Construction Sector Report Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Forecasts to 2015 Reference code: CN0107SR Published: August 2011 www.icd-research.com EXECUTIVE SUMMARY 1 Executive Summary The consumption value of global earthmoving equipment increased at a CAGR of 1.13% during the review period (2006–2010). Robust growth in the Asia-Pacific region has offset decline in the world‘s other two significant markets, North America and Europe, which recorded CARCs of -10.69% and -8.28% over the review period. The global economic crisis was one of the main factors behind steep industry contraction. Loaders, the largest sector in the global earthmoving equipment market, achieved a CAGR of 2.28% during the review period, increasing their market share from 36.5% in 2006 to 38.2% in 2010. The excavators sector recorded the fastest growth rates with a CAGR of 2.43% and accounted for 35.6% of the earthmoving equipment market, an increase of 1.7 percentage points over 2006. Construction tractors, the smallest sector, recorded a CARC of -1.97% during the review period, observing a market share contraction of 29.6% in 2006 to 26.1% in 2010. Construction activities increased in most countries by 2010 a trend which is anticipated to continue over 2011, ICD projects the earthmoving equipment market to record positive growth and achieve a CAGR of 9.26%. While the Asia-Pacific region is expected to remain the industry‘s driving force over the forecast period, North America and Europe are also expected to regain the growth momentum and achieve healthy growth rates alongside South America and the Middle East. Globally, the Asia-Pacific region represents the largest and fastest growing earthmoving equipment market, valuing US$34.4 billion in 2010, equivalent to a 51.4% share of global consumption value. China has been the sustaining force behind recent rapid expansion in the Asia-Pacific region, with construction activities for the 2008 Beijing Olympics alongside significant infrastructural investments, in line with the government‘s eleventh Five-Year Plan, 2006–2010, being key factors. Additionally, factors such as robust economic growth, an expanding population and rapid urbanization are supporting growth rates across Asia-Pacific countries such as Indonesia, India and the Philippines. In contrast to most countries in the region, Japan recorded a CARC of -11.36% during the review period. However, the reconstruction activities following the devastating earthquake and tsunami in March 2011 are expected to provide a significant thrust to the earthmoving equipment market over the forecast period (2010–2015). China, South Korea, India and Indonesia are additionally expected to continue their growth. Consequently, the earthmoving equipment consumption value is projected to achieve a CAGR of 11.30% over the forecast period. North America is the second largest earthmoving equipment market registering a 21.1% share of global consumption value in 2010. The region recorded a CARC of -10.69% during the review period as the US housing bubble burst in the wake of the sub-prime crisis causing construction activities to decline. The area is currently undergoing a period of regional recovery and increased construction activity which is anticipated to support the demand for earthmoving equipment, recording the second highest CAGR of 8.54% over the forecast period. Growth will be bolstered by government stimulus packages, rising employment rates, increased construction activity and improvements in consumer confidence. Although it was expected that the debt crisis would give rise to challenges for the industry in the US, the US Congress is expected to pass a bill that will raise the debt ceiling by US$2.4 trillion in 2011. Consumption of earthmoving equipment is forecast to reach US$21.3 billion by 2015. Europe was the second worst performing market during the review period with a CARC of -8.28%. As a result of the global economic crisis the region additionally observed declining market shares, with global share decreasing from 29.0% in 2006 to 19.6% in 2010. The decline was more severe across developed economies in Western European, nations such as Spain, Italy, France and Germany, while developing Central and Eastern European economies, such as Russia and Poland, recorded modest declines. As a Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 2 Forecasts to 2015 © ICD Research. This product is licensed and is not to be photocopied Published: August 2011 EXECUTIVE SUMMARY result of the debt crisis, uncertain economic conditions across Western European are expected to mitigate growth, with the region projected to achieve a CAGR of 5.27% over the forecast period. Limited growth is expected to be supported by construction activities in less developed European economies such as Russia, Hungary, Croatia, and Poland. South America represented the second fastest growing earthmoving equipment market globally, with a review period CAGR of 13.86%. Growth has been supported by the implementation of a political and economic plan known as ―Democratic Security‖, in Colombia alongside a US$285.4 billion (BRL500.8 billion) investment allocation by the Brazilian federal government for infrastructure development under the Programade Aceleraçãodo Crescimento (PAC) program. Over the forecast period, Brazil will continue to sustain growth levels within the region making significant investments for the construction of stadia and transportation infrastructure associated with The 2014 FIFA World Cup and for The 2016 Olympic Games. Mexico, Argentina and Colombia are additionally expected to record growth due to robust economic expansion, increasing population and rapid urbanization. As a result, earthmoving equipment consumption is projected to achieve a CAGR of 7.35% over the forecast period. Globally, the Middle East is the smallest consumer of earthmoving equipment accounting for a 2.8% share of overall consumption in 2010. During the review period, regional consumption expanded at a CAGR of 4.14% with the UAE and Saudi Arabia registering significant growth rates, while simultaneously consumption declined in Qatar and Turkey. The region observed increased levels of construction activity up until 2008 as revenues from oil increased and governments across the region made attempts to diversify their economies by investing in infrastructure. With construction activities recovering and Qatar and Saudi Arabia expected to attract large investments over 2011, the earthmoving equipment consumption is forecast to expand at a CAGR of 7.35% over the forecast period. Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 3 Forecasts to 2015 © ICD Research. This product is licensed and is not to be photocopied Published: August 2011 TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary .............................................................................................................. 2 1 Introduction ......................................................................................................................... 20 1.1 What is this Report About? ..............................................................................................................20 1.2 Definitions .......................................................................................................................................20 1.3 Summary Methodology ...................................................................................................................21 2 GLOBAL MARKET ENVIRONMENT ................................................................................... 24 2.1 Economic Indicators ........................................................................................................................24 2.1.1 GDP at Constant Prices............................................................................................................................ 24 2.1.2 GDP Per Capita at Constant Prices ......................................................................................................... 25 2.2 Demographics and Labor ................................................................................................................26 2.2.1 Population ................................................................................................................................................. 26 2.2.2 Growth in Mid-Age Population .................................................................................................................. 27 2.2.3 Employment Rate ..................................................................................................................................... 28 2.2.4 Unemployment Rate ................................................................................................................................. 29 2.3 Industrial Output Growth .................................................................................................................30 2.4 Services Growth ..............................................................................................................................31 2.5 Agriculture Growth ..........................................................................................................................32 2.6 Construction Value Added as a Percentage of GDP .......................................................................33 3 GLOBAL EARTHMOVING EQUIPMENT MARKET