AEM Survey Forecasts Tough Year Ahead

November 18, 2008 – The construction equipment manufacturing industry expects continued business declines in the United States through year-end 2008 of 8.6 percent, followed by flat growth in 2009 of 0.04 percent, according to the annual outlook survey of the Association of Equipment Manufacturers (AEM), Milwaukee, Wis.

The AEM survey provides a snapshot of construction machinery manufacturers’ predictions for overall year-end 2008 and 2009 business in the U.S., Canada and worldwide.

 

Canada is predicted to fare better, with business stabilizing at minus 1.7 percent for 2008, followed by 2.2 percent growth in 2009. Sales to worldwide markets are anticipated to increase 8.5 percent by year-end 2008 and gain 5.4 percent in 2009.

 

AEM is the North-American based international trade group representing the off-road equipment manufacturing industry. Each year it surveys its construction equipment manufacturer members about expected sales of the machines that build and repair roads, bridges, houses, offices, schools and other infrastructure in America and worldwide.

 

The AEM annual outlook forecast covers 72 different whole machine product types and 19 types of attachments and components, grouped into seven broad categories: earthmoving, lifting, bituminous, concrete and aggregate, light equipment, attachments and components, and miscellaneous equipment.

 

AEM consolidates manufacturers’ estimates of overall business activity. Each forecast in the 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 survey was conducted in third quarter 2008 with many of the responses prior to the U.S. financial market collapse.

 

“The overall slowdown of the past year or so, after record expansion, accelerated this fall with a worsening housing market and collapse of major financial institutions in the U.S.,” said AEM President Dennis Slater. “The continued financial turmoil is affecting commercial projects as well. While the strength of the global economy has spurred equipment export growth, we now face a slowdown here as well.”

 

“This is certainly a challenging and unpredictable time,” he continued. “But we have learned from previous downturns how to operate more efficiently, and we are positioned for a rebound, hopefully as 2009 progresses, and into 2010. Government measures to boost infrastructure investment will play a critical role in our industry’s recovery as well as strengthening the U.S. economy overall.”   
                                                                                             

Trends affecting growth

The AEM outlook survey asked respondents to rank the influence of several factors on future construction equipment sales. The state of the general economy was cited as a key factor affecting future industry growth. Specifically, the level of housing starts and highway funding will be a major influence on construction equipment business volume. Continued export demand, and the relative strength of the U.S. dollar, will also affect sales, and the price of steel and other commodities continue to be a concern.

 

Slater said that an immediate increase in public works funding would help jumpstart the U.S. economy. “Committing funds to infrastructure renewal not only provides manufacturing and construction jobs, but also helps ensure we have safe and efficient movement of goods and people,” he said.

 

According to the survey, sales of lifting equipment are anticipated to decrease 7.4 percent in the U.S. by year-end 2008, remain flat (up 0.9 percent) for Canada, and show gains of 4.2 percent for worldwide markets. Market predictions for 2009 are growth of 2.4 percent in the U.S., gains of 5.6 percent for Canada and increases of 8.2 percent in worldwide markets.

 

Lifting equipment includes knuckle and telescopic boom truck cranes; all terrain, hydraulic truck, rough terrain and tower cranes; lattice boom cranes; rough terrain and truck-mounted forklifts; and telescopic handlers.

 

The business volume for attachments and components is predicted to show year-end 2008 gains of 3.3 percent in the U.S., 2.6 percent for Canada and 6.9 percent for worldwide markets. Sales in 2009 are expected to grow by 3.4 percent in the U.S., 2.6 percent for Canada and 5.4 percent for worldwide markets.

The attachments and components category includes buckets; quick couplers; augers; demolition shears; pulverizers/crushers; hydraulic components; rippers/scarifiers; compactors; grapples; blades; rakes; forks; snow blowers; powertrains; engines; asphalt cutters; hooks; bearings; and brake systems.