Construction Machinery Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 650 firms in the US that manufacture construction machinery produces a wide range of products, but common types include backhoes, excavators, loaders, concrete mixers, dredging equipment, jack hammers, cranes, augers and drills, pile drivers, and paving machines, as well as attachments and replacement parts. Key customers include construction machinery dealers and rental firms, construction companies, farms, government, waste and recycling firms, and landscapers.

Dependence on Economy and Construction Activity

Construction machinery sales tend to shrink during economic downturns when building slows and during periods of high interest rates that make financing high-ticket items less favorable.

Competition from Used Equipment

Construction equipment manufacturers compete for sales against used equipment.

Industry size & Structure

A typical construction machinery manufacturer operates out of a single location, employs 105 workers, and generates about $49 million annually.

    • The construction machinery manufacturing industry consists of about 650 companies that employ 68,800 workers and generate $32 billion annually.
    • Customer industries include construction machinery dealers and rental firms, construction firms, farms, landscaping companies, government, waste and recycling operations, and home improvement stores.
    • The industry is highly concentrated with the eight largest companies representing 62% of industry revenue.
    • Large companies include Caterpillar, Case, John Deere Construction, Doosan, Hitachi, Hyundai, Kubota, and Volvo Construction. Firms also produce equipment used in agriculture, forestry, mining, and drilling.
                                    Industry Forecast
                                    Construction Machinery Manufacturers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Nov 10, 2022 - Nonresidential Building Construction Outlook Improves
                                    • The Dodge Momentum Index (DMI) increased 9.6% in October 2022 to 199.7 (2000=100), up from the revised September reading of 182.2. The DMI Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component increased by 13%, and institutional rose by 2.9%. An increase in office and lodging projects boosted the commercial planning pipeline. The institutional sector was mixed amid a growing pipeline of recreation and education projects, but the number of healthcare and public planning projects declined. Developers and project owners continue to see healthy demand, despite recession concerns, although continued inflation, high interest rates and materials costs, and labor shortages have the potential to blunt the flow of new projects.
                                    • Caterpillar and United Rentals posted strong third-quarter results, suggesting sustained demand for construction machinery in the sales and rental markets. Caterpillar’s construction segment saw revenue rise 19% in Q3 2022 compared to the same period in 2021. Sales rose on higher pricing and improved equipment volumes as dealers beefed up inventory. Sales were strongest in North America and Latin America, which saw revenues rise 29% and 51%, respectively. Driven by broad-based demand, United Rentals saw its rental revenue jump 20% in Q3 2022 over Q3 2021. The company said that despite mounting economic headwinds, nearly all nonresidential construction indicators are cause for optimism. The company expects demand to get a boost in 2023 from increased infrastructure spending.
                                    • On a seasonally adjusted basis, the total value of US construction put in place rose 0.2% in September 2022 compared to the prior month, according to the US Census Bureau. Unadjusted total US construction spending was up 10.3% year-over-year in September. Seasonally adjusted residential spending was flat in September compared to August but increased 11.7% over September 2021. Adjusted nonresidential spending was up by 0.5% compared to August but increased 8.9% year-over-year.
                                    • New single-family home sales decreased 10.9% month over month and declined 17.6% year over year in September 2022, according to the US Department of Commerce. On a year-to-date basis, new home sales were down 14.3% in the first nine months of 2022 compared to the same period in 2021. According to Freddie Mac, on November 10, 2022, the US weekly average rate on a 30-year fixed mortgage was 7.08%. A year ago, the rate was just over 3%. Industry watchers expect new home sales to remain weak as the Fed uses interest rate hikes to bring down inflation.
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