"Although the absolute level of demand for construction equipment in Europe is still fine, the mood of European companies is changing," stated Johann Sailer, President of CECE, the Committee for European Construction Equipment, at a press conference on the occasion of the CECE Congress held in Berlin. “One of the biggest issues for the industry is the strong gap running across Europe,” he continued.
Click here to download a PDF of Sailer's presentation from the conference.
Markets like Spain and Italy had to face even further decreases in the first half of the year while others like the Scandinavian and Baltic markets or even Turkey have experienced a good rise in demand and big markets like Germany, France and the UK recently have shown clear signs of slowdown.
Business climate is deteriorating
The CECE monthly business barometer index that indicates the business climate among the European construction industry has decreased for four months in a row which according to Sailer is a bad sign. Both, current business and future sales expectations are evaluated negatively by the majority of the industry people surveyed. A clear indicator for this are falling incoming orders. The danger of the further escalation of the Euro crisis remains one of the biggest threats since it is leading to uncertainty and thus less investments on the customer and the public side.
Production plus in 2012 – pessimistic outlook for 2013
On average, the European construction equipment industry is estimated to see a 6% production growth by the end of this year. The outlook for 2013 is rather pessimistic. It is expected that the still well-performing markets will no longer grow in the same speed as they have after the crisis. And those, that by now must have hit the bottom line will recover only very modestly. Beyond Europe, it is especially the weak Chinese market that worries the industry. In China, local construction equipment sales have dropped by 40% in the first half of the year and will probably end up with a 25% decline by the end of it.
The picture of the industry not only is heterogeneous when comparing markets but also when comparing equipment segments. In Europe, equipment related to building construction is expected to stay on the growth path while demand for earthmoving and road equipment cannot be expected to see much momentum as of today.
Earthmoving and road construction equipment sales down
During the first half of the year, earthmoving equipment sales have not changed much compared to the previous year. In total, a little more than 28.000 units were sold which reflects the comparatively good absolute level of the industry. Wheeled excavators were the best-performing product group with sales unchanged to previous year’s period. Big-volume machines such as crawler excavators and wheeled loaders stayed within single-digit declines, whereas skid-steers, backhoe loaders, dozers, dump trucks and motor graders all recorded a decline. Compaction equipment is in a slightly better shape than earthmoving, yet it looks like growth will also come to an end by the end of the year. Light compaction equipment already recorded sales declines in the first half of the year while self-propelled rollers are still on a growth path and sales of asphalt pavers remain almost unchanged. Given a pessimistic outlook for the European civil engineering industry with austerity programs and a general lack of new road projects in most countries, the equipment industry will derive its growth in the coming months only from replacement investments. This will probably imply further decreases especially in Central and Eastern European countries where equipment fleets are young and replacement is unlikely to be seen on a big scale.
Growth for building construction equipment
Building construction accounts for the biggest customer segment in Europe. Concrete equipment and tower cranes are still in a long-term process of recovery from crisis. On a year-to-date basis, tower crane sales in Europe are now up between 5 and 10%. For the full year of 2012, a single-digit growth remains the most likely scenario. Although demand is accelerating, the absolute level in Southern European countries remains devastating. In the concrete equipment industry demand is growing again, but also here with big differences by countries. For truck mixers CECE statistics recorded a solid growth of above 20% in the first half of the year compared to the same period the previous year. Batching plants and mixer systems have shown similar results. Prospects for concrete equipment are not too bad. With a positive outlook for the building construction industry in some European countries, demand should exceed sheer replacement. Currently incoming orders above last year’s level confirm this trend for the next months. Double-digit growth in sales on European level for 2012 appear realistic.