Significant demand for infrastructure and residential buildings is set to drive growth in the market for heavy construction equipment around the world over the next five years, a new report has found.
In its latest Heavy Construction Equipment Market – Global Trends & Forecasts to 2018 report, research firm MarketsandMarkets Analysis says it expects the market for equipment relating to earth moving, material handling and other heavy construction to grow at an average compound rate of 8.3 per cent over the next five years to reach $195 billion by 2018.
The report, which analyses the market on the basis of application (residential building, commercial building and infrastructure) and geographic location, says growth will be driven by demand for new infrastructure, residential buildings to accommodate a rising population and public infrastructure in emerging markets.
It says the Asia Pacific region is seeing a good deal of construction on airports, dams and hydro-electric projects – which will sustain high level industrial activities – and growing energy demand, and that these factors are leading a large number of international players to set up manufacturing and distribution facilities there.
MarketsandMarkets is not alone in its optimistic appraisal of the construction market outlook, and subsequent demand for equipment, over the longer term.
In the recent Global Construction 2025 report, for example, Global Construction Perspectives and Oxford Economics say they expect the overall construction market to grow by around 70 per cent between now and 2025 as huge demand for housing and infrastructure in China and India offsets contracting markets in Western Europe.
Despite such bullish forecasts long term, however, equipment makers with heavy exposure to struggling markets in Western Europe continue to experience challenging conditions.
On July 17, for example, US manufacturer Terex was forced to slash full year earnings forecast for 2013 by around a quarter, citing challenging conditions in Europe and ‘mixed’ markets elsewhere outside of an improving North America, though the company did specify it expected a near-term softening rather than a protracted slowdown.
In its report, MarketsandMarkets says earthmoving equipment, including excavators, loaders, backhoes, motor graders and other equipment, has the largest market share of any heavy construction equipment segment, and that growth in this market will be driven by demand from BRIC nations.
In terms of market application, infrastructure will be at the forefront as strong investment governments in China, India and Brazil and earthquake reconstruction activities in Japan will drive demand for work on railways, roads, dams, irrigation canals, schools, hospitals, sports complexes and other heavy civil construction work.