CONSTRUCTION MACHINERY
Overview
DATA TABLE (Millions US$)
| x | 2004 | 2005 | 2006 |
| Total Market Size | 887.5 | 944.2 | 977.1 |
| Total Local Production | 26.2 | 27.9 | 28.8 |
| Total Exports | 246.7 | 262.4 | 271.6 |
| Total Imports | 1108 | 1178.8 | 1219.9 |
| Imports from the U.S. | 440.2 | 463.7 | 479.9 |
Exchange rates:
2004 0.7364
2005 0.7606
2006 0.7569
The above figures are unofficial estimates.
The construction machinery market, which is dominated by imports, depends upon the pace and type of construction and development.
According to the Housing Industry Association’s 2006 Construction 100 report, total construction turnover in Australia for year ended June 30, 2006 was US$51.4 billion.
The report cites engineering construction turnover for projects in Australia during 2005-06 at US$21.1 billion, an increase of 24.5 percent on the previous year. Roads is the largest category of engineering activity, by value, followed by heavy industry (including mining), electricity, pipelines, telecommunications, bridges/railways/harbors, water and sewerage, recreation and other. Over the short and long term, electricity, pipelines, water and sewerage are forecast to be the star performers for engineering construction spending growth.
Non-residential construction activity for 2005-06 rose by 11.7 percent to US$14.8 billion. Office and retail construction were the largest sectors of activity, followed by industrial. Of all segments, health and aged care is forecast to be the strongest performer over the short, medium, and long terms.
Residential building work during 2005-06 is valued at US$15.5 billion. While there was a slight increase in the number of new home starts to 60,759 by the largest residential builders, their revenue was down 28 percent to US$8.5 billion. Multi-unit construction fell by 9.2 percent in 2005-06 to US$7 billion. The home building industry has contracted since 2003, but recently there have been signs of a turnaround as leading indicators such as building approvals and housing finance commitments have risen. But with interest rates rising, there is concern that higher borrowing costs may stifle any recovery.
In 2005, the import value of construction machinery was approximately US$1.1 billion, with imports from the U.S. valued at US$463.7 million. U.S. manufacturers enjoy a good market image, particularly those that have been operating either through wholly owned subsidiaries or Australian agents for many years. Major U.S. manufacturers supplying the market are Caterpillar, Case, John Deere, and Ingersoll-Rand.
The Free Trade Agreement between the U.S. and Australia (AUSFTA) has eliminated import duty on construction machinery from the U.S. This puts U.S. imports in a stronger pricing competitive position, as the rate from other countries is five percent.
Best Prospects/Services
Investment in heavy equipment is likely to continue over the next few years to support strong growth in infrastructure construction activity, especially electricity, pipelines, water and sewerage. Indications are that the highest demand in construction machinery is for machinery for public works, off-highway dumpers, self-propelled track laying bulldozers and angledozers, graders and levelers, and mechanical shovels and excavators.
Australian buyers seek construction machinery with the most efficient technology and techniques. Pricing is also an important consideration. Large construction machinery can use significant levels of energy and, therefore, energy efficiency is an important factor. Quality of service (including after sales service) is also essential. The specialized and technical nature of construction equipment typically requires manufacturers and/or agents to provide on-call back up servicing programs and substantial product warranties.
Opportunities
The largest four States for infrastructure spending during 2006 were Queensland, New South Wales, Western Australia, and Victoria, with projects worth more than an estimated US$22.8 billion. A number of major infrastructure projects are planned in these States for commencement in 2007 and 2008, including:
| Project | Value | Comencement Date |
|---|---|---|
| Sydney to Brisbane Motorway | US$2.2 billion | February 2008 |
| Australian Inland Rail Express (Melbourne to Darwin Rail Link via Brisbane) | US$2.2 billion | June 2008 |
| Brisbane North-South Bypass Tunnel | US$1.5 billion | January 2007 |
| M4 East Expressway Extension, New South Wales | US$1.5 billion | February 2007 |
| Wiggins Island Coal Terminal Project, Queensland | US$1.4 billion | June 2007 |
| Mid West Rail/Port Infrastructure,Western Australia | US$1.2 billion | February 2008 |
| Dampier to Bunbury Natural Gas Pipeline,Western Australia | US$1.1 billion | December 2007 |
| South Coast Rail Corridor, New South Wales | US$1billion | October 2007 |
| Canberra Monorail System | US$912 million | June 2007 |
| Ballera Gas Pipeline, Queensland | US$760 million | July 2007 |
| Sydney Harbour Bridge Expansion | US$760 million | February 2008 |
| Western Sydney Water Recycling Scheme | US$425 million | February 2007 |
| Port Phillip Bay Channel Deepening, Victoria | US$304 million | June 2007 |
| Esperance-Kalgoorlie Desalination Project, Western Australia | US$304 million | August 2007 |
Resources
Trade Events
CIVENEX 2007
Date: May 16-17, 2007
Location: Sydney Showground, Homebush, Sydney
Website: www.civenex.com
LOGOV EXPO
Date: October 2008
Location: Logan City, Brisbane
Website: www.logov.net
Publications
Construction Contractor: http://www.constructioncontractor.com.au
Earthmover & Civil Contractor, The: http://www.earthmover.com.au
Associations
Australasian Tunnelling Association: http://www.ats.org.au
Australian Construction Industry Forum (ACIF): http://www.acif.com.au
Australian Constructors Association: http://www.constructors.com.au
Australian Procurement and Construction Council: http://www.apcc.gov.au
Civil Contractors Federation: http://www.civilcontractors.com
Housing Industry Association: http://www.hia.com.au
Master Builders Association of Australia: http://www.masterbuilders.com.au
U.S. companies seeking information on the Australian construction market are encouraged to contact Patricia Matt at the U.S. Commercial Service in Sydney
(email: patricia.matt@mail.doc.gov )