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Background
The U.S. construction
equipment industry is comprised of hundreds of firms, from small
businesses to some of the world's largest multinational corporations.
Construction equipment is used for the construction of residential
and nonresidential buildings, for surface or "strip" mining
operations, for new power and manufacturing plants, for logging
operations, and for adding to or renovating infrastructures such
as sewage and water lines, roads, bridges, and tunnels.
Machines built
by the industry are usually classified into ten types: backhoes;
bulldozers; construction and surface mining rock drill bits; construction
tractors and attachments; off-highway trucks; pile-driving equipment;
portable crushing, pulverizing, and screening machinery; powered
post hole digging machinery; motor graders and paving machinery;
and, surface mining machinery. (NAICS
33312)
Industry
Overview and Global Competitiveness
Industry
Characteristics
The construction
equipment industry is a very cyclical one, with high sales growth
during boom years and reductions in output during economic slowdowns
and downturns. The industry is affected particularly by factors
such as housing starts, consumer confidence, and employment. Since
residence and business construction is typically debt-financed,
and since most of the industry's equipment are "big ticket"
items, interest rates and the availability of credit are important
factors.
In 2001, the
industry's shipments were valued at $14.3 billion, down 17 percent
from its 2000 level of $17.1 billion. The industry's decline reflects
a worldwide economic slowdown, industry consolidations, and the
movement of manufacturing facilities overseas by some of the major
manufacturers.
The majority
of the over 800 construction equipment manufacturers in the United
States are small or medium-sized and employee some 70,000 people.
However, the bulk of the industry's sales are dominated by several
very large multinational companies. Over recent years, there has
been a constant restructuring of the industry. Scores of companies
are either being acquired by some of the larger firms who are diversifying
their product lines, or going out of business.
Competitiveness in World Markets
The United States
is the world's largest producer of construction equipment. The U.S.
is recognized worldwide as producers of high quality state-of-the-art
products. Historically, the U.S. is a net exporter of construction
equipment. In 2001, total U.S. exports were $6.23 billion, compared
with imports of $5.9 billion. While both imports and exports of
construction equipment have declined in recent years, they steadily
increased over the past decade. The recent worldwide economic slowdown
has adversely affected international trade in construction machinery.
The industry views the slowdown as temporary and expects both imports
and exports to continue their upward trend in the near future.
Over recent
years, Canada, Australia, Mexico, Brazil, and Chile have been leading
markets for U.S. exports of construction equipment. Key sources
for U.S. imports have been Japan, Germany, France, Italy, and Korea.
Today, China is probably the most important potential market for
construction equipment. Many industry professionals refer to China
as the "world's largest construction site." Competition
for the China market will be fierce. Quality, price, competitive
financing, and after-sales-service will continue to be important
factors for American companies' ultimate success in China and in
the international marketplace.
U.S. and Global Trends
Foreign competition
for construction equipment markets is fierce. Since most of the
construction equipment is expensive, sales rely heavily on the best
financing packages available. Japan, Germany, and other European
countries also manufacture high quality construction equipment and
compete with U.S. manufacturers–not only in the United States–but
all over the world..
In many markets
around the world, U.S. manufacturers remain the dominant suppliers
of construction equipment. Market share percentages vary from country
to country. However, in most instances, U.S. market shares have
been declining to Japanese, German, and recently, Korean competition.
Assessment of Industry's Trading Environment
Key Opportunities
for Expanding Exports
The key export
opportunities for U.S. manufacturers of construction equipment lie
in the developing countries like China, Mexico, and Brazil. In Western
Europe, U.S. manufacturers are fighting to maintain their market
shares, but most of these market are supplied from local plants
that are either joint ventures or wholly owned subsidiaries of some
of the large U.S. manufacturers. Eastern European and the Newly
Independent Central Asian States are also strong potential markets
for U.S. construction equipment. However, competition from Western
European and Japanese competitors will be extremely fierce.
Prepared by:
Len
Heimowitz
Deputy Director, Office of Machinery
(202) 482-0558
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