For further information on the Construction Machinery industry in Australia, please contact Commercial Specialist Patricia Matt, U.S. Commercial Service Sydney on Tel: (+61-2) 9373-9211, Fax: (+61-2) 9221-0573, Email: patricia.matt@mail.doc.gov
Overview
Imported construction machinery dominates the Australian market. The construction/mining/extraction industries are the largest consumers of imported construction equipment in Australia.
Engineering construction prospects remain strong, with infrastructure activity set to record continuing growth. According to a recent HIA/Reed Construction Data 100 Report, engineering construction work increased 24.4 percent during the year ended June 30, 2007 to US$42.3 billion. Private contractors accounted for 76 percent of this total. Public and private infrastructure initiatives lead the market. The Australian government allocated US$18.6 billion in the 2007 budget to improve Australia’s inland transport system over the next five years. State governments have also budgeted for high levels of capital work over the next few years, with most of it in engineering construction. A November, 2007 report of the Australian Industry Group/Australian Constructors Association estimated that during 2007-08, road project funding will rise 15.4 percent, rail projects 22.2 percent, water supply projects 24.8 percent, electricity generation and supply 19.3 percent, and telecommunications 15.1 percent. Other areas of growth include civil projects such as the construction and upgrading of freight and port facilities to ease export bottlenecks.
Non-residential construction is forecast to maintain an upward trend. HIA/Reed Construction Data 100 Report estimates the value of activity in this sector during year ended June 30, 2007 at US$22.1 billion, up by 16.3 percent on the previous year. Demand for office space continues to underpin much of the growth, while the retail environment is strengthening. Health and community services’ building is forecast to be a strong performer over the short, medium, and long terms.
The residential building industry has been on the decline since 2003, with a combination of rising interest rates and poor affordability affecting results for Australia’s largest home building companies. Housing starts by the top 100 builders in the year to June 30, 2007 fell 6.2 percent to 56,332, with a total of 149,000 for the whole industry. For October 2007, total building approvals declined 2.8 percent to 13,553, with the volatile apartment sector driving the overall fall. However, other parts of the market remain on track for recovery. The Housing Industry Association’s Economics Group forecasts 158,000 start for year ending June 30, 2008 and 166,000 in 2008-09.
The estimated value of construction machinery during calendar year 2007 is US$1.3 billion, with imports from the U.S. valued at US$578.3 million. U.S. manufacturers, particularly those operating through wholly-owned subsidiaries or Australian agents, enjoy a good market image for their product quality. Major U.S. manufacturers supplying the market are Caterpillar, Case New Holland, John Deere, and Ingersoll-Rand. Others include Bobcat, Vermeer, Manitowoc, Terex, and Ditch Witch.
Japan and Germany are the key third-country suppliers. Komatsu, Hitachi, Kobelco, Kawasaki, and Kubota are the principal Japanese companies exporting construction equipment to Australia. Lieberr, Demag, and Bomag are the main German brands in this market.
Australian manufacturing mainly comprises small amounts of customized products as wear parts, attachments (buckets, tractor tires, cabs, wheels and rims), and replacement parts for incorporation into imported base units. While construction machinery prices range from a few thousand dollars to well in excess of one million dollars, the items manufactured by the local industry generally are targeted to the lower end of this range.
The Free Trade Agreement between the U.S. and Australia (AUSFTA) has eliminated import duty on construction machinery from the U.S. This, together with a favorable exchange rate, puts U.S. imports in a stronger competitive position, as the import duty rate from other countries is five percent.
Best Prospects
Investment in heavy equipment is likely to continue over the next few years, particularly to support ongoing growth in infrastructure construction activity. Equipment that is consistently in demand includes off-highway dumpers, graders and levelers, self-propelled track laying bulldozers and angle dozers, front-end shovel loaders, and scrapers.
Pricing, technology, and after sales service, influence the buying habits in this market. Australian end-users are willing to invest in technology that offers superior precision, flexibility, safety, and reliability features. Large construction machinery that consumes high levels of energy are at a disadvantage. Manufacturers and/or agents must provide on-call back up servicing programs and substantial product warranties.
Opportunities
Contact Patricia Matt for a listing of major infrastructure projects.
Trade Shows
CIVENEX 2008
Date: May 22-24, 2008
Location: Eastern Creek, Sydney
Frequency: Annual
Web site: http://www.civenex.com
NATIONAL CONSTRUCTION EXHIBITION
Date: August 7-9, 2008
Location: Annual
Web site: http://www.nce.reedexhibitions.com.au
LOGOV EXPO
Date: October 2008
Location: Logan City, Brisbane
Frequency: Bi-annual
Web site: http://www.logov.net