gale, 2006, Volume 2, 1034-1039.

Industry Initiation-Machinery. Wachovia Capital Markets, LLC. 18 September 2006.

Lazich, Robert S. Market Share Reporter 2007. Thomson Gale, 2007, Volume 1, 389-396.

"Product Summary: 2002." 2002 Economic Census. U.S. Department of Commerce, Bureau of the Census. March 2006.

see also Hand Tools, Machine Tools, Trucks

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