European Market Update

In 2009 all product markets declined. The Western European market for construction equipment declined by 48.1% compared with 2008, the sharpest one year fall in the past sixty plus years. Recovery began in 2010 and the markets improved by 15.9% to reach 89,000 units, slightly less than half of the market peak that was reached in 2007. In 2010, the performance of the individual product categories ranged from a decline of 1.9% for backhoe loaders to an increase of 22.9% for mini-excavators. We are forecasting that overall product markets will grow slightly in 2012 compared with 2011, up 0.8%. We believe the 2013 market will increase 9% to a total of 115,800 units, a level that is similar to that reached in the early 2000s.