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

                                    Mar 8, 2024 - Wages Rise Faster than Equipment Pricing
                                    • Producer prices charged by construction machinery manufacturers increased sharply in the fourth quarter of 2023 compared to Q4 2022. Wage growth in the industry over the same period rose even faster than pricing. Wage growth outpacing machinery manufacturers’ ability to increase prices could signal margin pressure. In Q4 2023, industry employment decreased slightly compared to a year earlier.
                                    • North American construction and engineering spending in 2024 is expected to grow by about 2%, down from 10% growth in 2023, according to FMI’s first-quarter 2024 North American Engineering and Construction Outlook. Slower spending for residential and some other private sector construction segments will slow overall construction and engineering spending. Construction subsectors that are expected to see double-digit growth in 2024 include manufacturing (up 18% in 2024 over 2023), conservation and development (+13%), public safety (+13%), lodging (+12%), transportation (+12%), power (+11%), sewage and wastewater (+11%), and educational (+10%). Other pockets of steady growth include highway and street, water supply, and healthcare. High interest rates continue to put downward pressure on residential and commercial projects. Single-family construction spending is forecast to drop 5% in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 15% in 2024 after projects in development peaked at 1 million units in mid-2023. The only nonresidential building construction segments projected to post negative growth in 2024 are commercial (down 4% compared to 2023) and office (-2%).
                                    • The Dodge Momentum Index (DMI) decreased 1.4% in February 2024 to 180.5 (2000=100), down from the revised January reading of 180.5. The Momentum 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 dropped by 2.3%, and institutional rose by 0.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “Weaker office and healthcare planning constrained nonresidential planning in February. However, the Index remains 25% higher than where it was just two years ago. Most other categories showed growth over the month and Dodge remains optimistic that nonresidential planning will stay elevated throughout 2024 alongside rising confidence in 2025 market conditions.”
                                    • Home sizes increased during the pandemic as families sought more space, and interest rates were near record lows. As interest rates have risen and homes have become less affordable, the trend is reversing, and homes are getting smaller, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. In the fourth quarter of 2023, the median single-family home square footage was 2,156, which is the lowest since 2010. The NAHB suggests that smaller home sizes will likely persist amid continued affordability issues.
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