What’s Happening in Construction: January 2013 Edition

Industry Insights Commenti

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Enjoy this round-up of interesting stories from the world of construction.

ELFA: top 10 equipment acquisition trends for 2013
In mid-January, the Equipment Leasing and Finance Association (ELFA) revealed its predicted top 10 equipment acquisition trends for 2013. The ELFA represents the US$725 billion equipment finance sector. Three predictions on the top 10 list:

  • Equipment investment will increase in the second half of 2013 due to greater economic stability following the fiscal cliff crisis. An improving housing sector will also play a role.
  • A continuing low interest rate environment will provide added incentive for businesses to invest in equipment.
  • Seven out of 10 U.S. businesses will use at least one form of financing for equipment acquisition.

Visit elfaonline.org for the complete top 10 trends.1

Caterpillar cuts 2012 forecast and predicts flat growth
The world’s largest manufacturer of construction equipment cut its 2012 forecast once again with the release of its Q3 2012 results. Faced with a slow-down in the global mining industry and dealers selling off inventory to meet current levels of demand, Caterpillar predicted that its sales volume would be about the same in 2013 as 2012, plus or minus 5%. “We’re not expecting rapid growth,” said Caterpillar CEO Doug Oberhelman. Caterpillar will release its 2012 full-year results on January 28, 2013.2

John Deere sees 2013 construction equipment sales up 8% due to US upturn
John Deere expects a 5% increase in global equipment sales in 2013. The company achieved record sales of US$33.5 billion in 2012. Increasing demand for construction equipment in its key U.S. and Canadian markets will be offset by ongoing economic weakness in Europe. As a result, the company forecasts an 8% increase in global sales of construction machinery, compared to 19% in 2012.3

AGC survey: 31% of US construction firms planning to hire in 2013
According to survey results released by the Associated General Contractors of America (AGC) in January, 31% of US construction firms are planning to add new staff in 2013; only 9% are planning layoffs. The number of firms planning to acquire new equipment decreased to 64% (from 70% last year). Contractors are more optimistic about increases in private than public sector construction, with a large percentage predicting no significant change in project volume in the coming year. Stephen E. Sandherr, the AGC's CEO, noted: “While the outlook for the construction industry appears to be heading in the right direction for 2013, many firms are still grappling with significant economic headwinds.”4

Euroconstruct skeptical on 2014 recovery
Euroconstruct, a construction forecast group made up of 19 European research institutes, predicts construction market will return to growth in 2014, but with the debt crisis in Europe showing no sign of resolution, recovery in 2014 may be unlikely.

European construction activity declined 4.7% for 2012 to €1.27 trillion (US$1.65 trillion) across 19 major European markets. Euroconstruct predicts a further decline of 2.5% in 2013 before the market returns to growth with a 1% increase in 2014.

Spain’s construction market is expected to lose the most with a 30.8% decline in construction output in 2012, following falls of 22.4%, 17.6% and 20.1% in 2009, 2010 and 2011. A further fall of 23% is forecast for 2013. Portugal and Ireland are also expected to see double-digit declines in construction output this year. Euroconstruct forecasts single-digit growth for Germany, Denmark, Norway, Sweden and Switzerland.5

Modest growth forecasted for 2013 transportation construction market
According to the American Road and Transportation Builders Association’s (ARTBA) annual forecast, the US transportation construction infrastructure market is expected to experience a modest increase of 3% in 2013, from $126.5 billion to $130.3 billion, mainly from highway and street pavements, private work for driveways, parking lots, airport terminal and runway work, railroads, and port waterway construction. The bridge market is predicted to remain flat for the next year.6

Sany’s bid to usurp Caterpillar
Sany has completed the first five-year phase of its infrastructure investment program in the US by setting up a sales network that covers 65% of North America through 12 primary dealers. In the next five-year phase, Sany intends to become number one in market share of crawler cranes and excavators in North America.

Sany’s continued growth may depend upon acquiring key parts suppliers and competitors. Set up in 2006, Sany America is a wholly owned subsidiary of Sany Heavy Industry, China’s biggest manufacturer of heavy machinery and the sixth largest in the world. In March 2012, Sany acquired Putzmeister for US$663 million, a sign of its ambition to surpass industry leader, Caterpillar.7


1 Top 10 Equipment Acquisition Trends for 2013
2 Red Flare From Caterpillar: Record Profits For Now, But Grim Times Ahead
3 John Deere eyes annual sales of $50 billion by 2018
4 AGC: 2013 Should Be A Good Year for Construction Industry
5 Euroconstruct skeptical on 2014 recovery
6 2013 Transportation Construction Market Forecast: Modest Growth
7 Sany’s bid to usurp Caterpillar


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