Global and China Construction Equipment Industry Report, 2011-2012

Since 2001, the global construction equipment industry had experienced robust development, and it embraced its peak in 2007 but saw a cumulative fall of 35.4% for two consecutive years in 2008 and 2009. In 2010, the global construction equipment industry picked up its skyrocketing growth momentum, with the growth rate exceeding 50%. In 2011, the industrial growth rate approximated 26% and the market scale was roughly USD190 billion.

There are two driving forces that guarantee the relative stability of the global construction equipment industry. On the one hand, emerging economics represented by China are lavishing on infrastructure construction. On the other hand, developed economics, except Europe, strive to conduct infrastructure construction to create job opportunities in consideration of economic stimulus.

In China, every first quarter not only marks the peak season to start infrastructure projects, but also indicates the prime season for the sale of construction equipments. In every Jan.-April, the sales volume of construction equipments makes up around 55% of the throughout year. In Q1 2012, China’s sales volume of excavator decreased by 41.9% year-on-year to 44,000 units, while that of loader, truck crane, bulldozer and roller declined by 27.2%, 45%, 47.35% and 48.4%, respectively.

The sharp reduction came as the monetary tightening measures launched by the government. Since the Central government worries that further hefty investment in infrastructure construction may lead to debt crisis or financial woe, it started to exercise monetary squeeze measure to control credit scale. Another contributor to the reduction lies in restriction of investments in the property market.

Although the domestic market of China shows rather gloomy, the export market witnesses boom. In Q1 2012, the export volume of excavator reached 816, up 82.6% year-on-year, while that of loader and bulldozer increased by 38.3% and 9.4% to 7,548 and 908, respectively.

American companies, in particular, performed well. In Q1 2012, the revenue from Machinery and Power Systems division of Caterpillar surged by 25%, with the operating profit also rising 25%. In the corresponding period, the backlog order of Terex was valued at USD2.301 billion, up 28.4% over Q1 2011.

The only highlight in the Chinese market comes to concrete machinery. The market share of the two tycoons, SANY and Zoomlion, stands at around 47% each. With the respective strategy of zero down-payment and low down-payment to spur the market growth, both of them make concentrated efforts to exploit concrete machinery market.

In construction equipment market, many players have long been occupying a solid position and grow ever stronger. More than 15 M&A cases occur every year. After a decade of high-speed development, China has limited space for further development, but the Chinese businesses has been empowered to implement large-scale oversea M&As. European top 3 concrete machinery manufacturers, Putzmeister, Schwing and CIFA, were all taken over by their Chinese counterparts.