Despite the slump in residential construction and the threat of a slowdown in non-residential activity, aerial work platforms continue to be in high demand across North America. We asked a few leading manufacturers for their take on the future of this hot business segment and what it means to rental businesses. Included in the discussion were Chris Koch, general manager - North American operations at Haulotte Group, Howard I. Kaplan, vice president product parent for aerials with JLG, and Linda Mayer, vice president and general manager, global marketing and product management for Terex Aerial Work Platforms.
Q: How would you characterize the current demand for aerial work platforms?
A: (Koch -- Haulotte) In the North American market, the demand for small aerial work platforms has softened due to the downturn in the housing market. The commercial market for large AWPs remains active and should remain active through 2008. Therefore, demand for large AWPs ... should remain strong as well.?
(Kaplan -- JLG) The demand has been on the increase year over year since 2005.
(Mayer -- Terex) There is continued strong demand in the lift market in infrastructure construction, maintenance and repair applications. There is a direct correlation between improvements and growth in infrastructure and demand for lift products. Although residential construction is clearly declining, we are seeing growth elsewhere.
Q: Do you expect demand to increase, remain stable or decrease over the next couple of years?
A: (Kaplan -- JLG) We would expect to reach peak demand in early 2008 in North America. When we look worldwide, however, we see growing demand for at least the next few years, despite the possibility for some soft spots along the way.
(Mayer --- Terex) We expect to see minimal to moderate growth in North America and continued robust growth in Europe, Asia and Latin America.
(Koch -- Haulotte) We believe the demand for small AWPs for the total industry in North America will decrease over the next couple of years. Manufacturers who offer specialty products and offer options to their current products to meet the specific needs of the market will increase their market share. Haulotte is already developing new options to meet our worldwide market. The demand for large AWPs will increase due to the large commercial projects that are currently underway.
Q: What factors do you believe are affecting this demand?
A: (Mayer -- Terex) The factors driving demand differ based on the geographic region. In North America, the economy is still strong and certain segments are stronger than others and driving the growth - energy, transportation and mining.
In Europe, rental penetration is still low in some countries and consolidation within the channel is therefore driving regional growth. Plus, new markets, such as Eastern Europe, are opening up.
In Asia, the acceptance of rental as a channel and of aerial products is still relatively low, but we see evidence of a growing support for safety and therefore, aerial products.
In addition, with the fast pace of growth, the need for speed in construction is gaining ground. In Latin America, some countries, such as Brazil, are seeing strong growth in construction as well as a more stable economy. So, the factors driving demand vary greatly and are specific to the region, the local economy and the structure of the rental channel.
(Koch -- Haulotte) The market in North America is demanding more facilities for power generation, refineries and tar sands. In addition, other large projects in North America which include power plants, will continue at an accelerated pace for the foreseeable furture.
(Kaplan -- JLG) There is such strength in nonresidential construction on a global basis. Beyond that, we see growing use of access equipment in industrial, commercial and institutional applications; demand for used equipment; demand in emerging markets as an outlet for rental fleets; and a more stable rental segment than in the last peak.