According to a new study of world construction equipment demand by industry research firm Freedonia Group Inc., global demand for construction machinery is forecast to advance 3.9 percent per year through 2019 to $218 billion, decelerating from the 2009-2014 period.
Regions with an abundance of developing countries, such as the Asia/Pacific region, Central and South America, and the Africa/Mideast region are all expected to register above average gains going forward on construction spending, especially as infrastructure projects continue to increase. For instance, more than two thirds of all additional construction equipment demand generated between 2014 and 2019 will be attributable to China. In contrast, more industrialized areas like North America and Western Europe will underperform the global market through 2019 in large part due to strong sales in 2014 as these countries recovered from the global financial crisis and operators replaced older machines. As a result of these relatively recent purchases, as well as the growing leasing and rental markets for construction machinery in these more developed countries, replacement sales are expected to slow in the near future.
Significant investment in large mining projects in a number of countries throughout the region will help Central and South America recover from the equipment demand decline registered between 2009 and 2014, which was largely due to a major oversupply in Brazil, the result of preparations for the 2014 FIFA World Cup and the 2016 Summer Olympics. Increased mining activity and rising construction expenditures of all kinds will help fuel construction machinery demand in the Africa/ Mideast region. Sales of equipment in Eastern Europe are expected to slow from the 2009-2014 period but still rise in line with aggregate global growth. Market expansion will be fueled by preparations for the 2016 International Ice Hockey Federation World Championship and 2018 FIFA World Cup in Russia.
Excavators, loaders to be fastest growing products
Demand for excavators and loaders is expected to advance at the fastest pace of any major construction machinery market segment through 2019. Sales of these products will be fueled by rising construction and mining activity, as loaders and excavators are incredibly versatile and can be used across multiple construction projects. Increased infrastructure spending will help support advances for graders, mixers, pavers, rollers, and related equipment, while rising residential building construction spending, particularly in urban areas, will help drive new crane sales. Despite expanding at the slowest rate of any major product category through 2019, increased mining activity will help drive gains for dozers and off-highway trucks. As more operators opt to purchase new machinery amid improving economic circumstances, sales of aftermarket parts and attachments are expected to post below average growth. However, the growing versatility of many loaders and excavators will stimulate countervailing demand for attachments.
China to overtake US as largest national supplier
The leading manufacturers of construction machinery are the US, China, Japan, and Germany, accounting for more than two thirds of total global production in 2014. Following a period of decline, output of construction machinery from China is expected to rebound, growing the fastest of any country through 2019, and the country will overtake the US as the largest national supplier of this equipment in that year. Countries in Central and South America are expected to post the biggest production gains, as local suppliers increase output based on advances in domestic consumption and new export opportunities abroad.
This Freedonia industry study, World Construction Machinery, presents historical demand data (2004, 2009 and 2014) plus forecasts for 2019 and 2024 in 6 world regions and 33 countries. The study also assesses key market environment variables, evaluates company market share and profiles 37 global industry players