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
Recent Developments
Mar 10, 2023 - Manufacturing, Infrastructure Projects Boost Construction Sector
- The total value of nonresidential construction put in place declined 0.1% in January 2023 compared to the prior month, according to the US Census Bureau. While overall spending declined, manufacturing projects were a bright spot, and manufacturing construction spending in January was up 5.9% over December. Power projects saw 0.9% growth, office spending increased 0.7%, and healthcare was up 0.2%. Spending on commercial projects fell by 3.1%. Construction spending for manufacturing projects in January 2023 was up 53.6% year over year. Associated Builders and Contractors (ABC) chief economist Anirban Basu said, “With the CHIPS and Science Act directing $280 billion into semiconductor manufacturing and an ongoing desire to reshore manufacturing capacity, the segment should continue to thrive.”
- A robust labor market and wage growth combined with steady investments in equipment, IT, and factory construction could help the US economy avoid a recession in 2023, according to Associated General Contractors of America (AGC) chief economist Ken Simonson. Manufacturing and infrastructure investments stemming from the Infrastructure Investment and Jobs Act and the Chips and Science Act are expected to be key pockets of growth for the construction sector. In the manufacturing sector, projects are being driven by EV battery plant and carbon capture projects. However, Simonson noted that high materials, labor, and financing costs could cause a slowdown for other types of commercial construction categories, including warehouse, retail, office, lodging, and multifamily.
- The Dodge Momentum Index (DMI) increased 1.9% in February 2023 to 203.0 (2000=100), up from the revised January reading of 199.3. 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 rose by 1.4%, and institutional increased by 2.9%. Commercial planning got a boost from an almost 20% rise in office planning, and stronger data center project planning. In the institutional sector, education and healthcare planning saw gains, with research laboratories being a noted bright spot. Dodge’s associate director of forecasting said, “The continued elevation in the DMI should provide hope that construction activity will grow in 2024. Owners and developers tend to put projects into planning until well after economic conditions weaken. During the Great Recession, for example, the DMI did not substantially decline until 2009. Therefore, the anticipated mild economic growth in 2023 could cause the DMI to moderate over the year, but it is unlikely to fall below historical norms.”
- Multifamily developer confidence improved in the fourth quarter of 2022 but remained in negative territory, according to February’s Multifamily Market Survey (MMS) report by the National Association of Home Builders (NAHB). The Multifamily Production Index (MPI) rose two percentage points in Q4 to 34 compared to the third quarter of 2022. The Multifamily Occupancy Index increased by four points to 49 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While multifamily housing demand is robust, supply is catching up with demand in some markets. The NAHB expects multifamily production will slow significantly over the next two years after rapid growth in 2022. Developers face several challenges, including high regulatory costs, difficulty securing new project financing, and high interest rates.
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