AEM Report Predicts Modest Growth in 2008

October 17, 2007 • The construction equipment manufacturing industry expects overall U.S. and Canadian business to remain flat through the end of 2007 but rebound in 2008, while sales to worldwide markets should continue strong through 2007 and into the next year, according to the annual forecast of the Association of Equipment Manufacturers (AEM).

Each year AEM surveys its construction equipment manufacturer members about expected sales of the machines that build, repair and maintain America's and the world's roads, bridges, dams, houses, offices, schools and other public and private infrastructure. In the latest AEM outlook survey, overall construction equipment demand by year-end 2007 is predicted to decline 1.9 percent in the United States and remain flat in Canada at minus 0.1 percent, while worldwide business is anticipated to increase 9.9 percent.

 

In 2008, growth is expected in the United States, Canada and worldwide, with the biggest gains in global markets • an increase of 2.8 percent for the United States and 2.9 percent for Canada, and growth in worldwide markets of 8 percent.

 

The outlook survey asked respondents to rank the influence of several factors on future construction equipment sales. As expected, the impact of the housing slump was a key factor, as well as the state of the general economy, including interest rates and credit availability. Adequate transportation funding will also have a major impact on the business of many, according to the survey, as will rental company demand. Construction machinery manufacturing is export intensive, and the strength of the dollar against other currencies is also expected to affect business growth. Machinery makers also cited commodity shortages and prices, including steel and energy.

 

 “Overall, we've seen a slowdown in the past year or so, but it comes after some very good years for the equipment manufacturing industry,” said Dennis Slater, AEM president. “The residential housing slump in the United States has sent ripples across the entire economy, not only the construction industry. However, growth in non-residential construction continues to offset losses in the housing market. For equipment manufacturers, the continued global demand for construction machinery is also balancing the slowdown in our domestic business. Economic signals are mixed, but there is guarded optimism that our economy will remain resilient and not descend into recession.”

 

“Our outlook survey is meant to provide a snapshot look at the industry, and some product areas are experiencing stronger growth than others. Even then, a company's individual situation may depend on its particular market mix or geographic footprint,” Slater noted.

             

Sales of lifting equipment by year-end 2007 are predicted to gain 0.6 percent for the U.S. and 2.7 percent for Canada, while increasing 15.7 percent for other worldwide markets. For 2008, sales are expected to increase 5.2 percent in the U.S., anticipated to grow 1.3 percent for Canada and predicted to gain 11.9 percent for other worldwide markets. Lifting equipment includes aerial work platforms; knuckle and telescopic boom truck cranes; all terrain, hydraulic truck and rough terrain cranes; lattice boom cranes; rough terrain and truck-mounted fork lifts; tower cranes; and telescopic handlers.

 

The AEM annual outlook forecast covers 71 whole machine product types and 23 types of attachments and components, grouped into seven general categories. AEM conducts the survey in the third quarter of the year and consolidates manufacturers' estimates of overall business activity. Each forecast in the AEM survey is the average of responses from companies in each product line, predicting industry wide expectations rather than individual company performance, and unit sales rather than company profitability. The complete survey will be online at www.aem.org in the Industry Trends section.