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 625 construction machinery manufactures in the US produce 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.

Competition from Used Equipment

Construction equipment manufacturers compete for sales against used equipment.

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.

Industry size & Structure

A typical construction machinery manufacturer operates out of a single location, employs 115 workers, and generates about $56 million annually.

    • The construction machinery manufacturing industry consists of about 625 companies that employ 73,000 workers and generate $35 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 8, 2023 - Demand Remains Strong
                                    • Construction machinery shipments, new orders, and sales were robust in the first half of 2023. Equipment demand has been supported by public investments in infrastructure and the clean energy transition, which has boosted mining activity for minerals used in electric cars and energy storage. Inventories were up in mid-2023 year-over-year as construction machinery manufacturers hedged against potential supply chain issues, but inventory growth has begun to soften. Employment and wage growth have been driven by solid machinery demand, but manufacturers’ producer prices have also moved higher, protecting margins as costs have gone up.
                                    • North American engineering and construction spending is forecast to rise by 5% in 2023 compared to the 12% growth seen in 2022, according to FMI’s fourth-quarter 2023 North American Engineering and Construction Outlook. Overall growth in 2023 will be supported by double-digit gains in key segments, including manufacturing (up 58%), multifamily (+18%), sewage and waste disposal (+18%), conservation and development (+17), lodging (+16%), water supply (+16%), and highway and street (+12%). Other segments expected to post strong growth include healthcare (+9%), public safety (+9%), amusement & recreation (+8%), educational (+8%), office (+8%), transportation (7%), and commercial (+6%). With a 13% decline in spending, single-family housing is the only segment that is expected to post negative growth in 2023.
                                    • The total value of construction put in place increased by 0.4% in September 2023 compared to the prior month, according to the US Census Bureau. Spending for nonresidential projects increased 0.3%, and residential spending rose 0.6%. Within the nonresidential segment, spending growth was led by educational projects, with an increase of 1.8% in September compared to August, followed by amusement and recreation (+1.3%), conservation and development (+1.3%), and power (+0.9%). In commenting on September construction spending, Associated Builders and Contractors (ABC) Chief Economist Anirban Basu said, “While some private categories, including power, commercial and amusement and recreation saw healthy month-over-month increases, publicly financed construction accounted for more than 72% of September’s rise. Given increased federal infrastructure spending and exorbitant financing costs for private construction, that dynamic should remain firmly in place over the coming months.”
                                    • High diesel prices and government incentives are prompting some construction firms to switch to electric construction equipment, according to Construction Dive. While compact electric excavators have been in use for some time, more recently, advances in battery technology have led equipment manufacturers to offer larger electric-powered machinery, including cranes, mining trucks, and heavy-duty equipment. In addition to lower operating and maintenance costs, electric equipment also reduces emissions and noise. The Inflation Reduction Act includes a tax credit for 30% of the purchase price for all-electric equipment and 15% of the cost of plug-in hybrid machinery.
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