Manufacturers Predict Modest Growth in 2008

Oct. 19, 2007
The construction equipment manufacturing industry expects overall U.S. and Canadian business to remain flat through the end of 2007 but to rebound in 2008, with sales to worldwide markets remaining strong through 2007 and into 2008, according to the annual forecast of the Association of Equipment Manufacturers.

The construction equipment manufacturing industry expects overall U.S. and Canadian business to remain flat through the end of 2007 but to rebound in 2008, with sales to worldwide markets remaining strong through 2007 and into 2008, according to the annual forecast of the Association of Equipment Manufacturers.

In the latest AEM outlook survey, overall construction equipment demand by year-end 2007 is predicted to decline 1.9 percent in the United States, remain flat in Canada at minus 0.1 percent, with worldwide business expected to rise 9.9 percent.

In 2008, the U.S. market should increase 2.8 percent, Canada 2.9 percent, with growth internationally of 8 percent.

The impact of the housing slump was seen as a key factor by respondents, as well as the state of the general economy, including interest rates and credit availability. Adequate transportation funding will have an impact on many businesses, as will rental company demand. The strength of the dollar against other currencies is expected to affect business growth, as will commodity shortages and prices, especially in steel and energy.

“Overall, we’ve seen a slowdown in the past year or so, but it comes after some very good years for the equipment manufacturing industry,” said AEM president Dennis Slater. “The residential housing slump in the United States has sent ripples across the entire economy, not only the construction industry. However, growth in non-residential construction continues to offset losses in the housing market. For equipment manufacturers, the continued global demand for construction machinery is also balancing the slowdown in our domestic business. Economic signals are mixed, but there is guarded optimism that our economy will remain resilient and not descend into recession.”

Slater addressed the importance of the rental industry to equipment manufacturers. “Rental is a major distribution channel for construction equipment, especially for smaller and medium size machines. Over the past few years, the nature of the rental business has changed. It has not only grown, but that growth has come with major consolidation among companies. There are fewer and larger players, with much more negotiating clout when dealing with manufacturers. And in recent years, more rental companies are being bought by private equity firms, and their focus on cash flow can affect capital spending.”

Business in 2007 for bituminous equipment — including asphalt plants and pavers, cold planers, pneumatic, static and vibratory rollers, and soil stabilizers is expected to drop 8.7 percent in the U.S., while increasing 9.6 percent in other worldwide markets. Business volume in 2008 is expected to grow, with a 1.0 percent increase in the U.S., 1.8 percent in Canada and 7.7 percent in the rest of the world.

Concrete and aggregate equipment sales are expected in increase 4.0 percent in the U.S. by year-end 2007, with a 5.7-percent jump in Canada, and 8.7 percent in the rest of the world. Predictions for 2008 are a 5.2-percent increase in the U.S., 6.2 percent in Canada and 10.1 in other worldwide markets.

In earthmoving, sales will drop 8.9 percent in the U.S. and 5.1 percent in Canada, while gaining 12.4 percent internationally. For 2008, earthmoving equipment sales are expected to drop 1.7 percent in the U.S., 0.5 percent in Canada, with a 7.0 percent increase in the rest of the world.

Sales of lifting equipment will gain 0.6 percent in the U.S., 2.7 percent in Canada and 15.7 in the rest of the world. For 2008, sales are expected to jump 5.2 percent in the U.S., 1.3 percent in Canada and 11.9 percent for other worldwide markets.

Light equipment is expected to decrease 1.0 percent in the U.S., with a 2.5 percent increase in Canada and 6.3 percent in the rest of the world. For 2008, sales are expected to jump 3.7 percent in the U.S., 4.1 percent in Canada and 5.3 percent for the rest of the world.