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

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

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 ANALYSIS ...... 34 3.1 Market Overview ...... 34 3.2 Global Earthmoving Equipment Consumption ...... 36 3.2.1 Consumption Value ...... 36 3.2.2 Consumption Value by Category ...... 38 3.3 Global Earthmoving Equipment Production ...... 42 3.3.1 Production Value ...... 42 3.3.2 Production Value by Category ...... 44 4 NORTH AMERICA ...... 48 4.1 Market Environment ...... 48 4.1.1 Economic Indicators ...... 48 4.1.2 Monetary Indicators ...... 49 4.1.3 Trade and Investment Indicators ...... 49 4.2 North America Earthmoving Equipment Market Analysis ...... 50 4.3 Consumption ...... 52 4.3.1 Consumption Value ...... 52 4.3.2 Consumption Value by Category ...... 54

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 4 Forecasts to 2015

TABLE OF CONTENTS

4.4 Production ...... 58 4.4.1 Production Value ...... 58 4.4.2 Production Value by Category ...... 60 4.5 UNITED STATES ...... 64 4.5.1 Consumption Value ...... 64 4.5.2 Consumption Value by Category ...... 66 4.6 CANADA ...... 67 4.6.1 Consumption Value ...... 67 4.6.2 Consumption Value by Category ...... 69 5 EUROPE ...... 70 5.1 Market Environment ...... 70 5.1.1 Economic Indicators ...... 70 5.1.2 Monetary Indicators ...... 71 5.1.3 Trade and Investment Indicators ...... 71 5.2 Europe Earthmoving Equipment Market Analysis ...... 72 5.3 Consumption ...... 74 5.3.1 Consumption Value ...... 74 5.3.2 Consumption Value by Category ...... 76 5.4 Production ...... 80 5.4.1 Production Value ...... 80 5.4.2 Production Value by Category ...... 82 5.5 Germany ...... 85 5.5.1 Consumption Value ...... 85 5.5.2 Consumption Value by Category ...... 87 5.6 SPAIN ...... 88 5.6.1 Consumption Value ...... 88 5.6.2 Consumption Value by Category ...... 90 5.7 FRANCE ...... 91 5.7.1 Consumption Value ...... 91 5.7.2 Consumption Value by Category ...... 93 5.8 ITALY ...... 94 5.8.1 Consumption Value ...... 94 5.8.2 Consumption Value by Category ...... 96 5.9 UNITED KINGDOM ...... 97 5.9.1 Consumption Value ...... 97 5.9.2 Consumption Value by Category ...... 99 5.10 CROATIA ...... 100 5.10.1 Consumption Value ...... 100

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 5 Forecasts to 2015

TABLE OF CONTENTS

5.10.2 Consumption Value by Category ...... 102 5.11 CZECH REPUBLIC ...... 103 5.11.1 Consumption Value ...... 103 5.11.2 Consumption Value by Category ...... 105 5.12 RUSSIA ...... 106 5.12.1 Consumption Value ...... 106 5.12.2 Consumption Value by Category ...... 108 5.13 POLAND ...... 109 5.13.1 Consumption Value ...... 109 5.13.2 Consumption Value by Category ...... 111 5.14 HUNGARY ...... 112 5.14.1 Consumption Value ...... 112 5.14.2 Consumption Value by Category ...... 114 5.15 SWITZERLAND ...... 115 5.15.1 Consumption Value ...... 115 5.15.2 Consumption Value by Category ...... 117 5.16 NETHERLANDS ...... 118 5.16.1 Consumption Value ...... 118 5.16.2 Consumption Value by Category ...... 120 6 ASIA-PACIFIC ...... 121 6.1 Market Environment ...... 121 6.1.1 Economic Indicators ...... 121 6.1.2 Monetary Indicators ...... 122 6.1.3 Trade and Investment Indicators ...... 122 6.2 Asia-Pacific Earthmoving Equipment Market Analysis ...... 123 6.3 Consumption ...... 125 6.3.1 Consumption Value ...... 125 6.3.2 Consumption Value by Category ...... 127 6.4 Production ...... 130 6.4.1 Production Value ...... 130 6.4.2 Production Value by Category ...... 132 6.5 CHINA ...... 135 6.5.1 Consumption Value ...... 135 6.5.2 Consumption Value by Category ...... 137 6.6 INDIA ...... 138 6.6.1 Consumption Value ...... 138 6.6.2 Consumption Value by Category ...... 140 6.7 JAPAN ...... 141

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 6 Forecasts to 2015

TABLE OF CONTENTS

6.7.1 Consumption Value ...... 141 6.7.2 Consumption Value by Category ...... 143 6.8 SOUTH KOREA ...... 144 6.8.1 Consumption Value ...... 144 6.8.2 Consumption Value by Category ...... 146 6.9 AUSTRALIA ...... 147 6.9.1 Consumption Value ...... 147 6.9.2 Consumption Value by Category ...... 149 6.10 INDONESIA ...... 150 6.10.1 Consumption Value ...... 150 6.10.2 Consumption Value by Category ...... 152 6.11 MALAYSIA ...... 153 6.11.1 Consumption Value ...... 153 6.11.2 Consumption Value by Category ...... 155 6.12 PHILIPPINES ...... 156 6.12.1 Consumption Value ...... 156 6.12.2 Consumption Value by Category ...... 158 7 SOUTH AMERICA ...... 159 7.1 Market Environment ...... 159 7.1.1 Economic Indicators ...... 159 7.1.2 Monetary Indicators ...... 160 7.1.3 Trade and Investment Indicators ...... 160 7.2 South American Earthmoving Equipment Market Analysis ...... 161 7.3 Consumption ...... 163 7.3.1 Consumption Value ...... 163 7.3.2 Consumption Value by Category ...... 165 7.4 Production ...... 169 7.4.1 Production Value ...... 169 7.4.2 Production Value by Category ...... 171 7.5 BRAZIL ...... 174 7.5.1 Consumption Value ...... 174 7.5.2 Consumption Value by Category ...... 176 7.6 ARGENTINA ...... 177 7.6.1 Consumption Value ...... 177 7.6.2 Consumption Value by Category ...... 179 7.7 COLOMBIA ...... 180 7.7.1 Consumption Value ...... 180 7.7.2 Consumption Value by Category ...... 182

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 7 Forecasts to 2015

TABLE OF CONTENTS

7.8 MEXICO ...... 183 7.8.1 Consumption Value ...... 183 7.8.2 Consumption Value by Category ...... 185 8 MIDDLE EAST ...... 186 8.1 Market Environment ...... 186 8.1.1 Economic Indicators ...... 186 8.1.2 Trade and Investment Indicators ...... 186 8.2 The Middle Eastern Earthmoving Equipment Market Analysis ...... 187 8.3 Consumption ...... 189 8.3.1 Consumption Value ...... 189 8.3.2 Consumption Value by Category ...... 191 8.4 Production ...... 194 8.4.1 Production Value ...... 194 8.4.2 Production Value by Category ...... 196 8.5 SAUDI ARABIA ...... 199 8.5.1 Consumption Value ...... 199 8.5.2 Consumption Value by Category ...... 201 8.6 UNITED ARAB EMIRATES ...... 202 8.6.1 Consumption Value ...... 202 8.6.2 Consumption Value by Category ...... 204 8.7 QATAR ...... 205 8.7.1 Consumption Value ...... 205 8.7.2 Consumption Value by Category ...... 207 8.8 TURKEY ...... 208 8.8.1 Consumption Value ...... 208 8.8.2 Consumption Value by Category ...... 210 9 Company Profile: AB Volvo ...... 211 9.1 AB Volvo Company Overview ...... 211 9.2 AB Volvo - Business Description ...... 211 9.3 AB Volvo - Main Products and Services ...... 213 9.4 AB Volvo - History ...... 213 9.5 AB Volvo - SWOT Analysis ...... 215 9.5.1 AB Volvo – Strengths ...... 215 9.5.2 AB Volvo – Weaknesses ...... 216 9.5.3 AB Volvo – Opportunities...... 216 9.5.4 AB Volvo – Threats ...... 217 9.6 AB Volvo – Company Information ...... 218 9.6.1 AB Volvo - Key Competitors ...... 218

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 8 Forecasts to 2015

TABLE OF CONTENTS

9.6.2 AB Volvo - Key Employees ...... 219 10 Company Profile: Caterpillar Inc...... 220 10.1 Caterpillar Inc. Company Overview ...... 220 10.2 Caterpillar Inc. - Business Description ...... 220 10.3 Caterpillar Inc. - Main Products and Services ...... 221 10.4 Caterpillar Inc. - History ...... 222 10.5 Caterpillar Inc. - SWOT Analysis ...... 223 10.5.1 Caterpillar Inc. – Strengths ...... 223 10.5.2 Caterpillar Inc. – Weaknesses ...... 224 10.5.3 Caterpillar Inc. – Opportunities ...... 224 10.5.4 Caterpillar Inc. – Threats ...... 225 10.6 Caterpillar Inc. – Company Information ...... 226 10.6.1 Caterpillar Inc. - Key Competitors ...... 226 10.6.2 Caterpillar Inc. - Key Employees ...... 226 11 Company Profile: Mitsubishi Heavy Industries, Ltd...... 228 11.1 Mitsubishi Heavy Industries, Ltd. - Company Overview ...... 228 11.2 Mitsubishi Heavy Industries, Ltd. - Business Description ...... 228 11.3 Mitsubishi Heavy Industries, Ltd. - Main Products ...... 230 11.4 Mitsubishi Heavy Industries, Ltd. - History ...... 232 11.5 Mitsubishi Heavy Industries, Ltd. - SWOT Analysis ...... 233 11.5.1 Mitsubishi Heavy Industries, Ltd. – Strengths ...... 233 11.5.2 Mitsubishi Heavy Industries, Ltd. – Weaknesses ...... 234 11.5.3 Mitsubishi Heavy Industries, Ltd. – Opportunities ...... 234 11.5.4 Mitsubishi Heavy Industries, Ltd. – Threats...... 235 11.6 Mitsubishi Heavy Industries, Ltd. – Company Information ...... 236 11.6.1 Mitsubishi Heavy Industries, Ltd. - Key Competitors ...... 236 11.6.2 Mitsubishi Heavy Industries, Ltd. - Key Employees ...... 236 12 Company Profile: Hyundai Heavy Industries Co., Ltd...... 238 12.1 Hyundai Heavy Industries Co., Ltd. - Company Overview ...... 238 12.2 Hyundai Heavy Industries Co., Ltd. - Business Description ...... 238 12.3 Hyundai Heavy Industries Co., Ltd. - Main Products and Services ...... 240 12.4 Hyundai Heavy Industries Co., Ltd. - History ...... 241 12.5 Hyundai Heavy Industries Co., Ltd. - SWOT Analysis ...... 242 12.5.1 Hyundai Heavy Industries Co., Ltd. – Strengths ...... 242 12.5.2 Hyundai Heavy Industries Co., Ltd. – Weaknesses ...... 243 12.5.3 Hyundai Heavy Industries Co., Ltd. – Opportunities ...... 243 12.5.4 Hyundai Heavy Industries Co., Ltd. – Threats ...... 244

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 9 Forecasts to 2015

TABLE OF CONTENTS

12.6 Hyundai Heavy Industries Co., Ltd. – Company Information ...... 244 12.6.1 Hyundai Heavy Industries Co., Ltd. - Key Competitors ...... 244 12.6.2 Hyundai Heavy Industries Co., Ltd. - Key Employees ...... 245 13 Company Profile: Komatsu Ltd...... 246 13.1 Komatsu Ltd. – Company Overview ...... 246 13.2 Komatsu Ltd. – Business Description ...... 246 13.3 Komatsu Ltd. – Main Products and Brands ...... 247 13.4 Komatsu Ltd. – History ...... 248 13.5 Komatsu Ltd. – SWOT Analysis ...... 249 13.5.1 Komatsu Ltd. – Strengths ...... 249 13.5.2 Komatsu Ltd. – Weaknesses ...... 250 13.5.3 Komatsu Ltd. – Opportunities ...... 251 13.5.4 Komatsu Ltd. – Threats ...... 251 13.6 Komatsu Ltd. – Company Information ...... 252 13.6.1 Komatsu Ltd. – Key Competitors ...... 252 13.6.2 Komatsu Ltd. – Key Employees ...... 252 14 Company Profile: Hitachi Construction Machinery Co., Ltd...... 254 14.1 Hitachi Construction Machinery Co., Ltd. - Company Overview ...... 254 14.2 Hitachi Construction Machinery Co., Ltd. - Business Description ...... 254 14.3 Hitachi Construction Machinery Co., Ltd. - Main Products and Services ...... 255 14.4 Hitachi Construction Machinery Co., Ltd. - History ...... 256 14.5 Hitachi Construction Machinery Co., Ltd. - SWOT Analysis ...... 257 14.5.1 Hitachi Construction Machinery Co., Ltd. – Strengths ...... 258 14.5.2 Hitachi Construction Machinery Co., Ltd. – Weaknesses ...... 258 14.5.3 Hitachi Construction Machinery Co., Ltd. – Opportunities ...... 259 14.5.4 Hitachi Construction Machinery Co., Ltd. – Threats ...... 260 14.6 Hitachi Construction Machinery Co., Ltd. – Company Information ...... 260 14.6.1 Hitachi Construction Machinery Co., Ltd. - Key Competitors ...... 260 14.6.2 Hitachi Construction Machinery Co., Ltd. - Key Employees ...... 261 15 Company Profile: Doosan Infracore Co., Ltd ...... 262 15.1 Doosan Infracore Co. Ltd - Company Overview ...... 262 15.2 Doosan Infracore Co., Ltd - Business Description ...... 262 15.3 Doosan Infracore Co. Ltd - Major Products ...... 264 15.4 Doosan Infracore Co., Ltd - History ...... 265 15.5 Doosan Infracore Co., Ltd - SWOT Analysis ...... 266 15.5.1 Doosan Infracore Co., Ltd – Strengths ...... 266 15.5.2 Doosan Infracore Co., Ltd – Weaknesses ...... 267

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 10 Forecasts to 2015

TABLE OF CONTENTS

15.5.3 Doosan Infracore Co. Ltd – Opportunities ...... 267 15.5.4 Doosan Infracore Co. Ltd – Threats ...... 268 15.6 Doosan Infracore Co., Ltd – Company Information ...... 269 15.6.1 Doosan Infracore Co. Ltd - Key Competitors...... 269 15.6.2 Doosan Infracore Co. Ltd - Key Employees ...... 269 16 Company Profile: BEML Limited ...... 270 16.1 BEML Limited - Company Overview ...... 270 16.2 BEML Limited - Business Description ...... 270 16.3 BEML Limited - Major Products Services and Brands ...... 272 16.4 BEML Limited - History ...... 275 16.5 BEML Limited - SWOT Analysis ...... 276 16.5.1 BEML Limited – Strengths ...... 276 16.5.2 BEML Limited – Weaknesses ...... 277 16.5.3 BEML Limited – Opportunities ...... 277 16.5.4 BEML Limited – Threats ...... 279 16.6 BEML Limited – Company Information ...... 280 16.6.1 BEML Limited - Key Competitors ...... 280 16.6.2 BEML Limited - Key Employees ...... 280 17 Company Profile: Escorts Limited ...... 281 17.1 Escorts Limited Company Overview ...... 281 17.2 Escorts Limited - Major Products ...... 281 17.3 Escorts Limited – Company Information ...... 282 17.3.1 Escorts Limited - Key Competitors ...... 282 17.3.2 Escorts Limited - Key Employees ...... 282 18 Company Profile: Telco Construction Equipment Company Limited ...... 283 18.1 Telco Construction Equipment Company Limited Company Overview ...... 283 18.2 Telco Construction Equipment Company Limited - Business Description ...... 283 18.3 Telco Construction Equipment Company Limited - Major Products, Services and Brands ...... 284 18.4 Telco Construction Equipment Company Limited - History ...... 285 18.5 Telco Construction Equipment Company Limited - SWOT Analysis ...... 286 18.5.1 Telco Construction Equipment Company Limited – Strengths ...... 286 18.5.2 Telco Construction Equipment Company Limited – Weaknesses ...... 287 18.5.3 Telco Construction Equipment Company Limited – Opportunities ...... 287 18.5.4 Telco Construction Equipment Company Limited – Threats ...... 288 18.6 Telco Construction Equipment Company Limited – Company Information ...... 289 18.6.1 Telco Construction Equipment Company Limited - Key Competitors ...... 289 18.6.2 Telco Construction Equipment Company Limited - Key Employees ...... 289

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 11 Forecasts to 2015

TABLE OF CONTENTS

19 Annual Review ...... 290 20 Appendix ...... 299

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 12 Forecasts to 2015

TABLE OF CONTENTS

LIST OF FIGURES

Figure 1: Global GDP at Constant Prices (US$ Billion), 2006–2015 ...... 24 Figure 2: Global GDP Per Capita at Constant Prices (US$), 2006–2015 ...... 25 Figure 3: Global Population (Million), 2006–2015 ...... 26 Figure 4: Global Growth in Mid-Age Population (%), 2006–2015 ...... 27 Figure 5: Global Employment Rate (%), 2006–2015 ...... 28 Figure 6: Global Unemployment Rate (%), 2006–2015 ...... 29 Figure 7: Global Industrial Output Growth (%), 2006–2015 ...... 30 Figure 8: Global Services Growth (%), 2006–2015 ...... 31 Figure 9: Global Agriculture Growth (%), 2006–2015 ...... 32 Figure 10: Global Construction Value Added as a Percentage of GDP (%), 2006–2015 ...... 33 Figure 11: Global Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 34 Figure 12: Global Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 36 Figure 13: Global Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 37 Figure 14: Global Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 39 Figure 15: Global Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 41 Figure 16: Global Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 42 Figure 17: Global Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 43 Figure 18: Global Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 45 Figure 19: Global Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 47 Figure 20: North American Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 50 Figure 21: North American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 52 Figure 22: North American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 53 Figure 23: North American Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 55 Figure 24: North American Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 57 Figure 25: North American Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 58 Figure 26: North American Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 59 Figure 27: North American Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 61 Figure 28: North American Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 63 Figure 29: US Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 64 Figure 30: US Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 65 Figure 31: US Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 66 Figure 32: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 67 Figure 33: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 68 Figure 34: Canadian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015...... 69 Figure 35: European Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 72 Figure 36: European Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 74 Figure 37: European Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 75 Figure 38: European Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 77 Figure 39: European Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 79 Figure 40: European Earthmoving equipment Production Value (US$ Million), 2006–2010 ...... 80 Figure 41: European Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 81 Figure 42: European Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 83 Figure 43: European Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 84 Figure 44: German Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 85 Figure 45: German Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 86 Figure 46: German Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 87 Figure 47: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 88 Figure 48: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 89 Figure 49: Spanish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 90 Figure 50: French Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 91 Figure 51: French Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 92 Figure 52: French Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 93 Figure 53: Italian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 94 Figure 54: Italian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 95 Figure 55: Italian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 96 Figure 56: UK Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 97 Figure 57: UK Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 98

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 13 Forecasts to 2015

TABLE OF CONTENTS

Figure 58: UK Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 99 Figure 59: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 100 Figure 60: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 101 Figure 61: Croatian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 102 Figure 62: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 103 Figure 63: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 104 Figure 64: Czech Republic Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 105 Figure 65: Russian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 106 Figure 66: Russian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 107 Figure 67: Russian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 108 Figure 68: Polish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 109 Figure 69: Polish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 110 Figure 70: Polish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 111 Figure 71: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 112 Figure 72: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 113 Figure 73: Hungarian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 114 Figure 74: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 115 Figure 75: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 116 Figure 76: Swiss Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 117 Figure 77: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 118 Figure 78: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 119 Figure 79: Dutch Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 120 Figure 80: Asia-Pacific Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 123 Figure 81: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 125 Figure 82: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 126 Figure 83: Asia-Pacific Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 128 Figure 84: Asia-Pacific Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 129 Figure 85: Asia-Pacific Earthmoving equipment Production Value (US$ Million), 2006–2010 ...... 130 Figure 86: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 131 Figure 87: Asia-Pacific Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 133 Figure 88: Asia-Pacific Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 134 Figure 89: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 135 Figure 90: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 136 Figure 91: Chinese Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 137 Figure 92: Indian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 138 Figure 93: Indian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 139 Figure 94: Indian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 140 Figure 95: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 141 Figure 96: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 142 Figure 97: Japanese Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 143 Figure 98: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 144 Figure 99: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 145 Figure 100: South Korean Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 146 Figure 101: Australian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 147 Figure 102: Australian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 148 Figure 103: Australian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 149 Figure 104: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 150 Figure 105: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 151 Figure 106: Indonesian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 152 Figure 107: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 153 Figure 108: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 154 Figure 109: Malaysian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 155 Figure 110: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 156 Figure 111: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 157 Figure 112: Philippine Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 158 Figure 113: South America Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 161 Figure 114: South American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 163 Figure 115: South American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 164 Figure 116: South American Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 166 Figure 117: South American Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 168

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 14 Forecasts to 2015

TABLE OF CONTENTS

Figure 118: South American Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 169 Figure 119: South American Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 170 Figure 120: South American Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 172 Figure 121: South American Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 173 Figure 122: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 174 Figure 123: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 175 Figure 124: Brazilian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 176 Figure 125: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 177 Figure 126: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 178 Figure 127: Argentine Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015...... 179 Figure 128: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 180 Figure 129: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 181 Figure 130: Colombian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 182 Figure 131: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 183 Figure 132: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 184 Figure 133: Mexican Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015...... 185 Figure 134: Middle East Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015 ...... 187 Figure 135: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 189 Figure 136: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 190 Figure 137: Middle East Earthmoving Equipment Consumption Value by Category (%), 2006–2010 ...... 192 Figure 138: Middle East Earthmoving Equipment Consumption Value by Category (%), 2010–2015 ...... 193 Figure 139: Middle East Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 194 Figure 140: Middle East Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 195 Figure 141: Middle East Earthmoving Equipment Production Value by Category (%), 2006–2010 ...... 197 Figure 142: Middle East Earthmoving Equipment Production Value by Category (%), 2010–2015 ...... 198 Figure 143: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 199 Figure 144: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 200 Figure 145: Saudi Arabian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 201 Figure 146:UAE Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 202 Figure 147: UAE Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 203 Figure 148: UAE Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 204 Figure 149: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 205 Figure 150: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 206 Figure 151: Qatar Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 207 Figure 152: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 208 Figure 153: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 209 Figure 154: Turkish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015 ...... 210

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 15 Forecasts to 2015

TABLE OF CONTENTS

LIST OF TABLES

Table 1: Global Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 36 Table 2: Global Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 37 Table 3: Global Earthmoving Equipment Consumption Value by Category/Sub Category (US$ Million), 2006–2010 ...... 38 Table 4: Global Earthmoving Equipment Consumption Value by Category/Sub Category (US$ Million), 2010–2015 ...... 40 Table 5: Global Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 42 Table 6: Global Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 43 Table 7: Global Earthmoving Equipment Production Value by Category/Sub Category (US$ Million), 2006–2010 ...... 44 Table 8: Global Earthmoving Equipment Production Value by Category/Sub Category (US$ Million), 2010–2015 ...... 46 Table 9: North American Economic Indicators, 2006–2010 ...... 48 Table 10: North American Economic Indicators, 2010–2015 ...... 48 Table 11: North American Monetary Indicators, 2006–2010 ...... 49 Table 12: North American Monetary Indicators, 2010–2015 ...... 49 Table 13: North American Trade and Investment Indicators, 2006–2009 ...... 49 Table 14: North American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 52 Table 15: North American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 53 Table 16: North American Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010 ...... 54 Table 17: North American Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015 ...... 56 Table 18: North American Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 58 Table 19: North American Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 59 Table 20: North American Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010...... 60 Table 21: North American Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015...... 62 Table 22: US Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 64 Table 23: US Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 65 Table 24: US Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015...... 66 Table 25: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010...... 67 Table 26: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015...... 68 Table 27: Canadian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 69 Table 28: European Economic Indicators, 2006–2010 ...... 70 Table 29: European Economic Indicators, 2010–2015 ...... 70 Table 30: European Monetary Indicators, 2006–2010 ...... 71 Table 31: European Monetary Indicators, 2010–2015 ...... 71 Table 32: European Trade and Investment Indicators, 2006–2009 ...... 71 Table 33: European Earthmoving Equipment Value (US$ Million), 2006–2010 ...... 74 Table 34: European Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 75 Table 35: European Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010 ...... 76 Table 36: European Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015 ...... 78 Table 37: European Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 80 Table 38: European Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 81 Table 39: European Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010 ...... 82 Table 40: European Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015 ...... 84 Table 41: German Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 85 Table 42: German Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 86 Table 43: German Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 87 Table 44: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 88 Table 45: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 89 Table 46: Spanish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 90 Table 47: French Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 91 Table 48: French Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 92 Table 49: French Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 93 Table 50: Italian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 94 Table 51: Italian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 95 Table 52: Italian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 96 Table 53: UK Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 97 Table 54: UK Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 98 Table 55: UK Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015...... 99 Table 56: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 100 Table 57: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 101

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 16 Forecasts to 2015

TABLE OF CONTENTS

Table 58: Croatian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 102 Table 59: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 103 Table 60: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 104 Table 61: Czech Republic Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 105 Table 62: Russian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 106 Table 63: Russian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 107 Table 64: Russian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 108 Table 65: Polish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 109 Table 66: Polish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 110 Table 67: Polish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 111 Table 68: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 112 Table 69: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 113 Table 70: Hungarian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 114 Table 71: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 115 Table 72: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 116 Table 73: Swiss Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 117 Table 74: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 118 Table 75: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 119 Table 76: Dutch Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 120 Table 77: Asia-Pacific Economic Indicators, 2006–2010 ...... 121 Table 78: Asia-Pacific Economic Indicators, 2010–2015 ...... 121 Table 79: Asia-Pacific Monetary Indicators, 2006–2010...... 122 Table 80: Asia-Pacific Monetary Indicators, 2010–2015...... 122 Table 81: Asia-Pacific Trade and Investment Indicators, 2006–2009 ...... 122 Table 82: Asia-Pacific Earthmoving Equipment Value (US$ Million), 2006–2010 ...... 125 Table 83: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 126 Table 84: Asia-Pacific Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010 ...... 127 Table 85: Asia-Pacific Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015 ...... 129 Table 86: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 130 Table 87: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 131 Table 88: Asia-Pacific Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010...... 132 Table 89: Asia-Pacific Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015...... 134 Table 90: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 135 Table 91: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 136 Table 92: Chinese Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015...... 137 Table 93: Indian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 138 Table 94: Indian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 139 Table 95: Indian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 140 Table 96: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 141 Table 97: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 142 Table 98: Japanese Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 143 Table 99: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 144 Table 100: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 145 Table 101: South Korean Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 146 Table 102: Australian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 147 Table 103: Australian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 148 Table 104: Australian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 149 Table 105: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 150 Table 106: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 151 Table 107: Indonesian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 152 Table 108: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 153 Table 109: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 154 Table 110: Malaysian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 155 Table 111: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 156 Table 112: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 157 Table 113: Philippine Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 158 Table 114: South American Economic Indicators, 2006–2010 ...... 159 Table 115: South American Economic Indicators, 2010–2015 ...... 159 Table 116: South American Monetary Indicators, 2006–2010 ...... 160 Table 117: South American Monetary Indicators, 2010–2015 ...... 160

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 17 Forecasts to 2015

TABLE OF CONTENTS

Table 118: South American Trade and Investment Indicators, 2006–2010 ...... 160 Table 119: South American Earthmoving Equipment Value (US$ Million), 2006–2010 ...... 163 Table 120: South American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 164 Table 121: South America Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010 ...... 165 Table 122: South America Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015 ...... 167 Table 123: South American Earthmoving Equipment Production Value (US$ Million), 2006–2010...... 169 Table 124: South American Earthmoving Equipment Production Value (US$ Million), 2010–2015...... 170 Table 125: South America Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010 ...... 171 Table 126: South America Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015 ...... 173 Table 127: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 174 Table 128: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 175 Table 129: Brazilian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 176 Table 130: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 177 Table 131: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 178 Table 132: Argentine Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 179 Table 133: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 180 Table 134: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 181 Table 135: Colombian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 182 Table 136: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2006–2010...... 183 Table 137: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2010–2015...... 184 Table 138: Mexican Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 185 Table 139: Middle East Economic Indicators, 2006–2010 ...... 186 Table 140: Middle East Economic Indicators, 2010–2015 ...... 186 Table 141: Middle East Trade and Investment Indicators, 2006–2009 ...... 186 Table 142: Middle East Earthmoving Equipment Value (US$ Million), 2006–2010 ...... 189 Table 143: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 190 Table 144: Middle East Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010 ...... 191 Table 145: Middle East Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015 ...... 193 Table 146: Middle East Earthmoving Equipment Production Value (US$ Million), 2006–2010 ...... 194 Table 147: Middle East Earthmoving Equipment Production Value (US$ Million), 2010–2015 ...... 195 Table 148: Middle East Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010 ...... 196 Table 149: Middle East Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015 ...... 198 Table 150: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010...... 199 Table 151: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015...... 200 Table 152: Saudi Arabian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 201 Table 153: UAE Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 202 Table 154: UAE Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 203 Table 155: UAE Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 204 Table 156: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 205 Table 157: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 206 Table 158: Qatar Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 207 Table 159: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010 ...... 208 Table 160: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015 ...... 209 Table 161: Turkish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015 ...... 210 Table 162: AB Volvo , Key Facts ...... 211 Table 163: AB Volvo , Main Products and Services ...... 213 Table 164: AB Volvo , History ...... 213 Table 165: AB Volvo ,, Key Employees ...... 219 Table 166: Caterpillar Inc., Key Facts ...... 220 Table 167: Caterpillar Inc., Main Products and Services ...... 221 Table 168: Caterpillar Inc., History ...... 222 Table 169: Caterpillar Inc., Key Employees ...... 226 Table 170: Mitsubishi Heavy Industries, Ltd., Key Facts ...... 228 Table 171: Mitsubishi Heavy Industries, Ltd., Main Products ...... 230 Table 172: Mitsubishi Heavy Industries, Ltd., History ...... 232 Table 173: Mitsubishi Heavy Industries, Ltd.,, Key Employees ...... 236 Table 174: Hyundai Heavy Industries Co., Ltd., Key Facts ...... 238 Table 175: Hyundai Heavy Industries Co., Ltd., Main Products and Services ...... 240 Table 176: Hyundai Heavy Industries Co., Ltd., History ...... 241 Table 177: Hyundai Heavy Industries Co., Ltd.,, Key Employees ...... 245

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 18 Forecasts to 2015

TABLE OF CONTENTS

Table 178: Komatsu Ltd., Key Facts ...... 246 Table 179: Komatsu Ltd., Main Products & Brands ...... 247 Table 180: Komatsu Ltd., History ...... 248 Table 181: Komatsu Ltd.,, Key Employees ...... 252 Table 182: Hitachi Construction Machinery Co., Ltd., Key Facts ...... 254 Table 183: Hitachi Construction Machinery Co., Ltd., Main Products and Services ...... 255 Table 184: Hitachi Construction Machinery Co., Ltd., History...... 256 Table 185: Hitachi Construction Machinery Co., Ltd.,, Key Employees ...... 261 Table 186: Doosan Infracore Co., Ltd, Key Facts ...... 262 Table 187: Doosan Infracore Co. Ltd, Major Products ...... 264 Table 188: Doosan Infracore Co., Ltd, History ...... 265 Table 189: Doosan Infracore Co. Ltd., Key Employees ...... 269 Table 190: BEML Limited, Key Facts ...... 270 Table 191: BEML Limited , Major Products Services and Brands ...... 272 Table 192: BEML Limited , History ...... 275 Table 193: BEML Limited., Key Employees ...... 280 Table 194: Escorts Limited, Key Facts ...... 281 Table 195: Escorts Limited, Major Products ...... 281 Table 196: Escorts Limited,, Key Employees ...... 282 Table 197: Telco Construction Equipment Company Limited, Key Facts ...... 283 Table 198: Telco Construction Equipment Company Limited, Major Products Services and Brands ...... 284 Table 199: Telco Construction Equipment Company Limited, History ...... 285 Table 200: Telco Construction Equipment Company Limited., Key Employees ...... 289

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 19 Forecasts to 2015

INTRODUCTION

1 Introduction

1.1 What is this Report About?

This report is the result of ICD‘s extensive market and company research covering the global earthmoving equipment market. It provides detailed historic and forecast earthmoving equipment market values, segmented at category level; regional analysis, and analysis of the leading companies in the market.

―Global Earthmoving Equipment– Market Opportunities and Business Environment, Analyses and Forecasts to 2015‖ provides a top-level overview and detailed category and company-specific insights into the operating environment for construction equipment companies. It is an essential tool for companies active across the global construction value chain and for new companies considering entering the market.

NOTE: For the purposes of this report geographical regions consist of the following:

North America - United States and Canada Europe - Germany, Spain, France, Italy, the United Kingdom, Croatia, Czech Republic, Russia, Poland, Hungary, Switzerland and the Netherlands Asia-Pacific - Australia, China, Japan, India, Indonesia, Malaysia, the Philippines and South Korea South America - Argentina, Brazil, Colombia and Mexico The Middle East - Saudi Arabia, the United Arab Emirates, Qatar, and Turkey

1.2 Definitions

For the purposes of this report, the following timeframes apply:

Review period: 2006 to 2010

Forecast Period: 2011 to 2015

Earthmoving equipments are part of the global construction equipment market, and can be categorized as follows: Excavators Crawler/ Wheeled Excavators Mini Excavators Loaders Backhoe loaders Crawler/ Wheeled/Compact loaders Skid-Steer loaders Construction Tractors Bulldozers/Crawlers Tractors Wheeled Tractors

All data is collected in local currency. To avoid distortions due to currency fluctuations, all conversions are made into US$, of current, historical and forecast data alike, by taking a yearly average exchange rate. All the values in tables, with the exception of compound annual growth rate (CAGR) values, and compound annual rate of change (CARC) are displayed to two decimal places, and therefore growth rates may appear inconsistent with absolute values due to this rounding method.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 20 Forecasts to 2015

INTRODUCTION

1.3 Summary Methodology

All ICD reports are rigorously sourced and created according to a comprehensive four-stage methodology:

1) Market study

A. Standardization

Market definitions are specified using recognized industry classifications. The same definition is used for every country Annual average currency exchange rates for the latest complete year are collected. These are applied across both historical and forecast data in order to remove exchange rate fluctuations

B. Internal audit

Review of in-house databases to gather existing data: Historic market databases and reports Company database Construction magazine portfolio Construction projects database

C. Trend monitoring and primary research

Review of the latest construction company and project trends Biannual surveys using expert panels compiled from across the construction value chain: Construction contractors Equipment and material manufacturers and suppliers Architects and designers Project owners and financiers Project advisors

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 21 Forecasts to 2015

INTRODUCTION

2) Research

A. Sources Collection of the latest market-specific data from a wide variety of respected industry sources: Government statistics Industry associations Company filings Broker reports International organizations

B. Expert opinion Collation of opinion taken from ICD journalist interviews of leading industry figures Analysis of third party opinion and forecasts: Broker reports Industry associations Construction media Official government sources

C. Data consolidation and verification Consolidation of data and opinion to create historical datasets Creation of models to benchmark data across sectors and geographies

3) Analysis

A. Market forecasts Feed of forecast data into market models: Macroeconomic indicators Industry-specific drivers Analysis of ICD Construction Projects Database in order to identify trends by sector: Latest project announcements Financing shortfalls Project cancellations and postponements

B. Report writing Analysis of market data Discussion of company and industry trends and issues Integration of survey results Annual review of financial deal and construction project trends

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 22 Forecasts to 2015

INTRODUCTION

4) Quality control

A. Templates Detailed process manuals Standardized report templates and accompanying style guides Complex forecasting tool used to ensure forecast methodologies are consistently applied Quality control checklists

B. Quality control process Competitor review Senior level quality control Randomized spot checks on data integrity Benchmark checks across databases Market data cross-checked for consistency with accumulated data from: Construction Projects Database Company filings

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 23 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2 GLOBAL MARKET ENVIRONMENT

2.1 Economic Indicators

2.1.1 GDP at Constant Prices

In 2010, global gross domestic product (GDP) at 2000 constant prices stood at US$37,177.3 billion, recording a CAGR of 1.90% during the review period.

GDP growth is expected to increase at a CAGR of 3.51% over the forecast period to reach US$44,168.5 billion by 2015.

Figure 1: Global GDP at Constant Prices (US$ Billion), 2006–2015

Source: ICD Research Analysis / © ICD Research

Note: “Global” includes only those thirty countries which are analyzed in the report. Applicable for all the graphs and tables in the report.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 24 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.1.2 GDP Per Capita at Constant Prices

In 2010, global GDP per capita at 2000 constant prices stood at US$19,136.6 recording a CAGR of 1.35% during the review period.

Global GDP per capita is expected to increase at a CAGR of 2.74% over the forecast period to vaule US$21,909.0 by 2015.

Figure 2: Global GDP Per Capita at Constant Prices (US$), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 25 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.2 Demographics and Labor

2.2.1 Population

The global population reached 4.4 billion in 2010, recording a CAGR of 0.87% during the review period.

Over the forecast period, the global population is expected to increase at a CAGR of 0.79% to reach 4.6 billion by 2015.

Figure 3: Global Population (Million), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 26 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.2.2 Growth in Mid-Age Population

During the review period growth in the mid-age population decreased from 2.0% to 1.4% and is anticipated to remain at 1.4% over the forecast period.

Figure 4: Global Growth in Mid-Age Population (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 27 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.2.3 Employment Rate

The global employment rate increased from 54.3%–55.2% during the review period. By 2015, the global employment rate is expected to reach 56.8%, an increase of 1.6 percentage points from figures in 2010.

Figure 5: Global Employment Rate (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 28 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.2.4 Unemployment Rate

The global unemployment rate decreased from 7.1% in 2006 to 6.9% in 2010. By 2015, the global unemployment rate is expected to reach 6.5%, a decrease of 0.4 percentage points.

Figure 6: Global Unemployment Rate (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 29 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.3 Industrial Output Growth

In 2010, industrial output growth reached 11.9%, compared to 13.2% in 2006. Industrial output growth is expected to decline to 5.3% in 2015, a of 6.6 percentage points in comparison with 2010 figures.

Figure 7: Global Industrial Output Growth (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 30 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.4 Services Growth

Annual services growth decreased from 12.0%–9.8% during the review period. By 2015 it is expected to decline to 4.1%, a decrease of 5.7 percentage points from 2010.

Figure 8: Global Services Growth (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 31 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.5 Agriculture Growth

Annual agricultural growth output increased from 4.5%–7.7% during the review period. In 2015, agricultural growth is expected to decline to 6.1%, a decrease of 1.6 percentage points from 2010.

Figure 9: Global Agriculture Growth (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 32 Forecasts to 2015

GLOBAL MARKET ENVIRONMENT

2.6 Construction Value Added as a Percentage of GDP

Construction value added as a percentage of GDP increased from 6.0%–6.2% during the review period. It is expected to reach 6.3% by 2015, representing an increase of 0.1 percentage points compared to 2010 figures.

Figure 10: Global Construction Value Added as a Percentage of GDP (%), 2006–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 33 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

3 GLOBAL EARTHMOVING EQUIPMENT MARKET ANALYSIS

3.1 Market Overview

Global earthmoving equipment consumption underwent a period of strong recovery in 2010 registering a growth of 23.2%, after recording a 32.0% decline in 2009. The recovery was supported primarily by the Asia- Pacific market, China in particular. Driven by a 59.3% growth in consumption in the Chinese market, overall consumption in Asia-Pacific market recorded a growth of 47.9% in 2010. Moreover, apart from Europe, which recorded a decline of 3.2%, all other regional markets recorded positive growth in consumption in 2010, with North America growing by 11.7% and Middle East by 8.1%.

Global consumption value reached US$67.0 billion in 2010 from US$64.1 billion in 2006, reflecting a CAGR of 1.13% during the review period. Consumption pattern has undergone a fundamental compositional change, with Asia-Pacific overtaking North America as the largest consumer of earthmoving equipment in 2007. The global economic crisis facilitated the region to firmly establish its position as the largest earthmoving equipment consumer as construction activities only decelerated in the region in comparison to the declines observed in the North American and European markets. Moreover, levels of recovery in 2010 were stronger in the Asia-Pacific region. Consequently, Asia-Pacific‘s share of world consumption value increased from 30.6%– 51.4% during the review period, an increase of 20.8 percentage points. In contrast, North American and European shares decreased by 13.6% and 9.4 % points respectively, accounting for 21.1% and 19.6% of the global consumption value in 2010. South America and the Middle East accounted for 5.1% and 2.8% respectively of global consumption value in 2010, with both the regions extending their market share during the review period.

Figure 11: Global Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 Market Value (US$ Million) Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 34 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Production value of earthmoving equipment increased from US$64.6 billion in 2006 to US$69.1 billion in 2010, reflecting a CAGR of 1.71% during the reviewed period. In terms of production, Asia-Pacific established its position as the market leader of earthmoving equipment during the review period. The region increased its market share from 45.2% in 2006 to 59.9% in 2010, an increase of 14.7 percentage points. North America‘s share contracted from 27.0%–18.8%, while Europe‘s share contracted from 25.2%–17.5% during the corresponding period. Going forward, ICD anticipates the Asia-Pacific region to remain the fastest growing market in terms of production, with a projected CAGR of 10.08% over the forecast period. Encouraged by growth in the Asia-Pacific market, global production of earthmoving equipment is forecast to register a CAGR of 8.66% over the forecast period and value US$104.7 billion.

The World Bank expects the global economy to grow between 3.0–4.0% per annum from 2011 to 2013, with developing countries in regions such as Asia-Pacific (excluding Japan, Australia and South Korea), Eastern and Central Europe, Middle East and South America growing at a much higher rate of 6.0–7.0%. As a result of the high GDP growth, construction activities are also expected to grow at a healthy to robust pace in these regions. Driven by construction activities in these regions, the earthmoving equipment consumption value is projected to register a CAGR of 9.26% over the forecast period and value US$104.4 billion. Supported by growth in the Chinese construction market, the Asia-Pacific region is projected to register the highest CAGR of 11.30% over the forecast period. Growth in the region will additionally be bolstered by the Indian government‘s initiative to increase infrastructure spending from 7–10%. of the GDP from 7%, Japanese reconstruction efforts following the devastating earthquake and tsunami of March 2011 and South Korean infrastructural investments in preparation for hosting of the 2012 World Exposition (World Fair) and the 2018 Winter Olympic Games. North America is projected to register a CAGR of 8.54% over the forecast period, with growth in construction activities fostered by tax incentives introduced under the American Recovery and Reinvestment Act (ARRA) in 2009. Other regions such the Middle East, South America and Europe are projected to achieve CAGRs of 7.35%, 5.98% and 5.27% respectively over the forecast period.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 35 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

3.2 Global Earthmoving Equipment Consumption

3.2.1 Consumption Value

The consumption value of global earthmoving equipment stood at US$67.0 billion in 2010, an increase of 23.2% from 2009, recording a CAGR of 1.13% during the review period.

Table 1: Global Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 64,077.6 2007 74,550.3 16.3% 2008 80,064.4 7.4% 2009 54,417.8 -32.0% 2010 67,020.2 23.2% CAGR 2006-2010 1.13% Source: ICD Research Analysis / © ICD Research

Figure 12: Global Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 36 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Over the forecast period the consumption of global earthmoving equipment is expected to increase at a CAGR of 9.26% and value US$104.4 billion in 2015.

Table 2: Global Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 67,020.2 2011 73,069.7 9.0% 2012 79,546.5 8.9% 2013 87,198.4 9.6% 2014 95,403.9 9.4% 2015 104,352.1 9.4% CAGR 2010-2015 9.26% Source: ICD Research Analysis / © ICD Research

Figure 13: Global Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 37 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

3.2.2 Consumption Value by Category

In 2010, loaders accounted for the largest share of earthmoving equipment consumption value globally accounting for 38.2% and valuing US$25.6 billion. Loaders were followed by excavators and construction tractors with the two categories accounting for 35.6% and 26.1% respectively.

The excavators‘ category recorded the highest CAGR of 2.43% during the review period, followed by loaders with 2.28%.

Table 3: Global Earthmoving Equipment Consumption Value by Category/Sub Category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 21,695.7 25,481.0 27,919.6 18,509.0 23,878.8 2.43% Crawler/ Wheeled Excavators 14,821.7 17,710.5 19,834.8 13,538.6 18,393.8 5.55% Mini Excavators 6,874.1 7,770.5 8,084.7 4,970.4 5,485.1 -5.49% Loaders 23,408.3 28,113.5 30,274.1 19,690.4 25,616.0 2.28% Backhoe loaders 4,393.6 4,845.9 4,774.9 2,326.3 2,498.3 -13.16% Crawler/ Wheeled/Compact loaders 15,002.7 19,373.4 21,643.5 15,134.3 20,686.9 8.36% Skid-Steer loaders 4,012.0 3,894.2 3,855.6 2,229.8 2,430.8 -11.77% Construction Tractors 18,973.5 20,955.8 21,870.8 16,218.4 17,525.4 -1.97% Bulldozers/Crawlers Tractors 6,202.4 6,938.6 7,177.6 5,431.5 5,990.9 -0.86% Wheeled Tractors 12,771.1 14,017.2 14,693.2 10,786.9 11,534.5 -2.51% Overall 64,077.6 74,550.3 80,064.4 54,417.8 67,020.2 1.13% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 38 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Figure 14: Global Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 39 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Over the forecast period, loaders are expected to remain the largest category in earthmoving equipment, accounting for a 40.0% share, valuing US$41.7 billion. Excavators are projected to account for a 37.2% share.

Loaders projected to achieve the fastest growth rate over the forecast period, with a CAGR of 10.26%; followed by excavators with 10.19% and construction tractors with 6.32%.

Table 4: Global Earthmoving Equipment Consumption Value by Category/Sub Category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015

Excavators 23,878.8 26,223.4 28,879.7 31,919.4 35,128.2 38,797.8 10.19% Crawler/ Wheeled Excavators 18,393.8 20,244.6 22,434.3 24,923.2 27,531.1 30,546.9 10.68% Mini Excavators 5,485.1 5,978.9 6,445.4 6,996.1 7,597.2 8,250.9 8.51% Loaders 25,616.0 28,211.1 31,011.7 34,301.7 37,859.2 41,740.9 10.26% Backhoe loaders 2,498.3 2,655.6 2,826.2 3,038.9 3,276.1 3,515.3 7.07% Crawler/ Wheeled/Compact 20,686.9 22,892.5 25,287.9 28,083.2 31,107.1 34,431.9 10.73% loaders Skid-Steer loaders 2,430.8 2,663.0 2,897.7 3,179.6 3,476.0 3,793.7 9.31% Construction Tractors 17,525.4 18,635.2 19,655.1 20,977.4 22,416.4 23,813.4 6.32% Bulldozers/Crawlers Tractors 5,990.9 6,413.2 6,785.3 7,281.3 7,805.5 8,331.6 6.82% Wheeled Tractors 11,534.5 12,222.0 12,869.8 13,696.0 14,610.9 15,481.8 6.06% Overall 67,020.2 73,069.7 79,546.5 87,198.4 95,403.9 104,352.1 9.26% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 40 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Figure 15: Global Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 41 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

3.3 Global Earthmoving Equipment Production

3.3.1 Production Value

The production of global earthmoving equipment valued US$69.1 billion in 2010, an increase of 31.9% from 2009, after recording a CAGR of 1.71% during the review period.

Table 5: Global Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 64,587.7 2007 77,114.6 19.4% 2008 84,293.4 9.3% 2009 52,396.7 -37.8% 2010 69,122.8 31.9% CAGR 2006-2010 1.71% Source: ICD Research Analysis / © ICD Research

Figure 16: Global Earthmoving Equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 42 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Over the forecast period the production of global earthmoving equipment is anticipated to increase at a CAGR of 8.66% and valueUS$104.7 billion in 2015.

Table 6: Global Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 69,122.8 2011 74,922.9 8.4% 2012 80,969.6 8.1% 2013 88,311.5 9.1% 2014 96,228.8 9.0% 2015 104,713.8 8.8% CAGR 2010-2015 8.66% Source: ICD Research Analysis / © ICD Research

Figure 17: Global Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 43 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

3.3.2 Production Value by Category

In 2010, excavators accounted for the largest share of earthmoving equipment production accounting for 39.9% and valuing US$27.6 billion. Loaders represented the second largest category market with 38.6% share of global production in 2010.

In terms of growth, loaders represented the fastest growing category with a CAGR of 3.51% over the forecast period, followed by excavators with a CAGR of 2.56%.

Table 7: Global Earthmoving Equipment Production Value by Category/Sub Category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 24,959.3 30,196.5 34,070.0 18,909.7 27,614.4 2.56% Crawler/ Wheeled Excavators 18,481.3 22,626.9 26,318.0 14,516.5 22,110.1 4.58% Mini Excavators 6,478.0 7,569.6 7,752.0 4,393.3 5,504.3 -3.99% Loaders 23,244.0 28,695.5 31,418.7 20,053.1 26,683.2 3.51% Backhoe loaders 3,880.4 4,410.8 4,543.9 2,181.5 2,378.9 -11.51% Crawler/ Wheeled/Compact loaders 15,925.7 20,796.5 23,396.6 15,833.5 22,021.2 8.44% Skid-Steer loaders 3,438.0 3,488.1 3,478.2 2,038.1 2,283.0 -9.73% Construction Tractors 16,384.4 18,222.7 18,804.6 13,433.9 14,825.2 -2.47% Bulldozers/Crawlers Tractors 6,080.6 7,059.8 7,401.1 5,332.7 6,026.0 -0.23% Wheeled Tractors 10,303.7 11,162.9 11,403.5 8,101.2 8,799.2 -3.87% Overall 64,587.7 77,114.6 84,293.4 52,396.7 69,122.8 1.71% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 44 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Figure 18: Global Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 45 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Over the forecast period, loaders are expected to emerge as the largest category of earthmoving equipment globally, accounting for a 41.1% share and valuing US$43.0 billion. Excavators are projected to account for 40.0% share and construction tractors for 18.9% share of global consumption value.

Loaders are expected to record the highest CAGR of 10.01% over the forecast period, followed by excavators with a CAGR of 8.69% and construction tractors with representing a CARG of 5.98%.

Table 8: Global Earthmoving Equipment Production Value by Category/Sub Category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015

Excavators 27,614.4 29,864.3 32,267.1 35,216.9 38,440.4 41,892.3 8.69% Crawler/ Wheeled Excavators 22,110.1 23,959.7 25,944.9 28,407.9 31,091.7 33,967.3 8.97% Mini Excavators 5,504.3 5,904.7 6,322.2 6,809.0 7,348.7 7,924.9 7.56% Loaders 26,683.2 29,356.5 32,174.5 35,497.1 39,095.3 42,997.2 10.01% Backhoe loaders 2,378.9 2,545.7 2,708.9 2,913.1 3,133.0 3,356.8 7.13% Crawler/ Wheeled/Compact 22,021.2 24,327.3 26,780.4 29,649.5 32,762.9 36,156.1 10.43% loaders Skid-Steer loaders 2,283.0 2,483.6 2,685.1 2,934.5 3,199.5 3,484.3 8.82% Construction Tractors 14,825.2 15,702.0 16,528.1 17,597.5 18,693.1 19,824.4 5.98% Bulldozers/Crawlers Tractors 6,026.0 6,393.3 6,753.7 7,224.0 7,712.0 8,212.7 6.39% Wheeled Tractors 8,799.2 9,308.8 9,774.4 10,373.4 10,981.1 11,611.6 5.70% Overall 69,122.8 74,922.9 80,969.6 88,311.5 96,228.8 104,713.8 8.66% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 46 Forecasts to 2015

EARTHMOVING EQUIPMENT MARKET ANALYSIS

Figure 19: Global Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 47 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4 NORTH AMERICA

4.1 Market Environment

4.1.1 Economic Indicators

Table 9: North American Economic Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 GDP at constant prices (US$ billion) 12,825.2 13,158.4 13,244.4 12,893.6 13,398.7 1.10% GDP per capita at constant prices 37,079.3 8,504.5 38,488.8 36,060.5 38,571.5 0.99% (US$) Disposable income (US$ billion) 10,832.1 11,447.6 12,028.8 12,034.4 12,242.2 3.11% Population (million) 330.7 333.9 337.0 340.5 343.8 0.97% Employment rate (%) 60.3% 60.6% 60.2% 60.8% 61.1% N/A Unemployment rate (%) 5.5% 5.3% 6.0% 5.6% 5.5% N/A Industrial output growth (%) 8.8% 5.0% 2.8% -4.3% 9.1% N/A Services growth (%) 10.7% 9.4% 4.3% -7.1% 10.2% N/A Agriculture growth (%) -5.6% 17.1% -3.9% 1.2% 4.1% N/A Source: ICD Research Analysis / © ICD Research

Table 10: North American Economic Indicators, 2010–2015

CAGR Indicators 2010 2011 2012 2013 2014 2015 2010– 2015 GDP at constant prices (US$ 13,398.7 13,785.1 14,059.2 14,460.3 14,739.3 15,022.4 2.31% billion) GDP per capita at constant prices 38,571.5 39,147.1 39,556.2 40,085.5 40,384.1 40,667.4 1.06% (US$) Disposable income (US$ billion) 12,242.2 12,961.4 13,282.2 13,828.2 14,197.4 14,655.7 3.66% Population (million) 343.8 347.0 350.4 353.7 357.0 360.4 0.95% Employment rate (%) 61.1% 61.2% 61.4% 61.7% 61.9% 62.1% N/A Unemployment rate (%) 5.5% 5.6% 5.7% 5.6% 5.6% 5.6% N/A Industrial output growth (%) 9.1% 4.5% 3.8% 3.8% 4.0% 4.0% N/A Services growth (%) 10.2% 4.9% 5.0% 5.1% 4.9% 4.3% N/A Agriculture growth (%) 4.1% 3.5% 2.5% 2.0% 4.5% 4.4% N/A Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 48 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.1.2 Monetary Indicators

Table 11: North American Monetary Indicators, 2006–2010

Indicators 2006 2007 2008 2009 2010 Wholesale Price Index (WPI) 104 107 114 107 115 Consumer Price Index (CPI) 152 156 161 161 161 Source: ICD Research Analysis / © ICD Research

Table 12: North American Monetary Indicators, 2010–2015

Indicators 2010 2011 2012 2013 2014 2015 Wholesale Price Index (WPI) 115 243 252 266 276 286 Consumer Price Index (CPI) 161 327 331 335 338 341 Source: ICD Research Analysis / © ICD Research

4.1.3 Trade and Investment Indicators

Table 13: North American Trade and Investment Indicators, 2006–2009

CAGR 2006– Indicators 2006 2007 2008 2009 2009 Total exports (US$ billion) 1,932.8 2,162.6 2,376.5 1962.9 0.52% Total imports (US$ billion) 2670.2 2848.0 3062.7 2373.4 -3.85% Trade balance (US$ billion) -737.3 -685.4 -686.2 -410.5 N/A FDI inflows in construction (US$ million) 11,665.8 12,962.0 9,821.1 11,068.6 -1.74% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 49 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.2 North America Earthmoving Equipment Market Analysis

Despite earthmoving equipment consumption value recording a yearly growth of 11.7% in 2010 the North American market recorded an overall CARC of -10.69% during the review period. Declining from US$14.2– US$22.3 billion over 2006–2010, consumption value declined in both markets within the region, with the US recording a CARC of -11.85% and Canada recording a CAGR of 5.71%. This decline in consumption was characterized by a decline construction during the same period, coinciding with the sub-prime crisis. As a result, contractors cancelled or postponed the purchase of earthmoving equipment, which resulted in a decline of 34.0% in 2009‘s following a decline of 1.0% in 2008.

Figure 20: North American Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 consumption value (US$ million) Source: ICD Research Analysis / © ICD Research

With the North American market showing signs of recovery in 2010 and the construction industry expected to recover fully by 2012, contractors have started replenishing their earthmoving equipment inventory, which reached record low levels during the recession owing to financial constraints. The US accounted for a 78.5% share of the regional consumption value of earthmoving equipment in 2010, growth achieved despite a 5.9% decline in the construction industry. In terms of production, the US accounted 93.2% share of the market revenue for earthmoving equipment in the North American market in 2010. US production for earthmoving equipment was valued at US$12.1 billion in 2010, while overall production exhibited a CARC of -7.10% during the review period, the US market recorded a CARC of -7.25% and the Canadian market of -4.88%.

ICD projects the consumption market for earthmoving equipment to grow at a CAGR of 8.54% over the forecast period. The US is projected to record the faster CAGR of 8.66% over the forecast period. Growth in the US is being supported by tax incentives, introduced under the ARRA in 2009, which is leading to a recovery in the US residential market. In addition, the act comprised infrastructure investments of US$105.3 billion, healthcare investments of US$155.1 billion, educational investments of US$100 billion, and housing

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 50 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

investments of US$14.7 billion. Going forward the US construction industry activity is expected to build in momentum and support growth in the earthmoving equipment market.

Canada, the other market in the North American region, is projected to record a CAGR of 8.09% over the forecast period. Growth is likely to be driven by construction industry recovery in 2010, anticipated to sustain momentum achieve a CAGR of 4.88% over the forecast period. The Economic Action Plan (EAP), introduced over 2009–2010, comprising investments of US$61.7 billion (CAD63.6 billion) for the period 2009–2012 is expected to be the key supporter of growth for the industry.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 51 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.3 Consumption

4.3.1 Consumption Value

Consumption of earthmoving equipment in North America valued US$14.2 billion in 2010, an increase of11.7% over 2009 recording a CARC of -10.69% during the review period.

Table 14: North American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 22,256.2 2007 19,389.7 -12.9% 2008 19,198.9 -1.0% 2009 12,677.4 -34.0% 2010 14,158.9 11.7% CARC 2006-2010 -10.69% Source: ICD Research Analysis / © ICD Research

Figure 21: North American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 52 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects consumption of earthmoving equipment in North America to increase at a CAGR of 8.54% over the forecast period to value US$21.3 billion in 2015.

Table 15: North American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 14,158.9 2011 15,456.4 9.2% 2012 16,616.5 7.5% 2013 18,151.6 9.2% 2014 19,702.1 8.5% 2015 21,331.1 8.3% CAGR 2010-2015 8.54% Source: ICD Research Analysis / © ICD Research

Figure 22: North American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 53 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.3.2 Consumption Value by Category

In 2010, construction tractors accounted for a 59.0% share of earthmoving equipment consumption value in North America, valuing US$8.3 billion. Loaders accounted for a 29.6% share of the region‘s market while construction tractors comprised 11.4% share.

All categories in the North American earthmoving equipment market recorded a decline in consumption value during the review period, with excavators registering the largest decline with a CARC of -23.38%.

Table 16: North American Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006– 2010 Excavators 4,677.9 3,808.0 4,112.9 1,346.9 1,612.1 -23.38% Crawler/ Wheeled Excavators 2,629.0 2,222.5 2,230.9 645.0 809.6 -25.51% Mini Excavators 2,048.9 1,585.5 1,882.0 702.0 802.5 -20.89% Loaders 8,247.7 6,890.6 6,903.2 3,680.8 4,197.2 -15.54% Backhoe loaders 2,118.6 2,017.8 1,911.2 567.0 660.3 -25.28% Crawler/ Wheeled/Compact loaders 3,542.0 2,775.3 3,026.6 2,012.7 2,295.9 -10.27% Skid-Steer loaders 2,587.1 2,097.6 1,965.3 1,101.1 1,241.1 -16.78% Construction Tractors 9,330.5 8,691.1 8,182.9 7,649.7 8,349.6 -2.74% Bulldozers/Crawlers Tractors 3,039.9 2,776.6 2,662.9 2,479.6 2,753.4 -2.45% Wheeled Tractors 6,290.6 5,914.6 5,519.9 5,170.1 5,596.2 -2.88% Overall 22,256.2 19,389.7 19,198.9 12,677.4 14,158.9 -10.69% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 54 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 23: North American Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 55 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Over the forecast period, construction tractors are expected to remain the largest category in North America, accounting for a 55.0% share and valuing US$11.7 billion. Loaders are expected to register the highest CAGR of 10.99% over the forecast period and expand their market share to 33.1% in 2015, from 29.6% in 2010.

Table 17: North American Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010– 2015 Excavators 1,612.1 1,775.8 1,931.3 2,120.9 2,318.4 2,529.9 9.43% Crawler/ Wheeled Excavators 809.6 905.9 997.4 1,107.1 1,223.2 1,343.6 10.66% Mini Excavators 802.5 869.9 933.9 1,013.8 1,095.2 1,186.3 8.13% Loaders 4,197.2 4,692.8 5,176.4 5,774.6 6,395.6 7,070.4 10.99% Backhoe loaders 660.3 718.8 773.5 845.4 917.7 995.3 8.55% Crawler/ Wheeled/Compact loaders 2,295.9 2,588.1 2,872.9 3,221.3 3,580.8 3,975.2 11.60% Skid-Steer loaders 1,241.1 1,385.8 1,530.0 1,707.8 1,897.1 2,099.9 11.09% Construction Tractors 8,349.6 8,987.8 9,508.8 10,256.1 10,988.1 11,730.8 7.04% Bulldozers/Crawlers Tractors 2,753.4 2,979.4 3,139.5 3,402.5 3,643.0 3,903.6 7.23% Wheeled Tractors 5,596.2 6,008.4 6,369.3 6,853.6 7,345.1 7,827.2 6.94% Overall 14,158.9 15,456.4 16,616.5 18,151.6 19,702.1 21,331.1 8.54% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 56 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 24: North American Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 57 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.4 Production

4.4.1 Production Value

During the review period, production value within the North American earthmoving equipment market recorded a CARC of -7.10%. However, in 2010, production increased by 12.3% over 2009, and valued US$13.0 billion.

Table 18: North American Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 17,410.3 2007 16,690.8 -4.1% 2008 17,671.4 5.9% 2009 11,551.1 -34.6% 2010 12,966.6 12.3% CARC 2006-2010 -7.10% Source: ICD Research Analysis / © ICD Research

Figure 25: North American Earthmoving Equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 58 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects production in the North American earthmoving equipment market to increase from US$13.0 billion in 2010 to US$18.8 billion in 2015. Over the forecast period the production of earthmoving equipment is expected to increase at a CAGR of 7.68%.

Table 19: North American Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 12,966.6 2011 13,968.6 7.7% 2012 14,909.6 6.7% 2013 16,147.2 8.3% 2014 17,429.5 7.9% 2015 18,769.8 7.7% CAGR 2010-2015 7.68% Source: ICD Research Analysis / © ICD Research

Figure 26: North American Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 59 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.4.2 Production Value by Category

In 2010, construction tractors accounted for the largest production value in the North American earthmoving equipment market, accounting for a share of 54.1% and valuing US$7.0 billion. This was followed by loaders with a production value of US$4.9 billion.

All the categories in the North American earthmoving equipment market registered a decline in production value during the review period, with the excavators‘ category recording the largest decline at a CARC of - 17.40%.

Table 20: North American Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006– 2010 Excavators 2,250.5 2,207.0 2,837.2 839.0 1,047.7 -17.40% Crawler/ Wheeled Excavators 1,351.4 1,372.2 1,628.6 410.2 538.1 -20.56% Mini Excavators 899.1 834.8 1,208.6 428.8 509.6 -13.23% Loaders 7,971.7 7,307.2 7,818.7 4,057.4 4,903.9 -11.44% Backhoe loaders 1,922.8 2,014.8 2,056.2 527.7 621.6 -24.60% Crawler/ Wheeled/Compact loaders 3,637.1 3,141.0 3,626.9 2,352.8 2,919.7 -5.34% Skid-Steer loaders 2,411.8 2,151.4 2,135.6 1,177.0 1,362.6 -13.30% Construction Tractors 7,188.1 7,176.6 7,015.5 6,654.7 7,015.0 -0.61% Bulldozers/Crawlers Tractors 2,881.5 2,911.8 2,915.7 2,808.4 3,151.2 2.26% Wheeled Tractors 4,306.6 4,264.8 4,099.8 3,846.2 3,863.8 -2.68% Overall 17,410.3 16,690.8 17,671.4 11,551.1 12,966.6 -7.10% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 60 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 27: North American Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 61 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

With a predicted CAGR of 6.11% and a category production value of US$9.4 billion, construction tractors is forecast to be the largest category in the North American earthmoving equipment market in 2015. This category is expected to account for a 50.3% share of production in the North American earthmoving equipment market in 2015, a decrease of 4.1 percentage points over 2010. With a share of 40.6%, loaders are expected to be the second largest production category in 2015.

Table 21: North American Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010– 2015 Excavators 1,047.7 1,157.6 1,271.1 1,409.3 1,556.9 1,718.0 10.40% Crawler/ Wheeled Excavators 538.1 598.2 658.9 735.7 817.2 906.0 10.98% Mini Excavators 509.6 559.4 612.1 673.6 739.8 812.0 9.76% Loaders 4,903.9 5,361.1 5,818.2 6,378.5 6,975.1 7,614.0 9.20% Backhoe loaders 621.6 679.6 727.6 800.4 877.4 955.1 8.97% Crawler/ Wheeled/Compact loaders 2,919.7 3,186.1 3,465.8 3,790.1 4,136.9 4,511.2 9.09% Skid-Steer loaders 1,362.6 1,495.4 1,624.7 1,788.0 1,960.8 2,147.7 9.53% Construction Tractors 7,015.0 7,449.9 7,820.4 8,359.4 8,897.4 9,437.8 6.11% Bulldozers/Crawlers Tractors 3,151.2 3,353.3 3,528.7 3,782.2 4,036.1 4,294.2 6.39% Wheeled Tractors 3,863.8 4,096.6 4,291.7 4,577.3 4,861.3 5,143.6 5.89% Overall 12,966.6 13,968.6 14,909.6 16,147.2 17,429.5 18,769.8 7.68% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 62 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 28: North American Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 63 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.5 UNITED STATES

4.5.1 Consumption Value

Consumption of earthmoving equipment in the US valued US$11.1 billion in 2010, an increase of11.7% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 11.85%.

Table 22: US Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 18,400.1 2007 15,466.8 -15.9% 2008 14,945.2 -3.4% 2009 9,951.8 -33.4% 2010 11,111.2 11.7% CARC 2006-2010 -11.85% Source: ICD Research Analysis / © ICD Research

Figure 29: US Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 64 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment to increase at a CAGR of 8.66% over the forecast period and valueUS$16.8 billion in 2015.

Table 23: US Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 11,111.2 2011 12,155.4 9.4% 2012 13,023.0 7.1% 2013 14,266.7 9.5% 2014 15,507.3 8.7% 2015 16,833.5 8.6% CAGR 2010-2015 8.66% Source: ICD Research Analysis / © ICD Research

Figure 30: US Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 65 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.5.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value of earthmoving equipment in the US with a 61.6% share and a value of US$6.8 billion. The loaders and excavators categories recorded the second and third largest consumption values, at US$3.3 billion and US$946.5 million, respectively.

Table 24: US Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 3,503.7 946.5 1,559.7 Crawler/ Wheeled Excavators 1,984.9 446.8 740.3 Mini Excavators 1,518.8 499.7 819.4 Loaders 7,219.7 3,315.9 5,807.2 Backhoe loaders 1,824.6 419.3 644.3 Crawler/ Wheeled/Compact loaders 3,155.3 1,910.9 3,383.8 Skid-Steer loaders 2,239.8 985.7 1,779.1 Construction Tractors 7,676.7 6,848.8 9,466.6 Bulldozers/Crawlers Tractors 2,383.0 2,408.0 3,330.9 Wheeled Tractors 5,293.7 4,440.8 6,135.7 Overall 18,400.1 11,111.2 16,833.5 Source: ICD Research Analysis / © ICD Research

Figure 31: US Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 66 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.6 CANADA

4.6.1 Consumption Value

Consumption of earthmoving equipment in Canada valued US$3.0 billion in 2010, an increase of 11.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -5.71%.

Table 25: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 3,856.1 2007 3,922.9 1.7% 2008 4,253.8 8.4% 2009 2,725.7 -35.9% 2010 3,047.7 11.8% CAGR 2006-2010 -5.71% Source: ICD Research Analysis / © ICD Research

Figure 32: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 67 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Canada to increase at a CAGR of 8.09% over the forecast period and valueUS$4.5 billion in 2015.

Table 26: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 3,047.7 2011 3,300.9 8.3% 2012 3,593.5 8.9% 2013 3,885.0 8.1% 2014 4,194.8 8.0% 2015 4,497.6 7.2% CAGR 2010-2015 8.09% Source: ICD Research Analysis / © ICD Research

Figure 33: Canadian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 68 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

4.6.2 Consumption Value by Category

In 2010, the construction tractors category accounted for the largest consumption value in the Canadian earthmoving equipment market, with a share of 49.2% and a value of US$1.5 billion. The loaders and excavators markets recorded the second and third largest consumption values, at US$881.3 million and US$665.6 million, respectively.

Table 27: Canadian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 1,174.2 665.6 970.2 Crawler/ Wheeled Excavators 644.1 362.8 603.2 Mini Excavators 530.1 302.8 366.9 Loaders 1,028.1 881.3 1263.2 Backhoe loaders 294.0 240.9 351.0 Crawler/ Wheeled/Compact loaders 386.7 385.0 591.4 Skid-Steer loaders 347.3 255.4 320.8 Construction Tractors 1,653.9 1,500.8 2,264.2 Bulldozers/Crawlers Tractors 657.0 345.3 572.7 Wheeled Tractors 996.9 1,155.4 1,691.5 Overall 3,856.1 3,047.7 4,497.6 Source: ICD Research Analysis / © ICD Research

Figure 34: Canadian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 69 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5 EUROPE

5.1 Market Environment

5.1.1 Economic Indicators

Table 28: European Economic Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 GDP at constant prices (US$ billion) 8,906.9 9,132.4 9,134.2 8,754.6 8,892.9 -0.04% GDP per capita at constant prices 17,410.1 18,276.8 18,054.6 16,763.4 17,050.0 -0.52% (US$) Disposable income (US$ billion) 8,087.2 9,234.7 10,116.4 9,197.7 9,309.0 3.58% Population (million) 525.2 526.0 526.8 526.7 526.6 0.07% Employment rate (%) 41.9% 42.6% 42.8% 42.4% 42.7% N/A Unemployment rate (%) 6.3% 5.4% 5.2% 5.9% 5.6% N/A Industrial output growth (%) 7.8% 15.5% 13.3% -10.2% 4.4% N/A Services growth (%) 7.3% 15.1% 13.2% -9.5% 4.1% N/A Agriculture growth (%) 3.7% 14.6% 11.9% -7.6% 3.1% N/A Source: ICD Research Analysis / © ICD Research

Table 29: European Economic Indicators, 2010–2015

CAGR Indicators 2010 2011 2012 2013 2014 2015 2010– 2015 GDP at constant prices (US$ 8,892.9 9,064.8 9,255.7 9,455.6 9,660.6 9,862.3 2.09% billion) GDP per capita at constant 17,050.0 17,474.4 17,873.7 18,319.6 18,787.6 19,259.3 2.47% prices (US$) Disposable income (US$ billion) 9,309.0 9,498.8 9,826.9 10,172.4 10,503.4 10,896.9 3.20% Population (million) 526.6 526.4 526.1 525.7 525.3 524.8 -0.07% Employment rate (%) 42.7% 42.8% 42.8% 43.0% 43.1% 43.2% N/A Unemployment rate (%) 5.6% 5.4% 5.3% 5.2% 5.1% 4.9% N/A Industrial output growth (%) 4.4% 3.6% 4.2% 4.2% 4.5% 4.3% N/A Services growth (%) 4.1% 3.4% 4.1% 4.1% 4.4% 4.1% N/A Agriculture growth (%) 3.1% 2.8% 3.0% 3.1% 4.6% 3.6% N/A Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 70 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.1.2 Monetary Indicators

Table 30: European Monetary Indicators, 2006–2010

Indicators 2006 2007 2008 2009 2010 Wholesale Price Index (WPI) 95.9 99.7 106.6 104.4 107.3 Consumer Price Index (CPI) 94.3 97.4 102.1 104.8 101.8 Source: ICD Research Analysis / © ICD Research

Table 31: European Monetary Indicators, 2010–2015

Indicators 2010 2011 2012 2013 2014 2015 Wholesale Price Index (WPI) 107.3 110.8 114.1 117.7 120.9 125.10 Consumer Price Index (CPI) 101.8 104.3 107.4 110.5 113.6 116.6 Source: ICD Research Analysis / © ICD Research

5.1.3 Trade and Investment Indicators

Table 32: European Trade and Investment Indicators, 2006–2009

Indicators 2006 2007 2008 2009 CAGR 2006–2009 Total exports (US$ billion) 4,719.7 5,485.2 6,168.3 2,506.1 -19.02% Total imports (US$ billion) 4,562.5 5,292.7 5,941.3 2,323.8 -20.14% Trade balance (US$ billion) 236.3 290.0 320.6 184.9 NA Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 71 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.2 Europe Earthmoving Equipment Market Analysis

The consumption value of earthmoving equipment in the European market contracted from US$18.6 billion in 2006 to US$13.2 billion in 2010, registering a CARC of -8.28% during the review period. Consumption value began declining in many countries in 2008, but the high growth in Russia, Poland and France offset the decline in other markets. However, in 2009, all countries within the European market faced decline and consumption value declined by 46.5%, followed by a further decline of 3.2% in 2010. The impact of the global economic crisis across the European construction industry caused this decline during the review period and the introduction of fiscal packages and stimulus by governments across the region in 2010 arrived too late to resolve the situation. All the earthmoving equipment markets in the region posted lower consumption values in 2010 as compared to 2006, with Spain recording the highest CARC of -29.23% during the review period. The Spanish market, which had undergone a period of increasing construction activity until 2007 declined rapidly in the aftermath of the economic crisis. In 2010, Housing starts had declined by 90% from a peak of 1 million in 2007. Though all countries observed decline, the rate of deceleration varied widely, with Croatia recording the highest decline with a CARC of -25.39% and Poland recording the lowest CARC of -0.52%.

Figure 35: European Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 consumption value (US$ million) Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 72 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

European consumption of earthmoving equipment is highly consolidated with the five leading countries accounting for 80.7% share of the region‘s total. Italy, Germany and the UK are the three largest earthmoving equipment consumers in the region with a combined share of 58.2% of the total consumption value for 2010. The three countries hold market shares of 25.3%, 18.7% and 14.2% respectively. Russia and France were other significant consumers with consumption shares of 12.4% and 10.1% respectively.

During the review period, the production value of earthmoving equipment declined from US$16.3 billion in 2006 to US$12.1 billion in 2010, registering a CARC of -7.14%. Russia and Croatia were the only two countries with positive CAGRs in production value during the review period, with CAGRs of 7.09% and 1.04% respectively. In terms of production, the market has even greater concentrated with Italy, the UK and Germany, the three largest producers accounting for 67.2% share of total production value for the region in 2010. Over the forecast period, ICD projects the earthmoving equipment production value to expand at a CAGR of 4.67% with Croatia projected to achieve the highest CAGR of 7.42%; followed by the UK with a CAGR of 5.94%, Hungary registering 5.69% and Poland recording 5.30%.

ICD projects the earthmoving equipment consumption value to reach US$17.0 billion in 2015, from US$13.2 billion in 2010, a CAGR of 5.27% over the forecast period. Growth is expected to be supported by an increase in construction activity in less developed economies in Central and Eastern Europe such as Russia, Hungary, Croatia, and Poland. These markets projected to achieve CAGRs of 9.38%, 8.64%, 7.27%, and 5.04% respectively. The Russian construction industry is expected to record strong growth rates over the forecast period owing to significant infrastructure investments required for hosting trade and sports events such as Pacific Economic Cooperation (APEC) Summit 2012, the Winter Olympic Games 2014 and the FIFA World Cup 2018. In contrast to increasing growth rates in Central and Eastern European nations, developed economies in the Western European nations are forecast to achieve more modest rates of growth. It is anticipated that growth in the UK will be supported by higher construction activities in the industrial construction market, while infrastructure construction would be fostered by the 2012 Olympic Games in London.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 73 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.3 Consumption

5.3.1 Consumption Value

Consumption of earthmoving equipment in Europe valued US$13.2 billion in 2010, a decrease of 3.2% over 2009. The value of earthmoving equipment consumption recorded a CARC of -8.28% during the review period.

Table 33: European Earthmoving Equipment Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 18,601.8 2007 25,209.3 35.5% 2008 25,407.5 0.8% 2009 13,597.7 -46.5% 2010 13,165.5 -3.2% CARC 2006-2010 -8.28% Source: ICD Research Analysis / © ICD Research

Figure 36: European Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 74 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Europe to increase at a CAGR of 5.27% over the forecast period and value US$17.0 billion in 2015.

Table 34: European Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 13,165.5 2011 13,789.9 4.7% 2012 14,440.8 4.7% 2013 15,219.6 5.4% 2014 16,132.4 6.0% 2015 17,016.8 5.5% CAGR 2010-2015 5.27% Source: ICD Research Analysis / © ICD Research

Figure 37: European Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 75 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.3.2 Consumption Value by Category

In 2010, excavators accounted for the largest share of earthmoving equipment consumption value in Europe, with a 37.0% share and a value of US$4.9 billion. Construction tractors and loaders recorded the second and third largest consumption values, at US$4.7 billion and US$3.6 billion, respectively.

Table 35: European Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 7,536.3 9,958.9 9,371.9 4,933.3 4,873.2 -10.33% Crawler/ Wheeled Excavators 4,840.6 6,388.2 6,028.6 3,091.8 3,066.1 -10.79% Mini Excavators 2,695.8 3,570.7 3,343.3 1,841.5 1,807.0 -9.52% Loaders 5,428.3 7,149.2 7,315.0 3,622.4 3,638.7 -9.52% Backhoe loaders 1,684.1 2,049.1 1,937.8 1,058.7 1,043.5 -11.28% Crawler/ Wheeled/Compact loaders 2,813.3 3,920.7 4,172.5 1,971.3 2,003.7 -8.13% Skid-Steer loaders 930.9 1,179.4 1,204.7 592.4 591.5 -10.72% Construction Tractors 5,637.1 8,101.2 8,720.7 5,042.1 4,653.6 -4.68% Bulldozers/Crawlers Tractors 1,585.4 2,375.2 2,404.3 1,289.0 1,239.9 -5.96% Wheeled Tractors 4,051.6 5,726.0 6,316.4 3,753.1 3,413.8 -4.19% Overall 18,601.8 25,209.3 25,407.5 13,597.7 13,165.5 -8.28% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 76 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 38: European Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 77 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

The excavators‘ category is expected to remain the largest in Europe, accounting for 37.4% of the market and valuing US$6.4 billion in 2015. The construction tractors and loaders categories are expected to record the second and third largest consumption values, at US$5.8 billion and US$4.9 billion, respectively. The loaders category is expected to record the highest CAGR of 5.98% over the forecast period.

Table 36: European Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 4,873.2 5,111.1 5,371.6 5,681.4 6,021.5 6,365.6 5.49% Crawler/ Wheeled Excavators 3,066.1 3,218.8 3,382.6 3,573.8 3,790.2 4,006.1 5.49% Mini Excavators 1,807.0 1,892.3 1,989.0 2,107.5 2,231.3 2,359.6 5.48% Loaders 3,638.7 3,847.6 4,052.5 4,303.7 4,578.8 4,864.0 5.98% Backhoe loaders 1,043.5 1,090.5 1,140.9 1,212.9 1,300.4 1,378.4 5.72% Crawler/ Wheeled/Compact loaders 2,003.7 2,127.4 2,239.0 2,370.3 2,506.8 2,662.6 5.85% Skid-Steer loaders 591.5 629.6 672.6 720.4 771.6 823.0 6.83% Construction Tractors 4,653.6 4,831.1 5,016.7 5,234.6 5,532.0 5,787.1 4.46% Bulldozers/Crawlers Tractors 1,239.9 1,306.6 1,374.4 1,455.5 1,554.2 1,648.5 5.86% Wheeled Tractors 3,413.8 3,524.5 3,642.3 3,779.2 3,977.9 4,138.6 3.93% Overall 13,165.5 13,789.9 14,440.8 15,219.6 16,132.4 17,016.8 5.27% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 78 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 39: European Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 79 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.4 Production

5.4.1 Production Value

During the review period the production value of the European earthmoving equipment market recorded a CARC of -7.14%. However, in 2010 production increased by 0.3% over 2009 to value US$12.1 billion.

Table 37: European Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 16,279.1 2007 21,172.2 30.1% 2008 20,994.6 -0.8% 2009 12,073.1 -42.5% 2010 12,106.9 0.3% CAGR 2006-2010 -7.14% Source: ICD Research Analysis / © ICD Research

Figure 40: European Earthmoving equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 80 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects production in the European earthmoving equipment market to increase from US$12.1 billion in 2010 to US$15.2 billion in 2015. Over the forecast period the production of earthmoving equipment in Europe is expected to increase at a CAGR of 4.67%.

Table 38: European Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 12,106.9 2011 12,639.5 4.4% 2012 13,196.4 4.4% 2013 13,818.1 4.7% 2014 14,519.9 5.1% 2015 15,212.0 4.8% CAGR 2010-2015 4.67% Source: ICD Research Analysis / © ICD Research

Figure 41: European Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 81 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.4.2 Production Value by Category

In 2010, excavators had the largest category production in the European earthmoving equipment market, accounting for a share of 40.4% and valuing US$4.9 billion, followed by loaders with a production value of US$3.9 billion. All categories recorded a decline in production during the review period with the excavators‘ category recording the highest CARC of -7.51%.

Table 39: European Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 6,691.8 8,388.4 8,564.5 4,919.4 4,896.9 -7.51% Crawler/ Wheeled Excavators 4,328.6 5,410.9 5,611.7 3,137.9 3,134.2 -7.75% Mini Excavators 2,363.2 2,977.5 2,952.8 1,781.6 1,762.8 -7.07% Loaders 5,195.5 6,811.6 6,754.4 3,760.8 3,890.5 -6.98% Backhoe loaders 1,627.5 1,932.8 1,919.3 1,189.5 1,230.6 -6.75% Crawler/ Wheeled/Compact loaders 2,857.6 3,939.5 3,900.5 2,047.5 2,128.4 -7.10% Skid-Steer loaders 710.5 939.3 934.6 523.8 531.5 -7.00% Construction Tractors 4,391.7 5,972.3 5,675.7 3,392.9 3,319.5 -6.76% Bulldozers/Crawlers Tractors 1,488.6 2,100.1 2,048.4 1,227.0 1,173.8 -5.77% Wheeled Tractors 2,903.1 3,872.2 3,627.3 2,165.9 2,145.7 -7.28% Overall 16,279.1 21,172.2 20,994.6 12,073.1 12,106.9 -7.14% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 82 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 42: European Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 83 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

With a predicted CAGR of 4.73% and a production value of US$6.2 billion, excavators is forecast to be the largest category in the European earthmoving equipment market in 2015. The category is expected to account for a 40.6% share of production in the European earthmoving equipment market by 2015. With a share of 33.2%, the loaders category is expected to record the second largest production in 2015.

Table 40: European Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 4,896.9 5,101.0 5,326.6 5,582.3 5,880.4 6,170.2 4.73% Crawler/ Wheeled Excavators 3,134.2 3,267.2 3,413.9 3,579.7 3,776.3 3,969.1 4.84% Mini Excavators 1,762.8 1,833.8 1,912.7 2,002.6 2,104.1 2,201.0 4.54% Loaders 3,890.5 4,111.2 4,318.6 4,544.8 4,798.0 5,051.4 5.36% Backhoe loaders 1,230.6 1,298.1 1,368.7 1,447.9 1,534.7 1,621.8 5.68% Crawler/ Wheeled/Compact loaders 2,128.4 2,252.7 2,359.8 2,469.6 2,597.0 2,725.0 5.07% Skid-Steer loaders 531.5 560.3 590.1 627.3 666.2 704.7 5.80% Construction Tractors 3,319.5 3,427.3 3,551.3 3,690.9 3,841.5 3,990.4 3.75% Bulldozers/Crawlers Tractors 1,173.8 1,201.1 1,244.4 1,294.7 1,351.0 1,403.9 3.64% Wheeled Tractors 2,145.7 2,226.2 2,306.9 2,396.3 2,490.6 2,586.6 3.81% Overall 12,106.9 12,639.5 13,196.4 13,818.1 14,519.9 15,212.0 4.67% Source: ICD Research Analysis / © ICD Research

Figure 43: European Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 84 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.5 Germany

5.5.1 Consumption Value

Consumption of earthmoving equipment in Germany valued US$2.5 billion in 2010, a decrease of 2.5% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -6.46%.

Table 41: German Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 3,212.9 2007 4,992.8 55.4% 2008 5,046.9 1.1% 2009 2,523.6 -50.0% 2010 2,460.2 -2.5% CARC 2006-2010 -6.46% Source: ICD Research Analysis / © ICD Research

Figure 44: German Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 85 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Germany to increase at a CAGR of 3.39% over the forecast period and value US$2.9 billion in 2015.

Table 42: German Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 2,460.2 2011 2,553.2 3.8% 2012 2,625.2 2.8% 2013 2,701.5 2.9% 2014 2,802.3 3.7% 2015 2,905.8 3.7% CAGR 2010-2015 3.39% Source: ICD Research Analysis / © ICD Research

Figure 45: German Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 86 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.5.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value of earthmoving equipment in Germany, with a share of 50.8% and a value of US$2.4 billion. The excavators and loaders categories recorded the second and third largest consumption values, of US$640.4 million and US$570.3 million, respectively.

Table 43: German Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 1,092.6 640.4 794.0 Crawler/ Wheeled Excavators 784.2 460.3 565.9 Mini Excavators 308.4 180.1 228.1 Loaders 738.8 570.3 661.8 Backhoe loaders 118.0 90.6 101.8 Crawler/ Wheeled/Compact loaders 597.2 461.4 538.6 Skid-Steer loaders 23.6 18.3 21.4 Construction Tractors 1,381.5 1249.4 1,450.0 Bulldozers/Crawlers Tractors 348.1 245.2 289.0 Wheeled Tractors 1,033.5 1,004.2 1,161.1 Overall 3,212.9 2,460.2 2,905.8 Source: ICD Research Analysis / © ICD Research

Figure 46: German Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 87 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.6 SPAIN

5.6.1 Consumption Value

Consumption of earthmoving equipment in Spain valued US$361.9 million in 2010, a decrease of 19.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 29.23%.

Table 44: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,442.6 2007 1,996.8 38.4% 2008 1,184.7 -40.7% 2009 451.2 -61.9% 2010 361.9 -19.8% CARC 2006-2010 -29.23% Source: ICD Research Analysis / © ICD Research

Figure 47: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 88 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Spain to increase at a CAGR of 1.92% over the forecast period and value US$398.0 million in 2015.

Table 45: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 361.9 2011 353.8 -2.2% 2012 361.5 2.2% 2013 371.9 2.9% 2014 384.4 3.4% 2015 398.0 3.5% CAGR 2010-2015 1.92% Source: ICD Research Analysis / © ICD Research

Figure 48: Spanish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 89 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.6.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value in the Spanish earthmoving equipment market, with a share of 67.3% and a value of US$243.7 million. The excavators and loaders categories recorded the second and third largest consumption values of US$66.6 million and US$51.6 million, respectively.

Table 46: Spanish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 558.9 66.6 80.2 Crawler/ Wheeled Excavators 439.1 51.3 61.7 Mini Excavators 119.8 15.3 18.5 Loaders 458.0 51.6 57.9 Backhoe loaders 246.5 26.5 29.7 Crawler/ Wheeled/Compact loaders 84.8 12.8 13.5 Skid-Steer loaders 126.7 12.2 14.7 Construction Tractors 425.8 243.7 259.9 Bulldozers/Crawlers Tractors 74.4 22.7 26.3 Wheeled Tractors 351.4 221.0 233.6 Overall 1,442.6 361.9 398.0 Source: ICD Research Analysis / © ICD Research

Figure 49: Spanish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 90 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.7 FRANCE

5.7.1 Consumption Value

Consumption of earthmoving equipment in France valued US$1.3 billion in 2010, a decrease of 4.2% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -9.07%.

Table 47: French Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,939.6 2007 2,394.2 23.4% 2008 2,755.8 15.1% 2009 1,383.8 -49.8% 2010 1,326.1 -4.2% CARC 2006-2010 -9.07% Source: ICD Research Analysis / © ICD Research

Figure 50: French Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 91 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in France to increase at a CAGR of 9.62% over the forecast period and value US$4.3 billion in 2015.

Table 48: French Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 2,739.8 2011 3,025.5 10.4% 2012 3,327.3 10.0% 2013 3,657.4 9.9% 2014 3,992.2 9.2% 2015 4,336.8 8.6% CAGR 2010–2015 9.62% Source: ICD Research Analysis / © ICD Research

Figure 51: French Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 92 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.7.2 Consumption Value by Category

In 2010, the construction tractors category accounted for the largest consumption value in the French earthmoving equipment market, with a share of 40.8% and a value of US$541.5 million. The excavators and loaders categories recorded the second and third largest consumption values, at US$424.9 million and US$359.7 million respectively.

Table 49: French Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 650.4 424.9 565.2 Crawler/ Wheeled Excavators 416.7 276.2 377.7 Mini Excavators 233.7 148.7 187.5 Loaders 617.7 359.7 464.8 Backhoe loaders 219.5 131.8 154.7 Crawler/ Wheeled/Compact loaders 307.2 178.4 250.8 Skid-Steer loaders 90.9 49.5 59.3 Construction Tractors 671.6 541.5 606.3 Bulldozers/Crawlers Tractors 149.5 140.1 170.2 Wheeled Tractors 522.1 401.4 436.1 Overall 1,939.6 1,326.1 1,636.3 Source: ICD Research Analysis / © ICD Research

Figure 52: French Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 93 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.8 ITALY

5.8.1 Consumption Value

Consumption of earthmoving equipment in Italy valued US$3.3 billion in 2010, a decrease of 0.4% over 2009. However, during the review period the consumption value of earthmoving equipment recorded a CARC of - 8.03%.

Table 50: Italian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 4,649.8 2007 5,818.0 25.1% 2008 5,367.2 -7.7% 2009 3,341.4 -37.7% 2010 3,327.2 -0.4% CAGR 2006-2010 -8.03% Source: ICD Research Analysis / © ICD Research

Figure 53: Italian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 94 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Italy to increase at a CAGR of 5.21% over the forecast period and value US$4.3 billion in 2015.

Table 51: Italian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 3,327.2 2011 3,470.6 4.3% 2012 3,635.7 4.8% 2013 3,836.7 5.5% 2014 4,077.2 6.3% 2015 4,289.8 5.2% CAGR 2010-2015 5.21% Source: ICD Research Analysis / © ICD Research

Figure 54: Italian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 95 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.8.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Italian earthmoving equipment market, with a share of 52.9% and a value of US$1.8 billion. The loaders and construction tractors categories recorded the second and third largest consumption values of US$907.3 million and US$658.3 million respectively.

Table 52: Italian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 2,509.2 1,761.6 2,339.2 Crawler/ Wheeled Excavators 1,417.0 994.7 1,323.0 Mini Excavators 1,092.3 766.9 1,016.3 Loaders 1,226.3 907.3 1,181.5 Backhoe loaders 232.5 175.6 236.6 Crawler/ Wheeled/Compact loaders 541.5 397.0 503.2 Skid-Steer loaders 452.3 334.8 441.6 Construction Tractors 914.3 658.3 769.1 Bulldozers/Crawlers Tractors 452.1 334.0 392.4 Wheeled Tractors 462.2 324.3 376.7 Overall 4,649.8 3,327.2 4,289.8 Source: ICD Research Analysis / © ICD Research

Figure 55: Italian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 96 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.9 UNITED KINGDOM

5.9.1 Consumption Value

Consumption of earthmoving equipment in the UK valued US$1.9 billion in 2010, an increase of 5.9% over 2009. However, during the review period the consumption value of earthmoving equipment recorded a CARC of -10.03%.

Table 53: UK Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 2,857.9 2007 3,407.0 19.2% 2008 2,934.9 -13.9% 2009 1,768.8 -39.7% 2010 1,872.3 5.9% CARC 2006-2010 -10.03% Source: ICD Research Analysis / © ICD Research

Figure 56: UK Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 97 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the UK to increase at a CAGR of 6.13% over the forecast period and value US$2.5 billion in 2015.

Table 54: UK Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,872.3 2011 1,995.8 6.6% 2012 2,095.4 5.0% 2013 2,226.5 6.3% 2014 2,381.4 7.0% 2015 2,521.2 5.9% CAGR 2010-2015 6.13% Source: ICD Research Analysis / © ICD Research

Figure 57: UK Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 98 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.9.2 Consumption Value by Category

In 2010, loaders accounted for the largest consumption value in the UK earthmoving equipment market, with a share of 48.7% and a value of US$880.3 million. The excavators and construction tractors categories recorded the second and third largest consumption values of US$497.8 million and US$494.2 million respectively.

Table 55: UK Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 986.4 497.8 591.9 Crawler/ Wheeled Excavators 676.7 329.6 372.1 Mini Excavators 309.7 168.2 219.8 Loaders 1,274.6 880.3 1228.2 Backhoe loaders 673.0 473.3 635.5 Crawler/ Wheeled/Compact loaders 574.9 388.4 565.4 Skid-Steer loaders 26.7 18.6 27.3 Construction Tractors 596.9 494.2 701.0 Bulldozers/Crawlers Tractors 177.3 113.9 151.8 Wheeled Tractors 419.6 380.3 549.2 Overall 2,857.9 1,872.3 2,521.2 Source: ICD Research Analysis / © ICD Research

Figure 58: UK Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 99 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.10 CROATIA

5.10.1 Consumption Value

Consumption of earthmoving equipment in Croatia valued US$53.5 million in 2010, a decrease of 43.6% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 25.39%.

Table 56: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 172.7 2007 189.7 9.9% 2008 230.2 21.3% 2009 94.9 -58.8% 2010 53.5 -43.6% CARC 2006-2010 -25.39% Source: ICD Research Analysis / © ICD Research

Figure 59: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 100 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Croatia to increase at a CAGR of 7.27% over the forecast period and value US$76.0 million in 2015.

Table 57: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 53.5 2011 58.1 8.7% 2012 64.1 10.2% 2013 68.1 6.3% 2014 71.9 5.6% 2015 76.0 5.6% CAGR 2010-2015 7.27% Source: ICD Research Analysis / © ICD Research

Figure 60: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 101 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.10.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value in the Croatian earthmoving equipment market with a share of 59.3% and a value of US$31.7 million. The excavators and loaders categories recorded the second and third largest consumption values, of US$13.2 million and US$8.6 million respectively.

Table 58: Croatian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 71.8 13.2 17.5 Crawler/ Wheeled Excavators 45.6 8.4 11.2 Mini Excavators 26.2 4.8 6.3 Loaders 24.1 8.6 12.6 Backhoe loaders 4.2 1.5 2.2 Crawler/ Wheeled/Compact loaders 15.6 5.6 8.2 Skid-Steer loaders 4.3 1.5 2.3 Construction Tractors 76.8 31.7 45.9 Bulldozers/Crawlers Tractors 10.5 3.4 4.7 Wheeled Tractors 66.3 28.3 41.2 Overall 172.7 53.5 76.0 Source: ICD Research Analysis / © ICD Research

Figure 61: Croatian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 102 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.11 CZECH REPUBLIC

5.11.1 Consumption Value

Consumption of earthmoving equipment in the Czech Republic valued US$383.9 million in 2010, a decrease of 15.2% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -5.37%.

Table 59: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 478.7 2007 708.4 48.0% 2008 859.7 21.4% 2009 452.5 -47.4% 2010 383.9 -15.2% CARC 2006-2010 -5.37% Source: ICD Research Analysis / © ICD Research

Figure 62: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 103 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the Czech Republic, to increase at a CAGR of 3.54% over the forecast period and value US$456.8 million in 2015.

Table 60: Croatian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 383.9 2011 396.9 3.4% 2012 409.9 3.3% 2013 425.9 3.9% 2014 437.3 2.7% 2015 456.8 4.5% CAGR 2010-2015 3.54% Source: ICD Research Analysis / © ICD Research

Figure 63: Czech Republic Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 104 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.11.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value in the Czech Republic earthmoving equipment market, with a share of 44.9% and a value of US$172.5 million. The excavators and loaders categories recorded the second and third largest consumption values ofUS$160.3 million and US$51.1 million respectively.

Table 61: Czech Republic Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 170.0 160.3 178.2 Crawler/ Wheeled Excavators 104.1 99.3 109.7 Mini Excavators 65.9 61.0 68.5 Loaders 117.0 51.1 63.6 Backhoe loaders 24.9 12.7 16.4 Crawler/ Wheeled/Compact loaders 67.8 25.8 30.2 Skid-Steer loaders 24.4 12.6 17.0 Construction Tractors 191.6 172.5 215.0 Bulldozers/Crawlers Tractors 42.5 32.7 39.2 Wheeled Tractors 149.1 139.8 175.8 Overall 478.7 383.9 456.8 Source: ICD Research Analysis / © ICD Research

Figure 64: Czech Republic Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 105 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.12 RUSSIA

5.12.1 Consumption Value

Consumption of earthmoving equipment in Russia valued US$1.6 billion in 2010, an increase of 5.2% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -2.39%.

Table 62: Russian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,799.0 2007 2,654.7 47.6% 2008 3,729.9 40.5% 2009 1,551.8 -58.4% 2010 1,632.8 5.2% CARC 2006-2010 -2.39% Source: ICD Research Analysis / © ICD Research

Figure 65: Russian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 106 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Russia to increase at a CAGR of 9.38% over the forecast period and value US$2.6 billion in 2015.

Table 63: Russian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,632.8 2011 1,763.5 8.0% 2012 1,906.0 8.1% 2013 2,078.5 9.0% 2014 2,311.6 11.2% 2015 2,556.6 10.6% CAGR 2010-2015 9.38% Source: ICD Research Analysis / © ICD Research

Figure 66: Russian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 107 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.12.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Russian earthmoving equipment market with a share of 39.1% and a value of US$639.1 million. The loaders and construction tractors categories recorded the second and third largest consumption values of US$502.1 million and US$491.7 million respectively.

Table 64: Russian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 648.9 639.1 971.5 Crawler/ Wheeled Excavators 393.2 401.2 621.0 Mini Excavators 255.7 237.9 350.6 Loaders 575.9 502.1 809.2 Backhoe loaders 120.8 97.8 155.7 Crawler/ Wheeled/Compact loaders 335.4 308.2 474.9 Skid-Steer loaders 119.7 96.1 178.6 Construction Tractors 574.3 491.7 775.9 Bulldozers/Crawlers Tractors 186.8 227.2 430.9 Wheeled Tractors 387.5 264.5 344.9 Overall 1,799.0 1,632.8 2,556.6 Source: ICD Research Analysis / © ICD Research

Figure 67: Russian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 108 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.13 POLAND

5.13.1 Consumption Value

Consumption of earthmoving equipment in Poland valued US$788.9 million in 2010, a decrease of 16.3% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -0.52%.

Table 65: Polish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 805.5 2007 1,221.0 51.6% 2008 1,574.7 29.0% 2009 942.4 -40.2% 2010 788.9 -16.3% CAGR 2006-2010 -0.52% Source: ICD Research Analysis / © ICD Research

Figure 68: Polish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 109 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Poland to increase at a CAGR of 5.04% over the forecast period and value US$1.0 billion in 2015.

Table 66: Polish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 788.9 2011 830.3 5.3% 2012 871.6 5.0% 2013 927.3 6.4% 2014 970.8 4.7% 2015 1,008.8 3.9% CAGR 2010-2015 5.04% Source: ICD Research Analysis / © ICD Research

Figure 69: Polish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 110 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.13.2 Consumption Value by Category

In 2010, construction tractors accounted for the largest consumption value in the Polish earthmoving equipment market, with a share of 52.5% and a value of US$413.8 million. The excavators and loaders categories recorded the second and third largest consumption values of US$225.4 million and US$149.6 million respectively.

Table 67: Polish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 255.1 225.4 294.0 Crawler/ Wheeled Excavators 162.0 144.2 189.6 Mini Excavators 93.1 81.2 104.4 Loaders 166.2 149.6 196.7 Backhoe loaders 28.7 25.6 36.1 Crawler/ Wheeled/Compact loaders 107.7 97.2 125.3 Skid-Steer loaders 29.8 26.7 35.3 Construction Tractors 384.2 413.8 518.1 Bulldozers/Crawlers Tractors 32.9 29.2 37.7 Wheeled Tractors 351.2 384.6 480.3 Overall 805.5 788.9 1,008.8 Source: ICD Research Analysis / © ICD Research

Figure 70: Polish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 111 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.14 HUNGARY

5.14.1 Consumption Value

Consumption of earthmoving equipment in Hungary valued US$124.0 million in 2010, a decrease of 49.3% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 14.74%.

Table 68: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 234.7 2007 331.6 41.3% 2008 393.9 18.8% 2009 244.7 -37.9% 2010 124.0 -49.3% CARC 2006-2010 -14.74% Source: ICD Research Analysis / © ICD Research

Figure 71: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 112 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Hungary to increase at a CAGR of 8.64% over the forecast period and value US$187.7 million in 2015.

Table 69: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 124.0 2011 136.8 10.3% 2012 150.2 9.8% 2013 163.3 8.7% 2014 173.1 6.0% 2015 187.7 8.4% CAGR 2010-2015 8.64% Source: ICD Research Analysis / © ICD Research

Figure 72: Hungarian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 113 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.14.2 Consumption Value by Category

In 2010, the construction tractors category accounted for the largest consumption value in the Hungarian earthmoving equipment market, with a share of 57.2% and a value of US$70.9 million. The excavators and loaders categories recorded the second and third largest consumption values, at US$30.1 million and US$23.1 million respectively.

Table 70: Hungarian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 55.6 30.1 40.7 Crawler/ Wheeled Excavators 35.3 19.1 26.4 Mini Excavators 20.3 11.0 14.3 Loaders 54.6 23.1 29.6 Backhoe loaders 9.4 4.0 5.1 Crawler/ Wheeled/Compact loaders 35.4 15.0 19.1 Skid-Steer loaders 9.8 4.1 5.4 Construction Tractors 124.6 70.9 117.5 Bulldozers/Crawlers Tractors 9.4 5.0 6.5 Wheeled Tractors 115.1 65.9 110.9 Overall 234.7 124.0 187.7 Source: ICD Research Analysis / © ICD Research

Figure 73: Hungarian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 114 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.15 SWITZERLAND

5.15.1 Consumption Value

Consumption of earthmoving equipment in Switzerland valued US$295.5 million in 2010, a decrease of 1.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 0.70%.

Table 71: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 303.9 2007 323.1 6.3% 2008 311.0 -3.8% 2009 301.0 -3.2% 2010 295.5 -1.8% CARC 2006-2010 -0.70% Source: ICD Research Analysis / © ICD Research

Figure 74: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 115 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Switzerland to increase at a CAGR of 2.25% over the forecast period and value US$330.3 million in 2015.

Table 72: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 295.5 2011 300.9 1.8% 2012 307.3 2.1% 2013 315.6 2.7% 2014 322.2 2.1% 2015 330.3 2.5% CAGR 2010-2015 2.25% Source: ICD Research Analysis / © ICD Research

Figure 75: Swiss Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 116 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.15.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Swiss earthmoving equipment market with a share of 56.1% and a value of US$165.9 million. The construction tractors and loaders categories recorded the second and third largest consumption values of US$74.2 million and US$55.4 million respectively.

Table 73: Swiss Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 170.6 165.9 184.3 Crawler/ Wheeled Excavators 119.8 117.2 133.3 Mini Excavators 50.9 48.7 51.0 Loaders 55.1 55.4 63.1 Backhoe loaders 0.3 0.1 0.2 Crawler/ Wheeled/Compact loaders 48.0 48.3 55.2 Skid-Steer loaders 6.8 6.9 7.7 Construction Tractors 78.2 74.2 82.9 Bulldozers/Crawlers Tractors 32.0 30.6 32.2 Wheeled Tractors 46.2 43.7 50.7 Overall 303.9 295.5 330.3 Source: ICD Research Analysis / © ICD Research

Figure 76: Swiss Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 117 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.16 NETHERLANDS

5.16.1 Consumption Value

Consumption of earthmoving equipment in the Netherlands valued US$539.2 million in 2010, a decrease of 0.5% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -6.46%.

Table 74: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 704.4 2007 1,171.9 66.4% 2008 1,018.6 -13.1% 2009 541.7 -46.8% 2010 539.2 -0.5% CARC 2006-2010 -6.46% Source: ICD Research Analysis / © ICD Research

Figure 77: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 118 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the Netherlands to increase at a CAGR of 3.79% over the forecast period and value US$649.4 million in 2015.

Table 75: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 539.2 2011 556.5 3.2% 2012 580.2 4.3% 2013 599.5 3.3% 2014 624.9 4.2% 2015 649.4 3.9% CAGR 2010-2015 3.79% Source: ICD Research Analysis / © ICD Research

Figure 78: Dutch Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 119 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

5.16.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Dutch earthmoving equipment market, with a share of 46.0% and a value of US$247.9 billion. The construction tractors and loaders categories recorded the second and third largest consumption values of US$211.6 million and US$79.6 million respectively.

Table 76: Dutch Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 367.0 247.9 308.8 Crawler/ Wheeled Excavators 247.1 164.7 214.5 Mini Excavators 119.9 83.2 94.3 Loaders 120.0 79.6 95.0 Backhoe loaders 6.2 3.9 4.4 Crawler/ Wheeled/Compact loaders 97.8 65.6 78.2 Skid-Steer loaders 16.0 10.1 12.4 Construction Tractors 217.4 211.6 245.7 Bulldozers/Crawlers Tractors 69.8 55.8 67.5 Wheeled Tractors 147.5 155.8 178.2 Overall 704.4 539.2 649.4 Source: ICD Research Analysis / © ICD Research

Figure 79: Dutch Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 120 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6 ASIA-PACIFIC

6.1 Market Environment

6.1.1 Economic Indicators

Table 77: Asia-Pacific Economic Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 GDP at constant prices (US$ billion) 9,919.3 10,539.8 10,899.4 10,946.5 11,693.4 4.20% GDP per capita at constant prices (US$) 11,627.9 12,038.6 12,166.3 11,916.1 12,401.4 1.62% Disposable income (US$ billion) 6,578.7 7,354.7 8,345.2 8,663.6 9,041.9 8.28% Population (million) 2,954.5 2,982.3 3,010.0 3,038.1 3,065.9 0.93% Employment rate (%) 62.1% 62.4% 62.2% 61.9% 62.3% N/A Unemployment rate (%) 10.6% 10.2% 10.1% 10.3% 10.0% N/A Industrial output growth (%) 14.0% 16.6% 12.3% -1.1% 14.2% N/A Services growth (%) 10.5% 12.7% 7.5% -5.6% 9.0% N/A Agriculture growth (%) 9.1% 17.7% 15.2% -0.4% 10.2% N/A Source: ICD Research Analysis / © ICD Research

Table 78: Asia-Pacific Economic Indicators, 2010–2015

CAGR Indicators 2010 2011 2012 2013 2014 2015 2010–2015 GDP at constant prices (US$ 11,693.4 12,333.9 13,025.4 13,758.8 14,534.3 15,365.4 5.61% billion) GDP per capita at constant 12,401.4 12,791.6 13,201.7 13,614.0 14,034.8 14,467.1 3.13% prices (US$) Disposable income (US$ billion) 9,041.9 9,812.3 10,421.4 11,128.6 11,934.9 12,891.3 7.35% Population (million) 3,065.9 3,093.5 3,120.8 3,147.7 3,174.1 3,199.9 0.86% Employment rate (%) 62.3% 62.4% 62.4% 62.6% 62.7% 62.9% N/A Unemployment rate (%) 10.0% 9.9% 9.8% 9.7% 9.6% 9.5% N/A Industrial output growth (%) 14.2% 8.1% 7.7% 7.5% 7.7% 7.9% N/A Services growth (%) 9.0% 3.7% 3.5% 3.3% 3.4% 3.3% N/A Agriculture growth (%) 10.2% 7.8% 7.0% 7.0% 7.4% 7.4% N/A Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 121 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.1.2 Monetary Indicators

Table 79: Asia-Pacific Monetary Indicators, 2006–2010

Indicators 2006 2007 2008 2009 2010 Wholesale Price Index (WPI) 106 110 121 117 126 Consumer Price Index (CPI) 109 112 119 122 124 Source: ICD Research Analysis / © ICD Research

Table 80: Asia-Pacific Monetary Indicators, 2010–2015

Indicators 2010 2011 2012 2013 2014 2015 Wholesale Price Index (WPI) 126 130 134 139 144 149 Consumer Price Index (CPI) 124 129 133 138 144 149 Source: ICD Research Analysis / © ICD Research

6.1.3 Trade and Investment Indicators

Table 81: Asia-Pacific Trade and Investment Indicators, 2006–2009

Indicators 2006 2007 2008 2009 CAGR 2006–2009 Total exports (US$ billion) 2,842.9 3,370.7 3,856.7 1,950.4 -11.80% Total imports (US$ billion) 2,552.3 2,978.5 3,558.6 1,781.2 -11.30% Trade balance (US$ billion) 290.6 392.2 298.2 169.2 NA Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 122 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.2 Asia-Pacific Earthmoving Equipment Market Analysis

The Asia-Pacific region is home to many construction markets, ranging from highly developed and established economies such as Japan and Australia to some of the fastest growing and emerging economies such as China, India and the Philippines. Consumption of earthmoving equipment was valued at US$41.4 billion within the region in 2010, recording a growth of 47.9% over 2009. The market reacted strongly in 2010, following a decline of 21.6% in 2009, due, in part, to economic stimulus and government incentives alongside frustrated demand from inactivity in 2009. Investments in the infrastructure sector formed the foundation of the fiscal packages announced by various governments during the period of prevalent economic contraction.. With CAGRs of 59.3% and 56.0% respectively, China and South Korea were key to increased levels of growth in 2010.

As a result of the strong recovery in 2010, the consumption value of earthmoving equipment reached US$41.4 billion in 2010, from US$29.2 in 2006, recording a CAGR of 9.13% during the review period. China has been the main driving force behind the growth in the review period, with a CAGR of 26.61%; followed by South Korea posting growth rates of 11.85%, Indonesia recording 11.61% and the Philippines registering levels of 9.04%. Growth rates in India and Australia remained minimal with CAGRs of 0.92% and 0.52% respectively. Conversely, consumption in the Japanese earthmoving equipment market recorded a CARC of -11.36% during the review period.

Figure 80: Asia-Pacific Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 consumption value (US$ million) Source: World Market Intelligence Analysis /© World Market Intelligence

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 123 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

As a result of the fast growth in the Chinese construction industry, the country‘s share of earthmoving equipment consumption in the Asia-Pacific region increased from 52.3% in 2006 to 76.6% in 2010. Robust growth within the Chinese construction industry was supported by an increase in construction activity as the country prepares for the 2008 Beijing Olympics. Further growth is anticipated to be sustained through the government‘s eleventh Five-Year Plan, 2006–2010, from which construction continues on building infrastructure such as roads, bridges, ports and airports across the country. Japan represents the second largest consumer with a market share of 10.0%, a decrease of 18.5 percentage points over 2006. The country‘s declining market share is a result of the decelerated activity in the country‘s construction industry and an aging and declining population being compounded by shrinking private investments and reduced governmental investments following the global economic crisis.

China became the largest earthmoving equipment producer within the Asia-Pacific region, when it overtook Japan in 2008. In 2010, China accounted for 63.0% share of the region‘s earthmoving equipment production, with a value of US$26.1 billion. In comparison, Japan comprised 25.8% and valued US$10.7 billion. Additionally, South Korea and India are significant producers with market shares of 5.1% and 4.5% respectively. Overall, production value in the Asia-Pacific earthmoving equipment market valued US$41.4 billion in 2010, expanding from US$29.2 billion in 2006 and recording a CAGR of 9.13% during the review period. ICD projects the production value of earthmoving equipment to register a CAGR of 10.08% over the forecast period and value US$67.0 billion by 2015.

ICD expects the earthmoving equipment market consumption to moderate to a CAGR of 11.30% over the forecast period with Japan expected to emerge as the fastest growing market as construction activity anticipated to increase with the announcement of the US$2.6 billion (JPY23 trillion) East Japanese Earthquake Reconstruction Program spread over the next ten years. China is expected to record the second highest CAGR of 11.79% over the forecast period with construction activities expected to be supported by high levels of foreign direct investment (FDI), a rise in manufacturing levels and government funding for large scale infrastructure and industrial projects. Among other markets, the Philippines is projected to record a CAGR of 11.17%; followed by South Korea with comprising 9.23%, India posting growth rates of 7.14%, Malaysia registering 5.70%, Australia recording 5.62% and Indonesia accounting for a growth of 4.53%. In South Korea construction activities will be supported by infrastructural investments in preparation for hosting the 2012 World Exposition (World Fair) and the 2018 Winter Olympic Games. In addition, the country‘s raising status in manufacturing, evident from the country‘s expanding exports level, are also expected to contribute as growth drivers for the construction industry.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 124 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.3 Consumption

6.3.1 Consumption Value

Consumption of earthmoving equipment in the Asia-Pacific region valued US$34.4 billion in 2010, an increase of 47.9% over 2009. The value of earthmoving equipment consumption recorded a CAGR of 15.10% during the review period.

Table 82: Asia-Pacific Earthmoving Equipment Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 19,609.2 2007 25,468.8 29.9% 2008 29,681.9 16.5% 2009 23,271.8 -21.6% 2010 34,420.7 47.9% CAGR 2006-2010 15.10% Source: ICD Research Analysis / © ICD Research

Figure 81: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 125 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Asia-Pacific to increase at a CAGR of 11.30% over the forecast period and value US$58.8 billion in 2015.

Table 83: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 34,420.7 2011 38,215.9 11.0% 2012 42,523.2 11.3% 2013 47,474.9 11.6% 2014 52,795.9 11.2% 2015 58,788.9 11.4% CAGR 2010-2015 11.30% Source: ICD Research Analysis / © ICD Research

Figure 82: Asia-Pacific Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 126 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.3.2 Consumption Value by Category

In 2010, loaders accounted for the largest share of earthmoving equipment consumption value in the Asia- Pacific region, with a 46.0% share and a value of US$15.6 billion. Excavators and construction tractors recorded the second and third largest consumption values of US$15.6 billion and US$3.0 billion, respectively. Loaders recorded the fastest growing consumption among end-user markets, with a CAGR of 17.13% during the review period.

Table 84: Asia-Pacific Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 8,311.3 10,266.8 12,548.7 10,516.3 15,592.9 17.03% Crawler/ Wheeled Excavators 6,677.3 8,255.0 10,515.5 8,824.9 13,476.5 19.19% Mini Excavators 1,634.0 2,011.8 2,033.2 1,691.5 2,116.3 6.68% Loaders 8,416.4 12,387.5 13,961.0 10,648.7 15,842.6 17.13% Backhoe loaders 247.0 311.6 332.0 237.7 259.3 1.23% Crawler/ Wheeled/Compact loaders 8,027.0 11,888.9 13,456.5 10,260.5 15,429.1 17.75% Skid-Steer loaders 142.5 187.0 172.5 150.5 154.2 1.98% Construction Tractors 2,881.4 2,814.5 3,172.2 2,106.7 2,985.2 0.89% Bulldozers/Crawlers Tractors 976.6 1,077.0 1,106.2 814.1 1,073.0 2.38% Wheeled Tractors 1,904.9 1,737.5 2,066.0 1,292.6 1,912.2 0.10% Overall 19,609.2 25,468.8 29,681.9 23,271.8 34,420.7 15.10% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 127 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 83: Asia-Pacific Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 128 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Excavators‘ category is expected to be the largest earthmoving equipment category in the Asia-Pacific region, accounting for a share of 46.0% and valuing US$27.4 billion in 2015. The loaders and construction tractors categories are expected to record the second and third largest consumption values of US$27.1 billion and US$4.3 billion respectively. Over the forecast period the excavators‘ category is expected to register the fastest consumption growth in Europe with a CAGR of 11.97%.

Table 85: Asia-Pacific Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 15,592.9 17,420.6 19,539.3 21,946.9 24,476.3 27,443.2 11.97% Crawler/ Wheeled Excavators 13,476.5 15,011.6 16,873.2 18,983.0 21,173.5 23,766.3 12.02% Mini Excavators 2,116.3 2,409.0 2,666.1 2,963.9 3,302.8 3,676.9 11.68% Loaders 15,842.6 17,602.4 19,569.1 21,850.5 24,339.4 27,067.7 11.31% Backhoe loaders 259.3 280.6 302.7 329.7 359.2 390.4 8.53% Crawler/ Wheeled/Compact loaders 15,429.1 17,159.7 19,095.6 21,339.9 23,789.3 26,475.1 11.40% Skid-Steer loaders 154.2 162.1 170.9 180.9 190.9 202.2 5.57% Construction Tractors 2,985.2 3,192.9 3,414.8 3,677.5 3,980.2 4,278.0 7.46% Bulldozers/Crawlers Tractors 1,073.0 1,150.2 1,239.6 1,335.4 1,456.6 1,571.3 7.93% Wheeled Tractors 1,912.2 2,042.7 2,175.2 2,342.0 2,523.6 2,706.7 7.20% Overall 34,420.7 38,215.9 42,523.2 47,474.9 52,795.9 58,788.9 11.30% Source: ICD Research Analysis / © ICD Research

Figure 84: Asia-Pacific Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 129 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.4 Production

6.4.1 Production Value

During the review period, the production value of the Asia-Pacific earthmoving equipment market recorded a CAGR of 9.13%. Moreover, in 2010 production increased by 56.9% over 2009 and valued US$41.4 billion.

Table 86: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 29,209.4 2007 37,178.3 27.3% 2008 42,908.4 15.4% 2009 26,410.3 -38.4% 2010 41,425.4 56.9% CAGR 2006-2010 9.13% Source: ICD Research Analysis / © ICD Research

Figure 85: Asia-Pacific Earthmoving equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 130 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects production in the Asia-Pacific earthmoving equipment market to increase from US$41.4 billion in 2010 to US$67.0 billion in 2015. Over the forecast period the production of earthmoving equipment in the Asia-Pacific region is expected to increase at a CAGR of 10.08%.

Table 87: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 41,425.4 2011 45,491.6 9.8% 2012 49,835.0 9.5% 2013 55,088.3 10.5% 2014 60,776.0 10.3% 2015 66,967.5 10.2% CAGR 2010-2015 10.08% Source: ICD Research Analysis / © ICD Research

Figure 86: Asia-Pacific Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 131 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.4.2 Production Value by Category

In 2010, excavators had the largest category production in the Asia-Pacific earthmoving equipment market, accounting for a share of 50.3% and valuing US$20.8 billion, followed by loaders with a production value of US$16.9 billion.

The loaders category recorded the fastest production growth among the individual categories of earthmoving equipment in the Asia-Pacific region with a CAGR of 15.54% during the review period.

Table 88: Asia-Pacific Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006– 2010 Excavators 15,487.6 18,968.0 21,807.5 12,410.3 20,840.7 7.70% Crawler/ Wheeled Excavators 12,480.3 15,449.4 18,576.8 10,527.3 17,954.8 9.52% Mini Excavators 3,007.3 3,518.6 3,230.8 1,882.9 2,885.9 -1.02% Loaders 9,470.6 13,791.1 15,791.3 11,335.4 16,876.2 15.54% Backhoe loaders 174.3 238.0 239.9 194.0 212.3 5.05% Crawler/ Wheeled/Compact loaders 9,150.7 13,371.3 15,399.3 11,001.8 16,519.2 15.91% Skid-Steer loaders 145.5 181.8 152.2 139.6 144.8 -0.14% Construction Tractors 4,251.2 4,419.1 5,309.5 2,664.7 3,708.5 -3.36% Bulldozers/Crawlers Tractors 1,485.9 1,776.6 2,095.8 994.6 1,369.9 -2.01% Wheeled Tractors 2,765.3 2,642.5 3,213.7 1,670.0 2,338.5 -4.10% Overall 29,209.4 37,178.3 42,908.4 26,410.3 41,425.4 9.13% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 132 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 87: Asia-Pacific Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 133 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

With a predicted CAGR of 9.49% and a production value of US$32.8 billion, excavators are forecast to be the largest category within the Asia-Pacific earthmoving equipment market in 2015. This category is also expected to account for a 49.0% share of production by 2015. With a share of 43.1%, the loaders category is expected to record the second largest production in 2015.

Table 89: Asia-Pacific Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010– 2015 Excavators 20,840.7 22,709.6 24,703.3 27,181.0 29,875.2 32,787.5 9.49% Crawler/ Wheeled Excavators 17,954.8 19,574.5 21,314.4 23,492.2 25,852.3 28,398.5 9.60% Mini Excavators 2,885.9 3,135.1 3,388.9 3,688.8 4,022.9 4,389.0 8.75% Loaders 16,876.2 18,793.0 20,863.2 23,305.7 25,953.2 28,853.9 11.32% Backhoe loaders 212.3 230.2 249.9 274.0 300.4 328.5 9.13% Crawler/ Wheeled/Compact loaders 16,519.2 18,409.5 20,450.2 22,857.3 25,466.6 28,326.6 11.39% Skid-Steer loaders 144.8 153.4 163.2 174.5 186.2 198.8 6.55% Construction Tractors 3,708.5 3,988.9 4,268.6 4,601.6 4,947.7 5,326.0 7.51% Bulldozers/Crawlers Tractors 1,369.9 1,483.5 1,602.2 1,743.2 1,894.2 2,055.9 8.46% Wheeled Tractors 2,338.5 2,505.4 2,666.4 2,858.4 3,053.4 3,270.1 6.94% Overall 41,425.4 45,491.6 49,835.0 55,088.3 60,776.0 66,967.5 10.08% Source: ICD Research Analysis / © ICD Research

Figure 88: Asia-Pacific Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 134 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.5 CHINA

6.5.1 Consumption Value

Consumption of earthmoving equipment in China valued US$26.4 billion in 2010, an increase of 59.3% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 26.61%.

Table 90: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 10,263.3 2007 15,402.8 50.1% 2008 18,405.1 19.5% 2009 16,549.1 -10.1% 2010 26,369.4 59.3% CAGR 2006-2010 26.61% Source: ICD Research Analysis / © ICD Research

Figure 89: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 135 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in China to increase at a CAGR of 11.79% over the forecast period and value US$46.0 billion in 2015.

Table 91: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 26,369.4 2011 29,441.3 11.6% 2012 32,912.9 11.8% 2013 36,887.5 12.1% 2014 41,271.3 11.9% 2015 46,044.6 11.6% CAGR 2010-2015 11.79% Source: ICD Research Analysis / © ICD Research

Figure 90: Chinese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 136 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.5.2 Consumption Value by Category

In 2010, loaders accounted for the largest consumption value of earthmoving equipment in China, with a share of 55.6% and a value of US$14.7 billion. The excavators and construction tractors categories recorded the second and third largest consumption values of US$11.0 billion and US$673.3 million respectively.

Table 92: Chinese Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 2,833.8 11,031.8 19,471.1 Crawler/ Wheeled Excavators 2,454.1 9,841.6 17,373.7 Mini Excavators 379.6 1,190.2 2,097.4 Loaders 7,104.6 14,664.3 25,464.6 Backhoe loaders 15.2 47.7 78.1 Crawler/ Wheeled/Compact loaders 7,082.0 14,600.2 25,358.4 Skid-Steer loaders 7.3 16.4 28.1 Construction Tractors 325.0 673.3 1,108.9 Bulldozers/Crawlers Tractors 280.2 488.2 812.8 Wheeled Tractors 44.7 185.1 296.0 Overall 10,263.3 26,369.4 46,044.6 Source: ICD Research Analysis / © ICD Research

Figure 91: Chinese Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 137 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.6 INDIA

6.6.1 Consumption Value

Consumption of earthmoving equipment in India valued US$1.8 billion in 2010, an increase of 4.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 0.92%.

Table 93: Indian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,738.9 2007 2,212.2 27.2% 2008 2,099.2 -5.1% 2009 1,720.7 -18.0% 2010 1,803.9 4.8% CAGR 2006-2010 0.92% Source: ICD Research Analysis / © ICD Research

Figure 92: Indian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 138 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in India to increase at a CAGR of 7.14% over the forecast period and value US$2.5 billion in 2015.

Table 94: Indian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,803.9 2011 1,920.8 6.5% 2012 2,064.4 7.5% 2013 2,217.6 7.4% 2014 2,371.1 6.9% 2015 2,546.6 7.4% CAGR 2010-2015 7.14% Source: ICD Research Analysis / © ICD Research

Figure 93: Indian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 139 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.6.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Indian earthmoving equipment market, with a share of 56.8% and a value of US$1.0 billion. The loaders and construction tractors categories recorded the second and third largest consumption values of US$560.6 million and US$218.7 million respectively.

Table 95: Indian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 897.7 1,024.6 1,439.5 Crawler/ Wheeled Excavators 601.2 656.7 917.6 Mini Excavators 296.5 367.8 521.9 Loaders 545.0 560.6 794.8 Backhoe loaders 127.1 133.4 210.0 Crawler/ Wheeled/Compact loaders 340.8 343.6 479.4 Skid-Steer loaders 77.0 83.6 105.5 Construction Tractors 296.2 218.7 312.2 Bulldozers/Crawlers Tractors 93.1 93.9 136.9 Wheeled Tractors 203.1 124.8 175.4 Overall 1,738.9 1,803.9 2,546.6 Source: ICD Research Analysis / © ICD Research

Figure 94: Indian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 140 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.7 JAPAN

6.7.1 Consumption Value

Consumption of earthmoving equipment in Japan valued US$3.5 billion in 2010, an increase of 21.7% over 2009. However, during the review period the consumption value of earthmoving equipment recorded a CARC of -11.36%.

Table 96: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 5,597.5 2007 5,407.1 -3.4% 2008 6,230.6 15.2% 2009 2,840.0 -54.4% 2010 3,455.9 21.7% CARC 2006-2010 -11.36% Source: ICD Research Analysis / © ICD Research

Figure 95: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 141 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Japan to increase at a CAGR of 12.09% over the forecast period and value reach US$6.1 billion in 2015.

Table 97: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 3,455.9 2011 4,033.0 16.7% 2012 4,383.9 8.7% 2013 4,918.6 12.2% 2014 5,431.3 10.4% 2015 6,115.9 12.6% CAGR 2010-2015 12.09% Source: ICD Research Analysis / © ICD Research

Figure 96: Japanese Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 142 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.7.2 Consumption Value by Category

In 2010, the construction tractors category accounted for the largest consumption value in the Japanese earthmoving equipment market, with a share of 47.1% and a value of US$1.6 billion. The excavators and loaders categories recorded the second and third largest consumption values of US$1.6 billion and US$266.7 million respectively.

Table 98: Japanese Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 3,312.5 1,560.8 3,465.9 Crawler/ Wheeled Excavators 2,556.1 1,278.4 2,789.3 Mini Excavators 756.4 282.3 676.6 Loaders 435.6 266.7 348.0 Backhoe loaders 13.9 6.2 8.6 Crawler/ Wheeled/Compact loaders 408.4 254.6 331.5 Skid-Steer loaders 13.3 5.9 7.8 Construction Tractors 1,849.4 1,628.4 2,302.1 Bulldozers/Crawlers Tractors 448.9 306.3 388.5 Wheeled Tractors 1,400.5 1,322.1 1,913.6 Overall 5,597.5 3,455.9 6,115.9 Source: ICD Research Analysis / © ICD Research

Figure 97: Japanese Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 143 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.8 SOUTH KOREA

6.8.1 Consumption Value

Consumption of earthmoving equipment in South Korea valued US$1.6 billion in 2010, an increase of 56.0% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 11.85%.

Table 99: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,029.1 2007 1,180.9 14.7% 2008 1,435.6 21.6% 2009 1,032.0 -28.1% 2010 1,610.4 56.0% CAGR 2006-2010 11.85% Source: ICD Research Analysis / © ICD Research

Figure 98: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 144 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in South Korea to increase at a CAGR of 9.23% over the forecast period and value US$2.5 billion in 2015.

Table 100: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,610.4 2011 1,571.6 -2.4% 2012 1,840.2 17.1% 2013 2,048.4 11.3% 2014 2,229.6 8.8% 2015 2,503.8 12.3% CAGR 2010-2015 9.23% Source: ICD Research Analysis / © ICD Research

Figure 99: South Korean Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 145 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.8.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the South Korean earthmoving equipment market, with a share of 82.1% and a value of US$1.3 billion. The construction tractors and loaders categories recorded the second and third largest consumption values of US$160.0 million and US$128.1 million respectively.

Table 101: South Korean Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 772.7 1,322.3 2,175.6 Crawler/ Wheeled Excavators 755.8 1,303.1 2,148.1 Mini Excavators 16.9 19.2 27.6 Loaders 91.9 128.1 167.1 Backhoe loaders 2.3 1.6 2.2 Crawler/ Wheeled/Compact loaders 72.2 106.7 142.3 Skid-Steer loaders 17.4 19.7 22.6 Construction Tractors 164.6 160.0 161.1 Bulldozers/Crawlers Tractors 11.3 8.8 6.8 Wheeled Tractors 153.3 151.2 154.2 Overall 1,029.1 1,610.4 2,503.8 Source: ICD Research Analysis / © ICD Research

Figure 100: South Korean Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 146 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.9 AUSTRALIA

6.9.1 Consumption Value

Consumption of earthmoving equipment in Australia valued US$296.1 million in 2010, an increase of 1.0% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 0.52%.

Table 102: Australian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 289.9 2007 304.2 4.9% 2008 312.9 2.9% 2009 293.1 -6.3% 2010 296.1 1.0% CAGR 2006-2010 0.52% Source: ICD Research Analysis / © ICD Research

Figure 101: Australian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 147 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Australian to increase at a CAGR of 5.62% over the forecast period and value US$389.2 million in 2015.

Table 103: Australian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 296.1 2011 309.6 4.6% 2012 326.7 5.5% 2013 347.8 6.5% 2014 368.6 6.0% 2015 389.2 5.6% CAGR 2010-2015 5.62% Source: ICD Research Analysis / © ICD Research

Figure 102: Australian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 148 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.9.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Australian earthmoving equipment market, with a share of 44.0% and a value of US$130.2 million. The loaders and construction tractors categories recorded the second and third largest consumption values of US$85.4 million and US$80.5 million respectively.

Table 104: Australian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 131.1 130.2 170.3 Crawler/ Wheeled Excavators 83.2 82.7 108.0 Mini Excavators 47.9 47.5 62.3 Loaders 85.5 85.4 114.1 Backhoe loaders 14.8 14.8 20.6 Crawler/ Wheeled/Compact loaders 55.4 55.4 73.6 Skid-Steer loaders 15.3 15.1 19.9 Construction Tractors 73.3 80.5 104.9 Bulldozers/Crawlers Tractors 29.4 33.9 44.7 Wheeled Tractors 43.9 46.6 60.2 Overall 289.9 296.1 389.2 Source: ICD Research Analysis / © ICD Research

Figure 103: Australian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 149 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.10 INDONESIA

6.10.1 Consumption Value

Consumption of earthmoving equipment in Indonesia valued US$443.8 million in 2010, an increase of 6.9% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 11.61%.

Table 105: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 286.1 2007 406.8 42.2% 2008 545.1 34.0% 2009 415.3 -23.8% 2010 443.8 6.9% CAGR 2006-2010 11.61% Source: ICD Research Analysis / © ICD Research

Figure 104: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 150 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Indonesia to increase at a CAGR of 4.53% over the forecast period and value US$553.8 million in 2015.

Table 106: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 443.8 2011 467.4 5.3% 2012 486.9 4.2% 2013 506.0 3.9% 2014 531.6 5.1% 2015 553.8 4.2% CAGR 2010-2015 4.53% Source: ICD Research Analysis / © ICD Research

Figure 105: Indonesian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 151 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.10.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Indonesian earthmoving equipment market, with a share of 62.7% and a value of US$278.3 million. The construction tractors and loaders categories recorded the second and third largest consumption values of US$107.9 million and US$57.7 million respectively.

Table 107: Indonesian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 145.0 278.3 345.9 Crawler/ Wheeled Excavators 90.7 165.1 194.9 Mini Excavators 54.4 113.2 151.0 Loaders 77.8 57.7 74.2 Backhoe loaders 52.8 34.1 42.5 Crawler/ Wheeled/Compact loaders 24.9 23.6 31.7 Skid-Steer loaders 0.0 0.0 0.0 Construction Tractors 63.2 107.9 133.7 Bulldozers/Crawlers Tractors 63.2 107.9 133.7 Wheeled Tractors 0.0 0.0 0.0 Overall 286.1 443.8 553.8 Source: ICD Research Analysis / © ICD Research

Figure 106: Indonesian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 152 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.11 MALAYSIA

6.11.1 Consumption Value

Consumption of earthmoving equipment in Malaysia valued US$301.7 million in 2010, an increase of 2.2% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 0.32%.

Table 108: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 305.6 2007 441.1 44.3% 2008 505.0 14.5% 2009 295.2 -41.6% 2010 301.7 2.2% CAGR 2006-2010 -0.32% Source: ICD Research Analysis / © ICD Research

Figure 107: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 153 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Malaysia to increase at a CAGR of 5.70% over the forecast period and value US$398.0 million in 2015.

Table 109: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 301.7 2011 318.3 5.5% 2012 337.4 6.0% 2013 357.6 6.0% 2014 378.7 5.9% 2015 398.0 5.1% CAGR 2010-2015 5.70% Source: ICD Research Analysis / © ICD Research

Figure 108: Malaysian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 154 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.11.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in Malaysia earthmoving equipment market, with a share of 58.6% and a value of US$176.7 million. The construction tractors and loaders categories recorded the second and third largest consumption values, at US$75.3 million and US$49.7 million respectively.

Table 110: Malaysian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 173.2 176.7 249.5 Crawler/ Wheeled Excavators 108.2 104.8 153.5 Mini Excavators 65.0 71.9 96.0 Loaders 52.2 49.7 59.0 Backhoe loaders 13.0 12.2 15.1 Crawler/ Wheeled/Compact loaders 31.3 28.7 33.1 Skid-Steer loaders 7.9 8.8 10.8 Construction Tractors 80.2 75.3 89.5 Bulldozers/Crawlers Tractors 34.6 14.3 17.3 Wheeled Tractors 45.6 61.1 72.2 Overall 305.6 301.7 398.0 Source: ICD Research Analysis / © ICD Research

Figure 109: Malaysian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 155 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.12 PHILIPPINES

6.12.1 Consumption Value

Consumption of earthmoving equipment in the Philippines valued US$139.6 million in 2010, an increase of 10.5% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 9.04%.

Table 111: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 98.7 2007 113.8 15.3% 2008 148.4 30.4% 2009 126.3 -14.9% 2010 139.6 10.5% CAGR 2006-2010 9.04% Source: ICD Research Analysis / © ICD Research

Figure 110: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 156 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the Philippines to increase at a CAGR of 11.17% over the forecast period and value US$237.1 million in 2015.

Table 112: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 139.6 2011 153.8 10.2% 2012 170.8 11.0% 2013 191.3 12.0% 2014 213.6 11.6% 2015 237.1 11.0% CAGR 2010-2015 11.17% Source: ICD Research Analysis / © ICD Research

Figure 111: Philippine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 157 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

6.12.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value in the Philippine earthmoving equipment market, with a share of 48.9% and a value of US$68.2 million. The construction tractors and loaders categories recorded the second and third largest consumption values of US$41.1 million and US$30.3 million respectively.

Table 113: Philippine Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 45.2 68.2 125.5 Crawler/ Wheeled Excavators 27.9 44.1 81.2 Mini Excavators 17.4 24.1 44.2 Loaders 24.0 30.3 45.9 Backhoe loaders 7.9 9.3 13.5 Crawler/ Wheeled/Compact loaders 11.9 16.3 24.9 Skid-Steer loaders 4.2 4.6 7.4 Construction Tractors 29.5 41.1 65.7 Bulldozers/Crawlers Tractors 15.8 19.7 30.6 Wheeled Tractors 13.7 21.4 35.1 Overall 98.7 139.6 237.1 Source: ICD Research Analysis / © ICD Research

Figure 112: Philippine Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 158 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7 SOUTH AMERICA

7.1 Market Environment

7.1.1 Economic Indicators

Table 114: South American Economic Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 GDP at constant prices (US$ billion) 2,079.4 2,186.0 2,270.8 2,214.3 2,353.1 3.14% GDP per capita at constant prices (US$) 5,868.8 6,153.1 6,353.4 6,171.8 6,487.3 2.54% Disposable income (US$ billion) 1,590.2 1,855.4 2,092.1 1,952.6 2,072.2 6.84% Population (million) 377.9 382.3 386.6 391.2 395.7 1.16% Employment rate (%) 47.9% 48.2% 47.6% 47.2% 47.6% N/A Unemployment rate (%) 8.5% 8.4% 8.6% 8.7% 8.6% N/A Industrial output growth (%) 13.4% 10.7% 13.5% -8.9% 12.4% N/A Services growth (%) 12.8% 11.4% 13.8% -5.9% 10.7% N/A Agriculture growth (%) 11.9% 25.4% 22.3% 0.1% 12.8% N/A Source: ICD Research Analysis / © ICD Research

Table 115: South American Economic Indicators, 2010–2015

CAGR Indicators 2010 2011 2012 2013 2014 2015 2010–2015 GDP at constant prices (US$ billion) 2,353.1 2,448.1 2,552.6 2,658.7 2,765.2 2,870.8 4.06% GDP per capita at constant prices (US$) 6,487.3 6,677.3 6,870.4 7,064.0 7,256.3 7,444.6 2.79% Disposable income (US$ billion) 2,072.2 2,305.5 2,412.9 2,513.0 2,633.6 2,788.4 6.12% Population (million) 395.7 400.2 404.6 409.0 413.3 417.6 1.08% Employment rate (%) 47.6% 47.7% 48.1% 48.4% 48.7% 49.0% N/A Unemployment rate (%) 8.6% 8.5% 8.4% 8.3% 8.2% 8.1% N/A Industrial output growth (%) 12.4% 5.0% 4.6% 4.2% 3.7% 3.2% N/A Services growth (%) 10.7% 4.4% 4.7% 4.1% 3.6% 3.0% N/A Agriculture growth (%) 12.8% 12.3% 10.8% 11.4% 11.3% 10.5% N/A Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 159 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.1.2 Monetary Indicators

Table 116: South American Monetary Indicators, 2006–2010

Indicators 2006 2007 2008 2009 2010 Wholesale Price Index (WPI) 106 112 123 127 137 Consumer Price Index (CPI) 109 115 123 129 133 Source: ICD Research Analysis / © ICD Research

Table 117: South American Monetary Indicators, 2010–2015

Indicators 2010 2011 2012 2013 2014 2015 Wholesale Price Index (WPI) 137 145 152 159 166 173 Consumer Price Index (CPI) 133 138 143 148 154 161 Source: ICD Research Analysis / © ICD Research

7.1.3 Trade and Investment Indicators

Table 118: South American Trade and Investment Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 Total exports (US$ billion) 413.96 479.75 541.25 619.95 481.70 0.14% Total imports (US$ billion) 375.1 439.9 515.2 614.9 455.2 1.15% Trade balance (US$ billion) 38.9 39.9 26.1 5.1 26.5 NA Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 160 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.2 South American Earthmoving Equipment Market Analysis

Consumption of earthmoving equipment in the South American region valued US$3.4 billion in 2010, an increase from US$2.0 billion in 2006, recording a CAGR of 13.86%. The region registered varied growth rates with Colombia and Brazil recording robust CAGRs of 29.42%, while Argentina recorded a moderate CAGR of 0.68% and Mexico recorded a CARC of -3.92% during the review period. Strong growth in the consumption of earthmoving equipment has been supported by construction industry CAGRs of 12.83% in Colombia and 14.46% in Brazil. In Colombia, growth has been sustained by the implementation of ―Democratic Security‖ a political and economic plan which has improved security conditions and encouraged foreign investment. In Brazil, construction activities have significantly increased as a result of the US$285.4 billion (BRL500.8 billion) investment allocation by the federal government for infrastructure development under the Programade Aceleraçãodo Crescimento (PAC) plan, investment of which was increased to BRL633.6 billion (US$361.1 billion) in February 2009.

Figure 113: South America Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 consumption value (US$ million) Source: World Market Intelligence Analysis /© World Market Intelligence

With South American countries displaying signs of recovery from the global economic crisis, consumption value of earthmoving equipment market expanded by 8.1% in 2010. In 2009 consumption value had declined by 12.8% however, the market was supported by stimulus packages and investments in the construction industry in 2010, with the Argentinean construction industry expanding by 10%, Brazil by 22.3%, Colombia by 1.9% and Mexico by 3%. In 2010, Brazil was the largest market for earthmoving equipment within the South American market and accounted for 56.2% share of the consumption value. Colombia was the second largest market recording a 15.8% share, followed by Mexico acting for 14.4% and Argentina comprising 13.6%. Brazil was also the largest producer of earthmoving equipment in the region, with the country accounting for a 75.9%

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 161 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

share of the production value within the region in 2010, followed by Argentina accounting for 12.9%, Mexico comprising 9.3% and Colombia representing 1.9%.

ICD expects the consumption value of earthmoving equipment to moderate and achieve a CAGR of 5.98% over the forecast period. Mexico is projected to record the fastest growth, with a CAGR of 7.06%. Frustrated demand from a prolonged period of market inactivity is expected to support growth in the Mexican market alongside fiscal and monetary measures implemented by the government in order to stimulate the economy including tax breaks for corporate sector, increased public infrastructure spending, relaxation of policy rates and reforms in healthcare and education sector. The Mexican government‘s US$250 billion infrastructure expenditure plan over 2007–2012 is expected to sustain the infrastructure construction market. Brazil is projected to record the second highest CAGR of 6.55% over the forecast period with growth being driven by an expected CAGR of 10.75% over the forecast priod. Growth is anticipated to be supported by an allocated investment of US$25.7 billion by the federal governments, states and municipalities for the construction of stadia and transport infrastructure as part of the country‘s preparations to host The 2014 FIFA World Cup and the 2016 Olympic Games. In addition, the World Bank has announced an investment of US$11.1 billion for infrastructure projects related to these two major sporting events, alongside the PAC and PAC 2 schemes this is expected to sustain growth in the Brazilian construction market which will have a positive impact on the earthmoving equipment market

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 162 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.3 Consumption

7.3.1 Consumption Value

Consumption of earthmoving equipment in South America valued US$3.4 billion in 2010, an increase of 8.1% over 2009. The value of earthmoving equipment consumption recorded a CAGR of 13.86% during the review period.

Table 119: South American Earthmoving Equipment Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 2,039.1 2007 2,652.5 30.1% 2008 3,635.1 37.0% 2009 3,171.1 -12.8% 2010 3,427.1 8.1% CAGR 2006-2010 13.86% Source: ICD Research Analysis / © ICD Research

Figure 114: South American Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 163 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in South America to increase at a CAGR of 5.98% over the forecast period and value US$4.6 billion in 2015.

Table 120: South American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 3,427.1 2011 3,633.9 6.0% 2012 3,843.0 5.8% 2013 4,079.6 6.2% 2014 4,323.9 6.0% 2015 4,581.0 5.9% CAGR 2010-2015 5.98% Source: ICD Research Analysis / © ICD Research

Figure 115: South American Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 164 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.3.2 Consumption Value by Category

In 2010, excavators accounted for the largest share of earthmoving equipment consumption value in South America, with a 39.4% share and a value of US$1.4 billion. Loaders and construction tractors recorded the second and third largest consumption values of US$1.1 billion and US$967.0 million respectively. Excavators recorded the fastest growing consumption among end-user markets in South America with a CAGR of 17.19% during the review period.

Table 121: South America Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 716.8 944.2 1,392.4 1,304.0 1,351.9 17.19% Crawler/ Wheeled Excavators 409.6 558.4 766.9 738.0 779.4 17.45% Mini Excavators 307.2 385.7 625.5 566.0 572.6 16.85% Loaders 655.8 911.8 1,172.1 992.5 1,108.2 14.01% Backhoe loaders 190.6 289.1 394.0 313.3 369.0 17.96% Crawler/ Wheeled/Compact loaders 262.6 354.4 472.3 449.7 471.6 15.76% Skid-Steer loaders 202.6 268.3 305.8 229.5 267.6 7.20% Construction Tractors 666.5 796.6 1,070.6 874.6 967.0 9.75% Bulldozers/Crawlers Tractors 278.4 289.0 417.3 407.4 465.5 13.71% Wheeled Tractors 388.1 507.5 653.3 467.2 501.4 6.62% Overall 2,039.1 2,652.5 3,635.1 3,171.1 3,427.1 13.86% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 165 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 116: South American Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 166 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

The excavators‘ category is expected to be the largest earthmoving equipment market in South America, accounting for a share of 39.3% and a value of US$1.8 billion in 2015. The loaders and construction tractors categories are expected to record the second and third largest consumption values of US$1.5 billion and US$1.3 billion respectively. Over the forecast period the loaders category is expected to register the fastest consumption growth in South America with a CAGR of 6.40%.

Table 122: South America Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 1,351.9 1,433.1 1,511.8 1,605.0 1,700.0 1,800.4 5.90% Crawler/ Wheeled Excavators 779.4 828.1 876.8 932.2 989.6 1,048.9 6.12% Mini Excavators 572.6 605.0 635.0 672.8 710.4 751.5 5.59% Loaders 1,108.2 1,176.8 1,251.7 1,333.1 1,419.7 1,511.4 6.40% Backhoe loaders 369.0 387.1 413.0 437.7 465.4 492.6 5.95% Crawler/ Wheeled/Compact loaders 471.6 494.9 519.1 544.9 572.1 600.4 4.95% Skid-Steer loaders 267.6 294.8 319.6 350.5 382.1 418.4 9.35% Construction Tractors 967.0 1,024.0 1,079.5 1,141.5 1,204.2 1,269.3 5.59% Bulldozers/Crawlers Tractors 465.5 496.7 524.5 556.7 587.1 619.5 5.88% Wheeled Tractors 501.4 527.3 555.0 584.8 617.0 649.8 5.32% Overall 3,427.1 3,633.9 3,843.0 4,079.6 4,323.9 4,581.0 5.98% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 167 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 117: South American Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 168 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.4 Production

7.4.1 Production Value

During the review period the production value of the South American earthmoving equipment market recorded a CAGR of 12.20%. In 2010 production increased by 11.7% from 2009 and valued US$2.4 billion.

Table 123: South American Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,523.4 2007 1,891.8 24.2% 2008 2,499.3 32.1% 2009 2,160.4 -13.6% 2010 2,414.1 11.7% CAGR 2006-2010 12.20% Source: ICD Research Analysis / © ICD Research

Figure 118: South American Earthmoving Equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 169 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects production in the South American earthmoving equipment market to increase from US$2.4 billion in 2010 to US$3.5 billion in 2015. Over the forecast period the production of earthmoving equipment in South America is expected to increase at a CAGR of 7.52%.

Table 124: South American Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 2,414.1 2011 2,599.5 7.7% 2012 2,789.0 7.3% 2013 2,999.9 7.6% 2014 3,226.3 7.5% 2015 3,468.3 7.5% CAGR 2010-2015 7.52% Source: ICD Research Analysis / © ICD Research

Figure 119: South American Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 170 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.4.2 Production Value by Category

In 2010, loaders had the largest category production in the South American earthmoving equipment market, accounting for a share of 39.4% and a value of US$952.0 million, followed by excavators with a production value of US$736.7 million.

The loaders category recorded the fastest production growth among the individual categories of earthmoving equipment in South American with a CAGR of 14.32% during the review period.

Table 125: South America Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 454.5 555.9 764.2 651.8 736.7 12.84% Crawler/ Wheeled Excavators 273.5 346.0 438.9 384.4 424.5 11.62% Mini Excavators 181.0 209.9 325.3 267.5 312.2 14.61% Loaders 557.4 730.1 988.6 841.8 952.0 14.32% Backhoe loaders 147.4 215.7 317.4 260.3 304.0 19.84% Crawler/ Wheeled/Compact loaders 248.7 308.7 427.2 394.1 414.6 13.64% Skid-Steer loaders 161.4 205.8 244.0 187.4 233.4 9.67% Construction Tractors 511.5 605.8 746.6 666.8 725.3 9.12% Bulldozers/Crawlers Tractors 207.8 251.5 317.4 279.5 307.1 10.25% Wheeled Tractors 303.7 354.3 429.2 387.3 418.2 8.33% Overall 1,523.4 1,891.8 2,499.3 2,160.4 2,414.1 12.20% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 171 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 120: South American Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 172 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

With a predicted CAGR of 7.91% and a production value of US$1.4 billion, the loaders category is forecast to be the largest in the South American earthmoving equipment market in 2015. This category is also expected to account for a 40.2% share of production in the European earthmoving equipment market in 2015. With a share of 31.3%, the excavators‘ category is expected to record the second largest production in 2015.

Table 126: South America Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010– 2015 Excavators 736.7 797.8 860.9 930.9 1,006.1 1,086.1 8.07% Crawler/ Wheeled Excavators 424.5 457.7 491.6 529.4 569.8 612.6 7.61% Mini Excavators 312.2 340.1 369.4 401.6 436.2 473.5 8.69% Loaders 952.0 1,026.6 1,105.5 1,193.7 1,289.4 1,392.8 7.91% Backhoe loaders 304.0 326.6 350.8 378.0 406.6 436.5 7.50% Crawler/ Wheeled/Compact loaders 414.6 437.0 459.8 484.3 510.7 538.3 5.36% Skid-Steer loaders 233.4 263.0 294.9 331.4 372.1 418.1 12.36% Construction Tractors 725.3 775.1 822.5 875.2 930.9 989.3 6.41% Bulldozers/Crawlers Tractors 307.1 329.8 350.8 374.2 398.5 424.2 6.68% Wheeled Tractors 418.2 445.4 471.7 501.0 532.4 565.2 6.21% Overall 2,414.1 2,599.5 2,789.0 2,999.9 3,226.3 3,468.3 7.52% Source: ICD Research Analysis / © ICD Research

Figure 121: South American Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 173 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.5 BRAZIL

7.5.1 Consumption Value

Consumption of earthmoving equipment in Brazil valued US$1.9 billion in 2010, an increase of 7.5% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 24.09%.

Table 127: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 811.8 2007 1,075.3 32.5% 2008 1,596.7 48.5% 2009 1,790.4 12.1% 2010 1,925.2 7.5% CAGR 2006-2010 24.09% Source: ICD Research Analysis / © ICD Research

Figure 122: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 174 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Brazil to increase at a CAGR of 6.55% over the forecast period and value US$2.6 billion in 2015.

Table 128: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,925.2 2011 2,057.2 6.9% 2012 2,180.9 6.0% 2013 2,324.1 6.6% 2014 2,476.5 6.6% 2015 2,643.4 6.7% CAGR 2010-2015 6.55% Source: ICD Research Analysis / © ICD Research

Figure 123: Brazilian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 175 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.5.2 Consumption Value by Category

In 2010, excavators accounted for the largest consumption value of earthmoving equipment in Brazil, with a share of 40.5% and a value of US$780.3 million. The loaders and construction tractors categories recorded the second and third largest consumption values of US$635.4 million and US$509.5 million respectively.

Table 129: Brazilian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 329.3 780.3 1085.9 Crawler/ Wheeled Excavators 188.7 456.0 640.8 Mini Excavators 140.6 324.3 445.1 Loaders 245.0 635.4 876.1 Backhoe loaders 70.3 212.9 276.7 Crawler/ Wheeled/Compact loaders 102.3 268.4 337.4 Skid-Steer loaders 72.5 154.0 262.0 Construction Tractors 237.5 509.5 681.5 Bulldozers/Crawlers Tractors 98.2 236.3 309.6 Wheeled Tractors 139.4 273.3 371.8 Overall 811.8 1,925.2 2,643.4 Source: ICD Research Analysis / © ICD Research

Figure 124: Brazilian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 176 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.6 ARGENTINA

7.6.1 Consumption Value

Consumption of earthmoving equipment in Argentina valued US$467.3 million in 2010, an increase of 9.5% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 0.68%.

Table 130: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 454.9 2007 623.9 37.2% 2008 757.9 21.5% 2009 426.9 -43.7% 2010 467.3 9.5% CAGR 2006-2010 0.68% Source: ICD Research Analysis / © ICD Research

Figure 125: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 177 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Argentina to increase at a CAGR of 4.99% over the forecast period and value US$596.1 million in 2015.

Table 131: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 467.3 2011 489.7 4.8% 2012 514.1 5.0% 2013 542.2 5.5% 2014 569.4 5.0% 2015 596.1 4.7% CAGR 2010-2015 4.99% Source: ICD Research Analysis / © ICD Research

Figure 126: Argentine Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 178 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.6.2 Consumption Value by Category

In 2010, loaders accounted for the largest consumption value in the Argentinean earthmoving equipment market, with a share of 39.7% and a value of US$185.6 million. The construction tractors and excavators categories recorded the second and third largest consumption values of US$159.3 million and US$122.4 million respectively.

Table 132: Argentine Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 104.9 122.4 162.9 Crawler/ Wheeled Excavators 57.5 67.2 90.8 Mini Excavators 47.4 55.2 72.1 Loaders 159.2 185.6 241.4 Backhoe loaders 54.2 64.6 86.0 Crawler/ Wheeled/Compact loaders 61.8 85.2 109.6 Skid-Steer loaders 43.1 35.8 45.8 Construction Tractors 190.8 159.3 191.8 Bulldozers/Crawlers Tractors 18.3 36.9 49.7 Wheeled Tractors 172.5 122.4 142.1 Overall 454.9 467.3 596.1 Source: ICD Research Analysis / © ICD Research

Figure 127: Argentine Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 179 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.7 COLOMBIA

7.7.1 Consumption Value

Consumption of earthmoving equipment in Colombia valued US$540.4 million in 2010, an increase of 4.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 29.42%.

Table 133: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 192.6 2007 334.2 73.5% 2008 535.5 60.2% 2009 515.8 -3.7% 2010 540.4 4.8% CAGR 2006-2010 29.42% Source: ICD Research Analysis / © ICD Research

Figure 128: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 180 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Colombia to increase at a CAGR of 3.65% over the forecast period and value US$646.6 million in 2015.

Table 134: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 540.4 2011 556.7 3.0% 2012 577.3 3.7% 2013 602.6 4.4% 2014 625.9 3.9% 2015 646.6 3.3% CAGR 2010-2015 3.65% Source: ICD Research Analysis / © ICD Research

Figure 129: Colombian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 181 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.7.2 Consumption Value by Category

In 2010, the excavators‘ category accounted for the largest consumption value in the Colombian earthmoving equipment market, with a share of 53.7% and a value of US$290.3 million. The construction tractors and loaders categories recorded the second and third largest consumption values of US$134.5 million and US$115.7 million respectively.

Table 135: Colombian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 92.9 290.3 341.0 Crawler/ Wheeled Excavators 53.9 165.7 195.7 Mini Excavators 39.0 124.6 145.3 Loaders 43.3 115.7 143.9 Backhoe loaders 12.8 39.8 50.0 Crawler/ Wheeled/Compact loaders 17.1 46.4 57.7 Skid-Steer loaders 13.4 29.4 36.2 Construction Tractors 56.3 134.5 161.7 Bulldozers/Crawlers Tractors 30.0 81.7 96.9 Wheeled Tractors 26.3 52.8 64.8 Overall 192.6 540.4 646.6 Source: ICD Research Analysis / © ICD Research

Figure 130: Colombian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 182 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.8 MEXICO

7.8.1 Consumption Value

Consumption of earthmoving equipment in Mexico valued US$494.1 million in 2010, an increase of 12.8% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of - 3.92%.

Table 136: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 579.7 2007 619.1 6.8% 2008 745.0 20.3% 2009 438.0 -41.2% 2010 494.1 12.8% CAGR 2006-2010 -3.92% Source: ICD Research Analysis / © ICD Research

Figure 131: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 183 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Mexico to increase at a CAGR of 7.06% over the forecast period and value US$694.9 million in 2015.

Table 137: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 494.1 2011 530.3 7.3% 2012 570.8 7.6% 2013 610.7 7.0% 2014 652.1 6.8% 2015 694.9 6.6% CAGR 2010-2015 7.06% Source: ICD Research Analysis / © ICD Research

Figure 132: Mexican Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 184 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

7.8.2 Consumption Value by Category

In 2010, the loaders category accounted for the largest consumption value in the Mexican earthmoving equipment market, with a share of 34.7% and a value of US$171.5 million. The construction tractors and loaders categories recorded the second and third largest consumption values of US$163.6 million and US$158.9 million respectively.

Table 138: Mexican Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 189.6 158.9 210.6 Crawler/ Wheeled Excavators 109.4 90.5 121.5 Mini Excavators 80.2 68.5 89.1 Loaders 208.3 171.5 250.0 Backhoe loaders 53.3 51.6 79.9 Crawler/ Wheeled/Compact loaders 81.4 71.6 95.7 Skid-Steer loaders 73.6 48.3 74.4 Construction Tractors 181.8 163.6 234.3 Bulldozers/Crawlers Tractors 132.0 110.7 163.2 Wheeled Tractors 49.9 53.0 71.1 Overall 579.7 494.1 694.9 Source: ICD Research Analysis / © ICD Research

Figure 133: Mexican Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 185 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8 MIDDLE EAST

8.1 Market Environment

8.1.1 Economic Indicators

Table 139: Middle East Economic Indicators, 2006–2010

CAGR Indicators 2006 2007 2008 2009 2010 2006–2010 GDP at constant prices (US$ billion) 752.7 789.0 816.8 802.1 839.2 2.76% GDP per capita at constant prices (US$) 18,702.2 19,503.0 20,432.8 20,792.8 21,172.7 3.15% Population (million) 104.1 105.9 107.6 109.3 111.0 1.61% Employment rate (%) 59.3% 59.9% 61.6% 61.6% 62.6% N/A Unemployment rate (%) 4.7% 4.8% 5.0% 5.0% 5.0% N/A Industrial output growth (%) 21.9% 20.2% 35.1% -16.4% 19.2% N/A Services growth (%) 18.5% 17.1% 20.9% -10.8% 14.8% N/A Agriculture growth (%) 3.4% 10.2% 19.6% -9.7% 8.4% N/A Source: ICD Research Analysis / © ICD Research

Table 140: Middle East Economic Indicators, 2010–2015

CAGR Indicators 2010 2011 2012 2013 2014 2015 2010–2015 GDP at constant prices (US$ billion) 839.2 874.8 909.7 955.8 998.1 1,047.7 4.54% GDP per capita at constant prices (US$) 21,172.7 21,832.8 22,390.4 24,611.9 25,671.5 27,706.7 5.53% Population (million) 110.9 112.6 114.2 115.7 117.2 118.7 1.36% Employment rate (%) 62.6% 63.6% 64.1% 65.1% 65.9% 66.6% N/A Unemployment rate (%) 5.0% 4.9% 4.7% 4.6% 4.5% 4.5% N/A Industrial output growth (%) 19.2% 10.0% 8.7% 7.1% 7.3% 7.2% N/A Services growth (%) 14.8% 7.7% 6.8% 5.4% 5.9% 5.7% N/A Agriculture growth (%) 8.4% 4.3% 5.1% 4.2% 4.2% 4.5% N/A Source: ICD Research Analysis / © ICD Research

8.1.2 Trade and Investment Indicators

Table 141: Middle East Trade and Investment Indicators, 2006–2009

Indicators 2006 2007 2008 2009 CAGR 2006–2009 Total exports (US$ billion) 549.0 637.6 803.9 703.8 8.63% Total imports (US$ billion) 403.9 495.4 597.0 560.5 11.55% Trade balance (US$ billion) 145.2 142.2 207.0 143.4 NA Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 186 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.2 The Middle Eastern Earthmoving Equipment Market Analysis

Consumption of earthmoving equipment in the Middle East market valued US$1.8 billion in 2010, from US$1.6 billion in 2006, recording a CAGR of 4.14% during the review period. Consumption value fluctuated widely in the region, with UAE recording the highest CAGR of 19.18%, followed by Saudi Arabia recording 11.41%, while Qatar and Turkey recorded negative CARCs of 1.34% and 10.87% respectively, during the review period. Growth in the UAE market has been fostered by large scale commercial and infrastructure investments, FDI‘s and revenues from the oil industry. However, in 2008 growth in the regions construction market decelerated as a result of the global economic crisis, which had a direct effect on the earthmoving equipment segment. A decline in construction activity had a direct impact on the consumption value of earthmoving equipment, which decreased by 20.6% in 2009.

Figure 134: Middle East Earthmoving Equipment Consumption Dynamics by Value (%), 2006–2015

Note: Bubble size represents 2010 consumption value (US$ million) Source: ICD Research Analysis / © ICD Research

After weak growth in 2009, construction activity recorded substantial rates of growth in 2010, with Turkey recording a CAGR 23.7%, Saudi Arabia registering 6.1%, and the UAE posting a growth rate of 3.0%. As a result, the consumption value of earthmoving equipment increased by 8.7% in 2010. The UAE was the largest earthmoving equipment market in the region and accounted for 36.6% share of the region‘s total consumption value for 2010. This was followed by Saudi Arabia, Turkey and Qatar with market shares of 30.9%, 23.7% and 8.8% respectively. In terms of production, Turkey is the sole producer of earthmoving equipment in the region. In 2010, the country‘s production value reached US$209.8 million, increasing from US$165.5 million in 2006, and recording a CAGR of 6.11% during the review period. Other countries in the region are completely dependent on imports for meeting their internal requirements for earthmoving equipment.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 187 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Going forward, ICD projects the earthmoving equipment consumption market value US$2.6 billion in 2015 and record a CAGR of 7.35% over the forecast period. Construction activities are expected to continue with Qatar anticipated to emerge as the fastest growing regional market with a CAGR of 9.73%; followed by Saudi Arabia with 9.23%, Turkey with 6.75% and the UAE with 5.41%. In Qatar, growth in the construction industry and the earthmoving equipment market will be supported by significant infrastructure investments in preparation for the 2022 FIFA World Cup. Moreover, Saudi Arabia has planned investments of US$435–450billion in their domestic construction industry over the next five years. The Turkish construction industry exhibits strong growth potential due to demanding expansion in the country‘s infrastructure as a result of favorable social and economic conditions.. Plans for a network of high-speed rail connections in order to help reduce reliance on road transportation have been announced. Furthermore, a housing shortage in Istanbul in a key factor in increased levels of construction activity in the country with expected demand for 0.9–1.0 million housing units annually through 2015.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 188 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.3 Consumption

8.3.1 Consumption Value

Consumption of earthmoving equipment in the Middle East valued US$1.8 billion in 2010, an increase of 8.7% over 2009. The value of earthmoving equipment consumption recorded a CAGR of 4.14% during the review period.

Table 142: Middle East Earthmoving Equipment Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 1,571.4 2007 1,830.1 16.5% 2008 2,141.0 17.0% 2009 1,699.7 -20.6% 2010 1,848.1 8.7% CAGR 2006-2010 4.14% Source: ICD Research Analysis / © ICD Research

Figure 135: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 189 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the Middle East to increase at a CAGR of 7.35% over the forecast period and value US$2.6 billion in 2015.

Table 143: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 1,848.1 2011 1,973.6 6.8% 2012 2,122.9 7.6% 2013 2,272.6 7.1% 2014 2,449.6 7.8% 2015 2,634.3 7.5% CAGR 2010-2015 7.35% Source: ICD Research Analysis / © ICD Research

Figure 136: Middle East Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 190 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.3.2 Consumption Value by Category

In 2010, loaders accounted for the largest share of earthmoving equipment consumption value in the Middle East, with a 44.9% share and a value of US$829.4 million. Construction tractors and excavators recorded the second and third largest consumption values of US$569.9 million and US$448.8 million respectively.

Table 144: Middle East Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 453.5 503.2 493.7 408.4 448.8 -0.26% Crawler/ Wheeled Excavators 265.3 286.4 292.9 239.0 262.1 -0.30% Mini Excavators 188.2 216.8 200.8 169.4 186.7 -0.21% Loaders 660.0 774.5 922.9 746.1 829.4 5.88% Backhoe loaders 153.4 178.4 199.9 149.5 166.2 2.03% Crawler/ Wheeled/Compact loaders 357.7 434.2 515.5 440.2 486.6 8.00% Skid-Steer loaders 148.8 161.9 207.4 156.4 176.5 4.36% Construction Tractors 458.0 552.3 724.4 545.3 569.9 5.62% Bulldozers/Crawlers Tractors 322.0 420.7 586.9 441.4 459.2 9.28% Wheeled Tractors 136.0 131.6 137.5 103.9 110.8 -4.99% Overall 1,571.4 1,830.1 2,141.0 1,699.7 1,848.1 4.14% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 191 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 137: Middle East Earthmoving Equipment Consumption Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 192 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Loaders category is expected to be the largest earthmoving equipment in the Middle East, accounting for a share of 46.6% and a value of US$1.2 billion in 2015. The construction tractors and excavators categories are expected to record the second and third largest consumption values of US$748.2 million and US$658.6 million respectively.

Table 145: Middle East Earthmoving Equipment Consumption Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 448.8 482.7 525.6 565.2 612.0 658.6 7.97% Crawler/ Wheeled Excavators 262.1 280.1 304.2 327.2 354.5 382.0 7.82% Mini Excavators 186.7 202.6 221.4 238.0 257.4 276.6 8.18% Loaders 829.4 891.5 962.0 1,039.9 1,125.7 1,227.4 8.15% Backhoe loaders 166.2 178.5 196.1 213.1 233.4 258.6 9.24% Crawler/ Wheeled/Compact loaders 486.6 522.3 561.3 606.8 658.1 718.7 8.11% Skid-Steer loaders 176.5 190.6 204.6 219.9 234.2 250.1 7.22% Construction Tractors 569.9 599.3 635.3 667.6 711.9 748.2 5.60% Bulldozers/Crawlers Tractors 459.2 480.2 507.3 531.2 564.6 588.8 5.10% Wheeled Tractors 110.8 119.1 128.0 136.4 147.3 159.5 7.56% Overall 1,848.1 1,973.6 2,122.9 2,272.6 2,449.6 2,634.3 7.35% Source: ICD Research Analysis / © ICD Research

Figure 138: Middle East Earthmoving Equipment Consumption Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 193 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.4 Production

8.4.1 Production Value

During the review period the production value of the Middle East earthmoving equipment market recorded a CAGR of 6.11%. Moreover, in 2010 production increased by 4.0% from 2009 and valued US$209.8 million.

Table 146: Middle East Earthmoving Equipment Production Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 165.5 2007 181.5 9.7% 2008 219.7 21.0% 2009 201.7 -8.2% 2010 209.8 4.0% CAGR 2006-2010 6.11% Source: ICD Research Analysis / © ICD Research

Figure 139: Middle East Earthmoving Equipment Production Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 194 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects production in the Middle East earthmoving equipment market to increase from US$209.8 million in 2010 to US$296.3 million in 2015. Over the forecast period the production of earthmoving equipment in Middle East is expected to increase at a CAGR of 7.15%.

Table 147: Middle East Earthmoving Equipment Production Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 209.8 2011 223.7 6.6% 2012 239.5 7.1% 2013 258.0 7.7% 2014 277.1 7.4% 2015 296.3 6.9% CAGR 2010-2015 7.15% Source: ICD Research Analysis / © ICD Research

Figure 140: Middle East Earthmoving Equipment Production Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 195 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.4.2 Production Value by Category

In 2010, excavators had the largest category production in the Middle East earthmoving equipment market, accounting for a share of 44.0% and a value of US$92.3 million, followed by loaders with a production value of US$60.5 million and construction tractors with US$57.0 million.

The construction tractors category recorded the fastest production growth among the individual categories of earthmoving equipment in the Middle East with a CAGR of 8.05% during the review period.

Table 148: Middle East Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2006–2010

CAGR Category 2006 2007 2008 2009 2010 2006–2010 Excavators 74.8 77.2 96.6 89.2 92.3 5.37% Crawler/ Wheeled Excavators 47.5 48.4 62.0 56.7 58.6 5.38% Mini Excavators 27.3 28.7 34.6 32.5 33.7 5.36% Loaders 48.8 55.4 65.8 57.7 60.5 5.50% Backhoe loaders 8.4 9.5 11.2 10.0 10.5 5.60% Crawler/ Wheeled/Compact loaders 31.6 36.0 42.7 37.4 39.3 5.56% Skid-Steer loaders 8.8 9.9 11.9 10.3 10.7 5.22% Construction Tractors 41.8 49.0 57.3 54.9 57.0 8.05% Bulldozers/Crawlers Tractors 16.8 19.9 23.8 23.2 24.0 9.40% Wheeled Tractors 25.1 29.1 33.5 31.7 33.0 7.11% Overall 165.5 181.5 219.7 201.7 209.8 6.11% Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 196 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

Figure 141: Middle East Earthmoving Equipment Production Value by Category (%), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 197 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

With a predicted CAGR of 7.17% and a production value of US$130.4 million, excavators‘ category is forecast to be the largest one in the Middle East earthmoving equipment market in 2015. This category is also expected to account for a 44.0% share of production in the European earthmoving equipment market in 2015. With a share of 28.7%, the loaders category is expected to record the second largest production in 2015.

Table 149: Middle East Earthmoving Equipment Production Value by Category/Sub category (US$ Million), 2010–2015

CAGR Category 2010 2011 2012 2013 2014 2015 2010–2015 Excavators 92.3 98.3 105.3 113.4 121.8 130.4 7.17% Crawler/ Wheeled Excavators 58.6 62.1 66.1 71.0 76.0 81.1 6.72% Mini Excavators 33.7 36.2 39.2 42.5 45.8 49.3 7.94% Loaders 60.5 64.6 69.1 74.3 79.7 85.1 7.06% Backhoe loaders 10.5 11.2 12.0 12.9 13.9 14.9 7.33% Crawler/ Wheeled/Compact loaders 39.3 41.9 44.8 48.2 51.6 55.0 6.96% Skid-Steer loaders 10.7 11.5 12.3 13.2 14.2 15.2 7.17% Construction Tractors 57.0 60.8 65.2 70.2 75.6 80.8 7.22% Bulldozers/Crawlers Tractors 24.0 25.6 27.6 29.7 32.2 34.6 7.54% Wheeled Tractors 33.0 35.2 37.6 40.5 43.4 46.2 6.98% Overall 209.8 223.7 239.5 258.0 277.1 296.3 7.15% Source: ICD Research Analysis / © ICD Research

Figure 142: Middle East Earthmoving Equipment Production Value by Category (%), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 198 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.5 SAUDI ARABIA

8.5.1 Consumption Value

Consumption of earthmoving equipment in Saudi Arabia valued US$571.1 million in 2010, an increase of 9.6% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 11.41%.

Table 150: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 370.6 2007 538.8 45.4% 2008 685.9 27.3% 2009 521.2 -24.0% 2010 571.1 9.6% CAGR 2006-2010 11.41% Source: ICD Research Analysis / © ICD Research

Figure 143: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 199 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Saudi Arabia to increase at a CAGR of 9.23% over the forecast period and value US$887.8 million in 2015.

Table 151: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 571.1 2011 618.5 8.3% 2012 672.5 8.7% 2013 732.5 8.9% 2014 808.4 10.4% 2015 887.8 9.8% CAGR 2010-2015 9.23% Source: ICD Research Analysis / © ICD Research

Figure 144: Saudi Arabian Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 200 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.5.2 Consumption Value by Category

In 2010, loaders accounted for the largest consumption value of earthmoving equipment in Saudi Arabia, with a share of 49.0% and a value of US$279.9 million. The construction tractors and excavators categories recorded the second and third largest consumption values of US$275.7 million and US$15.5 million respectively.

Table 152: Saudi Arabian Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 14.3 15.5 27.7 Crawler/ Wheeled Excavators 8.2 8.5 15.3 Mini Excavators 6.0 7.0 12.4 Loaders 170.6 279.9 490.3 Backhoe loaders 40.3 55.4 103.9 Crawler/ Wheeled/Compact loaders 91.3 165.6 303.8 Skid-Steer loaders 39.0 58.9 82.6 Construction Tractors 185.8 275.7 369.7 Bulldozers/Crawlers Tractors 172.5 237.9 305.2 Wheeled Tractors 13.3 37.9 64.5 Overall 370.6 571.1 887.8 Source: ICD Research Analysis / © ICD Research

Figure 145: Saudi Arabian Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 201 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.6 UNITED ARAB EMIRATES

8.6.1 Consumption Value

Consumption of earthmoving equipment in the UAE valued US$676.6 million in 2010, an increase of 8.2% over 2009. During the review period the consumption value of earthmoving equipment recorded a CAGR of 19.18%.

Table 153: UAE Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 335.4 2007 473.3 41.1% 2008 782.5 65.3% 2009 625.2 -20.1% 2010 676.6 8.2% CAGR 2006-2010 19.18% Source: ICD Research Analysis / © ICD Research

Figure 146:UAE Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 202 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in the UAE to increase at a CAGR of 5.41% over the forecast period and value US$880.7 million in 2015.

Table 154: UAE Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 676.6 2011 708.5 4.7% 2012 749.9 5.8% 2013 785.3 4.7% 2014 831.1 5.8% 2015 880.7 6.0% CAGR 2010-2015 5.41% Source: ICD Research Analysis / © ICD Research

Figure 147: UAE Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 203 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.6.2 Consumption Value by Category

In 2010, loaders accounted for the largest consumption value in the UAE earthmoving equipment market with a share of 47.5% and a value of US$321.7 million. The excavators and construction tractors categories recorded the second and third largest consumption values of US$219.0 million and US$135.9 million respectively.

Table 155: UAE Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 97.7 219.0 315.6 Crawler/ Wheeled Excavators 56.4 126.1 180.8 Mini Excavators 41.3 92.9 134.7 Loaders 155.6 321.7 408.9 Backhoe loaders 36.8 66.8 91.0 Crawler/ Wheeled/Compact loaders 83.3 183.8 219.2 Skid-Steer loaders 35.6 71.1 98.8 Construction Tractors 82.1 135.9 156.3 Bulldozers/Crawlers Tractors 72.9 129.6 146.2 Wheeled Tractors 9.2 6.4 10.0 Overall 335.4 676.6 880.7 Source: ICD Research Analysis / © ICD Research

Figure 148: UAE Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 204 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.7 QATAR

8.7.1 Consumption Value

Consumption of earthmoving equipment in Qatar valued US$162.8 million in 2010, an increase of 14.4% over 2009. During the review period the consumption value of earthmoving equipment recorded a CARC of -1.34%.

Table 156: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 171.8 2007 102.2 -40.5% 2008 182.2 78.2% 2009 142.2 -21.9% 2010 162.8 14.4% CARC 2006-2010 -1.34% Source: ICD Research Analysis / © ICD Research

Figure 149: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 205 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Qatar to increase at a CAGR of 9.73% over the forecast period and value US$259.0 million in 2015.

Table 157: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 162.8 2011 177.8 9.3% 2012 195.2 9.8% 2013 215.2 10.3% 2014 236.5 9.9% 2015 259.0 9.5% CAGR 2010-2015 9.73% Source: ICD Research Analysis / © ICD Research

Figure 150: Qatar Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 206 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.7.2 Consumption Value by Category

In 2010, the construction tractors category accounted for the largest consumption value in the Qatari earthmoving equipment market, with a share of 36.8% and a value of US$59.9 million. The loaders and excavators categories recorded the second and third largest consumption values of US$56.6 million and US$46.3 million respectively.

Table 158: Qatar Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 30.1 46.3 76.8 Crawler/ Wheeled Excavators 17.4 26.6 44.2 Mini Excavators 12.7 19.6 32.6 Loaders 85.4 56.6 91.5 Backhoe loaders 20.2 11.2 17.2 Crawler/ Wheeled/Compact loaders 45.7 33.5 54.5 Skid-Steer loaders 19.5 11.9 19.8 Construction Tractors 56.3 59.9 90.7 Bulldozers/Crawlers Tractors 37.3 44.8 69.6 Wheeled Tractors 19.0 15.1 21.1 Overall 171.8 162.8 259.0 Source: ICD Research Analysis / © ICD Research

Figure 151: Qatar Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 207 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.8 TURKEY

8.8.1 Consumption Value

Consumption of earthmoving equipment in Turkey valued US$437.7 million in 2010, an increase of 6.5% over 2009. However, during the review period, the consumption value of earthmoving equipment recorded a CARC of -10.87%.

Table 159: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Year US$ Million % Growth 2006 693.6 2007 715.6 3.2% 2008 490.4 -31.5% 2009 411.1 -16.2% 2010 437.7 6.5% CARC 2006-2010 -10.87% Source: ICD Research Analysis / © ICD Research

Figure 152: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2006–2010

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 208 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

ICD expects the consumption of earthmoving equipment in Mexico to increase at a CAGR of 6.75% over the forecast period and value US$606.8 million in 2015.

Table 160: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Year US$ Million % Growth 2010 437.7 2011 468.7 7.1% 2012 505.4 7.8% 2013 539.7 6.8% 2014 573.6 6.3% 2015 606.8 5.8% CAGR 2010-2015 6.75% Source: ICD Research Analysis / © ICD Research

Figure 153: Turkish Earthmoving Equipment Consumption Value (US$ Million), 2010–2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 209 Forecasts to 2015

EARTHMOVING EQUIPMENT REGIONAL ANALYSIS

8.8.2 Consumption Value by Category

In 2010, the loaders category accounted for the largest consumption value in the Turkish earthmoving equipment market, with a share of 39.1% and a value of US$171.3 million. The excavators and construction tractors categories recorded the second and third largest consumption values of US$168.0 million and US$98.3 million respectively.

Table 161: Turkish Earthmoving Equipment Consumption Value by Category/Sub-Category (US$ Million), 2006, 2010 and 2015

Category/ Sub-Category 2006 2010 2015 Excavators 311.4 168.0 238.5 Crawler/ Wheeled Excavators 183.2 100.9 141.7 Mini Excavators 128.2 67.2 96.8 Loaders 248.4 171.3 236.6 Backhoe loaders 56.2 32.8 46.4 Crawler/ Wheeled/Compact loaders 137.5 103.9 141.2 Skid-Steer loaders 54.8 34.6 49.0 Construction Tractors 133.8 98.3 131.6 Bulldozers/Crawlers Tractors 39.3 46.9 67.8 Wheeled Tractors 94.5 51.5 63.8 Overall 693.6 437.7 606.8 Source: ICD Research Analysis / © ICD Research

Figure 154: Turkish Earthmoving Equipment Consumption Value by Category (%), 2006, 2010 and 2015

Source: ICD Research Analysis / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 210 Forecasts to 2015

COMPANY PROFILES

9 Company Profile: AB Volvo

9.1 AB Volvo Company Overview

AB Volvo (Volvo) is a commercial transport solutions providing company. Its product portfolio includes buses, construction equipment, trucks, and drive systems for marine and industrial applications alongside aircraft engine components. Volvo manufactures a wide range of trucks, such as light-duty trucks, heavy-duty trucks and midsize-duty trucks under the Volvo, Renault, Mack, and UD brand names. The company additionally offers financial services, industrial IT solutions and logistics solutions to customers. Volvo operates production facilities in 19 countries and markets its products in over 180 countries including Sweden, France, Japan, the US, China, Brazil and South Korea. The company is headquartered in Goteborg, Sweden.

Table 162: AB Volvo , Key Facts

Corporate Address VHQ, Gothenburg, , 405 08, Sweden Telephone + 46 31 660000 Fax + 46 31 537296 URL www.volvo.com Industry Construction Ticker Symbol, Exchange VOLV A (Stockholms Fondboers)VOLV B (Stockholms Fondboers) No. of Employees 90,409 Fiscal Year End December Revenue (US$ Million) 34,607.71 Revenue (SEK Million) 264,749.00 Locations Australia, China, India, Japan, Republic of Korea, Singapore, Austria, Belgium, Finland, France, Italy, Netherlands, Norway, Russian Federation, Sweden, Switzerland, Canada, United States, Brazil, Mexico Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

9.2 AB Volvo - Business Description

Volvo is a supplier of commercial transport solutions. The company, through its subsidiaries, manufactures and markets trucks, buses, aircraft engine components, construction equipment and drive systems for marine and industrial applications. As of December 31, 2010, the company employed 90,409 people.

Volvo operates its business through six segments: Trucks, Construction Equipment, Buses, Volvo Penta, Volvo Aero, and Customer Finance.

Through the Trucks segment, the company manufactures a large range of medium-heavy to heavy trucks for regional transport, long-haul and construction operations under the Volvo, Renault, Mack, and UD brand names. The company offers medium heavy to heavy trucks for regional transport and construction operations under Volvo brand. Under the Mack brand it manufactures heavy duty trucks targeted at heavy regional transport and vocational markets. Under UD brand name the company supplies a broad range of light, medium and heavy-duty trucks.. The company additionally offers light trucks and heavy trucks under the Renault brand name. During the FY2010, the Trucks segment contributed 62.6% towards the total revenues of the company.

Through the Construction Equipment segment, the company offers products, services and spare parts used in road construction and mining and forestry industry maintenance. The segment has operational presence in

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 211 Forecasts to 2015

COMPANY PROFILES

over 125 countries globally. Products offered through this segment includes articulated haulers, wheel loaders, motor graders, pavers, milling machines, wheeled and crawler excavators, compactors and a broad range of compact equipment such as backhoe loaders, wheel loaders, excavators and skid-steer loaders. During FY2010, the Construction Equipment segment contributed 20.2% towards the total revenues of the company.

Through the Buses segment, the company offers city and intercity buses, coaches and chassis alongside service programs which include financing and service contracts for vehicle and transport management systems. The segment also offers hybrid buses, such as Volvo 7700 Hybrid. During the FY2010, the Buses segment contributed 7.7% towards the total revenues of the company.

Under the Volvo Penta segment, the company offers marine engines and drive systems for marine applications. During FY2010, the Volvo Penta segment comprised 3.3% of the company‘s total revenues.

Through Volvo Aero segment, the company develops and produces components for aircraft, rocket and gas turbine engines alongside an extensive range of productivity-boosting services, including sales of spare parts for aircraft engines and aircraft, and the repair and overhaul of aircraft engines and gas turbines. The company additionally develops combustion chambers and rocket engine turbines supporting the European space program. During FY2010, the Volvo Aero segment contributed 2.9% towards the total revenues of the company.

Through the Customer Finance segment, the company offers customer and dealer financing. During FY2010, the Customer Finance segment contributed 3.4% towards the total revenues of the company.

Geographically, the company operates under six segments: Western Europe, Eastern Europe, North America, South America, Asia, and Other markets.

During FY2010, the Western Europe segment accounted for 33.9% of the company‘s total revenues, while Eastern Europe, North America, South America, Asia, and Other markets contributed with 4.9%, 17.6%, 10.8%, 25.2%, and 7.5%, respectively.

The company‘s research and development (R&D) activities are focused on developing sustainable solutions, such as engines for renewable fuels, and light trucks. During FY2010, the company‘s R&D expenses valued US$1,801.5 million (SEK12,970.00 million), comprising 4.9% of the total revenues.

In 2010, the company received orders for the delivery of 463 bus chassis in Curitiba, Brazil and Quito, Ecuador. The firm additionally secured orders for the delivery of 650 buses in Australia and 409 coaches in Mexico. Volvo sold its subsidiary in the US, Volvo Aero Services to H.I.G. Capital, a private investment firm and entered into a technological agreement with Yamaha Motor Co., Ltd to develop boat control system.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 212 Forecasts to 2015

COMPANY PROFILES

9.3 AB Volvo - Main Products and Services

Volvo‘s key products and services include:

Table 163: AB Volvo , Main Products and Services

Products Services Trucks Customer financing Buses Insurance services Components for aircraft and rocket engines Treasury operations Backhoe loader Wheel loaders Fleet management Articulated haulers Financing and leasing options Motor graders Maintenance, repair and overhaul services Skid steer loaders Leasing options Excavators Logistic solutions Industrial Drive systems for marine applications IT solutions Drive systems for industrial applications Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

9.4 AB Volvo - History

Table 164: AB Volvo , History

Year Event type Description The company sold its equity interest in Jinan Huawo Truck Corporation to China 2010 Stake Sale National Heavy Duty Truck Group Corporation (CNHTC). The company entered into an agreement with ORIX of Indonesia Finance (ORIF) to 2010 Contracts/Agreements provide finance program to its customers in Indonesia. The company launched its new truck, the Volvo FMX, at the Bauma international 2010 New Products/Services machinery fair in Munich.

2009 Contracts/Agreements The company's subsidiary, Volvo IT, entered into a three year agreement with the City of Goteborg in Sweden to run low-cost mainframe environments. The company entered into an agreement with the French engine manufacturer 2009 Contracts/Agreements Snecma to supply components for the engine of Boeing 737 aircraft. Volvo Aero and Rolls-Royce entered into a risk and revenue sharing agreement for 2008 Contracts/Agreements the Trent XWB engine for the Airbus A350XWB aircraft, under which Volvo Aero will develop and manufacture the intermediate compressor case, a key engine component.

2008 Contracts/Agreements The company‘s Volvo Aero entered into an agreement with aircraft engine manufacturer Pratt & Whitney to join P&W‘s Geared Turbofan engine program.

2008 New Products/Services Volvo introduced Volvo I-Sync, a new automated transmission for the Volvo FL distribution truck. 2008 New Products/Services The company‘s subsidiary Mack launched a new prestige truck, Titan.

2007 Acquisitions/Mergers/Takeovers The company‘s Volvo Aero acquired the composite company Applied Composites in Linkoping.

2007 Divestiture The company‘s subsidiary, Volvo Group Real Estate sold Sorred Energi to Goteborg Energi for US$38.8 million (SEK279 million).

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 213 Forecasts to 2015

COMPANY PROFILES

Table 164: AB Volvo , History

2007 Corporate Changes/Expansions The company acquired US based Ingersoll Rand‘s road development equipment division. 2007 Acquisitions/Mergers/Takeovers Volvo acquired Japanese truck maker Nissan Diesel Motor.

2006 Asset Purchase The company's Volvo Construction Equipment acquired 70% of shares in Lingong, a construction machinery manufacturer in China. The company acquired a 13% stake in Nissan Diesel for US$208.4 million (SEK1.5 2006 Asset Purchase billion).

2006 Contracts/Agreements The company's Volvo Aero entered into a contract for the production of the largest component in an aircraft engine, the fan case, for the Rolls-Royce Trent 1000 engine.

2005 Contracts/Agreements The company's subsidiary Volvo Aero received a contract worth US$277.8 million (SEK2 billion) to produce aircraft engine components for General Electric. 2004 Contracts/Agreements The company entered into a strategic alliance with ArvinMeritor to supply axles. 2004 Acquisitions/Mergers/Takeovers The company's subsidiary, Volvo Penta acquired, Marco Motors.

2004 Acquisitions/Mergers/Takeovers The company's subsidiary, Volvo Aero acquired Aero Craft through its strategic alliance with Carlton Forge Works. The company acquired the remaining 50% stake of the North American bus 2004 Asset Purchase manufacturer Pervost Car. Volvo Construction Equipment acquired the engine re-manufacturing assets of Echo 2004 Acquisitions/Mergers/Takeovers Industries. 2003 Corporate Changes/Expansions Volvo established an assembly facility for heavy trucks in Moscow.

2003 Asset Purchase The company purchased the assets of Volvo distribution business from LB Smiths. The company opened a new factory in Poland and established production facilities in 2002 Corporate Changes/Expansions Shanghai, China. 2001 Acquisitions/Mergers/Takeovers The company acquired the truck manufacturers, Mack and Renault VI. 1999 Acquisitions/Mergers/Takeovers Volvo sold its passenger car business to Ford Motor Company. Volvo entered into an agreement with Mitsubishi to extend their joint venture to truck 1997 Contracts/Agreements business operations. 1997 Acquisitions/Mergers/Takeovers Volvo purchased the bulldozer manufacturer, Champion of Canada. 1994 Business / Operations Closure The company shut down its Kalmar plant in the US. 1989 Corporate Changes/Expansions The company established the Uddevalla Plant in Sweden. 1986 Acquisitions/Mergers/Takeovers Volvo acquired GM Heavy Truck Corporation.

1981 Acquisitions/Mergers/Takeovers The company acquired White Motor Corporation in the US and AB Hoglund and Company in Saffle, Sweden. 1980 Corporate Changes/Expansions Volvo established a new plant for producing bus chassis and trucks in Curitiba, Brazil. 1969 Acquisitions/Mergers/Takeovers Volvo acquired the Olofstrom plant. 1965 Corporate Changes/Expansions Volvo established a diesel engine plant in Skovde, Sweden. 1965 Corporate Changes/Expansions The company established a plant in Ghent, Belgium, to manufacture cars. 1963 Corporate Changes/Expansions The company started its car assembly business in Halifax, Canada. 1950 Acquisitions/Mergers/Takeovers Volvo acquired Bolinder Munktell, a construction equipment manufacturer. 1946 New Products/Services The company produced the first small agricultural tractor. 1942 Acquisitions/Mergers/Takeovers The company acquired Kopings Mekaniska Verkstad, a gearbox manufacturer. 1941 Asset Purchase Volvo acquired a majority holding in Svenska Flygmotor. 1935 Stock Listings/IPO The company was listed on the Stockholm Stock Exchange. 1930 Acquisitions/Mergers/Takeovers The company acquired Pentaverken Skovde, an engine manufacturer.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 214 Forecasts to 2015

COMPANY PROFILES

Table 164: AB Volvo , History

1927 Incorporation/Establishment Ab Volvo was founded in Sweden. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

9.5 AB Volvo - SWOT Analysis

Volvo is one of the leading suppliers of commercial transport solutions, which include buses, construction equipment, trucks, drive systems for marine and industrial applications alongside aircraft engine components. The company‘s strong geographical presence and its diversified product lines are its main strengths, however, product recalls remain an area of concern. Going forward, environmental regulations and rising production costs may impact the company‘s performance. However, focus on emerging economies and a strategic agreement with Yamaha Motor Co., Ltd will present new growth opportunities for the company.

9.5.1 AB Volvo – Strengths

Strength – Comprehensive Product Portfolio Volvo‘s comprehensive product portfolio aids the company to offer a large range of products to its customers, mitigating the risk associated with revenue concentration in one segment. Volvo operates its business through six segments: Trucks, Construction Equipment, Buses, Volvo Penta, Volvo Aero, and Customer Finance.. The firm‘s comprehensive product portfolio allows the company to cater to a range of customer needs which in turn supports revenue growth.

Strength - Diversified Geographical Presence

The diversified geographical presence of Volvo enables the firm to serve a large customer base, ensuring a strong top line performance. Volvo operates production facilities in 19 countries and markets its products in more than 180 countries including Sweden, France, Japan, the US, China, Brazil and South Korea. Volvo operates its business under six geographic segments: Western Europe, Eastern Europe, North America, South America, Asia, and Other markets. During FY2010, the Western Europe segment contributed 33.9% towards the total revenues of the company, while Eastern Europe, North America, South America, Asia, and Other markets contributed 4.9%, 17.6%, 10.8%, 25.2%, and 7.5%, respectively. A diversified global presence enables the company to focus on large assets that will sustain production over many decades at low cost. This ensures the profitability of the company through the inevitable economic cycles.

Strength - Strong Sales Growth Volvo‘s strong sales growth enables it to undertake growth initiatives. The company holds a strong position in the trucks and buses market across the world and in FY2010, reported a sales growth of 21.2%, which was above the heavy machinery and vehicles industry average sales growth of 14.4%. Moreover, the company‘s competitor, Navistar International Corporation reported a sales growth of 4.9% over the same period. The strong performance of the company can be attributed to strong sales growth of its Trucks segment, which recorded growth of 20.4% on the back of increasing demand and market conditions. Increasing revenues will fuel the company‘s growth, enabling the firm to expand its market share.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 215 Forecasts to 2015

COMPANY PROFILES

9.5.2 AB Volvo – Weaknesses

Weakness - Decrease in Current Assets The decrease in Volvo‘s current assets is a concern area, indicating the firm‘s deteriorating liquidity position. Volvo‘s current ratio was 1.1 at the end of FY2010, below the heavy machinery and vehicles industry average* of 1.46. In contrast, competitor Navistar International Corporation reported a current ratio of 1.6 during FY2010. The declining current ratio of the company can be attributed to its decreasing current assets. During FY2010, the company‘s current assets decreased by 5.04%, which resulted in the decline in its current ratio. A lower than heavy machinery and vehicles industry average* current ratio indicates that the company is in a weaker financial position than other companies in the industry. Furthermore, the declining liquidity ratio of the company may affect its capacity to pursue growth initiatives.

Weakness - Frequent Product Recalls Frequent product recalls will tarnish the brand image of the company besides adding up new costs. For example, in January 2011, the company announced the recall of certain model 2011 VNL trucks manufactured from March 23–December 22, 2010. These vehicles are suspected to have the potential to start without warning due to faulty wiring. In November 2010, the company recalled certain 2006–2010 VN models, 2007 and 2009 VHD models and 2007–2009 VT truck models manufactured during November 2005, through October 2009. Additionally, in October 2010, Volvo announced the recall of certain 2008-2011 VHD‘s, VNL‘s, VNM‘s and 2008-2010 VT vehicles for their failure to comply with Part 567 certification requirements. Furthermore, in August 2010, the company recalled certain model year 2009–2010 VN trucks manufactured during 2008–2009 and in June 2010, recalled certain 2001–2006 VNL and VNM trucks fitted with TRW sealed drag links. Such widespread product recalls will result in significant losses principally due to the various costs associated with the recall process, the destruction of product inventory, and lost sales due to the unavailability of the product for a period of time. The company will suffer additional losses from a significant product liability judgment which would result in a loss of consumer confidence in its products, which could have a material adverse effect on the company‘s business results and the value of its brands.

9.5.3 AB Volvo – Opportunities

Opportunity - Focus on Emerging Markets The company‘s focus on emerging markets is expected to enhance its top-line performance. According to The World Bank, various stimulus packages announced by respective governments to bring economies back to a level of stability will result in global output expanding by 3.2% in 2011. India, Russia and Brazil are expected to grow at a GDP of 8%, 3% and 3.9% in 2011, respectively. Furthermore, according to the official estimates, GDP growth rate for India is projected reach 9% in 2012. Volvo is focused on enhancing its presence in fastest growing markets such as Brazil and India. During FY2010, the company recorded a sales growth of 71% in Brazil and in February 2011, received orders for delivering 463 bus chassis in Curitiba in Brazil and Quito in Ecuador. In addition, Volvo has planned to increase its manufacturing facilities in India to further strengthen its position in the Indian market prompted by budgetary support to the urban transport system. The growth potential is evident by the recent order for delivery of 100 triple-axle Volvo 9400XL coaches placed by Vijayanand Road Lines Logistics, VRL in December 2010. Volvo bought out its partner‘s stake of 30% in the joint venture Volvo Buses India Private Limited, in December 2010 indicating the company‘s strategic focus on the growth potential of the Indian market. Volvo‘s strong focus on operational expansion in emerging markets will further enhance its top-line performance.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 216 Forecasts to 2015

COMPANY PROFILES

Opportunity - Demand for Hybrid Vehicles Volvo will be in a position to take advantage of increased opportunities in the fuel efficient vehicles market, with advanced technologies such as hybrids, clean diesel engines, flexible-fuel ethanol vehicles and turbocharged direct injection system. The company‘s R&D activities are focused on developing sustainable solutions, such as engines for renewable fuels, and light trucks. In May 2010, the company launched the production of its hybrid buses, Volvo 7700 Hybrid and Volvo B5L Hybrid. The firm additionally secured orders for the delivery of150 hybrid buses in Europe and initiated the test driving of hybrid technology buses in South America and Mexico, to launch hybrid buses in the US. According to the US government‘s Energy Information Administration total sales of hybrid vehicles is expected to increase from 2.3% of new light duty vehicles (LDV) sales in 2007 to 20.6% and 39.6% by 2015 and 2030, respectively. It is further forecast that the number of hybrid vehicles sold could reach 7.9 million in 2030. With hybrid vehicles set to become the mainstay of the future automobile market, the company has opportunities to gain a higher market share and increase its revenues.

Opportunity - Strategic Agreement with Yamaha Motor Co., Ltd Strategic initiatives taken by Volvo are expected to drive its growth going forward. Volvo has entered into various strategic agreements to strengthen its business. For example, the company entered into a technological agreement with Yamaha Motor Co., Ltd (Yamaha) in December 2010, to develop boat control systems. The agreement is likely to create technological synergies vital for taking advantage of the growing demand within the marine industry for such control systems. Furthermore, the agreement enabled the company to distribute its marine engines in Japan in collaboration with Yamaha and in February 2011, Volvo and Yamaha established joint working groups for the evaluation of potential areas for deeper collaboration. The agreement will offer ample growth opportunities for the company going forward.

9.5.4 AB Volvo – Threats

Threat - Currency Fluctuations Volvo operates in many parts of the world and as a result, is affected by fluctuations in foreign exchange rates. Fluctuations in the value of the currency will have an impact on operations. Based in Sweden, the firm has been generating a significant share of its revenue and incurring expenditures in various currencies. During FY2010, the company generated 38% of its total revenues from Europe, 28% from the Americas and 25% of total revenues from Asia. With the company marketing its products in over 180 countries worldwide, it is exposed to the volatility of currency fluctuations which will have a direct impact on its top and bottom-line performance.

Threat - Increase in Production Cost The rising raw material costs have been an area of concern for the company. Volvo uses various raw materials such as steel and aluminum. The prices of these raw materials accounts for a significant share of the company's total cost of goods sold. Due to the increase in the commodity prices, the cost of raw materials and energy has also increased drastically. The company may incur loss in sales volume to the extent price increases are taken into account. In addition, continuous supply could be affected by weather conditions, national emergencies, strikes, governmental controls, natural disasters or supply shortages. Price fluctuations and non availability of raw materials will have a material effect on the firm‘s production cost and in turn the operational performance.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 217 Forecasts to 2015

COMPANY PROFILES

Threat - Stringent Environmental Regulations Volvo‘s operations are regulated by a broad range of state, local and foreign health, safety and environmental laws. These laws govern air emissions, wastewater discharges and the handling, storage disposal and release of wastes and hazardous substances. With rising concern for environment protection, Volvo may be exposed to increased litigation, compliance costs and unforeseen environmental remediation expenses. For example, the Kyoto Protocol calls on industrialized countries to reduce their greenhouse gas emissions by 5.2% annually over 2008–2012, compared to the emissions in 1990. Another important development is Clean Air Act (CAA) passed by several developed nations, including the UK, The US, and Canada. During 2008, the EPA extended the stricter emission standards to the engines manufactured by the company during 2005. The company disagreed with the EPA's interpretation and the dispute was referred to a US court. Both the parties are awaiting the final decision of the court. Rise in compliance costs and in some cases remedial costs may increase the operational costs of the company in turn affecting profit margins.

9.6 AB Volvo – Company Information

9.6.1 AB Volvo - Key Competitors

The following companies are Volvo‘s main competitors:

Cummins Inc. PACCAR Inc Daimler Trucks North America LLC Navistar International Corporation MAN SE Scania AB

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 218 Forecasts to 2015

COMPANY PROFILES

9.6.2 AB Volvo - Key Employees

Table 165: AB Volvo ,, Key Employees

Name Job Title Board Level Chief Executive Officer - Volvo Group, President, Leif Johansson Executive Board Director Staffan Jufors President - Volvo Trucks Senior Management Stefano Chmielewski President - Renault Trucks Senior Management President - North American Trucks, Chief Executive Dennis Slagle Senior Management Officer - North American Trucks Satoru Takeuchi President - UD Trucks Senior Management Hakan Karlsson President - Volvo Buses Senior Management Olof Persson President - Volvo Construction Equipment Senior Management Goran Gummeson President - Volvo Penta Senior Management Staffan Zackrisson President - Volvo Aero Senior Management President - Volvo Powertrain, Senior Vice Peter Karlsten Senior Management President - Technology Stefan Johnsson Senior Vice President Senior Management Mikael Bratt Chief Financial Officer, Senior Vice President Senior Management Senior Vice President, General Counsel - Volvo Eva Persson Senior Management Group Peter Bijur Director Non-Executive Board Jean-Baptiste Duzan Director Non-Executive Board Ying Yeh Director Non-Executive Board Lars Westerberg Director Non-Executive Board Ravi Venkatesan Director Non-Executive Board Anders Nyren Director Non-Executive Board Louis Schweitzer Chairman Non-Executive Board Martin Linder Director Non-Executive Board Per Lojdquist Senior Vice President Senior Management Jan-Eric Sundgren Senior Vice President Senior Management Berth Thulin Director Non-Executive Board Martin Weissburg President - Volvo Financial Services Senior Management Par Ostberg Senior Vice President, President - Trucks Asia Senior Management Mikael Sallstrom Director Non-Executive Board Hanne de Mora Director Non-Executive Board Lars Ask Director Non-Executive Board Peteris Lauberts Director Non-Executive Board Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 219 Forecasts to 2015

COMPANY PROFILES

10 Company Profile: Caterpillar Inc.

10.1 Caterpillar Inc. Company Overview

Caterpillar, Inc. is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company offers these products and services through three businesses divisions: machinery, engines and financial products. The company has a product portfolio of approximately 300 products in 23 countries, a client base in 200 countries and has more than 480 facility locations, half of which are outside of the US. The company‘s divisions and subsidiaries include Cat Financial, Caterpillar Logistics Services, Progress Rail, Cat Remanufacturing Services, Perkins and FG Wilson. Caterpillar employs more than 93,000 employees and is headquartered in Peoria, Illinois, US.

Table 166: Caterpillar Inc., Key Facts

Corporate Address 100 NE Adams Street, Peoria, Illinois (IL), 61629, United States Telephone + 1 309 6751000 Fax + 1 309 6756620 URL www.cat.com Industry Construction Ticker Symbol, Exchange CAT (New York Stock Exchange) No. of Employees 97,487 Fiscal Year End December Revenue (US$ Million) 32,396.00 Revenue (Local Currency) NA Locations Australia, China, India, Indonesia, Japan, Malaysia, Belgium, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, United Kingdom, Nigeria, South Africa, Tunisia, Canada, United States, Brazil, Mexico Source: Annual Report, Company Website, Primary and Secondary Research / / © ICD Research

10.2 Caterpillar Inc. - Business Description

Caterpillar Inc., (Caterpillar) based in the US, is involved in the production of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company has a network of 178 dealers spread across North America, Latin America, the Asia-Pacific region, Europe, Africa and the Middle East (EAME) region. During FY2009, the company gained 69% of its sales from customers outside of the US and provides rental services through 1,500 outlets worldwide.

Caterpillar operates through three business divisions: machinery, engines and financial products. The machinery division is involved in the design, manufacture and distribution of forestry, construction and mining machinery. In addition to the design, manufacture, remanufacture and maintenance of rail-related products the machinery division also provides logistics services. This division has a product portfolio of 300 products, including track and wheel tractors, track and wheel loaders, pipe layers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, off-highway trucks, articulated trucks, paving products and skid steer loaders. During FY2009, the division accounted for 56.01% of the company‘s total revenues.

The engines division of the company designs manufactures markets and sells electric power generation system engines that run on diesel and natural gas. The division additionally manufactures engines for use in

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 220 Forecasts to 2015

COMPANY PROFILES

marine vehicles, on-highway vehicles and locomotives. Furthermore, the division produces engines for petroleum, construction, industrial and agricultural uses. Its product portfolio comprises engines ranging from 10–21,000 horsepower. Caterpillar also designs, manufactures and services industrial gas turbine power system solutions for the oil, gas and power generation industries. These power system solutions range from 1,600–30,000 horsepower. In FY2009, this division accounted for 35.16% of the company‘s total revenues.

The financial products division of the company operates through Caterpillar's wholly-owned subsidiary, Cat Financial. This division provides a range of financial alternatives to clients and dealers for solar gas turbines, machinery and engines, alongside other equipment and marine vessels. Cat Financial operates through more than 40 offices and subsidiaries spread across the Americas, Asia, Australia and Europe. In FY2009, this division accounted for 15.73% of the total company revenue.

The company's geographical regions are categorized as North America, Latin America, the EMEA and the Asia-Pacific. During FY2009, the company generated total revenue of US$12,359 million from its North America region, US$3,903 million from Latin America, US$8,902 million from the EMEA region and US$7,232 million from the Asia-Pacific.

In August 2010, the company‘s wholly-owned subsidiary, Progress Rail Services, acquired Electro-Motive Diesel (EMD), an original equipment manufacturer of diesel-electric locomotives based in LaGrange, Illinois, for US$928 million. This acquisition will enable the company to expand its operations in energy power systems.

10.3 Caterpillar Inc. - Main Products and Services

The company‘s main products and services include:

Table 167: Caterpillar Inc., Main Products and Services

Products Services Construction equipment (bulldozers, excavators, wheel Caterpillar loaders) Machines CAT Work tools Cat Financial Engines Cat Logistics Generator sets Cat Reman Transfer switches Cat The Rental Store Uninterruptible power supply (UPS) FG Wilson Switchgear turbines Mak Electronics Perkins Cat machine security systems Services: Financing Insurance Locomotive and railcar remanufactured components Logistics Maintenance and support OEM solutions

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 221 Forecasts to 2015

COMPANY PROFILES

Table 167: Caterpillar Inc., Main Products and Services

Remanufacturing Rental Solar turbine customer services Track and way maintenance Railcar rebuilding and engineering Training Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

10.4 Caterpillar Inc. - History

Table 168: Caterpillar Inc., History

Year Event type Description

2009 Acquisitions/Mergers/Takeovers The company acquired JCS Co. Ltd., a subsidiary of Jinsung T.E.C. Co. Ltd., a manufacturer of undercarriage components for earthmoving and other off-road machinery based in South Korea.

2009 Contracts/Agreements The company entered into a joint venture with Navistar International Corp. to form a new company, NC2 Global LLC, to serve the global commercial truck market.

2008 Acquisitions/Mergers/Takeovers The company acquired 60% in share in Shandong Machinery Co. Ltd (SEM). Through this deal, SEM became a subsidiary of Caterpillar. SEM is a manufacturer of wheel loaders in China.

2008 Acquisitions/Mergers/Takeovers The company completed its acquisition of Lovat, Inc., a manufacturer of tunnel boring machines.

2008 Acquisitions/Mergers/Takeovers Caterpillar increased its stake in Shin Caterpillar Mitsubishi Ltd. (SCM) to 67% and renamed SCM as Caterpillar Japan Ltd.

2008 Contracts/Agreements Caterpillar formed a strategic alliance with Navistar International Corp. to focus on global truck business opportunities and engines.

2008 Acquisitions/Mergers/Takeovers Caterpillar acquired certain assets of Gremada Industries, Inc., a leader in the processes of remanufacturing and reclaiming metal parts and components.

2008 Contracts/Agreements The company and Trimble Navigation Ltd. formed a new joint venture company and a new distribution agreement.

2007 Acquisitions/Mergers/Takeovers Caterpillar acquired Eurenov S.A.S., a European remanufacturer of engines and components

2006 Corporate Changes/Expansions The company's subsidiary, Caterpillar Logistics Services, Inc. opened a new parts distribution center in the Lingang Industrial Area in Shanghai.

2001 New Products/Services Caterpillar introduced the 6 Sigma.

1998 New Products/Services The company launched the world's largest off-highway truck (the 797). 1997 Acquisitions/Mergers/Takeovers Caterpillar acquired Perkins Engines, based in the UK. 1986 Corporate Changes/Expansions Caterpillar Tractor Co. changes its name to Caterpillar Inc.

1983 Corporate Changes/Expansions Caterpillar Leasing Co. was expanded to offer equipment financing options to its clients worldwide and was renamed Caterpillar Financial Services Corp. 1965 Corporate Changes/Expansions Caterpillar Mitsubishi Ltd. was renamed as Shin Caterpillar Mitsubishi Ltd.

1963 Acquisitions/Mergers/Takeovers Caterpillar and Mitsubishi Heavy Industries Ltd. entered into a joint venture agreement in Japan and formed Caterpillar Mitsubishi Ltd. 1950 Acquisitions/Mergers/Takeovers Caterpillar Tractor Co. Ltd. was established in Great Britain.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 222 Forecasts to 2015

COMPANY PROFILES

Table 168: Caterpillar Inc., History

1925 Incorporation/Establishment Caterpillar Tractor Co. was formed as a merger between Holt Manufacturing Co. and C. L. Best Tractor Co. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

10.5 Caterpillar Inc. - SWOT Analysis

Caterpillar is a construction equipment manufacturer offering machinery and engines for the construction sector. Caterpillar also provides financial products as financial alternatives via insurance and loans on machinery and engines. The company's strong global market presence, supported by an extensive dealer network, product R&D activities are its strengths, while going forward, the growth of emerging markets and a positive outlook for equipment manufacturers could ensure strong growth. However, its declining market share and limited liquidity position are areas of concern for the company. Regulations and legal proceedings, combined with a negative outlook for the US construction industry, could also affect the company's growth.

10.5.1 Caterpillar Inc. – Strengths

Strength – Research and development Caterpillar focuses on product-oriented R&D to develop new machines, engines and components. The research team identifies new and better applications for existing products. During FY2009, the company's expenditure on R&D accounted for 4.4% of its total revenue, an increase from 3.4% of revenue in FY2008. The R&D activities of the company resulted in the launch of various new products, including the CX31-P600 and CX35-P800 transmissions for the petroleum market and the C175-16 diesel offshore drilling generator set for offshore applications. A focus on research and development helps the company to stay ahead of technological changes and introduce products and services before any other competitor.

Strength - Global presence Geographically diverse operations aid Caterpillar to mitigate the various risks associated with overdependence on a particular region or country. The company manufactures over 300 products in 23 countries across the world, marketing those products in 200 countries. The firm also has a total of more than 480 facilities worldwide and distributes its products through a strong dealer network of 178 dealers, spread across North America, Latin America, the Asia-Pacific and the EAME region. In FY2009, the company received 69% of sales from customers outside of the US, while it generated 38.14% of its total revenue from North America, 12.04% from Latin America, 24.47% from the EMEA region and 22.32% from the Asia-Pacific. A large geographical presence provides new growth avenues for the company, which is advantageous over some of its competitors with limited geographical diversification.

Strength - Strong product offerings Caterpillar is the global leader in construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The firm is additionally one of the leading services providers through Cat Financial, Caterpillar Remanufacturing Services, Caterpillar Logistics Services, Inc. and Progress Rail Services Corp. The company categorizes its products across the machinery, engines and financial products divisions. Caterpillar operates through more than 40 offices and subsidiaries spread across the Americas, Asia, Australia and Europe. A diverse product offering has enabled the company to cater to a diverse client base.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 223 Forecasts to 2015

COMPANY PROFILES

10.5.2 Caterpillar Inc. – Weaknesses

Weakness - Declining market share in sector Caterpillar‘s revenue declined at a CARC of -2.83% during FY2005–2009. This was below the construction equipment sector average of 5.86%. A lower than sector average revenue CAGR may indicate that the company has underperformed, which may be attributed to a weak competitive position, an inferior products and services portfolio, or a lack of innovative products and services. For example, one of the company‘s competitors, Komatsu, recently introduced its Autonomous Haulage System FrontRunner proprietary system, which was deployed at the Rio Tinto mine in Australia. This system is expected to significantly increase productivity at the mine, which is in a location where it is difficult to secure sufficient manpower.

Weakness - Limited liquidity position The company's current ratio was 1.39 at the end of FY2009. This was below the construction equipment sector average of 1.56. A lower than sector average current ratio indicates that the company is in a weaker financial position than other companies in the sector and may have difficulty in paying its short-term obligations. However, the current ratio of the company increased from 1.21 in FY2008, which indicates the company is working towards improving its liquidity position.

Weakness - Declining efficiency In FY2009, the company recorded a decrease in its turnover ratios, indicating an underutilization of resources compared to FY2008. The fixed asset turnover ratio and working capital turnover declined from 4.5 and 9.22 in FY2008 to 2.62 and 4.32 in FY2009 respectively. Furthermore, its capital employed turnover declined from 8.42 in FY2008 to 3.71 in FY2009. The lower utilization of resources often leads to increase in operational costs. The company must focus on its resource utilization for optimum results, and to increase the growth prospects and profitability of the company.

10.5.3 Caterpillar Inc. – Opportunities

Opportunity - Emerging markets The company can take advantage of the growth of infrastructure sectors in developing nations, as these sectors account for almost of all global construction spending. The infrastructure sectors of the majority of developed and developing countries are currently in receipt of substantial funding from respective governments due to financial packages to stimulate economic growth following the recent global financial crisis. For example, in 2010, China‘s National Development and Reform Commission (NDRC) announced an investment of RMB682.2 billion in 23 new development projects in impoverished western regions as part of efforts to increase domestic consumer demand. Furthermore, the Chinese non-residential construction sector is expected to grow between 12%–14% per annum until 2012.

In addition, the construction sectors of Argentina and Venezuela are expected to grow at an annual rate of 5% until 2012. India, the second largest populated economy after China, also has substantial development plans to improve and upgrade its infrastructure and utility facilities to support its economic growth. Caterpillar already has manufacturing facilities, offices and dealers in India, China and Latin American countries. In order to sustain its operations and financial stability in the face of a decline in the US construction industry, the company should increase its focus on emerging markets.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 224 Forecasts to 2015

COMPANY PROFILES

Opportunity - Positive outlook for equipment manufacturers Caterpillar can benefit from the expected increase in future sales of farm equipment in the US. According to the Association of Equipment Manufacturers (AEM) annual "outlook" survey, manufacturers predict increased business in 2011 and 2012. In 2010, tractor sales in the US are expected to be the strongest for 100- horsepower tractors. In addition, the Obama Administration's American Recovery and Reinvestment Act of 2009 (ARRA) has provided funding for heavy-duty diesel, on-road vehicles and off-road equipment owners to retrofit their engines to reduce diesel emissions. The funding represents a six-fold increase from the 2008 funding level and will be administered by the Environmental Protection Agency (EPA). There is also a potential demand for heavy-duty diesel emission control systems, as fleet owners plan to take advantage of the US$300 million stimulus funding under the Diesel Emissions Reduction Act (DERA) program of EPA. The company can capitalize on this scenario by utilizing its expertise in agricultural machines and engines.

Opportunity - Rising demand for renewable power The global impact of climate change and the increasing importance of environment protection have increased the demand for renewable energy. The contribution of renewable sources to the global energy supply increased from 750 gigawatts in 2001 to 1,047 gigawatts in 2008. The industry is expected to further increase its capacity base to 1,378 gigawatts by 2013. According to an Advanced International Policy (AIP) developed by the European Renewable Energy Council (EREC), renewable energy sources will contribute almost 50% to total primary energy consumption by 2040. Governmental initiatives and policies incentivizing investment in renewable energy include a reduction in capital costs upfront via subsidies and rebates, a reduced capital cost after purchase via tax benefits, production tax credits, concessionary loans and other financial assistance, and reduced capital and installation costs through bulk procurement. These policies are in force in many countries, including the US and Europe. The company deals with power systems that support alternative energy sources, including two Cat landfill gas low emission generators in Atlanta, which extract waste gases for electricity generation. The company could expand its expertise in this field to increase growth and take advantage of the increasing importance of renewable energy.

10.5.4 Caterpillar Inc. – Threats

Threat - Grey market heavy equipment sales Sales of heavy equipment through the grey market could have a negative impact on the company. Grey market heavy equipment sales were a more serious problem in the 1990s, when the US construction market was growing rapidly. This issue could worsen with the recovery of the US construction industry from the current global economic downturn, while the overseas markets remain depressed. For example, Chris Johnson Equipment, Inc. of Michigan illegally imported 29 Hyundai-branded wheel loaders and excavators and sold them to US customers, violating federal fair competition and other laws. Gray market importers pose a problem to the company and other legitimate dealers by offering equipment manufactured for other markets by the company, leading to the loss of sales.

Threat - Negative outlook of the US construction Industry The outlook of the US construction industry is negative. According to the AIA Consensus Construction Forecast Panel non-residential construction activity declined by an estimated 13.4% in 2010. The commercial and industrial construction sectors were also weak with estimated declines of almost 20% in most of the main categories. Institutional construction also recorded an estimated decline of 2% in the same year. As the company generates approximately 38.14% of its revenue from North America, the negative outlook for the US construction industry may adversely affect the company‘s performance in the next five years.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 225 Forecasts to 2015

COMPANY PROFILES

Threat - Environmental regulations The company's facilities and operations are governed by environmental laws and regulations concerning emissions, discharges into water and air, and the generation, transportation, storage, handling, treatment and disposal of non-hazardous and hazardous waste materials. With engines subject to extensive regulations, the company is faced with the challenge of improving product technology, and is forced to make substantial investments in R&D. Furthermore, the company has to comply with the emission and noise related regulations of the Environmental Protection Agency (EPA), state regulatory agencies in the US and various regulatory agencies in its countries of operation. Any non-compliance to applicable regulations may lead to fines and other penalties. For example, in February 2009, the Illinois Attorney General filed a complaint containing seven counts for violating state environmental laws and regulations. Each count carries statutory penalties of US$50,000 per violation and US$10,000 per day of violation. Furthermore, in March 2009, the EPA served a notice to Caterpillar for seeking civil penalties for violations of the Clean Water Act and Oil Pollution Act. These cases are pending, and the significant legal costs associated with these proceedings may have a negative effect on the company‘s profitability.

10.6 Caterpillar Inc. – Company Information

10.6.1 Caterpillar Inc. - Key Competitors

The following companies are Caterpillar‘s the main competitors:

Komatsu Ltd. Hitachi Construction Machinery Co.,Ltd.

10.6.2 Caterpillar Inc. - Key Employees

Table 169: Caterpillar Inc., Key Employees

Name Job Title Board Level James W. Owens Chairman, Director Non-Executive Board Richard P.Lavin President - Group Senior Management Stuart L. Levenick Group President Senior Management Douglas R. Oberhelman Vice Chairman, Chief Executive Officer Senior Management Edward J. Rapp Group President Senior Management Gerard R. Vittecoq Group President Senior Management Steven H. Wunning Group President Senior Management W. Frank Blount Director Non-Executive Board John R. Brazil Director Non-Executive Board Daniel M. Dickinson Director Non-Executive Board John T. Dillon Director Non-Executive Board Jananne A. Copeland Chief Accounting Officer Senior Management Eugene V. Fife Director Non-Executive Board Gail D. Fosler Director Non-Executive Board Juan Gallardo Director Non-Executive Board David R. Goode Director Non-Executive Board Peter A. Magowan Director Non-Executive Board William A. Osborn Director Non-Executive Board

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 226 Forecasts to 2015

COMPANY PROFILES

Table 169: Caterpillar Inc., Key Employees

Charles D. Powell Director Non-Executive Board Edward B. Rust, Jr Director Non-Executive Board Joshua I. Smith Director Non-Executive Board James B. Buda Vice President, Secretary, General Counsel Senior Management Bradley M. Halverson Controller, Vice President - Financial Services Senior Management Susan C. Schwab Director Non-Executive Board Christopher C. Spears Senior Management Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 227 Forecasts to 2015

COMPANY PROFILES

11 Company Profile: Mitsubishi Heavy Industries, Ltd.

11.1 Mitsubishi Heavy Industries, Ltd. - Company Overview

Mitsubishi Heavy Industries, Ltd. (MHI) is a manufacturer of heavy machinery. The company supplies to energy, aircraft, space, ship and ocean, transportation, material handling, environment, automotive, industrial machinery, infrastructure, living and leisure and defense industries. MHI operate through five business divisions: Shipbuilding & Ocean Development, Power Systems, Machinery and Steel Structures, Aerospace and Mass and Medium-Lot Manufactured Machinery. The company principally operates worldwide and is headquartered in Tokyo, Japan.

Table 170: Mitsubishi Heavy Industries, Ltd., Key Facts

Corporate Address 2-16-5, Konan, Minato-ku, , 108-8215, Japan Telephone + 81 3 67163111 Fax + 81 3 67165800 URL www.mhi.co.jp Industry Energy and Utilities , Alternative Energy , Construction , Power Ticker Symbol, Exchange 7011 (The Tokyo Stock Exchange) No. of Employees 68,608 Fiscal Year End March Revenue (US$ Million) 32,232.16 Revenue (in JPY Million) 2,940,887.00 Locations Japan Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

11.2 Mitsubishi Heavy Industries, Ltd. - Business Description

MHI is a manufacturer of heavy machinery based in Japan. The firm supply machinery to the energy, aircraft, space, ship and ocean, transportation, material handling, environment, automotive, industrial machinery, infrastructure, living and leisure, and defense industries. MHI operates in Europe; Oceania; North America and Latin America; Asia and Africa.

MHI operates through five business divisions: Aerospace, Machinery & Steel Structures, Mass and Medium- Lot Manufactured Machinery, Power Systems, and Shipbuilding and Ocean Development.

The company‘s Aerospace division is involved in the manufacturing, installation, sale and repair of fighters, helicopters, structural parts and components of commercial transport aircraft, aero engines, missiles, torpedoes, space systems, launch services via launch vehicles. The total value of new orders in FY2010 for the firm‘s Aerospace division decreased to US$5.0 billion (JPY435.5 billion) from US$5.8 billion (JPY510.8 billion) in FY2009. This decrease was attributed to the fall in demand for defense- related products and commercial aircraft. For FY2010, the Aerospace division accounted for 16.7% of the company‘s total revenue.

The company‘s Machinery and Steel Structures division offers an extensive range of transportation systems, chemical plants, steel manufacturing machinery, cranes, material handling system and other products for vital infrastructure.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 228 Forecasts to 2015

COMPANY PROFILES

This division is involved in the manufacturing, installation, sale and repair of transportation systems, toll and fare collection machinery and other ITS equipment, petrochemical plants, flue gas desulfurization systems, flue gas CO2 recovery plants, oil and gas production plants, compressors and turbines, iron and steel manufacturing machinery, automotive products, medical systems, bridges, hydraulic gates, stacks, parking systems. MHI began full-scale manufacturing and sales of radiotherapy equipment and established a joint venture company to assess the business viability of organic electroluminescence (OEL) panels for lighting applications. For FY2010, the Machinery and Steel Structures segment accounted for revenues of US$6.2 billion (JPY542.0 billion), which is 18.10% of the company‘s total revenue.

The Mass and Medium-Lot Manufactured Machinery division comprises five divisions: General Machinery and Special Vehicles; Air-conditioning & Refrigeration Systems; Paper & Printing Machinery; Machine Tool and Industrial Machinery division. The company‘s General Machinery and Special Vehicles division engages in the manufacturing, installation, marketing and services of forklift trucks, construction machinery, earthmoving and grading machinery, medium and small-sized engines, turbochargers, agricultural machinery, tractors and special vehicles.

The Air-conditioning & Refrigeration Systems division produces automotive thermal systems and chilling systems. Whereas the Paper & Printing Machinery division supplies sheet-fed offset presses, commercial web offset presses, newspaper offset presses, corrugating and box making machines. The company‘s Machine Tool division manufactures large machine tools, gear cutting machinery, precision cutting tools, engine valves and power transmissions. The company‘s Industrial Machinery division manufactures injection molding machines, used in the production of plastic products, beverage filling and packaging machines. For FY2010, the Mass and Medium-Lot Manufactured Machinery division accounted for revenues of US$6.2 billion (JPY544.3 billion), which accounted for 18.18% of the company‘s total revenue.

The company‘s Power Systems division develops energy conservation measures, petroleum substitutes and new forms of energy and manufactures, installation, sale and repair of boilers, steam turbines, gas turbines, diesel engines, water turbines, wind turbines, SCR (DeNOx) system, marine machinery and desalination plants. It is also involved in manufacturing, installation, sale and repair of nuclear power plants and equipment, advanced reactor plants, nuclear fuel cycle plants and nuclear fuel. For FY2010, the Power Systems division accounted for revenues of US$12.2 billion (JPY1,066.0 billion), which accounted for 35.6% of the company‘s total revenue.

The Shipbuilding and Ocean Development division develops and constructs a large range of vessels and oceanic structures. MHI manufactures, installs, sells and repairs crude oil carriers, container ships, cruise ships, car ferries, LPG carriers, LNG carriers, defense vessels and offshore structures. For FY2010, the Shipbuilding & Ocean Development division accounted for revenues of US$2.6 billion (JPY230.6 billion), which is 7.70% of the total revenue of the company.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 229 Forecasts to 2015

COMPANY PROFILES

11.3 Mitsubishi Heavy Industries, Ltd. - Main Products

The company‘s key products include the following:

Table 171: Mitsubishi Heavy Industries, Ltd., Main Products

Products Shipbuilding and Ocean Development Crude oil carriers LPG carriers RO/RO ships Heavy lifters Fisheries patrol and survey vessels Survey observation and cleaning vessels Oil Recovery Ships Underwater Vehicle Various automated systems Pumps for ships Marine Engine Power Systems Fossil Fuel Power Plant: Conventional power plant GTCC (Gas Turbine Combined Cycle power plant) IGCC (Integrated coal Gasification Combined Cycle) Boilers Industrial boiler Boilers machinery Steam Turbines Industrial steam turbine Gas Turbines Pumps for thermal power plant Instrumentation and Control Flue gas Desulphurization plant Renewable Energy Power Plant: Photovoltaic Power Generation Wind Turbine Generators Geothermal power plant Water turbine plant Nuclear Power Generation: PWR Reactor Coolant System Reactor Internals Core and Fuel Reactor Vessel Steam Generator

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 230 Forecasts to 2015

COMPANY PROFILES

Table 171: Mitsubishi Heavy Industries, Ltd., Main Products

Engine Power Plant: Diesel Power Plant Gas Engine Power Plant GENERATOR SET Machinery and Steel Structures Transportation systems Toll and fare collection machinery ITS equipment Petrochemical plants Oil and gas production plants Compressors and turbines Iron and steel manufacturing machinery Automotive products Medical systems Semiconductor production equipment Other advanced equipment Aerospace Fighters Helicopters Structural parts and components of commercial transport aircraft Aero engines Missiles Torpedoes Space systems Mass and Medium-Lot Manufactured Machinery Forklift trucks Construction machinery Earthmoving and grading machinery Turbochargers Agricultural machinery Air-conditioners Automotive thermal systems Chilling systems Large machine tools Gear cutting machinery Precision cutting tools Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 231 Forecasts to 2015

COMPANY PROFILES

11.4 Mitsubishi Heavy Industries, Ltd. - History

Table 172: Mitsubishi Heavy Industries, Ltd., History

Year Event type Description In a joint venture with AREVA, Mitsubishi Materials Corporation (MMC) and Mitsubishi 2009 Contracts/Agreements Corporation (MC) established a fully-fledged nuclear fuel fabrication business. MHI separated its paper and printing machinery division and established a new 2009 Corporate Changes/Expansions company dedicated to printing and paper converting machinery operations. MHI established a joint venture in Thailand with EGAT for providing maintenance 2009 Corporate Changes/Expansions services to high-temperature components of gas turbines. MHI transferred its pulp and paper machinery business to Metso Paper to concentrate 2008 Corporate Changes/Expansions business resources into focused areas. The company established Mitsubishi Aircraft Corporation (MAC) to conduct its newly 2008 Corporate Changes/Expansions launched Mitsubishi Regional Jet business operations. 2008 New Products/Services MHI launched the Mitsubishi Regional Jet (MRJ), a next-generation regional jetliner. MHI‘s technology contract management system came into operation. This system manages a whole host of information related to joint R&D and patent application 2007 Others contracts such as data about the organizations MHI has signed intellectual property contracts with, relevant internal departments, and contract periods. MHI established a regional head office in Singapore to reorganize and expand its 2007 Corporate Changes/Expansions engine business in Asia. MHI entered into a joint venture with Shenyang Pump Co. Ltd. in China to conduct 2006 Contracts/Agreements sales and engineering relating to pumps. 2006 Corporate Changes/Expansions The company established a regional office in Dubai to the Middle East countries. Mitsubishi Heavy Industries India Precision Tools, Ltd. Is established in India to 2005 Corporate Changes/Expansions expand its production capacities for precision cutting tools. Mitsubishi Heavy Industries de Mexico, SA de CV, is established in Mexico, to expand 2004 Corporate Changes/Expansions the firms plants and large machinery business, 2004 Contracts/Agreements Hitachi and MHI integrated their air-conditioning and refrigeration operations. MHI has entered into an agreement with Harbin Turbine Company Limited, 2003 Contracts/Agreements Heilongjiang Province, China, to provide key components to Harbin Turbine for their super-critical steam turbines. MHI developed a high performance centrifugal compressor which finds application in 2003 New Products/Services gas injection equipment for oil and gas sector. The company has entered into French Nuclear power plant market in cooperation with 2002 Corporate Changes/Expansions COMEX NUCLEAIRE, a company based in France. 2001 New Products/Services MHI produced its first lifelike robotic fish, Mitsubishi Animatronics. MHI and Hitachi, Ltd. agreed to form a broad-based partnership in the area of metal 2000 Contracts/Agreements rolling mills. MHI developed the world's first technology to produce superior-grade graphite by 1999 New Products/Services microwaves. 1999 Corporate Changes/Expansions Mitsubishi Heavy Industries Australia, Pty. Ltd., is established.. MHI's automobile department became independent and Mitsubishi Motors Corporation 1970 Corporate Changes/Expansions began manufacturing and marketing automobiles. All three entities, West Japan Heavy-Industries, Ltd., Central Japan Heavy-Industries, 1964 Corporate Changes/Expansions Ltd. and East Japan Heavy-Industries, Ltd. were consolidated and the firm was reborn as MHI. MHI was divided into three entities: West Japan Heavy-Industries, Ltd., Central Japan 1950 Corporate Changes/Expansions Heavy-Industries, Ltd. and East Japan Heavy-Industries, Ltd. The firm‘s shipbuilding business turned into Mitsubishi Shipbuilding Co., Ltd., and was 1934 Corporate Changes/Expansions again launched as MHI. MHI established its position as the largest private firm in Japan, manufacturing ships, 1934 Corporate Changes/Expansions heavy machinery, airplanes, and railroad cars.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 232 Forecasts to 2015

COMPANY PROFILES

Table 172: Mitsubishi Heavy Industries, Ltd., History

Yataro Iwasaki, the founder of Mitsubishi took the lease of a Government-owned 1884 Incorporation/Establishment Nagasaki Shipyard. He named it Nagasaki Shipyard & Machinery Works, and started the shipbuilding business on a full scale. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

11.5 Mitsubishi Heavy Industries, Ltd. - SWOT Analysis

MHI is a manufacturer of heavy machinery in Japan. The company supplies to the energy, aircraft, space, ship and ocean, transportation, material handling, environment, automotive, industrial machinery, infrastructure, living and leisure, and defense industries. Its broad product portfolio allows it to fulfill the needs of various industries and offers the potential for growth and expansion. However, the global economic crisis and increasing input costs may have adverse impact on the company's business performance.

11.5.1 Mitsubishi Heavy Industries, Ltd. – Strengths

Strength - Diversified Operations MHI‘s large product range and diversified business operations offsets the risks associated with operating in any one particular business segment. A diverse product portfolio spanning various industries limits the effects of fluctuations in global economic trends alongside overall business performance. Additionally, the company‘s significant expertise in diversified markets allows it to reposition it operations in order to benefit from opportunities and growing demand in various segments.

Strength - Research and Development Activities The company‘s R&D activities develop new technologies and products and upgrade existing product offering to meet the changing needs of its customers. In the energy sector, MHI develops energy conservation measures, petroleum substitutes and new forms of energy. For the Aerospace sector, the company is planning to expand its business through participation in several development projects for new commercial aircrafts. It also helps Japan‘s space program acting as a systems administrator in launch vehicle development. Additionally, MHI increased spending in R&D activities to US$1.5 billion (JPY129,262 million) for 2010 compared to US$1.2 billion (JPY101,332 million) for 2009. Increasing emphasis on R&D adds the capabilities to introduce several new products and upgrade its existing portfolio. This helps the company to retain its clients by meeting their changing needs and procure new business.

Strength - Strong Liquidity Position MHI has improved its liquidity position during FY2010 strengthening its financial ability to support smooth operational functioning. The company is working to improve asset efficiency by reducing trade receivables and inventories alongside raising the utilization rate of its property, plant and equipment. This indicates that the company is in a strong liquidity position and is more capable of meeting its short term obligations ensuring operational efficiency.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 233 Forecasts to 2015

COMPANY PROFILES

11.5.2 Mitsubishi Heavy Industries, Ltd. – Weaknesses

Weakness - Declining Operating Margin and ROE MHI‘s operating margin decreased from 2.07% in FY2009 to 1.64% for the FY2010. The decrease in margins was due to increase in operations costs that recorded at 98.35% of total sales for 2010 as compare to 97.21% in 2009. Further, the operating margin of 1.64% was below the Construction Equipment sector average* of 8.44%. A lower than sector average* operating margin may indicate inefficient cost management or a weak pricing strategy by the company as a result the return on equity (ROE) was 1.1% at the end of FY2010. Furthermore, this may indicate that the company is not be using shareholders' money as efficiently and that it is generating low returns compared to other companies in the sector .This indicates that MHI‘s management has low focus on profitability.

Weakness - Underutilization of Resources In FY2010, the company recorded a decrease in its turnover ratios implying underutilization of resources compared to previous year. The fixed asset turnover and working capital turnover declined to 3.31 and 2.31, respectively, in FY2010 as compared to 3.82 and 2.88, respectively, in FY2009. This indicates that the company has not utilized its resources to optimum level as compare to its previous year. Lower utilization of resources mitigates the efforts for optimum results and it could also lead to increase in opportunity costs.

Weakness - Declining Market Share in Sector The company‘s sales growth has decreased from 5.38% in FY2009 to -12.88% in FY2010. As a result MHI‘s CAGR for revenue was 1.31% during 2006–2010. This was below the Construction Equipment sector average* of 17.17%. A lower than sector average* revenue CAGR may indicate that the company has underperformed and lost market share over the last four years. MHI‘s underperformance could be attributed to a weak competitive position or inferior products and services coupled with a lack of innovative products.

11.5.3 Mitsubishi Heavy Industries, Ltd. – Opportunities

Opportunity - Infrastructure Demand in Emerging Countries Increasing infrastructure expenditure across emerging countries provides opportunities for expansion. In 2010, MHI identified the Machinery & Steel Structures segment as a Growth Business due to the infrastructure investments in emerging markets that are expected to touch US$33 trillion (JPY2,898.1 trillion) through the end of next 20 years. The construction equipment market across the globe, excluding the US and Canada, is by 13% in 2011–2012. The growth is primarily led by developing economies such as China, India and Brazil. For example, the Union Minister of Roads and Transportation, Mr. Kamal Nath, announced at the inaugural section of CII's Excon 2009 that India‘s earthmoving and construction equipment industry's revenue has grown at over 40% annually in between 2004–2007, reaching US$2.3 billion (JPY202 billion) in 2007. This figure is expected to reach US$12-13 billion (JPY1,053.8-1,141.7 billion) by 2015. Additionally, MHI is planning to double production this financial year to meet demand from China and Indonesia. Such long term expenditure in infrastructure development could create increasing demand for company's products and services in all its operational markets.

Opportunity - Energy Sector Demand MHI can pursue opportunities provided by the growing trends in the renewable energy sector, especially the wind energy market. According to Energy Information Administration (EIA), 3.3 trillion kilowatt hour of new renewable power generation is projected to add to the global energy generation capacity by 2030. Of which, hydroelectric power is expected to account for 1.8 trillion kilowatt hours (54%) and energy from wind power is

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 234 Forecasts to 2015

COMPANY PROFILES

expected to account from 1.1 trillion kilowatt hours (33%). Renewable energy markets are an area of importance for the US government. To offset the pressure of emission reduction China is planning to increase its nuclear power capacity to 75 megawatts by 2020, which is eight times that of the current nine-megawatt capacity in the year 2010. As MHI already has presence in the Nuclear power sector it will benefit from these growing trends. The proposed doubling of renewable energy is expected to account for a share of 6% of the US electricity supply by the end of 2011. Wind power installed in Japan accounted for as little as 1.88 GW, about 0.3% of the electricity demand, however, it accounts for more than 10% of all energy consumption demand in Denmark and Spain. MHI has increased its focus on this sector to capitalize on the prevailing trends.

Opportunity - Rising Demand for Turbochargers MHI is currently observing an increased demand for turbochargers and it is meeting this demand by establishing a global turbocharger business network in Japan, Europe and Asia. Currently, the company is working towards doubling its production capacity for small-size turbochargers from the current 3.6 million units per annum to 6.9 million by the end of FY2011 in order to secure a 25% share of the global market. According to the company, the successful implementation of the expansion plan would make it the second largest turbocharger manufacturer in the world. The company is taking various upgrade initiatives, which include an upgrade of the factory in Sagamihara, Japan and a new production base in Thailand to assist in production and supply of major turbocharger components to the Main Plant in Sagamihara. In Europe, MHI plans to increase its final assembly capacity by 800,000 units to raise output to the level of 2.8 million units.. The successful implementation of the company‘s initiatives to meet the increasing demand for turbochargers would not only improve its financial conditions but also strengthen its current position in the market.

11.5.4 Mitsubishi Heavy Industries, Ltd. – Threats

Threat - Shortage of Skilled Labor Shortage of skilled personnel in Japan could affect the company's performance in domestic market. In addition to a prevailing shortage of skilled personnel, Negative growth in the Japanese population could pose challenges for the company. Japan recorded -0.4% natural birth increase and -0.06% in average rate of increase in the country‘s population. The average rate of increase is expected to fall further to -1.05% by 2050. Furthermore, the population of the country is ageing with median age of 49. Shortage of efficient human resource coupled with negative population growth and an ageing population might pose serious challenges for the company affecting its project deliverables.

Threat - Volatile Input Prices MHI is currently facing increases in the price of raw materials, which is driving up the cost of finished manufacture products. Volatile raw material prices could have a material impact on the operational costs of the company. The primary raw materials used in the cranes production include Iron, steel, copper and welding products. The ever increasing prices of raw materials, especially steel and copper, will put pressure on MHI‘s margins. Moreover, the Japanese government has decided to increase the wage rates from US$0.1 (JPY8.3) per hour to US$0.1 (JPY11.4) per hour by 2020. This would be achieved by increasing wages by 3% each year which will further impede the company's cost of production. MHI‘s operational costs have increased to 98.35% of total sales for FY2010 as compared to 97.21% in FY2009. Due to increase in operating cost the company has to increase it margin and which will in turn increase the competition in the markets.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 235 Forecasts to 2015

COMPANY PROFILES

Threat - Sluggish Growth in Japanese Economy The Japanese economy saw the implementation of restrictive lending conditions by financial institutions making it difficult for real estate companies to raise enough capital, which led to the deterioration of financial position of Japan‘s property developers and construction companies. As a result MHI stand observe a decrease in revenues due to unfavorable economic conditions across Japan. Slow growth in the Japanese economy and other parts of the globe has lowered the revenues of most of the company‘s business segments. In turn, consumer confidence is also being negatively affected. Conversely,, the unemployment rate in Japan has begun to increase, however, according to the International Monetary Fund; the Japanese economy is forecasted to decrease in growth from 2.4 % in 2010 to 1.8 % in 2011, which was lowered by 0.2% from its previous projection. Moreover, according to data released by Ministry of Land, Infrastructure, Transport and Tourism of Japan, construction orders fell by 25% in April 2010. Japan is MHI‘s main market, accounting for half of its total net sales. The prevailing slow market conditions and continued downturn could have a negative impact on the financial performance of the company.

11.6 Mitsubishi Heavy Industries, Ltd. – Company Information

11.6.1 Mitsubishi Heavy Industries, Ltd. - Key Competitors

The following companies are MHI‘s main competitors: IHI Corporation Studsvik AB Foster Wheeler Ltd. Japan Nuclear Fuel Limited China State Shipbuilding Corporation

11.6.2 Mitsubishi Heavy Industries, Ltd. - Key Employees

Table 173: Mitsubishi Heavy Industries, Ltd.,, Key Employees

Name Job Title Board Level Kazuo Tsukuda Chairman Non-Executive Board Hideaki Omiya President Executive Board Ichiro Fukue Director, Senior Executive Vice President Executive Board Hiroshi Kan Senior Executive Vice President, Director Executive Board Sunao Aoki Senior Executive Vice President, Director Executive Board Katsuhiko Yoshida Executive Vice President, Director Executive Board Shiro Iijima Executive Vice President, Director Executive Board Katsuhiko Yasuda Director, Executive Vice President Executive Board Akira Sawa Director, Executive Vice President Executive Board Teruaki Kawai Executive Vice President, Director Executive Board Shunichi Miyanaga Executive Vice President, Director Executive Board Yoshiaki Tsukuda Executive Vice President, Director Executive Board Yujiro Kawamoto Executive Vice President, Director Executive Board Makoto Shintani Senior Vice President Senior Management Takashi Abe Senior Vice President Senior Management Akira Hishikawa Senior Vice President Senior Management Hisashi Hara Senior Vice President Senior Management

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 236 Forecasts to 2015

COMPANY PROFILES

Table 173: Mitsubishi Heavy Industries, Ltd.,, Key Employees

Takato Nishizawa Senior Vice President Senior Management Noriaki Fuseya Senior Vice President Senior Management Takumi Saito Senior Vice President Senior Management Masafumi Wani Senior Vice President Senior Management Atsushi Maekawa Senior Vice President Senior Management Kiyoshi Yamauchi Senior Vice President Senior Management Eiji Tsuchida Senior Vice President Senior Management Shigero Masamori Senior Vice President Senior Management Shinichi Yoshida Senior Vice President Senior Management Koji Hiramoto Senior Vice President Senior Management Kazuyuki Kato Senior Vice President Senior Management Takashi Kobayashi Senior Vice President Senior Management Shigeki Iwamatsu Senior Vice President Senior Management Toshio Kodama Senior Vice President Senior Management Yukinori Horiguchi Senior Vice President Senior Management Masahiko Arihara Senior Vice President Senior Management Toshiro Yagami Senior Vice President Senior Management Yorihiko Kojima Director Non-Executive Board Yoshihiro Sakamoto Director Non-Executive Board Akihiro Wada Director Non-Executive Board Ken Watabe Senior Vice President Senior Management Takashi Sudo Senior Vice President Senior Management Hisakazu Mizutani Senior Vice President Senior Management Yoichi Kujirai Senior Vice President Senior Management Kazuo Sohma Senior Vice President Senior Management Akihiko Fujiwara Senior Vice President Senior Management Shigeto Matsumura Senior Vice President Senior Management Yasukuni Yamasaki Senior Vice President Senior Management Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 237 Forecasts to 2015

COMPANY PROFILES

12 Company Profile: Hyundai Heavy Industries Co., Ltd.

12.1 Hyundai Heavy Industries Co., Ltd. - Company Overview

Hyundai Heavy Industries Co., Ltd. (HHI) is a leading global shipbuilder, and provides its products and services to heavy industries worldwide. It manufactures and markets containerships, LNG carriers, tankers, floating units, oil and gas facilities, diesel engines, propellers, transformers, excavators, wheel loaders and other heavy industry products. HHI operates six business divisions: Shipbuilding, Offshore and Engineering, Industrial Plant and Engineering, Construction Equipment, Electro Electric Systems, and Engine and Machinery. The company has operations in Africa, Asia, North America, South America and Europe. HHI is headquartered in Ulsan, South Korea.

Table 174: Hyundai Heavy Industries Co., Ltd., Key Facts

Corporate Address 1, Junha-Dong, Ulsan, 682-792, Republic of Korea Telephone +82 52 202 2114 Fax +82 2 746 4662 URL english.hhi.co.kr Industry Energy and Utilities, Construction, Transport and Logistics, Power Ticker Symbol, Exchange 009540 (Korea Stock Exchange(KOSE)) No. of Employees 24,982 Fiscal Year End December Revenue (US$ Million) 22,871.42 Revenue (in KRW Million) 29,254,382.09 Locations China, India, Japan, Republic of Korea, Singapore, Vietnam, Belgium, Bulgaria, France, Greece, Hungary, Netherlands, Russian Federation, Angola, Nigeria, United Arab Emirates, USA Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

12.2 Hyundai Heavy Industries Co., Ltd. - Business Description

HHI is one of the world‘s leading shipbuilders. The company, along with its subsidiaries and affiliates, manufactures and markets LNG carriers, containerships, tankers, oil and gas facilities, floating units, diesel engines, excavators, propellers, transformers, wheel loaders and other heavy industry products.

The company classifies its operations into six divisions: Shipbuilding, Offshore and Engineering, Construction Equipment, Electro Electric Systems, Engine and Machinery, and Industrial Plant and Engineering.

The Shipbuilding division manufactures crude oil tankers, chemical tankers, product carriers, LNG and LPG carriers, general cargo ships, bulk carriers, passenger ships, naval and special ships. Since 1972, the shipbuilding division has manufactured and delivered 1,600 vessels to 252 ship owners in 47 countries worldwide. HHI‘s Special and Naval Shipbuilding Division (SNSD) is the Korean Navy‘s licensed national defense industrial shipbuilder and engineering consultant, and manufactures submarines, naval ships and auxiliary service vessels. During FY2009, the Shipbuilding division generated 42.6% of company‘s total revenues, and at the end of FY2009, this division had an order backlog of US$26,681 million (KRW30,777,601 million).

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 238 Forecasts to 2015

COMPANY PROFILES

The Offshore and Engineering division is specialized in the development of oil and gas fields, production and installation of large turnkey facilities for drilling work, additionally providing other engineering procurement and construction (EPC) services. The division‘s products and services include floating units, fixed platforms, pipeline and subsea facilities and offshore installation services. The division has completed 3,000,000 tons of offshore facilities and 5,100 kilometers of subsea pipelines in 49 projects for over 30 clients. It has completed 150 projects including over 100 EPCI projects for the oil and gas industry worldwide. During FY2009, the Offshore and Engineering division generated 16.2% of the company‘s total revenues. As of December 2009, this division‘s order backlog was US$9,714 million (KRW11,205,488 million).

The Engine and Machinery division manufactures marine diesel engines, propellers and crankshafts. This division‘s product base includes marine propulsion engines, crankshafts, cylinder liners, turbochargers, propellers, shafts, rudders, diesel power plants, packaged power stations, robots and robotic systems, and submerged cargo pump systems. During FY2009, the Engine and Machinery division generated 13.1% of the company‘s total revenues. At the end of FY2009, this division had an order backlog of US$5,722 million (KRW6,600,556 million).

HHI‘s Electro Electric Systems division provides turnkey solutions for power plants. These services include the design, engineering, manufacturing, installation and commissioning of electric and electronic systems to power plants, substations, locomotives, marine vessels and subways. It also manufactures and markets gas-insulated switchgears, transformers, high-voltage circuit breakers, motors and other electronic products. During FY2009, the Electric and Electronic Systems division generated revenues of US$2.4 billion (KRW2,712 billion), an increase of 40.9% over FY2008 and representing12.8% of the company‘s total turnover. As of December 31, 2009, the Electro Electric Systems division had an order backlog of US$1,839 million (KRW2,121,360 million).

The company‘s Industrial Plant and Engineering division provides project management services in engineering, procurement and construction projects. It also constructs power plants, oil and gas plants, gas processing plants, refineries and petrochemical plants, both in domestic and overseas locations. The division also produces and supplies environmental facilities, such as desulphurization and dust collection facilities, to power plants. During FY2009, the Industrial Plant and Engineering division generated 9.0% of the company‘s total revenues. At the end of FY2009, this division‘s order backlog was US$7,191 million (KRW8,295,106 million).

The Construction Equipment division manufactures heavy construction equipment such as hydraulic excavators, wheel loaders, industrial lift trucks, forklifts and skid-steer loaders. With four global operation centers in the US, Europe, India and China, the company has a production capacity of 22,000 units per year, and has a distribution network spread across 108 countries with 479 local distributors. During FY2009, the Construction Equipment division generated 5.6% of the company‘s total revenues. At the end of FY2009, this division had an order backlog of US$1,105 million (KRW1,274,662 million).

The company and its subsidiaries operate across Africa, Asia, North America, South America and Europe. The company has operations in finance and other sectors through affiliate businesses such as Hyundai Samho Heavy Industries, Hyundai Mipo Dockyard, Hyundai Venture Investment and Hyundai Futures. The company operates through subsidiaries, including Hyundai Heavy Industries Co. Nigeria, Ltd., Taishan Financial Leasing Co., Ltd., Hyundai Heavy Industries Europe NV, and Hyundai - Enova ITC.

HHI has four principal research and development (R&D) centers: the marine research, industrial research, electro mechanical research and techno design institutes. Its overseas research centers are located in China, Hungary and the US.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 239 Forecasts to 2015

COMPANY PROFILES

In May 2010 the company signed a US$600 million (KRW692,194 million) contract with Southern California Edison (SEC) in the US to provide 230 kv and 500 kv transformers for 10 years from 2010. HHI also acquired a 10% stake in Brazilian shipbuilder Offshore Services X (OSX).

12.3 Hyundai Heavy Industries Co., Ltd. - Main Products and Services

HHI‘s key products and services include:

Table 175: Hyundai Heavy Industries Co., Ltd., Main Products and Services

Products Services Crude oil tankers Design & engineering Chemical tankers Construction & trial services Product carriers Project management LNG / LPG carriers Integrated logistic support Passenger ships Combat system integration Naval and special ships Pipeline & subsea facilities Other container ships Construction of various power, oil and gas plants Floating units Fixed platforms Marine engines Turbochargers Propellers Packaged power stations Robots Transformers High-voltage circuit breakers Switchgears Motors Generators Other electric products Hydraulic excavators Wheel loaders Skid-steer loaders Forklift trucks Hydraulic machinery Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 240 Forecasts to 2015

COMPANY PROFILES

12.4 Hyundai Heavy Industries Co., Ltd. - History

Table 176: Hyundai Heavy Industries Co., Ltd., History

Year Event type Description 2009 New Products/Services The company released its new 21-ton wheel excavator, Robex 210W. The company acquired a controlling stake of 50% and one share in Hyundai 2009 Acquisitions/Mergers/Takeovers Corporation. The company agreed to acquire a 67.6% stake in Khorol Zerno LLC, an agricultural 2009 Acquisitions/Mergers/Takeovers management company, for around US$6.5 million (KRW7,498.0 million). The company was awarded the International Forum Design Award and Pin-Up Design 2009 Corporate Awards Awards 2009 for the HiMSEN Engine and Excavator, designed by HHI‘s Techno Design Institute. The company signed a US$250 million (KRW288,385 million) contract with South 2009 Contracts/Agreements Africa's electricity utility, Eskom Holdings Ltd., to supply high-voltage transformers for ten years. The company was honored with the President's Award for Labor Relations Grand Prix 2009 Corporate Awards of 2009 from the Ministry of Labor. The company was honored with the 2009 Labor-Management Culture Award by the 2009 Corporate Awards Korean Ministry of Labor and Korea Labor Foundation. The company's Industrial Plant and Engineering Division was awarded a U$$0.1 2009 Contracts/Agreements billion (KRW 66 billion) contract for a natural gas pipeline by Korea National Oil Corporation. 2008 Corporate Changes/Expansions The company's Construction Equipment division opened a facility in Moscow, Russia. 2008 Acquisitions/Mergers/Takeovers HHI acquired stakes in two CJ Group financial units. 2008 New Products/Services The company developed the Hi-Mate remote management system for excavators. The company‘s subsidiary Hyundai Construction Equipment India Pvt Ltd. established 2008 Corporate Changes/Expansions a plant in India to manufacture construction equipment, principally excavators. HHI‘s Electro Electric Systems acquired Ideal Electric, a US-based rotating machinery 2007 Acquisitions/Mergers/Takeovers manufacturing company. HHI signed a memorandum of understanding with Gunsan to build a ship block 2007 Contracts/Agreements factory. The company developed the first Korean dual-fuel diesel electric propulsion system for 2007 New Products/Services LNG carriers. The company established Wartsila Hyundai Engines, Ltd., a 50:50 joint venture with 2007 Acquisitions/Mergers/Takeovers the Finland-based Wartsila Corporation. The Construction and Equipment division opened a parts and service center in 2006 Corporate Changes/Expansions Korea‘s North Chungcheong Province. HHI announced the establishment of a holding company in Shanghai, China, with 2006 Corporate Changes/Expansions capital of US$30 million (KRW34,606.2 million), to focus on the local market. The company signed an agreement with Jiangsu Shagan Group Cp., Ltd. to procure 2006 Contracts/Agreements 180,000 tons of steel plates annually for shipbuilding. 2005 Corporate Awards The company‘s electric motor received an IECEx International Certification. HHI developed Korea‘s first marine hydraulic pump, and also introduced the new 2005 New Products/Services HBR-7 series of fork-lifts. The company entered into a strategic supply agreement with Thomas Equipment Ltd. 2005 Contracts/Agreements to distribute steer skid loaders. Korea‘s Ministry of Commerce, Industry and Energy selected two company products, 2004 Corporate Awards its synchronous generators and four-stroke diesel engines, as World-Class Products for 2004. 2004 New Products/Services HHI launched series of new forklift models equipped with EPA-certified Tier-2 engines. 2003 Corporate Changes/Expansions The company formed a third joint venture in China. 2002 New Products/Services HHI developed the world‘s largest propeller, with a 9.1m diameter and 29m

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 241 Forecasts to 2015

COMPANY PROFILES

Table 176: Hyundai Heavy Industries Co., Ltd., History circumference. HHI delivered the world‘s largest floating production storage and offloading (FPSO) 2001 New Products/Services unit. 2000 New Products/Services The company manufactured a marine diesel engine, the first of its kind in Korea. 1999 Stock Listings/IPO HHI was listed on the Korean Stock Exchange with ticker 009540. 1989 Commercial Operation HHI delivered the world‘s largest 40,000 ton jacket to Exxon Co., US. 1989 Acquisitions/Mergers/Takeovers The company merged with Hyundai Engines Co., Ltd. 1985 Corporate Awards HHI was selected as a world-class shipbuilder by Japan‘s Diamond Magazine. 1984 Corporate Changes/Expansions The company founded the Hyundai Maritime Research Institute. 1983 Corporate Changes/Expansions HHI established the Hyundai Industrial Research Institute (HIRI). The company's name was changed from Hyundai Shipbuilding & Heavy Industry Co., 1978 Corporate Changes/Expansions Ltd. to Hyundai Heavy Industries Co., Ltd. 1977 Others The company acquired ISO 14001 certification. Hyundai Heavy Industries Co., Ltd. was originally established as Hyundai Shipbuilding 1973 Incorporation/Establishment & Heavy Industry Co., Ltd. (HHI). Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

12.5 Hyundai Heavy Industries Co., Ltd. - SWOT Analysis

HHI is one of the world‘s leading heavy industry companies, providing a large variety of products and services. A strong emphasis on R&D, market leadership and diversified business operations are the key strengths of the company, although lawsuits remain an area of concern. Risks associated with rising raw material prices and a decline in the shipbuilding market may limit the firm‘s growth plans, but the expansion in the wind turbine market and development of advanced technologies may provide growth opportunities for the company.

12.5.1 Hyundai Heavy Industries Co., Ltd. – Strengths

Strength - Strong R&D HHI‘s focus on R&D activities enhances the company‘s offerings, enabling it to serve a diversified customer base. The company‘s R&D division creates innovative products and market-driven technologies through four research institutes in Korea, the US, Hungary and China. Its research organization has over 1,400 projects in progress at any given time, and in 2009, HHI invested US$0.1 billion (KRW164 billion) towards its R&D activities. This strong focus on R&D enables the company to offer innovative products, maintain its competitive position and achieve a top-five global market share across 25 product categories.

Strength - Diversified Business Operations The company‘s diversified business operations help it to serve a diversified customer base, ensuring strong revenue performance. HHI operates through six divisions: Shipbuilding, Industrial Plant and Engineering, Engine and Machinery, Electro Electric Systems, and Construction Equipment. These diversified operating divisions help the company to serve a broad customer base, enabling it to maintain its leading position in the market.

Strength - Industry Leadership The company‘s industry leadership position helps it to attract a large customer base. HHI is one of the world‘s leading heavy industry companies. The shipbuilding division is a world leader in shipbuilding with a market share of 15%, and its Offshore & Engineering division operates the world‘s largest offshore yard, with 215 acres. The company‘s Engine & Machine division is the world‘s largest marine diesel engine builder with a

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 242 Forecasts to 2015

COMPANY PROFILES

35% market share in 2009, and the Electro Electric Systems Division is the world‘s largest manufacturer of marine generators with a market share of 45% in 2009. The company‘s leadership position in various markets helps it to attract and serve a substantial customer base, giving the company a significant competitive edge.

12.5.2 Hyundai Heavy Industries Co., Ltd. – Weaknesses

Weakness - Lawsuits The company has been involved in various legal proceedings, claims and governmental investigations over the past few years, which may result in penalties and fines. The major proceedings against the company include four legal actions filed by its employees for damages from an industrial disaster, amounting to US$0.2 million (KRW242 million), and a US$17.5 million (KRW19,415 million) penalty imposed by the Korean Fair Trade Commission. This involvement in various legal proceedings may have a negative impact on the company‘s brand image.

12.5.3 Hyundai Heavy Industries Co., Ltd. – Opportunities

Opportunity - Strategic Expansion in Wind Market The company is focusing on expanding its operations in the wind turbine market, which should enable it to tap the growing opportunities in wind power. In April 2010, the company signed an agreement with Datang Shandong Power Generation Co., Ltd. and Weihai City Government to construct a 600MW capacity joint wind turbine manufacturing plant, which will be completed by the end of 2010, and operational from January 2011. The plant is 80% owned by Hyundai and 20% by Datang Shandong Power Generation. In January 2010, the company signed a memorandum of understanding (MoU) with Yunus Brothers for the Yuna Project to build a wind farm with a 50MW capacity at Sindh in Southern Pakistan. This project is expected to generate 15 MW of electricity and supply over 60,000 households. In March 2010, HHI completed a US$0.1 billion (KRW105.7 billion) wind turbine manufacturing plant at Gunsan Industrial Complex, Jeollabuk-do, Korea. This plant is currently producing 1.65MW wind turbines with annual capacity of 600MW, and the company is focusing on expanding the plant‘s wind turbine lines to produce 2MW onshore and 5MW offshore wind turbines, as well as expanding its annual manufacturing capacity to 800MW by 2013. In 2009 the company took orders for six 1.65MW wind turbines from Wave Wind in USA, and six wind turbines from Taebak in Korea. With a strong focus on expanding wind turbine manufacturing plants in rapidly emerging markets such as China and Korea, the company should strengthen its position these markets.

Opportunity - Developing Advanced Technologies The company‘s focus on developing advanced technologies may help it to further strengthen its position in the market. In January 2009, the company completed its expansion project at Dock No. 1, creating the world‘s first T-shaped dry dock. This will double the dock‘s annual turnover from four 10,000 TEU-class containerships to eight. In September 2008, HHI launched a new 80-ton excavator, which is equipped with a powerful, newly developed tier-3 engine, giving the excavator increased operating capabilities with lower emissions. It also upgraded its 7-series LPG forklifts with a powerful 4.3-liter GM engine for improved operator ergonomics and performance. Its LPG forklift range now includes nine models with load capacities ranging from 1,500 kg to 4,500 kg. The company has also developed the EcoBallast water treatment system for ships, which protects the marine environment from the transfer of foreign species via ballast water. These advancements are expected to increase the company‘s market shares across the industries in which it operates.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 243 Forecasts to 2015

COMPANY PROFILES

Opportunity - Diversifying Business and Exploring Markets The company is diversifying into the photovoltaic and wind power generation plant businesses. HHI has initiated a US$0.3 billion (KRW300 billion) investment program to increase its cell manufacturing capacity almost eleven-fold to 330 MW from 2007–2010. The company also aims to enter the high-voltage transformer and gas-insulated switchgear markets in India, and is on the verge of entering the US and Middle Eastern high-voltage transformer markets. In the solar power systems field, the company is exploring new business opportunities across Italy, Greece, France, the Czech Republic and other regional markets. This strategy is being carried out to reduce the risk of its business portfolio.

12.5.4 Hyundai Heavy Industries Co., Ltd. – Threats

Threat - Rising Raw Material Prices The company‘s operations are significantly affected by the high volatility in raw material prices. Steel is a key raw material used in various company activities, and the prices of raw materials account for a significant share of the company's total costs. The price of steel has been highly volatile in the recent years; the price of cold rolled steel coils increased from US$603 (KRW695,584) per ton in August 2007 to US$1,093 (1,260,819) per ton in August 2008, representing an increase of 81.2%, before falling to US$637 (KRW734,805) per ton in February 2009. This level of volatility makes it difficult for the company to adjust the price increments in its project cost management, and there may be significant deviation in the expected and achieved profit margins for larger long-term projects.

Threat - Declining Shipping Industry The declining shipping industry could pose a challenge for the company. According to World Shipping Council (WSC), the shipping industry was still facing hard times in 2010. Christopher Koch, the President and Chief Executive Officer of WSC, announced that shipping industry continued to face the most difficult times since containerization was invented in 1956. He also stated that in 2008, total containership capacity increased by 13.2%, with 9.9% forecast to be added in 2010, 10% in 2011, and 5.3% in 2012. This scenario could have a negative effect on the shipbuilding division, which generates a large proportion of the company‘s revenues.

12.6 Hyundai Heavy Industries Co., Ltd. – Company Information

12.6.1 Hyundai Heavy Industries Co., Ltd. - Key Competitors

The following companies are HHI‘s main competitors:

STX Offshore & Shipbuilding Aker Solutions ASA

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 244 Forecasts to 2015

COMPANY PROFILES

12.6.2 Hyundai Heavy Industries Co., Ltd. - Key Employees

Table 177: Hyundai Heavy Industries Co., Ltd.,, Key Employees

Name Job Title Board Level Min Keh-sik Chairman, Chief Executive Officer Executive Board Lee Jai-seong Chief Executive Officer, President Senior Management Oh Byung-wook President Senior Management Park Young-june Director Non-Executive Board Lee Man-woo Director Non-Executive Board Lee Jae-kyu Director Non-Executive Board Song Jung-hoon Director Non-Executive Board Senior Executive Vice President – Shipbuilding Kim Oi-hyun Division, Chief Operating Officer – Shipbuilding Senior Management Division Vice President – Industrial Plant and Engineering Chun In-soo Division, Chief Operating Officer – Industrial Plant Senior Management and Engineering Division Vice President – Engine and Machinery Division, Yoo Seung-nam Chief Operating Officer – Engine and Machinery Senior Management Division Executive Vice President – Electro Electric systems Kim Kweon-tae Division, Chief Operating Officer – Electro Electric Senior Management Systems Division Vice President – Constrcution Equipment Division, Choe Byeong-ku Chief Operating Officer – Constrcution Equipment Senior Management Division Executive Vice President – R&D Division, Chief Lee Choong-dong Senior Management Operating Officer – R&D Division Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 245 Forecasts to 2015

COMPANY PROFILES

13 Company Profile: Komatsu Ltd.

13.1 Komatsu Ltd. – Company Overview

Komatsu Ltd. (Komatsu) is an equipment manufacturer involved in the development, manufacture, marketing and sale of industrial products and services. The company‘s product portfolio includes excavating equipment, loading equipment, grading and roadbed preparation equipment, hauling equipment, forestry equipment, tunneling machines, recycling equipment, engines and components. These products are marketed to the construction, mining, utility and industrial sectors under the Komatsu brand name. In addition to this the company holds business interests in industrial machinery and vehicles, logistics and electronics. The company operates globally with plants located in Japan, the US, Germany, the UK, Sweden, Canada, Indonesia, Brazil, Italy, China and Thailand. Komatsu is headquartered in Tokyo, Japan.

Table 178: Komatsu Ltd., Key Facts

Corporate Address 2-3-6 Akasaka, Minato-ku, 107-8414, Japan Telephone +81 3 5561 2616 Fax +81 3 3505 9662 URL www.komatsu.com Industry Construction Ticker Symbol, Exchange 6301 (The Tokyo Stock Exchange) No. of Employees 38,518 Fiscal Year End March Revenue (US$ Million) 19,304.33 Revenue (in JPY Million) 1,431,564.00 Locations China, India, Indonesia, Japan, Thailand, Czech Republic, Germany, Italy, Norway, Russian Federation, Sweden, UK, Canada, USA, Brazil Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

13.2 Komatsu Ltd. – Business Description

Komatsu is a manufacturer of equipment for the construction, mining and utilities and forestry industries. It also manufactures and distributes industrial machinery and vehicles. The company operates through 143 consolidated subsidiaries, owned either directly and indirectly under its two business divisions and the management division.

The company‘s operating divisions are the Construction, Mining and Utility Equipment division and the Industrial Machinery and Others division. The Construction, Mining and Utility Equipment division offers a range of products used for excavation, loading, grading and roadbed preparation, hauling, tunneling, forestry and recycling. The product portfolio includes hydraulic excavators, mini excavators, backhoe loaders, wheel loaders, mini-wheel loaders, skid-steer loaders, bulldozers, motor graders, vibratory rollers and off-highway dump trucks.It offers harvesters, forwarders and feller-bunchers for forestry purposes. The company also supplies industrial vehicles, engines and components, casting products and products for logistics services. These product lines comprise railroad maintenance equipment, diesel engines, diesel generator sets, hydraulic equipment, steel castings and iron castings products. The operating subsidiaries in the division include Komatsu Utility Co., Ltd. and Komatsu America Corp. This division accounted for 89% of total company revenues in FY2010.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 246 Forecasts to 2015

COMPANY PROFILES

In the Industrial Machinery and Others division, the company offers metal forging and stamping presses, sheet metal machines, machine tools, defense systems and temperature-control equipment. This division accounted for 11% of total company revenues in FY2010.

Geographically the company operates in six regions: Japan, the Americas, Europe and CIS, China, Asia (excluding Japan and China) and Oceania, and Middle East and Africa. In FY2010, Japan accounted for 18% of total company revenues, with the Americas accounting for 24.12%, Europe and CIS 9.6%, China 19.27%, Asia and Oceania 22.22% and Middle East and Africa 6.74%.

In June 2010, Komatsu completed the construction of a new Komatsu Manufacturing Rus, LLC assembly plant, Komatsu's first construction and mining equipment assembly plant in Russia. In 2010, the company developed diesel engine technology which is compliant with new emission regulations in Japan, North America and Europe. Komatsu also established a joint venture with Bangkok Motor Works Co., Ltd. in Thailand. Komatsu planned to acquire a 40% share of Bangkok Komatsu Sales Co., Ltd. through its wholly owned subsidiary, Komatsu Asia & Pacific Pte Ltd.

13.3 Komatsu Ltd. – Main Products and Brands

The company‘s key products and brands include:

Table 179: Komatsu Ltd., Main Products & Brands

Products Brands Articulated dump trucks Komatsu Backhoe loaders Galeo Bulldozers Linde Casting products Zenoah Crankshaft millers Diesel engines Dump trucks Excimer lasers Feller-bunchers Fine plasma cutting machines Forklift trucks Forwarders Harvesters Hydraulic equipment Hydraulic excavators Laser cutting machines Machining centers Metal forging and stamping presses Mini hydraulic excavators Mini wheel loaders Mobile crushers Mobile screens Mobile soil stabilizers

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 247 Forecasts to 2015

COMPANY PROFILES

Table 179: Komatsu Ltd., Main Products & Brands

Mobile tub grinders Motor graders Packing and transport Prefabricated commercial-use structures Press brakes Shears Shield machines Skid-steer loaders Slag handling Small-diameter pipe jacking machines Temperature-control equipment Thermoelectric modules Transfer machines Tunnel boring machines Wheel loaders Wire saws Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

13.4 Komatsu Ltd. – History

Table 180: Komatsu Ltd., History

Year Event type Description Komatsu decided to shut down its Mooka plant in the Construction, Mining and Utility 2009 Others Equipment division, and the Komatsu plant in the Industrial Machinery and Others division, both located in Japan, and transfer their production capacity to other plants. The company introduced high-performance thermoelectric generation modules, and 2009 New Products/Services also developed convex dot formation methods for its chip manufacturing unit. The company established a joint venture with Bangkok Motor Works Co., Ltd. in 2009 Acquisitions/Mergers/Takeovers Thailand. It acquired 40% of the shares of Bangkok Komatsu Sales Co., Ltd through its wholly owned subsidiary, Komatsu Asia & Pacific Pte Ltd. Komatsu acquired Red Australia Equipment Pty Ltd., a distributor of forklift trucks in 2009 Acquisitions/Mergers/Takeovers Australia. 2008 Corporate Changes/Expansions Komatsu restructured the Japanese operations of subsidiary Komatsu Utility Co., Ltd. The company introduced the world's first hydraulic excavator for the construction 2008 New Products/Services sector. 2007 Incorporation/Establishment The company founded Komatsu Undercarriage China Corp. in China. The construction of three new plants at Ibaraki and Kanazawa in Japan and Chennai 2007 Corporate Changes/Expansions in India was completed. 2006 Acquisitions/Mergers/Takeovers The company sold 51% of Komatsu Electronic Metal's stock to Sumco Corp. The company founded Komatsu Industries (Shanghai) Ltd. in China as a sales 2004 Incorporation/Establishment company for industrial machineries. 2002 Acquisitions/Mergers/Takeovers The company founded Komatsu Italy SpA. 2000 Incorporation/Establishment The company founded Gigaphoton Inc., a joint venture with Ushio Inc. The company established Komatsu Cummins Chile Ltda., a holding company for 1999 Incorporation/Establishment construction and mining equipment sales distributors in Chile, as a joint venture with Cummins Engine.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 248 Forecasts to 2015

COMPANY PROFILES

Table 180: Komatsu Ltd., History

The company established Komatsu Asia & Pacific Pte. Ltd. in Singapore as a 1996 Incorporation/Establishment supervisory company for the Asia Pacific region. The company established Komatsu Shantui Construction Machinery Co., Ltd. in 1995 Incorporation/Establishment China. The company began the shipment of D41 medium-sized bulldozers manufactured by 1995 New Products/Services Komatsu do Brasil Ltda. The company launched its new corporate brand logotype. It also established NS 1991 Incorporation/Establishment Komatsu Pty. Ltd., in Australia. 1988 Incorporation/Establishment The company established the Komatsu Dresser Company in the US. 1986 Incorporation/Establishment The company established Komatsu Industries Europe GmbH. in Germany. 1985 Incorporation/Establishment The company established Komatsu UK Ltd. in the UK. The company established Komatsu America Manufacturing Corp. and Komatsu 1985 Incorporation/Establishment America Industries LLC in the US. 1979 Incorporation/Establishment The company launched Komatsu Australia Pty Ltd. in Australia. 1971 Incorporation/Establishment The company launched Komatsu Singapore Pte. Ltd. in Singapore. 1970 Incorporation/Establishment The company launched Komatsu America Corp. in the US. 1951 Others The company moved its head office from Ishikawa to Tokyo. 1941 New Products/Services The company began production of large hydraulic presses. Komatsu Iron Works was separated from Takeuchi Mining Co. and was established 1921 Incorporation/Establishment as Komatsu Ltd. Takeuchi Mining Industry established Komatsu Iron to manufacture machine tools and 1917 Incorporation/Establishment mining equipment. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

13.5 Komatsu Ltd. – SWOT Analysis

Komatsu develops, manufactures, markets and sells industrial products and services. The company has a diversified portfolio of equipment and machines catering to the construction, mining, utilities and industrial sectors. Komatsu has presence across the value chain in the construction equipment sector, and has a strong research focus and presence in developing economies in the Asia-Pacific region. The company faces challenges from increased regulatory requirements and volatile input prices which could hamper performance and profitability.

13.5.1 Komatsu Ltd. – Strengths

Strength - Strong R&D Initiatives Komatsu has a strong R&D program, which covers areas including information technology, management technology, control technology, artificial intelligence and environmentally friendly and energy-efficient equipment. In 2009, the company developed the world‘s first hydraulic excavator, with 25% lower fuel consumption than previous models. It has achieved reductions in NOx and CO2 emission across its product range, and in 2010 it developed a new diesel engine technology compliant with Euro 5 and Euro 6 regulations. Komatsu spent US$529.5 million (JPY46,449 million) in FY2010 and US$612.6 million (JPY53,736 million) in FY2009 on R&D. This strong R&D focus enables the company to offer innovative products and maintain a leading competitive position.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 249 Forecasts to 2015

COMPANY PROFILES

Strength - Market Leading Position The company holds a leading position in the construction, mining and utilities machinery sectors worldwide. As of June 2010, the company had 205 distributors in 148 countries, principally operating through sales subsidiaries and affiliates located in the US, Brazil, Chile, Belgium, Germany, France, Italy, Sweden, Russia, China, Singapore, Indonesia, India, Australia, the United Arab Emirates and South Africa. In FY2010, Japan accounted for 18% of total company revenues, with the Americas accounting for 24.12%, Europe and CIS 9.6%, China 19.27%, Asia and Oceania 22.22% and Middle East and Africa 6.74%. To increase its presence in Asia, the company established a joint venture with Bangkok Motor Works Co., Ltd. in Thailand, acquiring 40% of the shares of Bangkok Komatsu Sales Co., Ltd. through its wholly owned subsidiary, Komatsu Asia & Pacific Pte Ltd. In 2010, Komatsu constructed its first construction and mining equipment assembly plant in Russia. These expansion initiatives increase the company‘s market access and growth prospects.

Strength - Presence across Equipment Industry Value Chain Komatsu is a global manufacturer and distributor of a range of equipment and machinery for the construction, mining and industrial sectors. The company produces several major equipment components internally, reducing its dependency on third parties for the delivery of important components. Komatsu‘s domestic and international sales and distribution network consists of sales subsidiaries, affiliates, independent distributors and sales partners, and the company principally provides support services to customers through its distributors and dealers. Diversified modes of distribution enable the company to access end customers effectively and mitigates the risks associated with dependence on few means of distribution. This presence across the value chain gives the company a competitive edge.

13.5.2 Komatsu Ltd. – Weaknesses

Weakness - Declining Market Share in Sector The company's revenue declined at a CARC of -2.93% during 2006–2010. This was below the construction equipment sector average of 17.17%. The company's underperformance could be attributed to a weak competitive position or inferior products and services.

Weakness - Declining Operating Margin and Low ROE The company's operating margin decreased from 7.51% in FY2009 to 4.68% in FY2010. This was below the construction equipment sector average of 8.44%. A below-average operating margin may indicate issues with the company‘s cost management or pricing strategy. The company‘s operating margin fell 284 basis points over 2009, which may suggest that the management has a low focus on profitability. The company's return on equity (ROE) was 4.0% at the end of FY2010, below the construction equipment sector average of 11.7%. A below-average ROE may indicate that the company is not using its shareholders' money as efficiently as other companies in the sector, and that it is generating relatively low returns.

Weakness - Limited Liquidity Position The company's current ratio was 1.62 at the end of FY2010. This was below the construction equipment sector average of 1.92. A below-average current ratio indicates that the company is in a weaker financial position than other companies in the sector.

Weakness - Underutilization of Resources In FY2010, the company recorded a decrease in its turnover ratios, implying underutilization of resources compared to the previous year. The inventory ratio and declined from 2.97 in FY2009 to 2.77 in FY2010, while working capital turnover declined from 5.45 to 3.59. The capital employed turnover ratio declined to 1.71 in

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 250 Forecasts to 2015

COMPANY PROFILES

FY2010 from 2.48 in FY2009. This underutilization of resources could lead to an increase in opportunity costs, and affect the company‘s growth prospects and profitability.

13.5.3 Komatsu Ltd. – Opportunities

Opportunity - Global Infrastructure Spending Increasing global infrastructure spending provides substantial opportunities for the company to expand revenue. Several governments have initiated investment programs to boost their economies following periods of low and negative growth, with infrastructure spending a focal point of these programs. This long-term expenditure in infrastructure development could create increasing demand for company's products and services in all its operations markets.

Opportunity - Increasing demand for hybrid hydraulic excavators During 2004–2009, worldwide excavator sales grew by around 250%, and the development of infrastructure in developing regions is expected to drive demand further. Anticipating future market growth for hybrid hydraulic excavators in Japan and overseas, Komatsu expanded its production capacity of electric motors and other key components for hybrid hydraulic excavators at its Shonan Plant in Kanagawa Prefecture, Japan. Sales of crawler cranes are also expected to grow, for use in construction of the expanding energy market.

Opportunity - Sustainable Products Increasing environmental concern has led to changes in standards governing emissions and waste disposal. Pressure groups and government bodies have increased pressure on construction companies to reduce pollution and conform to environmental regulations, and the EU has agreed to reduce its emission levels by 20% by 2020. Similar initiatives have been taken by governments worldwide. These developments will create demand for equipment and machines that comply with and the new standards and regulations, and the company has already initiated several developments and technological advancements to decrease the environmental impact of its products. For instance, in 2010 the company developed diesel engine technology which is compliant with new emission regulations in Japan, North America and Europe. The technology will reduce emissions of nitrogen oxides and particulate matter, and improve fuel economy. Technological advancements such as these could put the company in a position to take advantage of the growing green market.

13.5.4 Komatsu Ltd. – Threats

Threat - Stringent Environmental Regulations The company‘s operations are subject to various international, federal, state and local environmental laws and regulations which are subject to change and stringent implementation. European emission standards such as the Euro 4 and Euro 5 regulations define the acceptable limits for exhaust emissions of new vehicles sold in EU member states. European regulations consist of phases of increasingly stringent standards, and in 2005, China started enacting phased emissions regulations similar to those in Europe. In the US market, the California Zero Emissions Vehicle (ZEV) regulations have been in place since 2005, and ZEV regulations have also been implemented in the states of Maine, Massachusetts, New Jersey, New York and Vermont. Stricter emissions standards could force the company to redesign its vehicles, increasing its operating costs, and non- compliance could result in fines and penalties.

Threat - Downturn in the Japanese economy A downturn in the Japanese economy has decreased the revenues of most of the company‘s divisions, and any further slowdown in the economy could have a serious negative effect on the company‘s operations. This

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 251 Forecasts to 2015

COMPANY PROFILES

may lead to financial constraints and hinder the company‘s growth. According to the International Monetary Fund, Japanese economic growth is forecast to decline from 2.4% in 2010 to 1.8% in 2011. The Japanese economy is also forecast to be affected by decreasing falling working-age population. These factors could pose serious challenges for the company.

Threat - Currency Fluctuation Risk The company‘s revenue is affected by currency fluctuations. The Japanese yen has appreciated against major currencies, which is a key factor in an annual decline of the company‘s consolidated net sales of 29.2% to US$16,319.8 million (JPY1,431,564 million). Currency fluctuations caused profits in the construction, mining and utility equipment division to register an annual decline of US$0.4 billion (JPY34.9 billion) in FY2010.

Threat - Volatile Raw Material Prices The company recorded an increase in operating costs for FY2009, resulting in reduced profit margins. The increase in operational costs is primarily due to highly volatile input costs, especially in parts, raw materials and material components such as steel. Steel prices are largely affected by the price of oil, which has been highly volatile for several years, particularly from 2008 when it set record highs during the early part of the year before reaching a high of over US$147 (JPY12,909.5) per barrel in July. It then fell to around US$90 per barrel in early September, 2008, and dropped lower still to US$74 (JPY6,498.7) at end of August, 2010. This volatility was reflected in steel prices across the globe; the London Metal Exchange registered steel billet prices in the Mediterranean region of over US$1,000 (JPY87,820) per tonne in June 2008, before falling by the end of the year as demand from the construction industry fell, along with fuel prices. It is difficult for the company to pass the effect of volatile input costs on to customers on real-time basis, and high input cost volatility makes pricing difficult; if company absorbs any cost increases costs, its margins could be affected.

13.6 Komatsu Ltd. – Company Information

13.6.1 Komatsu Ltd. – Key Competitors

The following companies are Komatsu‘s main competitors:

Tadano Ltd. Nikko Co., Ltd. Carrier Corporation Johnson Controls, Inc.

13.6.2 Komatsu Ltd. – Key Employees

Table 181: Komatsu Ltd.,, Key Employees

Name Job Title Board Level Masahiro Sakane Chairman Executive Board Kunio Noji Chief Executive Officer, President, Director Executive Board Yoshinori Komamura Director, Executive Vice President Executive Board President – Industrial Machinery General Head Yasuo Suzuki Executive Board Quarters Kenji Kinoshita Chief Financial Officer Executive Board Masao Fuchigami President – Research Division Executive Board Masao Fuchigami President – Research Division Senior Management

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 252 Forecasts to 2015

COMPANY PROFILES

President – Overseas Marketing, Construction & Taizo Kayata Senior Management Mining Nobukazu Kotake President – Development Division Senior Management Susumu Yamanaka President – Defense Systems Division Senior Management Masakatsu Hioki Senior Executive Officer Senior Management Tetsuji Ohashi President – Production Division Executive Board Kouichi Ikeda Director Non-Executive Board Hiroyuki Horii Vice President – Industrial Machinery Division Senior Management Shinichiro Komiya President – Japanese Domestic Marketing Senior Management Fusao Seki General Manager – CSR Senior Management Kazuhiko Iwata President – Global Mining Business Division Senior Management Mikio Fujitsuka General Manager – Corporate Planning Senior Management Fujitoshi Takamura President – Development Division Senior Management Noriyuki Sudo President – Rental and Used Equipment Business Senior Management Yoshisada Takahashi Vice President – Production Division Senior Management Tadashi Okada Vice President – Industrial Machinery Division Senior Management Masahiro Uegaki President – Procurement Division Senior Management Kazunori Kuromoto President – ICT Business Division Senior Management Mitsuru Ueno President – Engines Business Division Senior Management Kikuo Ejima President – Research Division Senior Management Hidetaka Kita President – Product Support Division Senior Management Noboru Sato President – Overseas Marketing Division Senior Management Kensuke Hotta Executive Board Noriaki Kano Director – Professor Emeritus Executive Board Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 253 Forecasts to 2015

COMPANY PROFILES

14 Company Profile: Hitachi Construction Machinery Co., Ltd.

14.1 Hitachi Construction Machinery Co., Ltd. - Company Overview

Hitachi Construction Machinery Co., Ltd. (HCM) is a leading construction equipment manufacturer and supplier. It develops, manufactures and supplies excavators, wheel loaders, off-road dump trucks, tunnel boring machines and other products. Operative along with its subsidiaries and other affiliates, HCM has manufacturing facilities in Europe, the US and Asia. The company‘s products are marketed worldwide. It is headquartered in Tokyo, Japan.

Table 182: Hitachi Construction Machinery Co., Ltd., Key Facts

Corporate Address 2-5-1 Koraku, Bunkyo-ku, , 112-8563, Japan Telephone + 81 3 38308064 Fax N/A URL www.hitachi-c-m.com Industry Construction, Power Ticker Symbol, Exchange 6305 (The Tokyo Stock Exchange) No. of Employees 19,528 Fiscal Year End March Revenue (US$ Million) 7,105.58 Revenue (in JPY Million) 605,788.00 Locations Australia, China, India, Indonesia, Japan, Malaysia, Mongolia, New Zealand, Republic of Korea, Singapore, Taiwan, Thailand, Vietnam, France, Germany, Italy, Netherlands, Russian Federation, Spain, Turkey, United Kingdom, Egypt, Ethiopia, Israel, Republic of the Congo, South Africa, Sudan, United Arab Emirates, Canada, United States, Mexico Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

14.2 Hitachi Construction Machinery Co., Ltd. - Business Description

HCM develops, manufactures and supplies excavators, wheel loaders, off-road dump trucks, tunnel boring machines and other products. It is the holding company of the Hitachi group, which consists of 62 subsidiaries and 20 affiliates. The company has manufacturing facilities located across China, India, Indonesia, the US, Canada, the Netherlands and France. The company has segregated its operations into two reportable segments. These include Construction Machinery and Industrial Vehicles.

In the Construction Machinery segment, the company manufactures and supplies a range of excavators. The products range from medium-sized and mini excavators to the 780-ton ultra-large excavators. The firm has manufacturing facilities in Europe, the US and Asia. HCM also manufactures and supplies wheel loaders, off- road dump trucks and tunnel boring machines. These products are used for digging, loading, carrying, breaking, grabbing, cutting, crushing and screening. HCM also provides certified used equipment and attachments through its network of 150 dealers worldwide. In addition, it provides spare parts such as hydraulic oils, hydraulic filters, high pressure hoses, ground engaging tools and remanufacturing components. HCM also provides after sales service and diagnostic tools and technical training in this segment. Recently, HCM launched the ZX U-3 mini-excavator with an ultra-short tail swing and expanded the EX-6 series of ultra- large hydraulic excavators. In 2009 the company launched the ZAXIS-3G series of 30t class hydraulic excavators in China. Demand for the company‘s products is increasing particularly rapidly in emerging economies. For FY2010, the segment accounted for 91.14% of the total company‘s revenues.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 254 Forecasts to 2015

COMPANY PROFILES

In the Industrial Vehicles segment, the company operates in association with TCM Corporation (TCM). It provides a range of compact wheel loaders and wheel loaders, rigid dump trucks, articulated dump trucks, truck mounted screen and truck mounted recycle equipment. The company manufactures vehicles such as electric-drive forklifts in Japan. To meet emission control regulations and to build business in emerging markets the company has launched the ‗C-1‘ Series vehicle in China. The segment accounted for 8.85% of the total revenues generated for FY2010.

In terms of geography, the company has segregated its operations across five segments: Japan, Asia, Europe, the Americas and Other. In FY2010, Japan accounted for 40% of the company‘s total revenues, Asia for 30.99%, Europe for 12.57%, the Americas for 3.72% and Other for 12.60%.

In June 2010 KCM Corporation and HCM reached an agreement under which HCM will acquire an equity stake in KCM through a third-party capital. KHI will hold a 66% share in KCM and HCM a 34% share. Further in March 2010 Hitachi Construction Machinery acquired 20% more shares of Telcon, to bring its total control to 60%, to make Telcon into a subsidiary and to take a strong lead in the rapidly growing Indian market.

14.3 Hitachi Construction Machinery Co., Ltd. - Main Products and Services

The main products and services for the company include:

Table 183: Hitachi Construction Machinery Co., Ltd., Main Products and Services

Products Services Excavators Spare parts Wheel loaders After sales service Off-road dump trucks Diagnostic tools Tunnel boring machines Technical training In-vehicle semiconductors Flat panel television displays Ultrasonic imaging devices Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 255 Forecasts to 2015

COMPANY PROFILES

14.4 Hitachi Construction Machinery Co., Ltd. - History

Table 184: Hitachi Construction Machinery Co., Ltd., History

Year Event type Description HCM acquired interest in Wenco International Mining Systems, Ltd (Wenco). Wenco 2009 Acquisitions/Mergers/Takeovers provides fleet management systems for the mining sector. Japan Industrial Design Promotion Organization awarded HCM with 2008 'Good 2008 Corporate Awards Design Awards' for its Zero Tail Swing hydraulic excavator and mini wheel loaders. The company planned an investment of US$0.2 billion (JPY 14 billion), excluding land 2007 Corporate Changes/Expansions cost, in a manufacturing facility near Hitachi-Naka port, Japan. The production is scheduled to begin by April 2008. HCM‘s medium-sized ZAXIS-3 hydraulic excavators received the iF Design Award. 2007 Corporate Awards Earlier, the same models won Good Design Award 2006 in Japan. Hitachi Construction Machinery (Singapore) Pte Ltd was renamed Hitachi 2006 Corporate Changes/Expansions Construction Machinery Asia and Pacific Pte. Ltd. (HMAP). Zhejiang University and HCM announced the establishment of a common laboratory 2006 Contracts/Agreements for construction machineries in China. 2006 New Products/Services HCM launched new dump trucks models, the EH750-3 and EH1100-3. The company announced the expansion of its current facility in Amsterdam, the 2005 Corporate Changes/Expansions Netherlands, to increase annual production of midsize excavators to 5000 machines in 2009. The ZAXIS380HH model was launched into market in February and by December, the company sold 27 excavators to domestic market. Moreover, HCM along with ELLE 2004 New Products/Services Construction Machinery (Tianjin) International Trade Co., Ltd (ELLE) introduced the ZAXIS850H, a heavy-duty excavator. ELLE is the HCM‘s prime distributor in China. The company received ‗Miles Prize‘ and the ‗Miles Company Award, Main Prize‘ from 2003 Corporate Awards Society of Japanese Value Engineering. The company established Hitachi Sumitomo Heavy Industries Construction Crane Co., 2002 Incorporation/Establishment Ltd. and Hitachi-Furukawa Loaders Europe S.A.S in France HCM entered into a business tie-up with Sumitomo Heavy Industries, Ltd. and 2001 Contracts/Agreements TADANO Ltd. in the crane market. The company, in association with TCM Corporation and Furukawa Co., Ltd, jointly 2001 New Products/Services released seven new models of the wheel loader series. HCM entered into a business agreement with TCM Corporation in the area of wheel 1999 Contracts/Agreements loaders. HCM's FA Division, which manufactures and sells ultrasonic imaging devices, was 1999 Corporate Changes/Expansions established independently as Hitachi Kenki Fine Tech Co., Ltd. The company acquired Euclid-Hitachi Heavy Equipment, Inc. from Volvo Construction 1998 Acquisitions/Mergers/Takeovers Equipment N.V. The company developed the EX5500, a super-size hydraulic excavator in the 515-ton 1997 New Products/Services class, the largest class in the world. It was awarded ISO 14001 certification, for environmental management systems. 1997 Corporate Awards The company was awarded the Ichimura Prize for the EX3500. HCM established Hefei Hitachi Excavators Co., Ltd. in the city of Hefei, China to enter 1995 Incorporation/Establishment the off-road dump truck market. 1994 Incorporation/Establishment The company established Euclid-Hitachi Heavy Equipment Inc. in the US HCM formed a technical collaboration agreement with Samsung Heavy Industries Co., 1993 Contracts/Agreements Ltd. in Korea for crawler cranes. The company entered the Indonesian market through the establishment of PT. Hitachi 1991 Incorporation/Establishment Construction Machinery. The company entered the bulldozer and road construction machinery markets. It also 1990 New Products/Services established Siam-Hitachi Construction Machinery Co., Ltd. in Thailand in October, 1990.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 256 Forecasts to 2015

COMPANY PROFILES

Table 184: Hitachi Construction Machinery Co., Ltd., History

1990 Stock Listings/IPO The company was listed on the first section of the Osaka Securities Exchange. HCM completed construction for the Dejima Plant base for mass production of 1989 Others reduction gears and other products near the Tsuchiura plant in Japan. The company entered into a joint venture agreement with Deere-Hitachi Construction 1988 Contracts/Agreements Machinery Corp., for the local production of hydraulic excavators in the US. The company launched the EX3500, one of the largest classes of super-size hydraulic 1987 New Products/Services excavators. Hitachi Construction released four models of the new-generation excavators under the 1986 New Products/Services EX series. HC entered into a joint venture agreement with Fiat-Hitachi Excavators S.p.A. in Italy 1986 Contracts/Agreements for local production of hydraulic excavators. The company was involved in capital participation in a construction machinery sales 1985 Financing Agreements company in France (Fiat-Hitachi Excavators France S.A.). HCM established Oriental Hitachi Construction Machinery Sdn. Bhd. in Malaysia and 1985 Incorporation/Establishment Hitachi Construction Machinery (America) Corp in the US. 1984 Incorporation/Establishment The company established Hitachi Construction Machinery (Singapore) Pte. Ltd. HCM entered into a business agreement with Deere & Company for the supply of 1983 Contracts/Agreements hydraulic excavators. The company was listed on the second edition of the Tokyo Stock Exchange. In the 1981 Stock Listings/IPO same year, it formed a business partnership with Tadano Ltd. in the area of track cranes and crawler cranes. 1979 Incorporation/Establishment The company established Yamagata Hitachi Construction Machinery Co., Ltd. The company formed a business tie-up with Kubota, Ltd. in the area of hydraulic 1976 Contracts/Agreements excavators. HCM developed an earth pressure balance shield machine, which was awarded the 1976 Corporate Awards Japan Society for The Promotion of Machinery Industry Prize. HCM incorporated the Adachi Plant into Tsuchiura Works, under plant relocation and 1974 Corporate Changes/Expansions production consolidation measures. 1972 Incorporation/Establishment The company Hitachi Construction Machinery (Europe) B.V. was established. Hitachi Construction Machinery Co., Ltd. was established through the amalgamation 1970 Incorporation/Establishment of Hitachi Construction Machinery Co., Ltd. (manufacturing company) and the former Hitachi Construction Machinery Co., Ltd. HCM acquired interest in Wenco International Mining Systems, Ltd (Wenco). Wenco 2009 Acquisitions/Mergers/Takeovers provides fleet management systems for mining sector. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

14.5 Hitachi Construction Machinery Co., Ltd. - SWOT Analysis

HCM is a leading manufacturer and supplier of excavators, wheel loaders, off-road dump trucks and tunnel boring machines. Its global operations are its main strength of the company. In addition, strategic partnerships and corporate restructurings across the world have enabled the company to expand its product portfolio. However, the weak global economic environment, declining demand and intense competition pose significant threats for the company.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 257 Forecasts to 2015

COMPANY PROFILES

14.5.1 Hitachi Construction Machinery Co., Ltd. – Strengths

Strength - Diversified Geographic Presence The company plots its operational activity globally, mitigating its business risk. HCM maintains manufacturing facilities across China, India, Indonesia, the US, Canada, the Netherlands and France. In addition, the firm operates through 62 subsidiaries and 20 affiliates, which provide a strong global platform for the company. The network of 150 dealers worldwide further adds to the competitive strength of the company. The company further increased its stake in Telco by 20% to total 60%, making it a subsidiary and increasing its presence in emerging markets such as India. Global operations mitigate the uncertainties in performance in few regions. For example, operations in China recorded the substantial annual increase of 33% for FY2010, limiting the decrease in overall revenues to 18.6% for FY2010 caused by underperformance in other markets.

Strength - Strategic Partnerships and Corporate Restructuring In addition to organic growth, the company emphasizes an inorganic growth strategy through joint ventures, strategic alliances and restructuring programs. Recently, HCM restructured its FA Division to form Hitachi Kenki Fine Tech Co., Ltd. Furthermore, it formed a business tie-up with TCM Corporation to enter into the wheel loaders market. In 2001, it jointly released seven new models of the wheel loader series in association with TCM Corporation and Furukawa Co. In addition, the company restructured the hydraulic plant in the Tsuchiura Works and the Kasumigaura Works in order to stream line operations to build a structure capable of supplying key components for 61,000 hydraulic excavators annually by 2011. Meanwhile, the production lines operated by the Tsuchiura Works have been relocated and expanded through setting up a new facility for increasing hydraulic excavator production capacity from 18,000–23,000 units annually. As an example of inorganic growth, in June 2010, KCM Corporation and HCM reached an agreement under which HCM will acquire an equity stake in KCM. KHI will hold 66% share in KCM and HCM a 34% share.

Strength - Improvement in Liquidity Position HCM‘s current ratio has improved from 1.30 in FY2009 to 1.61 at the end of FY2010. Moreover the quick ratio has increased from 0.653 at the end of FY2009 to 1.006 at the end of FY2010. This shows that the company is in a strong financial position and is more capable of meeting its short term obligations.

14.5.2 Hitachi Construction Machinery Co., Ltd. – Weaknesses

Weakness - Declining Market Share in Sector HCM‘s sales growth decreased in 2010 and 2009, by 18.59% and 20.87% respectively. As a result the company‘s revenue CARC was -0.84% during 2006–2010. This was far below the Construction Equipment sector average* of 17.17%. A lower than sector average* revenue CAGR may indicate that the company has lost market share over the last four years. Such underperformance can be attributed to a weak competitive position or inferior products and services.

Weakness - Underutilization of Resources In FY2010, the company recorded a decrease in its turnover ratios, implying underutilization of resources compared to FY2009. The fixed asset turnover and working capital turnover declined to 2.60 and 2.91, respectively in FY2010 from 3.27 and 5.98 in FY2009. Furthermore, the capital employed turnover declined to 1.98 in FY2009, as compared to 2.53 for 2008. This indicates that the company has not utilized its resources as efficiently as in the previous year, resulting in lower performance. Lower utilization of resources mitigates the efforts for optimum results and leads to an increase in opportunity costs.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 258 Forecasts to 2015

COMPANY PROFILES

Weakness - Declining Operating Margin and ROE HCM‘s operating margin has drastically fallen from 6% in FY2009 to 2.94% in FY2010. This was below the Construction Equipment sector average* of 8.44%. A lower than sector average* operating margin may indicate inefficient cost management or a weak pricing strategy by the company. The operating margin has decreased 313 basis points over 2009 which may indicate management's low focus on profitability. The company's return on equity (ROE) was 1.3% at the end of FY2010. This was below the Construction Equipment sector average* of 11.7%. A lower than sector average* ROE may indicate that the company is not using shareholders' money as efficiently as other companies in the sector and that it is generating low returns for its shareholders compared to other companies in the sector.

14.5.3 Hitachi Construction Machinery Co., Ltd. – Opportunities

Opportunity - Demand for Hydraulic Excavators and Crawler Cranes HCM‘s hydraulic excavator‘s sales are expected to increase, especially in nations with developing economies. Over the last six years, global excavator sales have grown by 2.5 times and this trend is expected to continue. Infrastructure demand in developing nations and regions such as China, other Asian countries, Australia, Russia-CIS and the Middle East are considered key drivers of the demand. According to a survey by the Association of Equipment Manufacturers, global construction machinery sales — except the US and Canada — are expected to grow by 13% over 2011–2012. In addition, HCM claims that demand for hydraulic excavators could rise by more than 20% in 2011 in its operating markets, principally developing nations. The company already has initiated several measures to seize such opportunities. For examples, the company has launched new products such as the ZAXIS-3G series of 30t class hydraulic excavators and increased promotion activates in China. This has resulted in an increase in net sales in China by 33% from the previous year to US$1,809 million (JPY 158,681 million). Furthermore, the company is making efforts to expand sales of new products such as the EX-6 Series, ultra-large hydraulic excavators equipped with environmentally friendly engines. In addition to hydraulic excavators, demand for crawler cranes is also increasing rapidly in emerging economies. The accelerating demand for energy globally could increase demand for lifting solutions, principally crawler cranes which find applications in oil and gas, power, wind farms and other industrial markets.

Opportunity - Indian Construction Equipment Market The Indian construction equipment industry is expected to grow with sustained investment in infrastructure, including roads, irrigation and urban infrastructure, and the likely recovery in residential real estate and increasing industrial investments from 2010–2011 onwards. The construction equipment industry in India is estimated to be worth US$4.4 billion (INR200 billion) in 2008–2009 with earthmoving equipment constituting over half of the entire industry. Construction accounts for 70% of demand for earthmoving equipment and the mining sector accounts for the remaining 30%.

Opportunity - Global Infrastructure Spending Increasing global infrastructure spending provides significant opportunities for HCM‘s company to capitalize upon. To stimulate the economies out of downturn and recession several governments globally have initiated investment programs. Infrastructure investments are expected to total US$33 trillion (JPY2,898.1 trillion) over the next 20 years. The company is also planning to double production in 2010 to meet demand from China and Indonesia. This long term expenditure in infrastructure development could create increasing demand for the company's products and services in all its markets.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 259 Forecasts to 2015

COMPANY PROFILES

14.5.4 Hitachi Construction Machinery Co., Ltd. – Threats

Threat - Stricter Emission Standards HCM‘s operations are subject to various international, national and local laws and regulations. Non-compliance with such norms and regulation could lead to penalties and fines. For example, the European Union has implemented its EURO 5 emissions standards in September 2009 and plans to introduce more stringent emissions standards, EURO 6 standards, by 2015. In China too, phased regulations similar to the EURO series of emissions regulations have been implemented since 2005. Stricter emissions standards could force the company to redesign its vehicles, in turn increasing its compliance costs.

Threat - Intense Competition HCM operates across markets characterized by intense competition due to the presence of large and established companies and have considerable price pressures. The company faces intense competition from companies such as Caterpillar Inc., Komatsu Ltd., Kubota Corp., Kobelco Construction Machinery Co. Further, low entry barriers have further increased competition.

14.6 Hitachi Construction Machinery Co., Ltd. – Company Information

14.6.1 Hitachi Construction Machinery Co., Ltd. - Key Competitors

The following companies are HMC‘s main competitors:

Tadano Ltd. KATO WORKS CO., LTD. Kobelco Construction Machinery Co., Ltd. OKADA AIYON CORPORATION

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 260 Forecasts to 2015

COMPANY PROFILES

14.6.2 Hitachi Construction Machinery Co., Ltd. - Key Employees

Table 185: Hitachi Construction Machinery Co., Ltd.,, Key Employees

Name Job Title Board Level Michijiro Kikawa President, Chief Executive Officer, Director Executive Board Yoshio Kubo Director Non-Executive Board Minoru Tsukada Director Non-Executive Board Mitsuji Yamada Executive Vice President Executive Board Toru Sakai Senior Vice President Executive Board Shinichi Mihara Senior Vice President Executive Board Kiichi Uchibayashi Director Executive Board Takayoshi Honma Vice President, Executive Officer Senior Management Terumasa Otsuka President and Representative Director of Senior Management Tsutomu Mizutani Executive Officer, Vice President Senior Management Makoto Sato Executive Officer, Vice President Senior Management Hiroshi Tokushige Vice President Executive Board Yukio Arima Vice President Senior Management Kiyomitsu Yamanaka Vice President Senior Management President of Hitachi Construction Machinery Tierra Yoshimi Iwase Senior Management Co. Mitsuhiro Tabei Executive Officer Senior Management Yuichi Tsujimoto Executive Officer Senior Management Masaki Kanahara Executive Officer Senior Management Shigeru Murasugi Executive Officer Senior Management Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 261 Forecasts to 2015

COMPANY PROFILES

15 Company Profile: Doosan Infracore Co., Ltd

15.1 Doosan Infracore Co. Ltd - Company Overview

Doosan Infracore Co. Ltd (Doosan) is a construction equipment manufacturer and supplier of excavators, wheel loaders, tower cranes and concrete pump trucks used for construction. It also manufactures engines, transmissions systems, hydraulic systems, electric generators and equipment parts. In the defense segment, the company produces IFVs, anti-air and guided weapons and precision equipment. The company‘s product portfolio includes a wide range of machine tools such as turning centers, machining centers, computer numerical control (CNC) boring machines, electric discharge machines, aspheric turning centers and automation systems. Doosan products are used in variety of industries, including agriculture, automotive, construction, engines and power generation. The company‘s operations are spread worldwide. Doosan is headquartered in Incheon, South Korea.

Table 186: Doosan Infracore Co., Ltd, Key Facts

Corporate Address 7-11 Hwasoo-Dong, Incheon, , 401-020, Republic of Korea Telephone + 82 32 2111114 Fax + 82 2 33988339 URL www.doosaninfracore.com Industry Construction , Industrial Goods and Machinery Ticker Symbol, Exchange 042670 (Korea Stock Exchange(KOSE)) No. of Employees 4,529 Fiscal Year End December Revenue (US$ Million) 4,329.84 Revenue (in KRW Million) 5,538,209.94 Locations China, India, Republic of Korea, Singapore, Belgium, France, Germany, Italy, United Kingdom, South Africa, United States, Brazil, Colombia, China, India, Republic of Korea, Singapore, Belgium, France, Germany, Italy, United Kingdom, South Africa, United States, Brazil, Colombia Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

15.2 Doosan Infracore Co., Ltd - Business Description

Doosan is a construction equipment manufacturer and supplier of excavators, wheel loaders, tower cranes and concrete pump trucks used in construction. The company also manufactures engines, transmissions systems, hydraulic systems, electric generators and other equipment parts, which find applications from agriculture and automotive to construction, engines and power generation industries. Doosan has presence in Asia, Africa, Europe, North America and South America. The company has classified its operations under six business groups: Construction Equipment, Machine Tools, Engines and Materials, Forklifts, Parts, and Compact Equipment.

Through its Engines and Materials segment, the company manufactures generator diesel engines, marine diesel engines, automotive diesel engines, industrial diesel engines, generator natural gas engines and automotive natural gas engines. The company also manufactures related materials such as iron cast and aluminum cast. During FY2009, the Engines and Materials segment accounted for 9.6% of the company‘s total revenues.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 262 Forecasts to 2015

COMPANY PROFILES

The company‘s Construction Equipment business manufactures crawler excavators, compact equipment, wheel loaders, wheeled excavators, articulated dump trucks, air compressors generators, lighting systems and light compaction equipment. During FY2009, the Construction Equipment business accounted for 41.1% of the company‘s total revenues.

Doosan‘s Compact Equipment business is operated through Bobcat Company. Bobcat designs, manufactures, and distributes compact equipment for the global construction, industrial, landscaping and agriculture markets. Its key products include skid-steer loaders, compact excavators, compact track loaders, telehandlers, compact attachments, compact tractors and utility vehicles. During FY2009, the Compact Equipment business accounted for 30.4% of the company‘s total revenues.

Doosan‘s Machine Tools group provides turning centers, machining centers, double column machining centers and horizontal boring mills. During FY2009, the Machine Tools business accounted for 9.4% of the company‘s total revenues.

Under the Forklifts business, the company manufactures engine forklift trucks, electric forklift trucks, electric reach trucks and warehouse equipment. During FY2009, the Forklifts business accounted for 6.3% of the company‘s total revenues.

Other key components are manufactured through the company‘s Parts segment. This includes construction equipment parts, forklift parts, engine parts and machining tool parts. In addition, the company provides forklift training and construction equipment training. During FY2009, the Parts business accounted for 3.2% of the company‘s total revenues.

Recently, the company announced investment of US$54.1 million (KRW60,100 million) on building a new factory to expand its machine business. Also, the company sold its 10,148,899 shares to Doosan Heavy Industry and Construction Co. With this acquisition, Doosan Heavy Industry holds a 44.83% stake in Doosan Infracore Co. Ltd.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 263 Forecasts to 2015

COMPANY PROFILES

15.3 Doosan Infracore Co. Ltd - Major Products

Table 187: Doosan Infracore Co. Ltd, Major Products

Products Engines Transmissions systems Hydraulic systems Electric generators Turning centers Machining centers CNC boring machines Electric discharge machines Aspheric turning centers Automation systems Excavators Wheel loaders Skid Steer loaders Tower cranes Concrete pump trucks Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 264 Forecasts to 2015

COMPANY PROFILES

15.4 Doosan Infracore Co., Ltd - History

Table 188: Doosan Infracore Co., Ltd, History

Year Event type Description Doosan Infracore Portable Power, a business unit of the company appointed Air 2010 Contracts/Agreements Compressor as an authorized dealer. 2010 Corporate Changes/Expansions The company completed a construction plant in Gunsan, Republic of Korea. The company increased its stake in Ireland-based Doosan Holdings Europe Limited to 2009 Acquisitions/Mergers/Takeovers 53.9%. Doosan Infracore was awarded the Best of the Best Award at '2009 Reddot Design 2009 Corporate Awards Award' for the futuristic concept excavator. The company sold its entire shares of Doosan Dst Co. Ltd, a manufacturer of defense 2009 Divestiture equipment. 2009 Acquisitions/Mergers/Takeovers Doosan acquired 4,874 shares of Doosan Infracore International, Inc. 2009 Divestiture Doosan sold its stake in Korea Aerospace Industries, Ltd. The company‘s Engines and Materials segment opened a Service Training Center at 2009 Corporate Changes/Expansions the Incheon plant in the Republic of Korea. 2008 Acquisitions/Mergers/Takeovers Doosan acquired Moxy, a Norwegian large size dump truck company. The company acquired the compact construction equipment unit, along with two other 2007 Acquisitions/Mergers/Takeovers units of Ingersoll-Rand. The company established Doosan Infracore (Suzhou) Co., Ltd.and Doosan Infracore 2007 Corporate Changes/Expansions India Private Ltd. The company established Doosan Holdings Europe Ltd and Doosan Holdings 2007 Corporate Changes/Expansions International Ltd. Doosan formed Doosan Infracore (China) investment Co., Ltd. as a holding company 2006 Corporate Changes/Expansions in China. 2005 Corporate Changes/Expansions Doosan established Doosan Infracore Co. Ltd. (rep. office) in Dubai, UAE. 2005 Corporate Changes/Expansions DHIL was renamed as Doosan Infracore Co. Ltd. 2003 Corporate Changes/Expansions DHIL formed Doosan Infracore Machine Tools Yantai Co, Ltd. in Shandong, China. DHIL established Doosan Infracore Germany GmbH in Germany and Doosan 1998 Corporate Changes/Expansions Infracore America Corp in the US. 1998 New Products/Services DHIL constructed a forklift factory in Shandong, China. The company entered into the UK and the Chinese markets through Doosan Infracore 1994 Corporate Changes/Expansions UK., Ltd and Doosan Infracore China Co., Ltd. in Shandong, China, respectively. 1990 Corporate Changes/Expansions DHIL established Doosan Infracore Europe S.A. in Belgium. 1986 Commercial Operation DHIL started mass production of the excavator model developed in-house. DHIL completed the construction of Changwon Defense Equipment Factory in the 1984 Corporate Changes/Expansions Republic of Korea. 1981 Corporate Changes/Expansions DHIL established its Central RandD Center. DHIL completed the construction of Changwon Machine Tools Factory and Incheon 1977 New Products/Services Excavator and Forklift Factory in the Republic of Korea. 1976 Corporate Changes/Expansions The company was renamed Daewoo Heavy Industries Ltd (DHIL). 1966 Stock Listings/IPO The company was listed on the Korea Stock Exchange. The company was reorganized as a state-run enterprise and renamed Korea 1963 Corporate Changes/Expansions Machinery Industries Corp. The company founded its first large-scale machinery factory at Incheon, Republic of 1942 Corporate Changes/Expansions Korea. 1937 Incorporation/Establishment Doosan was formed as Chosun Machine Works. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 265 Forecasts to 2015

COMPANY PROFILES

15.5 Doosan Infracore Co., Ltd - SWOT Analysis

Doosan is a leading construction equipment manufacturer and supplier of excavators, wheel loaders, tower cranes and concrete pump trucks used for construction. International certifications, wide geographic presence and strong product portfolio are the key strengths of the company, even as a high debt to equity ratio and weak operational performance remain major concern areas. Going forward, the company is at risk from currency fluctuations, the volatility of raw material prices and gray market heavy equipment sales may affect its business operations. However, its focus on emerging markets, expansion of facilities and construction and mining machinery market will provide growth opportunities for the company.

15.5.1 Doosan Infracore Co., Ltd – Strengths

Strength - International Certifications The international certifications and accreditations gained by the company resulted in strong brand recognition. Doosan‘s portfolio of different forklift truck models comprising diesel, gasoline, LPG, and electric engines has been awarded with international certifications including UL, CE, EMC, and EC Noise Directive as well as ISO 9001 and 14001 certifications in the Forklifts segment. Furthermore, the CNC boring machines, electric discharge machines, laser-cutting machines, aspheric turning centers, and automation systems manufactured under the Machine Tools division has been accredited with ISO 9001, ISO 14001, CE, UL, EMI, and EMC certifications. These certifications received are a result of established quality standards and processes.

Strength - Wide Geographic Presence Wide geographic presence enables the company to reach a diverse customer base across diverse geographies. Doosan has sales facilities located in Europe and in China and maintains local sales corporations in the US, the UK, Germany and South Africa and branch offices in France, Brazil and Colombia. Furthermore, it maintains an extensive global dealer network. In the Forklifts segment, the company maintains its distributors and parts supply bases in the US, Germany, France, Italy, the UK, Belgium, Brazil and Singapore and a dealer networks in 90 countries. In addition, in the Engines and Materials segment, it operates 146 parts agents in Korea and parts depots all over the world including in the US, Belgium, the UK, China, South Africa and Brazil. Diverse geographic presence also acts as strength for the company by enabling it to diversify its operational risk.

Strength - Strong Product Portfolio The company‘s strong product portfolio helps it to meet diverse needs of its customers. Doosan has maintained a strong product portfolio over the years. The company manufactures and supplies excavators, wheel loaders, tower cranes and concrete pump trucks. In addition, Doosan manufactures and supplies a line of machine tools including turning centers, machining centers, CNC boring machines, electric discharge machines, laser-cutting machines, and aspheric turning centers along with automation systems. Furthermore, the company provides 90 different lift truck models featuring diesel, gasoline, LPG and electric engines. In addition, the company manufactures ultra-low-pollution CNG and low-pressure natural gas (LPNG) engines. Its product portfolio also includes conventional models of diesel engines ranging from 24 to 1000HP. This diverse product portfolio enables the company to cater to a wide range of customers, which in turn mitigates the risk associated with dependence on a limited product range.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 266 Forecasts to 2015

COMPANY PROFILES

15.5.2 Doosan Infracore Co., Ltd – Weaknesses

Weakness - Weak Operational Performance The company reported weak financial performance in FY2008 and FY2009, which may limit its expansion and future growth plans. Despite revenue growth in FY2009, the company recorded operating and net losses in FY2008 and FY2009. In FY2009, the company‘s operating loss stood at US$0.4 billion (KRW395.3 billion) compared with an operating profit of US$0.1 billion (KRW115.5 billion) in FY2008. In addition, the company demonstrated a net loss of US$0.3 billion (KRW313.5 billion) in FY2009 compared with a net loss of US$0.1 billion (KRW123.1 billion) in the previous year. This was due to increased operating expenses, which as a percentage of sales increased from 98.4% in FY2008 to 107.1% in FY2009. The poor operational performance presents a challenge for the company in managing and controlling costs, which may further affect its margins.

Weakness - High Debt to Equity Ratio Doosan has witnessed a high debt to equity ratio over the past five years, which might place the company at risk as a result of paying the high interest. The company‘s debt to equity ratio increased from 0.8 in FY2005 to 4.4 in FY2009. This is much higher than Doosans nearest competitor, Hitachi Construction Machinery Co. Ltd, who reported a ratio of 1.02 in FY2009. The relatively high debt to equity ratio may affect company‘s ability to meet its obligations, which in turn may affect its business operations.

15.5.3 Doosan Infracore Co. Ltd – Opportunities

Opportunity - Construction and Mining Machinery Market The company is anticipated to benefit from the growth in the construction and mining machinery and equipment market. According to industry estimates, the global construction and mining equipment market will reach 822,000 units by 2015. Major drivers for this growth include an increase in residential and commercial building construction spending. Furthermore, the demand for construction equipment is expected to be high in developing and emerging countries as a result of an increase in the construction of highways, oil refineries, power plants, office buildings and other infrastructure projects. Developing markets in Asia-Pacific, Latin America, and the Middle East are expected to drive this market growth. China is expected to emerge as the fastest growing market for construction and mining machinery worldwide. As a result, Doosan could capitalize on the growing market to enhance its top-line performance.

Opportunity - Expansion of Facilities The company is focused on expanding its facilities and plants to enhance its presence in North America and the emerging markets of Central and South America. In this direction, in March 2, 2011, the company announced the investment of US$54.1 million (KRW60,100 million) to build a new factory which will be operational by December 31, 2018. Also, in October 2010, the company announced the investment of US$0.1 billion (KRW116.9 billion) in a new engine factory to be operational by January 31, 2015. Prior to this, the company began construction work at its joint venture facility located in Xuzhou, China in 2010. This facility is an equally-owned joint venture with the XCMG Group, based in China. Both companies planned to jointly invest CNY680 million for next four years to produce up to 50,000 diesel engine units with displacements of six and eight liters by 2013. Also, through this facility, the companies will manufacture diesel engines and expect to have an annual production capacity of 100,000 diesel engine units. These initiatives made by the company will further enhance its production base and meet the growing diverse needs of its customers.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 267 Forecasts to 2015

COMPANY PROFILES

Opportunity - Focus on Emerging Markets The company‘s focus on emerging markets will provide growth opportunities for the company. With various massive stimulus packages announced by respective governments to bring their economies back on track, global output is expected to expand by 3.2% in 2011. The Euro zone, Japan and the US are expected to grow by 1.7%, 1.8% and 2.7% in 2011, respectively. China is expected to report GDP growth of 9% during 2011 while India, Russia and Brazil are expected to grow at a GDP of 8%, 3% and 3.9% in 2011, respectively. Despite GDP growth below 2007 levels, the recovering global economy offers ample growth opportunities for the company, as companies across different sectors are pursuing their growth plans, more aggressively, than before. In order to capitalize on emerging markets, the company is focused on expanding its operation to these regions. For example, in 2010, the company announced plans to establish 20,000 units of production systems annually to 2015. This is to target customers in mature North American markets and customers in emerging South and Central American markets. These initiatives are anticipated to further enhance the company‘s top- line performance.

15.5.4 Doosan Infracore Co. Ltd – Threats

Threat - Foreign Currency Fluctuations Fluctuations in foreign currency exchange rates might affect the company‘s business as Doosan has operations across North America, Europe and Asia-Pacific. The company operates in many parts of the world and generates revenues in several currencies. A major portion of its revenues are generated from the British pound, Korean won, the Euro and the US dollar. In addition, the company faces risks from emerging market currencies. Any adverse movements in currency exchange rates may adversely affect its cash flow and results of operations. The company translates the financial statements of its international operations in Korean Won using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs, and expenses. During FY2009, due to fluctuations in foreign currency exchange rates, the company recorded currency translation loss of US$0.02 billion (KRW24 billion). Any further fluctuations in currency exchange rates may enable the company to incur losses in the future, which may affect its results of operations.

Threat - Volatility of Raw Material Prices Price volatility in raw materials may affect the company‘s business and result of operations. The company uses various raw materials such as steel, copper and aluminum in manufacturing of products. The prices of these raw materials account for a significant share of the company's total cost of goods sold. According to the US Bureau of Labor Statics, producer price indexes for core raw material inputs such as rolled steel, and primary aluminum, increased by 95.8%, and 90%, respectively in the last decade. Also, worldwide composite steel price was US$642 (KRW740,572.7) per ton in September 2009, rising to US$748 (KRW862,847.9) per ton in September 2010. Worldwide composite steel price increased by 10.5% in January 2011 compared with December 2010. Due to the increase in the commodity price, the cost of raw materials and energy may also increase drastically. The company may witness loss in sales volume to the extent price increases are taken into account. In addition, the continuous supply of raw materials may be affected by weather conditions, national emergencies, strikes, governmental controls, natural disasters or supply shortages. These pricing fluctuations and non-availability of these raw materials may have an adverse effect on the product cost and further operations of the company.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 268 Forecasts to 2015

COMPANY PROFILES

Threat - Grey Market Heavy Equipment Sales Parallel imports or grey market sales may have a negative impact on the company‘s performance. Grey market heavy equipment sales were a more serious problem in the 1990s, when the US construction market was growing. The issue may become more prominent again with the recovery of the US construction industry from the current global economic downturn whilst other markets remain depressed. For instance, Chris Johnson Equipment Inc., Michigan, illegally imported 29 Hyundai-branded wheel loaders and excavators and sold them to US customers violating federal fair competition and other laws. Gray market importers pose a problem for the company and other legitimate dealers by offering equipment manufactured for other markets, which may adversely affect the company‘s customer base.

15.6 Doosan Infracore Co., Ltd – Company Information

15.6.1 Doosan Infracore Co. Ltd - Key Competitors

The following companies are the main competitors of Doosan Infracore Co. Ltd:

Hyundai Heavy Industries Co., Ltd. Caterpillar Inc. Hitachi Construction Machinery Co.,Ltd. Sumitomo Heavy Industries, Ltd.

15.6.2 Doosan Infracore Co. Ltd - Key Employees

Table 189: Doosan Infracore Co. Ltd., Key Employees

Name Job Title Board Level Yongsung Kim President, Director, Co-Chief Executive Officer Executive Board Sungchul Choe Co-Chief Executive Officer, Vice Chairman Executive Board Ogyoo Lee Director, Vice President Executive Board Keysun Han President Senior Management Anthony Helsham President Senior Management Chief Executive Officer - Doosan Corporation, Yongmaan Park Executive Board Chairman Director, Chairman - Doosan Engineering and Jeongwon Park Executive Board Construction Co., Ltd Vice Chairman, Vice Chairman - Doosan Jaekyung Lee Executive Board Corporation Sunghee Lee Director Executive Board MyungJae Lee Director Non Executive Board Yang Ho Director Non Executive Board Gilwon Kim Director Non Executive Board Youngtak Lee Director Non Executive Board Jonghyun Yoon Director Non Executive Board Yongseok Yoon Director Non Executive Board Jongseok Kim Director Non Executive Board Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 269 Forecasts to 2015

COMPANY PROFILES

16 Company Profile: BEML Limited

16.1 BEML Limited - Company Overview

BEML Limited (BEML) is a leading manufacturer of heavy earthmoving equipments. It is a public sector undertaking under the Indian Ministry of Defense. The company also manufactures rail coaches and metro coaches, diesel engines and generator sets, hydraulic pumps and valves, powerline aggregates, defense transport vehicles and heavy duty multi-utility trucks. These products find application across coal, mining, steel, limestone, power, irrigation, construction, road building, aviation, defense, metro and railway segments. BEML exports its products to 52 countries worldwide and has manufacturing facilities in India, China and Indonesia. The company also operates through a joint venture and is headquartered in Bangalore, India.

Table 190: BEML Limited, Key Facts

Corporate Address Beml Soudha, Bangalore, , 560027, India Telephone + 91 80 22963240 Fax + 91 80 22963278 URL www.bemlindia.com Industry Construction Ticker Symbol, Exchange 500048 (Bombay Stock Exchange) No. of Employees 12,052 Fiscal Year End March Revenue (INR) 29,662.21 Revenue (US$ Million) 607.21 Locations India, Indonesia Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

16.2 BEML Limited - Business Description

BEML Limited (BEML) is a leading manufacturer and supplier of heavy earthmoving equipments, defense transport vehicles, generator sets, powerline and hydraulic accessories. It is operative under the administrative control of Ministry of Defense and is conferred with Mini-Ratna Category-1 Status. BEML is into design and development, testing, manufacturing, and supplying a range of products for the defense, metro rail, and mining and construction sectors.

Its operations are segregated across Mining and Construction, Rail and Metro, Defense, International Business, Technology and trading division.

In the Mining and Construction division, the company offers a wide range of mining machinery applicable across opencast and underground mines. Its product portfolio includes electric rope shovels, hydraulic excavators, bulldozers, wheel loaders, wheel dozers, dump trucks, motor graders, pipe layers, tire handlers, water sprinklers and backhoe loaders. In addition, the company also manufactures walking draglines for operations in the opencast mines. BEML has ventured into underground mining with products such as side discharge loader, load haul dumper, winch, winder, granby car and skips. In India, the company maintains a marketing network for sales and service of construction equipments across 22 states in India, the National Capital Region (NCR) and two Union Territories.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 270 Forecasts to 2015

COMPANY PROFILES

In this division, the company has formed a joint venture with Midwest Granite Limited and Pt. Sumber Mitra Jaya in Indonesia to form BEML-Midwest Ltd. This subsidiary would concentrate on bidding for contract mining projects across India and overseas.

In the Rail and Metro division, BEML supplies products for the Indian Railways such as overhead electric inspection cars, postal vans, integral rail coaches, AC and DC electric multiple units, broad-gauge rail bus, D- Emus, utility track vehicles, track laying equipment, spoil disposal units and treasury vans. Currently, it has also forayed into production of high-tech Metro Trains deployed for intra-city commuting. The company is also expanding its manufacturing capabilities to meet the greater needs of metro projects coming up in the country.

The company through its Defense division operates as the leading defense equipment manufacturer and supplier in India. It is engaged in the manufacturing and supply of state-of-the-art military equipments to the Indian Army and other defense forces. BEML manufactures a wide range of vehicles used for all-terrain operations including bridge layer, field artillery tractor, medium and heavy recovery vehicle, pontoon mainstream bridge systems, crash fire tenders and mobile mast vehicles. These vehicles are marketed under the brand name, Tatra.

BEML also supplies engineering mine ploughs, tank transportation trailers, weapon loading equipment, armored recovery vehicle, aircraft weapon loading trolley and aircraft towing tractors and milrail coaches and wagons. BEML also supplies ground support vehicles for Integrated Guided Missile Development Project in India. The company has also created a world class test track at its KGF Complex facility to test defense equipment and vehicles.

BEML‘s International division is engaged in distributing its products worldwide. The company has ‗Star Exporter‘ status in this segment and has its operations in 52 countries worldwide. BEML maintains an international office and warehouse in Malaysia and an international procurement office in China. In addition, the company has its marketing network in Middle East, Africa and Far East countries, and dealers and distributors operating from Syria, Tunisia, Sri Lanka and UAE along with representatives in Morocco and Suriname. It also has plans to set up assembly operations in partnership with local players across Morocco, Suriname and Indonesia.

BEML under Technology division offers services and solutions in areas of CAD, CAE, Testing and Technical Documentation. The company has been accredited with Centre for Military Airworthiness and Certification (CEMILAC) and ISO 9001-2000. Furthermore, presence of a National Accreditation Board for Testing and Calibration Laboratories (NABL) certified test facility and strategic alliances with global partners have enabled the company to become a global player in this segment. The company operates in four sectors namely, aerospace, automotive and mining, defense, and rail and metro.

Its Trading division deals with products and commodities such as in iron ore, coal, steel billets for both captive in-house requirements and also for customers within the country and abroad. This division has been awarded the status of ‗Two Star Export House‘.

In June 2010, the company signed a MOU with Karnataka Government for the establishment of a Manufacturing Complex in Bangalore. This Manufacturing Complex will be used for designing and manufacturing aircraft components, sub-assemblies and MRO activities pertaining to aerospace applications for the company‘s newly established Aerospace division.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 271 Forecasts to 2015

COMPANY PROFILES

16.3 BEML Limited - Major Products Services and Brands

The company‘s main products, services and brands include the following:

Table 191: BEML Limited , Major Products Services and Brands

Products Services Brands Crawler dozers CAD Tatra Wheel dozers CAE Excavators Testing Dump trucks Technical Documentation Loaders Backhoe loaders Pipe layers Walking dragline Rope shovel Sprinklers Graders Tyre handler C-crane Rail and Metro Stainless steel metro cars Passenger coaches AC electric multiple units Stainless steel AC Emus DC electric multiple units Rail bus 8-wheeler OHE 4-wheeler OHE Treasury Vans Spoil disposal units Track laying equipment Sky bus Utility track vehicle (UTV) Defense: MODELS OF BEML – TATRA VEHICLES WITH NON EURO VERSION BEML - TATRA T815 VVNC 8x8

VEHICLE BEML - TATRA T815 VVL 8x8 VEHICLE BEML - TATRA T815 VTI 8x8 - TANK

TRANSPORTER 30 M TELESCOPIC MOBILE MAST ON BEML TATRA T815 VVNC 8X8 CHASSIS BEML - TATRA T815 VVNC 8X8

CHASSIS FOR 15 M BRIDGE LAYING

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 272 Forecasts to 2015

COMPANY PROFILES

Table 191: BEML Limited , Major Products Services and Brands ROLE

BEML - TATRA T815 VVNC 6x6 HIGH

MOBILITY VEHICLE BEML - TATRA T815 VVNC 6x6 FIELD

ARTILLERY TRACTOR BEML - TATRA T815 VI 4x4 HIGH

MOBILITY VEHICLE BEML - TATRA CRASH FIRE TENDER Prithvi missile launcher Oxidiser carrier Warhead carrier Fuel carrier vehicle Missile transporter 10t mobile crane Ammunition loader Backhoe loader transporter Pontoon bridge set Pontoon truck Midstream pontoon Shore pontoon Truck mounted crane Pavement laying truck Dolly Motor tug launch (boat) Beml truck 4x2 for mounting rapiscan

scanner unit Hrv av 15 - heavy recovery vehicle Medium recovery vehicle Light recovery vehicle Models OF BEML – TATRA VEHICLES WITH BHARAT STAGE – II (EURO – II) Version BEML - TATRA T816 6MWR 8T 10x10

VEHICLE BEML - TATRA T815 27ET96 28 300

8x8.1R / 50T - TANK TRANSPORTER BEML - TATRA T815 27ER96 28 300

8x8.1R / 50T VEHICLE BEML - TATRA T815 27ER96 30 300

8x8.1R / 50T - 4150 VEHICLE BEML - TATRA T815 26RR36 22 255 6x6.1R / 50T HIGH MOBILITY VEHICLE (RHD) BEML - TATRA T815 25RR45 17 230

4x4.1 HIGH MOBILITY VEHICLE PINAKA PROJECT (MULTI BARREL

ROCKET LAUNCHER) Engineering mine plough

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 273 Forecasts to 2015

COMPANY PROFILES

Table 191: BEML Limited , Major Products Services and Brands

Mine protected vehicle Other Defense Products: BS42 SNOW CUTTER Armoured recovery vehicle wzt – 3 Aircraft towing tractor Self-propelled 155 mm gun – bhim t6 50 tonne trailer - for tank transportation 65 ton trailer 20 tonne low deck full trailer Wagons BFAT BOMN BRSTN BWTB MILRAIL Coach Hydraulic Aggregates Hydraulic pump Hydraulic cylinder Hydro-pneumatic suspension Control valve Powerline Aggregates: Transmission Axle Bevel gear Aggregates for BMP: Transmission Ejector and air cleaner assembly Final drive Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 274 Forecasts to 2015

COMPANY PROFILES

16.4 BEML Limited - History

Table 192: BEML Limited , History

Year Event type Description The company won an order of US$ 387.41 million (INR 1672.50 crores) from 2009 Contracts/Agreements Bangalore Metro Rail Corporation Limited (BMRCL) for the supply of 150 Metro Coaches. BEML is also expected to get an additional order for 63 Metro coaches.

2009 Contracts/Agreements BEML and Servo Controls formed a MoU to jointly design, develop and manufacture Gear pumps, Servo Actuators, Servo Valves and other hydraulic aggregates for Indian as well as global markets.

2009 Contracts/Agreements The company entered into an agreement with Sumber Mitra Jaya (SMJ) of Indonesia to bid for upcoming Contract Mining businesses in India.

2009 Contracts/Agreements BEML signed a Memorandum of Agreement with M/s. NFM Technologies, France for the manufacturing of Tunnel Boring Machines (TBMs) in India. BEML will be the only Indian company to manufacture Tunnel Boring Machines.

2009 Corporate Awards The company was awarded the prestigious 'BEST PSU' award instituted by the Indian Institute of Planning and Management.

2009 Corporate Changes/Expansions BEML established its Assembly Unit ―BEML BRASIL INDUSTRIAL LTDA‖ at Rio De Janeiro, Brazil. The company forayed in Indonesia by establishing its subsidiary PT. BEML Indonesia 2009 Incorporation/Establishment in August 2009. The company was established to provide 24hour 7 days a week 7 support and after sales services, spares and repair support and to expand its market base.

2008 Contracts/Agreements The company signed a MoU partnership with SAP India to market the SAP-ERP products and involve in its implementations in Defense, Rail and Metro and Mining and Construction sectors within the Indian Territory.

2008 Contracts/Agreements BEML Limited signed a Memorandum of Understanding (MoU) with Eurocopter, France for its Aerospace business.

2007 New Products/Services BEML constructed two new Hangers namely Under Frame Hanger and Shell Hanger in October 2007.

2007 Corporate Awards The company was acknowledged as the ―The Largest and Most Profitable Construction Equipment Company‖ by Construction World - NICMAR, 2007. 1991 Incorporation/Establishment BEML established its engine division in the year 1991 in Mysore.

1987 Corporate Changes/Expansions The company established its Hydraulics and Powerline (HandP) Division across an area covering 14.5 acres.

1986 Corporate Changes/Expansions The company established its Truck Division at Mysore, in 1986 with a total area of 600 acres.

1964 Incorporation/Establishment BEML Limited (formerly Bharat Earth Movers Limited) was established in May 1964 as a Public Sector Undertaking. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 275 Forecasts to 2015

COMPANY PROFILES

16.5 BEML Limited - SWOT Analysis

BEML Limited (BEML) is a leading manufacturer and supplier of heavy earthmoving equipments. It also manufactures rail coaches and metro coaches and heavy duty multi-utility trucks. Strong product support initiatives, presence in Middle East, Africa and Far East countries, wide range of construction equipment and presence across the niche business segments are the strengths for the company. BEML could use strategic alliances with foreign partners to capitalize on the growing construction sector in India. On the other hand, volatile raw material prices coupled with stringent environmental norms could be challenging for the company.

16.5.1 BEML Limited – Strengths

Strength – Niche Business Segments BEML has diversified its products and services portfolio to cater to niche segments. The Mining and Construction division offers a wide range of mining machineries which are applicable across opencast and underground mines. The product portfolio includes electric rope shovels, hydraulic excavators, bulldozers, wheel loaders, wheel dozers, dump trucks, motor graders, pipe layers, tire handlers, water sprinklers and backhoe loaders. In addition, the company also manufactures Walking Draglines for operations in the opencast mines. BEML products such as side discharge loader, load haul dumper, winch, winder, granby car, and skips are used in underground mining applications.

Moreover, the company provides overhead electric inspection cars, postal vans, integral rail coaches, AC and DC electric multiple units, broad-gauge rail bus, D-Emus, utility track vehicles, track laying equipment, spoil disposal units and treasury vans for the Indian Railways. BEML also manufactures wide range of vehicles used for all terrain operations including bridge layer, field artillery tractor, medium and heavy recovery vehicle, pontoon mainstream bridge systems, crash fire tenders, and mobile mast vehicles in the defense segment. This strong product portfolio has enabled the company to cater to niche business segments creating a competitive edge over its peers.

Strength - Strong Product Support Facilities The strong product portfolio offered by BEML is complemented by the company‘s research and development (RandD) initiatives and testing facilities. BEML is a Public Sector Undertaking (PSU) company (Mini Ratna Category-1) under the Indian Ministry of Defense. Being an undertaking of the Indian government has enabled the company to operate across industries where the entry barriers are very high. It operates as the leading defense equipment manufacturer and supplier in India. BEML supplies engineering mine ploughs, tank transportation trailers, weapon loading equipments, armored recovery vehicle, aircraft weapon loading trolley and aircraft towing tractors, rail coaches and wagons. The company also plays a pivotal role in the country‘s Integrated Guided Missile Development Project by supplying ground support vehicles for defense purposes.

BEML has also created a world class test track at its KGF Complex to test defense equipment and vehicles. In the aerospace segment, the company has completed several projects for HAL and Defense Research and Development Organization (DRDO) DRDO establishments recently. The aerospace division is also registered with Base Repair Depot of the India Air Force to offer total solutions on customized design and development of Ground Support Equipment (GSE) and Ground Handling Equipment (GHE). For instance, BEML‘s Technology Division CEMILAC is ISO 9001-2000 certified and offers end-to-end services and solutions in areas of CAD, CAE, Testing and Technical Documentation.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 276 Forecasts to 2015

COMPANY PROFILES

Strength - Wide Distribution Network The company has diversified geographic presence through joint ventures, partnerships and distributor networks that has enabled the company to create awareness about its service and product offerings worldwide and create a strong market position. BEML distributes its products worldwide through its International division. It operates as an export House with ‗Star Exporter‘ status and has operations in 52 countries worldwide. The company also maintains an international office and warehouse in Malaysia and an international procurement office in China. Furthermore, BEML has its marketing network in Middle East, Africa and Far East countries and dealers and distributors operating from Syria, Tunisia, Sri Lanka and UAE along with representatives in Morocco and Suriname. The company has plans to set up assembly operations plans plants in partnership with local players across Morocco, Suriname and Indonesia. Through its Technology Division, BEML has also expanded its business in Engineering Services Outsourcing (ESO) of non-BEML products. Being a Two-Star Export House through the Indian Ministry of Commerce, it also deals with products and commodities such as in iron ore, coal, steel billets for both captive in-house requirements and also for customers within the country and abroad.

16.5.2 BEML Limited – Weaknesses

Weakness - Declining Market Share in Sector Between 2006 and 2010, the company recorded an increase in revenue at a CAGR of 8.75%. This was below the construction equipment sector average of 17.17%, which indicates that the company has underperformed in relation to the average growth in the sector and has lost market share during the period. The company's underperformance could be attributed to a weak competitive position or inferior products and services offering or lack of innovative products and services. However the company‘s revenue increased by 2.31% between 2009 and 2010, indicating the company is improving its market share

Weakness - Declining Operating Margins In FY2010, the company maintained low margins compared with FY2009, affecting BEML‘s profitability and performance. The operating margin for FY2010 was 10.87% compared with operating margin of 113.46% compared with the previous year. This was principally due to operating costs which increased to 89.13% of total sales in 2010, compared with 86.54% of total sales in 2009. In addition, the net margins have also declined to 7.57% in 2010 from 9.32% in 2010. Declining margins have affected the profitability of the company decreasing its return on equity (ROE) of shareholders. The ROE of the company decreased to 10.99% in FY2010 compared with 14.07% in FY2009.

16.5.3 BEML Limited – Opportunities

Opportunity - Strategic Alliances The strategic alliances made by the company provide opportunities to increase its geographic presence as well as products and services portfolio. In 2010, the company signed a Memorandum of Agreement (MOA) with Kamaz Vectra Motors Ltd., a subsidiary of Russian Federation company manufacturing commercial and heavy vehicles for on road application. Through this strategic alliance the company will develop 4x4 Stallion Type of Vehicles for on-road application catering to the needs of defense forces, paramilitary and police forces. BEML is working with Kamaz Vectra to source chassis and vehicle to market BEML Tippers. Such alliances and partnerships would contribute to growth in product offering and market presence. Earlier, it also signed a Memorandum of Agreement with M/s. NFM Technologies, France (the second largest manufacturer of Tunnel Boring Machines in the World) for the manufacture of Tunnel Boring Machines (TBMs) in India. This establishment could lead to contracts for supplying TBMs to various projects in India and ASEAN countries. The Bangalore Metro and the upcoming Metro projects of Chennai, Kolkata, and Mumbai would provide a

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 277 Forecasts to 2015

COMPANY PROFILES

promising market for the TBMs markets. In addition, it could also be applicable across Irrigation and hydroelectric projects.

BEML has signed a MoU with Servo Controls to jointly design, develop and manufacture Gear pumps, Servo Actuators, Servo Valves and other hydraulic aggregates for Indian as well as global markets. In April 2009, BEML established its assembly unit ―BEML BRASIL INDUSTRIAL LTD‖ at Rio De Janeiro, Brazil to assemble its products related to Mining and Construction, Rail and Metro, and Defense segments. This could allow the company to have a local presence in Latin American countries.

Opportunity - Railway Expansion Initiatives in China The company could capitalize on the railway expansion initiatives in China. The Chinese government has plans to increase national spending on railway construction by investing EUR78 billion each year between 2010 and 2012 for expanding the country‘s railway network. Total Investments worth US$17 billion (RNB116.52 billion) has been planned in the Jiangxi province of china. This will include building of new railway lines over the next three years, according to state news agency Xinhua. On the other hand, almost 14 projects are to be completed by 2012, as a part of a longer term project identified by the state officials. This will expand the railway network across provinces and major tourist and industrial areas in China by 2020. The company‘s Rail and Metro division supplies various products for the railway sector. It also has presence in China along with its international procurement office in China. The company can take leverage on its experience in supplying railway equipments to railway projects in China to enhance its revenue generating capacity and increase market presence.

Opportunity - Construction Boom in India The development of the infrastructure and real estate market in India could provide opportunity to the company. According to the Planning Commission, the road freight industry in India is expected to grow at a compounded annual growth rate (CAGR) of 9.9 % between 2007 and 2012. Furthermore, according to the annual review of the roads and highways sector report published by Crisil Research in August 2009, around US$107 billion investment is expected in the sector between 2009 and 2014. The Government of India has also launched various programs and projects including National Highway Development Programme (NHDP) and Bharat Nirman Programme for the development of road infrastructure in India. Increasing construction activities in domestic market might increase the demand for construction equipments, which in turn might increase demand for the company‘s products.

Opportunity - Global Demand for Construction Equipment Aside from the Indian market, increasing global demand for construction equipment provides an opportunity for the company. According to a survey by Association for Equipment Manufacturers (AEM), the global construction equipment industry is expected to grow during 2010-12. Construction equipment market in the US is projected to grow at 5%, 15% and 14% in 2010, 2011 and 2012, respectively. The global demand for construction equipment is expected to grow at 7% in 2010 and 13% in 2011 and 2012. Major factors driving such demand include growth in economies worldwide after the recession supported by favorable consumer confidence level, economic interest rates and availability of credit facilities. Such conditions coupled with public spending in infrastructure facilities could create favorable conditions for the sector to grow. The company has presence in 52 countries in the world. Growth in this sector could benefit the company to increase its performance and market presence.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 278 Forecasts to 2015

COMPANY PROFILES

16.5.4 BEML Limited – Threats

Threat - Volatile Raw Material Prices The company has recorded an increase in operational costs for the FY 2009 and this resulted in reduction of profit margins of the company. The increase in operational costs is primarily due to increase in volatility in input costs, especially in parts, raw materials and material components such as steel materials. Steel prices in turn are largely affected by the oil price, which are highly volatile. The global steel prices have increased by about US$80 to US$100 per ton during the first quarter of 2010. In tune with international market, the prices in India have also increased by about US$76 (INR 3,500) per ton to US$100.3 (INR4,600) per ton. India steel producers like SAIL, JSW Steel and Tata Steel are also expected to increase prices owing to increasing input prices in recent quarters. It would be difficult for the company to pass off the effect of volatile input costs to the customers on a real time basis as competition makes this difficult. High input cost volatility hinders effective pricing strategies to secure and retain business.

Threat - Intense Competition The major geographic markets across which the company operates are highly competitive. In recent years, competition has intensified considerably due to highly maturing and saturating markets. India‘s excavator market is projected to continue to expand during the forecast period leading to the influx of new competitors such as Kobelco entering the sector. BEML currently competes with major global players such as Caterpillar Inc., Terex Corporation, and Volvo Construction Equipment NV, and local competitors like Telcon for several products in its portfolio operating in similar markets. As some of the competitors are market leaders in their respective home countries, the company needs to focus on select industry sectors. Competition is based largely on price, product and service quality, brand reputation, customer service and product features. In addition, competition has further increased during the economic downturn worldwide.

Threat - Stringent Environmental Norms The company's facilities and operations are impacted by environmental laws and regulations governing emissions, discharges into water and air, and the generation, transportation, storage, handling, treatment and disposal of non-hazardous and hazardous waste materials. With engines subject to extensive regulations, the company needs to improve product technology and has to make substantial investments in R&D. Furthermore, the company has to comply with the emission and noise related regulations of various regulatory agencies in the countries of current or future operation. Revamping products or certain manufacturing processes to comply with the regulations could pose a challenge for the company. Currently, the company provides tier II compliant engines in its equipments.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 279 Forecasts to 2015

COMPANY PROFILES

16.6 BEML Limited – Company Information

16.6.1 BEML Limited - Key Competitors

The following companies are the major competitors of BEML Limited:

Texmaco Limited Telco Construction Equipment Company Limited

16.6.2 BEML Limited - Key Employees

Table 193: BEML Limited., Key Employees

Name Job Title Board Level V. R. S. Natrajan Chairman, Managing Director Executive Board V. Mohan Director - Defense Executive Board M. Poongavanam Director - Mining and Construction Executive Board P. Dwarakanath Director - Metro and Railway Executive Board M. Pitchiah Director - Finance Executive Board M. Nellaiappan Director - Human Resources Executive Board M B N Rao Director Non Executive Board J P Batra Director - Independent Non Executive Board J P Singh Director - Independent Non Executive Board Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 280 Forecasts to 2015

COMPANY PROFILES

17 Company Profile: Escorts Limited

17.1 Escorts Limited Company Overview

Escorts Limited (Escorts) is a leading engineering conglomerate operative across the agri-machinery, construction and material handling equipment, railway equipment and auto components segment. Escorts‘ is engaged in manufacturing of hydraulic mobile cranes, tractors, loaders, vibratory rollers and forklifts. In addition, it also manufactures and supplies auto suspension products including shock absorbers and telescopic front forks. The railway equipment portfolio comprises brakes, couplers, shock absorbers, rail fastening systems, composite brake blocks and vulcanized rubber parts. Escorts has service outlets across 40 countries worldwide.

Escorts Construction Equipment Limited (ECEL), a manufacturing arm of Escorts Limited launched its backhoe loader, DIG MAX, a 76HP, 8 ton operating weight backhoe loader in January 2010.

Table 194: Escorts Limited, Key Facts

Corporate Address 15/5 Mathura Road, Faridabad, , 121 003, India Telephone + 91 129 2250222 Fax + 91 129 2250033 URL www.escortsgroup.com Industry Construction Ticker Symbol, Exchange 500495 (Bombay Stock Exchange) No. of Employees 7,464 Fiscal Year End September Revenue (US$ Million) 545.32 Revenue (INR Million) 26,639.09 Locations India, Poland Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

17.2 Escorts Limited - Major Products

The company‘s key products include the following

Table 195: Escorts Limited, Major Products

Products Tractors: Farmtrac Dozers Powertrac Escort Engines Trailers Lubricants

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 281 Forecasts to 2015

COMPANY PROFILES

Table 195: Escorts Limited, Major Products

ECEL Hydraulic Mobile Cranes Slew Cranes Compactors Forklifts Articulated Boom Cranes Railway Equipment Auto Components Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

17.3 Escorts Limited – Company Information

17.3.1 Escorts Limited - Key Competitors

The following companies are the major competitors of Escorts Limited:

First Tractor Company Limited Telco Construction Equipment Company Limited BEML Limited

17.3.2 Escorts Limited - Key Employees

Table 196: Escorts Limited,, Key Employees

Name Job Title Board Level Rajan Nanda Chairman, Managing Director Executive Board Nikhil Nanda Joint Managing Director, Executive Director Executive Board G B Mathur Senior Vice President Senior Management Group Head Human Resources and Employee Partha Dasgupta Senior Management Relations O K Balraj Chief Financial Officer Senior Management Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 282 Forecasts to 2015

COMPANY PROFILES

18 Company Profile: Telco Construction Equipment Company Limited

18.1 Telco Construction Equipment Company Limited Company Overview

Telco Construction Equipment Company (Telcon) is India's leading provider of equipment and services in the construction and earth-moving industries. It was set up in 1961 as a division of Tata Motors; and now has a joint venture between Tata Motors and Hitachi Construction Machinery Co of Japan. The company manufactures a range of equipment like excavators, loaders, compactors, cranes, dump trucks, and concrete mixers and pumps for the construction, agriculture, infrastructure, and mining sectors. The company also manufactures equipment spares and offers refurbishment and reconditioning services along with full maintenance contracts to clients. The company has manufacturing facilities in countries such as India, Spain, and China and operates through subsiadiaries, joint ventures, associates, and a network of distributors and dealers across countries. Telcon is headquartered in Bangalore, India.

Table 197: Telco Construction Equipment Company Limited, Key Facts

Corporate Address Jubilee Building, Bangalore, , 560025, India Telephone + 91 80 66953301 Fax + 91 80 66953309 URL www.telcon.co.in Industry Construction Ticker Symbol, Exchange N/A No. of Employees N/A Fiscal Year End March Revenue (US$ Million) 496.52 Revenue (Local Currency) 21,430.00 Locations China, India, Thailand, Spain, Egypt Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

18.2 Telco Construction Equipment Company Limited - Business Description

Telco Construction Equipment Company Limited (Telcon) designs, manufactures and supply‘s construction equipment. The products include hydraulic excavators, crawler cranes, wheel loaders, backhoe loaders, off- highway dumpers, wheeled equipments, road making equipments, motor graders, skid steer loaders, cane loaders, and truck loader cranes. Telcon products are used for agriculture, construction, infrastructure, and mining applications. The equipments are sold in India, as well as in Asia, Africa, and the Middle East. The company was established in 1961. As of March 30, 2010, Telco Construction Equipment Company Limited operates as a subsidiary of Hitachi Construction Machinery Co. Ltd.

The company manufactures a range of construction equipment in India and has two manufacturing plants in Jamshedpur in Jharkhand and in Dharwad in Karnataka. The Dharwad facility is the younger of the two facilities and was established in 1999. The facility is spread over 118 acres and rolls out more than a thousand machines with less than 50 workers. The facility in Jamshedpur is in operation since 1961 and is spread over 121,000 square meters.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 283 Forecasts to 2015

COMPANY PROFILES

Another plant is being set up in Kharagpur spread over 60 hectares. The Kharagpur plant will produce backhoe loaders, mini excavators, off-highway dump trucks, wheel loaders and large mining shovels. It will also have a RandD centre in collaboration with HCM.

Telcon manufactures concrete pumps and concrete mixers through the Spanish company Serviplem S.A., acquired in 2008. It ranks first among truck-mounted concrete mixers in Spain with a 70% market share and is the sixth largest company in the segment globally. Serviplem S.A. has presence in 40 countries, exporting 40% of the production. The subsidiary manufactures truck-mounted concrete mixers (since 1968) and tanks for transporting bulk cement and powders (since 1990). It also sells ‗THEAM‘ conveyors mounted on BARYVAL truck concrete-mixers in Spain. Serviplem S.A.has joint ventures and several technology transfer agreements for concrete mixers of capacities between 3 and 15m3 mounted on trucks or semi-trailers. The company has two manufacturing facilities in Zaragoza to manufacture truck-mounted concrete mixers and tanks for transporting cement with 29 m3 capacity made of steel and 30-32 m3 capacity made of aluminum. It also has a facility in Madrid, for mounting and after-sales center and a production center for the assembly and manufacture of truck-mounted concrete mixers in Baotou, China.

The other subsidiary, COMOPLESA LEBRERO S.A (LEBRERO) is a leading manufacturer of vibratory compactors for road construction since 1954. In addition, LEBRERO manufactures bitumen tanks and auxiliary machinery for public works with production facilities in an area of more than 31 000 square meters. Telcon acquired a controlling stake of 60% in the company in 2008. LEBRERO has a network of dealers across four continents and has a centralized inventory center in Zaragoza that stocks 26000 spare parts.

In March 2010 Telco has sold 20% stake in Telco Construction Equipment Company Ltd to Hitachi Construction Machinery Co. Ltd resulting in the company‘s shareholding being reduced to 40%.

18.3 Telco Construction Equipment Company Limited - Major Products, Services and Brands

The company‘s main products, services and brands include the following:

Table 198: Telco Construction Equipment Company Limited, Major Products Services and Brands

Products Services and Brands Hydraulic Excavators Full Maintenance Contracts Mini Excavator Specialized Reconditioning and Refurbishing Services Dump Trucks Crawler Cranes Baryval Tire Mounted Cranes - Vehicles Lebrero Rough Terrain TATA Cargo Cranes Pavers Vibratory Compactors Rammers Backhoe Loader Multi Utility Loader Wheel Loaders Hydraulic Filters

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 284 Forecasts to 2015

COMPANY PROFILES

Table 198: Telco Construction Equipment Company Limited, Major Products Services and Brands

Ground Engaging Tools Hydraulic Pumps And Motors Pins And Bushes Transmission Components Undercarriage Parts Bulk Dry Tanks Concrete Pumps, Concrete residue Recyclers Conveyor belts mounted on concrete mixers Gravel spreaders Bitumen spraying tanks Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

18.4 Telco Construction Equipment Company Limited - History

Table 199: Telco Construction Equipment Company Limited, History

Year Event type Description Telcon sold its 5,000th TATA HITACHI EX70 machine in March 2009. Telcon also 2009 New Products/Services launched a number of new models which includes the TATA TWL 3034, India‘s first hydrostatic wheel loader; TATA-HITACHI ZAXIS 370MTH hydraulic excavator; and Telcon Serviplem transit mixer. 2008 Others Telcon sold its 10,000th EX 200LC hydraulic excavator.

2008 Contracts/Agreements Telcon won an order for 16 TATA 315V backhoe loaders from Kolkata Metropolitan Development Authority (KMDA). 2008 Acquisitions/Mergers/Takeovers Telcon acquired a controlling stake of 60% in Comoplesa Lebrero S.A, Spain. 2008 Acquisitions/Mergers/Takeovers In March 2008, Telcon acquired a 79% stake in Serviplem S.A., Spain.

2007 New Products/Services In June 2007, Telcon introduced the Hitachi's ZAXIS 50U, a 5 ton mini excavator, India's first zero tail swing excavator.

2007 Corporate Awards In December SERVIPLEM, S.A. was awarded the international Swedish Steel Prize 2007 for design of new truck-mounted concrete mixer and its new semi-trailer mixer.

2007 Contracts/Agreements SERVIPLEM, S.A. - BARYVAL signed a contract with its new official dealer TD AUTOBAN in Russia for dry bulk tanks.

2004 Contracts/Agreements Telcon Eco Resurfaces Pvt Ltd (TERPL), a joint venture between Telcon, IVRCL Infrastructures and Projects Ltd and two Japan-based companies, GreenArm and Hitachi, was established.

2003 New Products/Services The company started manufacturing the Euclid-Hitachi 35-tonne capacity dump-trucks ( EH-600 model).

2001 Contracts/Agreements SERVIPLEM, S.A. signed a joint venture agreement with a Chinese firm for the assembly and manufacture of truck-mounted concrete mixers in Baotou, China. The company entered into a technical collaboration with Hitachi Construction 1984 Contracts/Agreements Machinery, Japan for manufacturing hydraulic excavators.

1962 Incorporation/Establishment SERVIPLEM, S.A. was formed on April 1962 as Industrias LEBRERO S.R.C., in Milagro, Spain. Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 285 Forecasts to 2015

COMPANY PROFILES

18.5 Telco Construction Equipment Company Limited - SWOT Analysis

The company is a market leader in specific equipment markets in India and Spain. Telcon also has support services and a strong focus on product innovation and development. The company could expand presence in under-penetrated markets and increase its association with Hitachi in RandD and exports. The Indian construction equipment industry, especially the ready-mix concrete business also offers opportunities for the company. Compliance to environmental norms, volatility in raw material prices and increasing entry of foreign players in India could pose challenges for Telcon.

18.5.1 Telco Construction Equipment Company Limited – Strengths

Strength – Market Leadership Telcon has a strong presence in India and is a leading manufacturer of construction equipment. The company has been a pioneer in hydraulic excavators and has sold excavators and construction equipment to both the government and private sector. Telcon has established itself as the leader since 2004 in excavators and crawler cranes and has captured over 66% market share in India. In 2008, the company sold its 10,000th EX 200LC hydraulic excavator and in 2009 sold its 5,000th TATA HITACHI EX70 machine in the month of March and has a strong network of dealers across India. The company has also established a strong presence in Spain after the acquisition of the Spanish company Serviplem S.A., in 2008. In Spain, Telcon is a leader among truck-mounted concrete mixers in Spain, with a 70% market share and is the sixth largest company in the segment globally. The other subsidiary, LEBRERO is a leading manufacturer of vibratory compactors for road construction and helps complement the existing product line of the Telcon. Besides, Telcon has the technology support of Hitachi, a global player in the equipment market.

Strength - Support Services Telcon has made efforts to cater to the needs of customers. It offers new customized attachments to agriculture and construction sector like the cane grab, clamshell, orange peel grab, rock breaker and crusher. The company also has improved the quality of after-sales service to clients through in-house training of mechanics of dealers. The company is setting up four operators‘ training schools at Dharwad (southern India), Jamshedpur, Kharagpur (eastern India) and Chandigarh in northern India. Telcon also offers value added service offerings such as Full Maintenance Contracts (FMC) and specialized reconditioning and refurbishing services. It also facilitates sale and rental of used construction machinery improving goodwill. The company also has realigned its Dealer Management System (DMS) with Channel Partners. It also plans to enhance the customer support network through channel partners by locating customer touch points at every 100km (62.13 miles) across the country. These efforts have helped improve the company‘s relationships with clients and created a competitive advantage.

Strength - Expansion of product portfolio Regular expansion of product portfolio through overseas acquisitions launch of new products has helped Telcon maintain its market leadership in India. Recently Telco has acquired 79% stake in SERVIPLEM S.A, a European Construction Equipment Company based in Zaragoza, Spain Further Telcon has signed another deal to acquire 60% stake in COMOPLESA LEBRERO S.A., a European Construction Equipment Company based in Zaragoza, Spain. The company pioneered the development of hydraulic excavators in India. The company‘s multi-utility loader has great utility in the agriculture sector. Telco indigenously developed the Motor Grader TG14 that has applications in road construction and mine haul road maintenance. In 2009, the company launched a number of new models which includes the TATA TWL 3034,Excon 2009, and TATA 315E, TATA-HITACHI ZAXIS 370MTH hydraulic excavator; and Telcon Serviplem transit mixer at the 9th International Mining and Machinery Exhibition. The company also plans to set up a RandD center in

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 286 Forecasts to 2015

COMPANY PROFILES

collaboration with Hitachi at its new manufacturing facility in Kharagpur. The company also won the 2008 JRD QV Award. It assembles 100% of products and manufactures more than 40% of components and aggregates in-house. These efforts have helped the company retain customers and stave off competition from other major players like JCB and BEML.

Strength - Hitachi provides strong technological support Hitachi plays a very significant role in Telcon‘s operations. Telcon‘s operating strengthens from its capabilities in indigenizing imported designs and its ability to introduce new models owing to its continuing access to new products/ technology from Hitachi. Moreover, Hitachi remained a major raw material provider for Telcon, supplying it with critical hydraulic components. Taking the relationship further, Hitachi now proposes to source some components from Telcon‘s new manufacturing facility being set up at Kharagpur. Besides, Hitachi is also planning to set up an R&D centre jointly with Telcon at Kharagpur to develop new products and also use the centre as a global R&D hub. Hitachi holds a 60% of the share in Telco which will help to develop new technology.

18.5.2 Telco Construction Equipment Company Limited – Weaknesses

Weakness - Product Range Telcon has a limited range of products as compared to many other players in the market. This limits its ability to become a global top 25 construction equipment player by 2012 as envisioned by the top management. The company has significant presence only in select product lines in select markets in excavators, loaders, compactors, and concrete mixers, primarily in the construction and earthmoving sectors. It is necessary for Telcon to expand the product range and become a full line equipment manufacturer to become a global player.

Weakness - Corporate Administration The company has a network of over 100 offices across India that manages sales for individual, private and public customers. This requires the need to develop and operate an efficient information system to handle orders, payments, financing and credit facilities. In 2009, a case was filed for fraud and deficiency of service wherein the Secuderabad office of Telcon is alleged to have colluded with Magma Fincorp Ltd. and another individual to collect post dated checks for the entire sale consideration amount without delivering the excavator to the complainant. An efficient management system is necessary, especially with the company expanding its product range and entering new markets.

18.5.3 Telco Construction Equipment Company Limited – Opportunities

Opportunity - Expand Presence in Under-Penetrated Markets Telcon has the opportunity to expand into under penetrated markets. Currently the company exports construction equipment to African, Asian and Middle Eastern countries. It could continue to pursue inorganic growth strategy to achieve this objective. The company already has acquired couple of companies in Spain and has various joint ventures and associates to support this objective. Some of them are Telcon Eco Road Resurfaces (a joint venture with IVRCL, India, and Hitachi and Green Arm, Japan); Hitachi Construction, Japan (hydraulic excavators and cranes); Lebrero, Spain (compactors); CESAN, Turkey (asphalt plants); Hitachi Truck Manufacturing, USA (dumpers); Tadano, Japan (tyre-mounted cranes); Hitachi-Sumitomo, Japan (crawler cranes); Berco (undercarriages); and Serviplem, Spain (concrete mixers and dry bulk tanks). The acquisition of Serviplem gave Telcon the access to superior technology, a manufacturing base in Europe and China, and a distribution network in Europe, the Middle East and China. The acquisition of Lebrero enables the company to compensate the absence of Hitachi‘s presence in compaction equipment and leverage Lebrero‘s technology and manufacturing base to provide compactors for distribution through Hitachi‘s network in Europe,

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 287 Forecasts to 2015

COMPANY PROFILES

the Middle East, Africa, CIS countries and South East Asia. Similar inorganic growth could help expand global presence and increase its product range.

Opportunity - Ready-mix Concrete Business in India The construction sector in India offers growth opportunities especially in the ready-mix concrete business. According to today‘s concrete technology Global ready mix concrete market is estimated to reach US$105.2 billion by 2015 .This business is expected to drive demand for transit mixers and concrete pumps by about 30% by 2015 in India. Telcon, has the ability to introduce concrete mixers from Serviplem and tap this opportunity. Global demand is also expected to grow with countries like China banning on-site concrete mixing due to environmental pollution.

Opportunity - Product Innovation with Hitachi The company can increase its relationship with Hitachi to produce newer equipment models, attachments and undertake R&D for the global market. Telcon is currently planning to increase the export of components to Hitachi‘s global manufacturing plants and has set up a joint development team. The two companies have already agreed to make Telcon the sourcing base for 35-ton to 100-ton off-highway rigid dump trucks for global markets. Telcon introduced the Hitachi's ZAXIS 50U, a 5 Tonne Mini Excavator which is India's first zero tail swing Excavator. The company also plans to set up the RandD center at Kharagpur plant. This could help launch new models with latest technology for global markets. Currently, BEML and Caterpillar lead in dumpers and dozers, JCB India in backhoe loaders while LandT-Komatsu and Telcon lead in excavators.

Opportunity - Indian Construction Equipment Market The Indian construction equipment industry is expected to grow with sustained investments in infrastructure including roads, irrigation and urban infrastructure; and likely recovery in residential real estate and increasing industrial investments from 2010-11 onwards. Construction accounts for 70% of demand for earthmoving equipments and mining sector the rest.

18.5.4 Telco Construction Equipment Company Limited – Threats

Threat - Compliance to Environmental Norms The company's facilities and operations are impacted by environmental laws and regulations governing emissions, discharges into water and air, and the generation, transportation, storage, handling, treatment and disposal of non-hazardous and hazardous waste materials. With engines subject to extensive regulations, the company is faced with the challenge of improving product technology and has to make substantial investments for research and development. Furthermore, the company has to comply with the emission and noise related regulations of various regulatory agencies in the countries of current or future operation. Revamping products or certain manufacturing processes to comply with the regulations could pose a challenge for the company. Currently the company provides tier II compliant engines in equipment.

Threat - Volatile Raw Material Prices In FY2009, the company has recorded an increase in operational costs which resulted in a reduction of profit margins of the company. The increase in operational costs is primarily due to increase in volatility in input costs, especially in parts, raw materials and material components such as steel materials. Steel prices in turn are largely affected by the oil price, which are highly volatile reaching a high of US$145 per barrel in June 2008 to a low of US$30 per barrel. It would be difficult for the company to pass off the effect of volatile input costs to the customers on real time basis as competition makes it difficult. High input cost volatility hinders effective pricing strategies to secure and retain business.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 288 Forecasts to 2015

COMPANY PROFILES

Threat - Competition from Foreign Players The major geographic markets in which the company operates are highly competitive and in recent years, competition has intensified considerably due to highly maturing and saturating markets. The construction equipment industry is reported to produce volumes of 40,000-45,000 units per annum and has an estimated turnover of US$2.6 billion to USD$3.1 billion (INR118.9-141.7 billion). The Indian market is relatively small as compared to the global market that is estimated at US$75 billion (INR3428.5 billion). With an annual growth rate of 37%, India‘s excavator market is projected to continue expanding for the foreseeable future leading to more new players like Kobelco entering the sector. Telcon currently competes with major global players such as Caterpillar Inc., Terex Corporation, Volvo Construction Equipment NV, and local players like Bharat Earth Movers Ltd for several products in its portfolio operating in similar markets. As some of the players are market leaders in their respective home countries, the company needs to focus on select industry sectors. Competition is based largely on price, product and service quality, brand reputation, customer service and product features. In addition, decreasing barriers to entry has further intensified competition. With the incremental capacities and new entrants, the industry is expected to become more competitive and fragmented.

18.6 Telco Construction Equipment Company Limited – Company Information

18.6.1 Telco Construction Equipment Company Limited - Key Competitors

The following companies are the major competitors of Telco Construction Equipment Company Limited: J C Bamford Excavators Ltd BEML Limited HERCULES HOISTS LIMITED

18.6.2 Telco Construction Equipment Company Limited - Key Employees

Table 200: Telco Construction Equipment Company Limited., Key Employees

Name Job Title Board Level Ranaveer Sinha Managing Director Executive Board K. C. Naveen Kumar Senior Management P Ravishankar General Manager - Sales and Marketing K Kimura Director - Operations Senior Management A Krishnakumar General Manager - Sales Senior Management M. Vijaykumar Chief Marketing Officer Senior Management Source: Annual Report, Company Website, Primary and Secondary Research / © ICD Research

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 289 Forecasts to 2015

ANNUAL REVIEW

19 Annual Review

Below is an extract of the most interesting and important activity in the global earthmoving equipment market during the last 12 months. This includes details of major construction projects, contract tenders and awards, financial deals and major company and industry events:

July 22, 2011: Hidromek, John Deere and ZF to develop drivetrain for backhoe loaders Hidromek, a Turkish manufacturer of construction equipment, has partnered with John Deere and ZF to develop a new drivetrain for its HMK 102B backhoe loaders. Hidromek has announced that the drivetrain provides 5% efficiency gains compared to its previous backhoe loader. The drivetrain combines a heavy-duty ZF electro hydraulic autoshift transmission with a 4.5 litre, 74kW JD4045HF280 engine from John Deere.

The engine complies with Stage IIIA/Tier 3 exhaust emission requirements, making the backhoe loader suitable for sale in Turkey, Africa, Latin America and Asia. Hidromek plans to develop a Stage IIIB/Interim Tier 4 version to address forthcoming emissions requirements in Europe and the US.

July 11, 2011: Komatsu unveils new D65-17 crawler dozer Komatsu America Corporation, a manufacturer of construction equipment, launched its new line of D65-17 crawler dozers. The new D65-17 is powered with the fuel efficient and larger displacement, 8.9 Liter, EPA Tier 4 Interim and EU Stage 3B emission certified Komatsu SAA6D114E-5 engines. The dozers are featured with a standard (EX), low ground pressure (PX) and a wide (WX) track model, which will provide customers flotation and weight distribution options that best match their applications.

The new line of equipment is available with an operating weight ranging from 44,355 pounds to 49,315 pounds, depending on the version. The dozer is primarily developed for heavy dozing and finishing operations and combines the revolutionary SIGMADOZER blade with a new highly efficient automatic transmission with torque converter lock-up to achieve exceptional productivity and fuel economy. The equipment is also fitted with new Komatsu 6-way Power Angle Tilt (PAT) blade, creating a balanced and agile tractor for light and medium dozing operations. The blade also provides precise grade cutting required for site prep, golf course or house pad applications.

July 7, 2011: Volvo Construction Equipment unveils new EC250D and EC300D excavators Volvo Construction Equipment launched new EC250D and EC300D heavy duty excavators, which offer improved cycle times and greater fuel efficiency. The new EC250D excavator weighs 54,230 to 61,730 pounds and has a maximum power of 202hp, while EC300D excavator weighs 66,140 to 73,630 pounds and includes a maximum power 227hp. The two excavators are equipped with Tier 4i certified Volvo D8H engines, delivering lower emissions and high fuel efficiency.

The engines feature a waste-gate turbo, externally cooled exhaust gas re-circulation (EGR) and diesel particulate filters (DPF) with partial fuel burner and active regeneration. The machines are installed with the latest generation care cab and offer operators enhanced visibility, ideally placed controls and monitors, and a quieter, safer and more comfortably spacious place to spend their days. Operators also are in for less of a shock with these new machines, due to the cab being ROPS protected and mounted on dampened cab mounts that iron out vibrations.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 290 Forecasts to 2015

ANNUAL REVIEW

June 20, 2011: LiuGong unveils new 766A backhoe loader China-based construction equipment manufacturer LiuGong has launched a new model midsize backhoe loader 766A, which features a Tier III Perkins engine that delivers 93 net hp to the Italian-manufactured 4- wheel drive. The new LiuGong machine features a four-speed power shuttle Carraro transmission and provides travel speeds up to 23.6 miles per hour. The backhoe has a rear axle differential lock system and multiple wet-disc brakes and the four-wheel drive automatically engages when the service brake is applied.

The equipment also features a maximum dig depth of 14 feet six inches and a bucket digging force of 13,083 pounds. The 766A backhoe also exhibits capabilities for utility and commercial construction applications. The 766A backhoe‘s loading height is 11 feet six inches and comes equipped with a 24 inches wide, 0.27 cubic yard bucket.

June 9, 2011: Terex unveils new twin drive excavator Terex showcased its new TC16 Twin Drive mini excavator at the International Rental Exhibition (IRE) in Amsterdam. The twin drive machine is powered by both a diesel and an electric engine. The diesel engine produces 13.1KW and can drive the excavator from trailer to project site. The electrical system can be switched on at the site to produce 11KW for a safe and quiet working environment on jobs such as renovation on buildings, demolition works and green houses with no emissions.

Terex also launched a prototype of the dual engine crawler excavator, which weighs 1.9 tonnes and can dig to 2.2m, at Bauma exhibition held in 2010 in China.

June 9, 2011: Bobcat unveils new rotary grinder attachments for loaders, excavators Bobcat, manufacturer of compact construction and utility equipments, launched a new range of rotary grinder attachments, RG20, RG40 and RG60, for its compact loader and excavator range. All the new rotary grinders feature a double drum driven by an integrated high-torque hydraulic motor.

The RG20 grinder has a standard cutting width of 565mm and is suitable for use on Bobcat E32, E35, E45, E50, E55W and E60 mini-excavators. The RG40 grinder has a standard cutting width of 625mm and is used for the E80 excavator and on the Bobcat S205H, S630, S630H, S650, S650H, T190H, T650 and T650H compact loaders. The largest model, the RG60 grinder, cuts to a width of 850mm and can be used on the Bobcat S770H, S850H, T770H, T870H and A770H compact loaders.

Bobcat states that the design of new grinding attachments allows them to be used for applications requiring precise removal of material, without damaging adjacent structures. They can also be used for less precise work such as the demolition of walls and other structures; for digging trenches in hard and rocky ground; and for preparing asphalt or concrete surfaces for repair.

June 6, 2011: JCB introduces new TM180 wheeled loader JCB launched TM180, a new telescopic boom wheeled loader, which will be available in the market from September 2011. The TM180 model has a lifting capacity of 1.8 tonnes with pallet forks. The loader has a maximum pallet loading height of 4534 mm, and maximum forward reach of 3674mm. The machine weighs 5.6 tonnes and is powered by a Tier IIIB compliant Deutz D2011 engine. The equipment produces 46kW of power and 190Nm of torque.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 291 Forecasts to 2015

ANNUAL REVIEW

June 3, 2011: JCB Caterpillar unveils new Cat 966K and 972K wheel loaders US-based construction equipment manufacturer Caterpillar has unveiled new 966K and 972K wheel loaders, which feature new designs and engines certified to meet Tier 4 Interim emissions standards and Stage IIIB regulations. The new 966K and 972K wheel loaders are equipped with a new operator station, new electro- hydraulic steering with either joystick or steering wheel control, Performance Series Buckets and a more efficient drive train. The new loaders will also offer high productivity and better fuel efficiency.

The new wheel loaders are powered by a new Cat C9.3 ACERT engine and at 1,800 rpm, deliver peak net power of 267hp on the 966K and 288 horsepower on the 972K. The machine is designed to accommodate buckets ranging in size from 3.25 to 13 cubic yards, the loaders work productively and economically in high- hour, high-volume applications. The machines are also equipped with a Cat Fusion coupler and a variety of work tools, making them ideal for construction, aggregates, forestry, industrial and other material-handling applications.

May 31, 2011: Bobcat unveils new T750 compact track loader Bobcat, a US-based manufacturer of construction equipment, added the T750 compact track loader to its M- series loader line that includes the T630, T650, T770 and T870 compact track loaders. The new T750 compact track loaders have an operating weight of 10,327 pounds, a rated operating capacity of 3,325 pounds, and are powered by an 85hp turbo-diesel engine. An additional feature on the optional deluxe instrumentation panel is its ability to monitor key loader functions, and the keyless start helps prevent theft. The loader is also installed with a new five-inch, full-colour LCD screen that offers better readability and interaction, easy to read virtual sweep gauges allow the operator to quickly read and understand the machine‘s performance.

May 30, 2011: Gehl adds two new RT Series compact track loaders to its fleet Gehl Company, a US-based construction equipment manufacturer, expanded its RT Series compact track loaders range by adding two new models, RT175 and RT210. The RT Series compact track loaders comprise powerful turbo-diesel engines which feature increased torque. The model RT175 engine produces up to 179 feet lbs of torque resulting in 11,840 pounds of tractive effort. The model RT210 engine produces 206 feet pounds of torque resulting in up to 12,359 pounds of tractive effort.

In new RT Series track, an extra large operator‘s station is designed for optimal operator comfort resulting in more productivity. The joystick controls are mounted directly to the suspension seat frame, allowing them to move with the operator as the machine travels.

May 26, 2011: Volvo unveils new wheeled loaders, excavators and articulated haulers Volvo Construction Equipment unveiled new wheeled loaders, excavators and articulated haulers compliant with Europe's Stage IIIB and US Tier 4 Interim emissions regulations. Equipped with Volvo's new V-ACT (Volvo Advanced Combustion Technology) diesel engines, the new machines are exhibited at the company's Eskilstuna facility in Sweden. The technology has produced fuel savings of -15% on some machines, notably the company's first 35 tonne wheeled loader, the L250G.

The company also displayed Volvo's new high lift wheeled loader - the L180G. The new wheeled loader is fitted with a 246 kW Tier 4 Interim/Stage IIIB compliant engine that is married to drive train, hydraulics and the lifting arm systems and has also demonstrated fuel efficiency savings of up to 15%.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 292 Forecasts to 2015

ANNUAL REVIEW

Further, the company exhibited two new models for its new generation of D-Series excavators - the Stage IIIB / Tier IV Interim-compliant EC380D and EC480D tracked excavators. The new machines weigh between 38 tons to 50,5 tons and have been designed for heavy digging and lifting operations.

May 16, 2011: Case Construction unveils new 1021F and 1121F wheel loaders Case Construction Equipment expanded its new F Series wheel loader product line with the launch of 1021F and 1121F wheel loaders. The new wheel loaders are specifically engineered for quarry, aggregate and truck- loading applications.

The 1021F wheel loader features a 296hp engine, a 5.5 cubic yard bucket, dump height of 121 inches and an operating weight of 53,500 pounds. The1121F is provided with a 320hp engine, a 6.25 cubic yard bucket, dump height of 126 inches and an operating weight of 60,800 pounds.

Case introduced selective catalytic reduction (SCR) technology for wheel loaders to increase productivity and meet Tier IV Interim emissions standards.

April 20, 2011: Galadari introduces green JCB backhoe loaders in Abu Dhabi Galadari Trucks and Heavy Equipment, the official dealer of JCB equipment in UAE, launched JCB‘s latest generation of green backhoe loaders in Abu Dhabi. The 3CX and 4CX backhoes feature a three pump hydraulic system that allows for the same high output hydraulic flow and pressure at reduced engine revolutions, cutting fuel consumption by 15%. The ecoDIG system of the loaders is controlled by a two- position rocker switch on the main console in the cab. The control offers choices of an eco mode, maximum efficiency and digging potential mode or an ultimate machine control mode to facilitate fine grading and delicate groundwork profiling applications.

April 15, 2011: Kobelco opens excavator manufacturing plant in India Kobelco Construction Machinery, a subsidiary of Japan-based Kobe Steel Limited, has inaugurated an excavator manufacturing plant near Chennai city in Tamil Nadu, India. The plant has been established with an estimated investment of US$15.7 million (INR700 million) and has an initial capacity of 1200 units per year. Kobelco will begin manufacturing 20 tonne excavators and will later manufacture 14 and 35 tonne excavators.

The first phase of the plant development is expected to require a total investment of INR1 billion ($22.5 million) with the plant expected to reach full capacity by 2013-14. The excavators will be produced using 50% local parts. Critical systems and components including the engine and electronics will be imported from Japan and Thailand. Excavators from the new plant will primarily be sold in the local market.

April 14, 2011: D Wardle Plant acquires two new Volvo G series wheeled loaders D Wardle (Plant), a UK-based earthmoving company, has received two new Volvo G series wheeled loaders in the UK. The L220G wheel loaders is part of Volvo‘s new G-series range with 20% increased lifting force, 10% improved breakout force and stronger hydraulics. The L220Gs feature new engines and driveline systems designed for improved productivity, lower emissions, greater smoothness, serviceability and operator comfort. The Volvos were selected for their slew of energy saving features including optishift transmission with its reverse by braking feature, the simple but effective eco pedal and engine auto shut off.

March 23, 2011: JCB announces US$130 million investment for new production facilities JCB is constructing a new factory with an investment of US$100 million in Brazil and will also invest US$30 million for an engine plant in Ballabgarh, Delhi, India. The new factory in Brazil will be a 350,000 square feet facility constructed on a 50 acre site in Sorocoba. Complete production will be relocated to the new facility.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 293 Forecasts to 2015

ANNUAL REVIEW

The facility is scheduled to be opened by 2012, with a production capacity of 5,000 backhoes and 2,500 excavators a year.

The Indian facility will be the first JCB facility outside Derbyshire, UK, to produce the firm's Dieselmax engines. The engines will be used in JCB products manufactured in India. Plans call for every backhoe manufactured in India to be fitted with an engine manufactured in India from April 2011. The move is aimed at meeting new local emissions legislation.

March 22, 2011: JCB launches new skid steer and compact track loader JCB, a manufacturer of construction equipment, launched a new range of skid steers and compact track loaders with rated operating capacities of 2,250 pounds. The new 225 wheeled skid steer and the 225T compact track loader come with all the features introduced with the seven other New Generation skid steer and track loader models. The new 225 wheeled skid steer and the 225T compact track loader feature tilting cab with increased service access, multifunction joysticks, and hydraulic quick hitch. An isolated cab is also included in the machines, which is sealed and pressurised with reduced noise levels. The cab also features heated air-suspension seat with adjustable armrests and O-ring face seals for all hydraulic connections.

March 11, 2011: Doosan unveils new DX235NLC narrow width crawler excavator South Korean conglomerate, Doosan Group unveiled a slim version of its DX235NLC excavator which comes with mono boom. The DX235NLC comes with a 4.7 ton counterweight in the mono boom and five ton counterweight in the articulated boom version. The crane also includes reinforced 12.5mm shoe plates and an over-dimensioned front body section.

The new equipment, with a width of 2.54m, meets the transport width standards of the road regulations in certain countries. The reduced width of the new machine enables operators to work in confined spaces on inner-city projects or housing developments. The oversized boom and counterweight in the 22.5 ton DX235NLC provide higher lifting performances than other excavators in the 21-24 ton category.

February 17, 2011: New Holland to unveil two wheeled loaders and crawler excavator at Samoter 2011 New Holland Construction has announced that it will unveil the E305C crawler excavator and the two wheeled loader models, the W170C and W190C at Samoter 2011, which will be held from 2 to 6 March 2011. The new models are powered by the new stage IIIB engine. The B115B and B110BTC backhoe loaders are equipped with new features which will reportedly increase fuel efficiency, operator comfort, productivity and durability.

The company will also exhibit the new W170C and W190C wheel loaders which feature high-pressure common rail engines that claim best in class power and torque.

February 16, 2011: Gehl unveils new V330 vertical lift skid loader Gehl, a manufacturer of compact equipment for agriculture and construction markets, has unveiled the new V330 vertical lift skid loader with more than 131 inches of near-vertical lift height. The V330 skid loader comes with an 84hp turbo-diesel engine and a rated operating capacity of 3,300 pounds. The new loader features a powerful Yanmar turbocharged diesel engine with 215lbf-ft peak torque. The horsepower and torque of the loader are enhanced with a high-performance drive train.

The V330 skid loader is also featured with the Hydraglide Ride Control System as standard equipment. The entire ROPS/FOPS assembly on the V330 skid loader tips rearward on a hydraulic lift for easy internal service access.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 294 Forecasts to 2015

ANNUAL REVIEW

January 31, 2011: Mota-Engil signs deal for more than 40 Caterpillar’s earthmoving equipment Portuguese contractor Mota-Engil Group has inked a deal with local Caterpillar dealer Barloworld STET for more than 40 machines for Douro Interior Highways project in the north east of Portugal. Pursuant to the deal, Barloworld STET has provided three Cat 323D L and two 336D LME medium size hydraulic excavators, and three 345D LME and one 365C LME large hydraulic excavators. The dealer has also supplied five CS76 XT soil compactors, four D6T and one D5K track-type tractors are also included in the package, along with six 730 articulated trucks, two 772 off-highway trucks and others. The order also includes seven used 740 articulated trucks and two pre-owned D8T track-type tractors. All of these machines are Cat Certified Used products, and as such carry a full Cat warranty.

January 28, 2011: Case launches F Series wheel loaders Case Construction Equipment has unveiled three new 721F, 821F and 921F F series wheel loaders, which provide quick acceleration, quicker cycle times and higher travel speeds. The new Case 721F, 821F and 921F wheel loaders evolved from the company‘s E Series product line. The Case F Series wheel loaders use proven selective catalytic reduction (SCR) technology to meet Tier 4 Interim emissions standards while also delivering increased power and improved fuel efficiency.

The Case 721F, 821F and 921F wheel loaders feature a 6.7-litre Tier 4 Interim-certified engine, rated at 179, 211 and 242hp (133, 158 and 180 kW), respectively. The new range of loaders has four programmable power modes to save fuel and increase available power, Economy, Standard, Auto and Max, gives operators flexibility in matching engine power to their jobs. The Case F Series wheel loaders can perform in a wide range of applications, from construction sites and landfills to quarry and aggregate operations.

January 19, 2011: Case Construction unveils C Series excavators Case Construction Equipment has expanded its C Series full-sized excavator line with three new models, Case CX250C, CX300C and CX350C. The new line of excavators replaces models in the company‘s B Series product line.

The excavators feature Tier 4 Interim-certified cooled exhaust gas recirculation (CEGR) technology that burns cleaner while delivering superior horsepower. These three new models deliver 177, 207 and 266 net horsepower (132, 154 and 198 kW), respectively. The new excavators are equipped with Case Intelligent Hydraulic System technology, which reduces total fuel consumption and improves performance. The Boom Economy Control of the machines reduces engine RPMs during the boom down and swing operation, while the Auto Economy Control lowers RPMs when the joysticks are inactive. The new excavators are also equipped with Swing Relief Control technology, which manages the hydraulic power allotted at the start of the swing operation, and Spool Stroke Control creates an automatic pressure adjustment during digging operations.

December 20, 2011: Komatsu unveils new 5.2 ton class PC55MR-3 midi excavator Global construction equipment maker Komatsu Europe International has expanded its MR-3 range of excavators with the addition of the 5.2 ton class PC55MR-3 midi excavator. The new midi excavator, which replaces the earlier model PC50, is equipped with a Stage IIIA engine (28.5kW Komatsu 4D88E-6), proportional controls, and offers auto-idling as an option.

The MR-3 range includes 1.4 ton to 5.5 ton models and is now almost complete, with just a two-ton unit to be unveiled in early 2011. All the models were built in Italy. The PC55 has an operating weight of 5,280kg to 5,350 kg, and has a "tight" tail design making it suitable for working in restricted spaces. The excavator has a bucket capacity of 0.07 cubic metres to 0.175 cubic metres and is available with either long or short arm, cab

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 295 Forecasts to 2015

ANNUAL REVIEW

or canopy, and rubber, steel or road liner shoes. The new excavator is equipped with Komatsu's KOMTRAX remote satellite monitoring system.

December 17, 2011: Case adds new four new T Series tractor loader backhoe models Case Construction Equipment has added four new T Series tractor loader backhoe models to its Construction King series, which include: Case 695ST, Case 590ST, Case 580ST and Case 580T. The company also said that the new models offer improved productivity, lower running costs and faster operation. The company provides the customers an option to choose between Powershift or Powershuttle transmission, pilot or mechanical backhoe controls, and two- or four-wheel steering. All the four models come equipped with a 1.2 cubic metre front loader bucket as standard. The models are equipped with load sensing hydraulics, which will ensure that power is available on demand, contributing to a 10% reduction in fuel consumption and lower engine noise levels.

December 14, 2011: John Deere to build construction equipment factory in China US-based construction equipment manufacturer John Deere announced plans for the construction of a US$50 million manufacturing facility in China. The new factory will produce four-wheel-drive loaders and excavators and will be located in the Tianjin Economic-Technological Development Area. The new facility will be the sixth manufacturing location in China for Deere. Construction is slated to begin immediately with completion scheduled towards the end of 2011.

November 30, 2011: Liebherr supplies new equipment to Lancaster Earthmoving Germany-based Liebherr supplied three excavators and a bulldozer to UK-based Lancaster Earthmoving, which are currently being used at Abberton Reservoir, near Colchester in Essex. Two of the excavators are R 944 C Litronic models with the third being an R 934 C Litronic. All three have been supplied with long heavy duty undercarriage with 750mm wide trackpads. CCTV rear-view cameras with in-cab colour monitors, screen vandal guards, roof beacons, additional headlights, load diagrams with overload warning systems and a wide selection of earthmoving and ditching buckets are included in the optional extras package.

November 30, 2011: Case Construction launches new range of angle brooms for wheel loaders Italy-based Case Construction Equipment has introduced a new range of hydraulic angle broom attachments, designed to increase the utility of its wheel loaders. Ranging in width from 96 to 120 inches, the new angle brooms enable Case wheel loaders to sweep streets and parking lots, clean jobsites and remove snow from jobsites. Angle broom models are available for Case 521D and E, 621D and E, 721D and E, and 821E wheel loaders.

November 25, 2011: Liebherr announces plans to manufacture wheeled loaders in China Liebherr Group, Germany-based manufacturer of construction equipment, announced plans to begin the manufacturing of wheeled loaders in China. The 140 kW/ 3.5 cubic metre bucket capacity L 556 II is the first model available. The machines will be manufactured at Liebherr's 19000 square meter excavator factory in Dalian and are expected to be available from April 2011.

October 29, 2011: OZ Turners and Mulchers launches new excavator flail mulchers Australia- based OZ Turners launched the new Oz Mulcher 50EX excavator flail mulchers, a line of heavy duty flail mulchers designed for roadside, railway and property maintenance applications. The new Oz Mulcher 50EX excavator flail mulchers will weigh around 500kg. The heavy duty RockHound 50HD excavator flail mulchers are suitable for use with 10T to 30T large excavators and backhoes in rough terrain. The maneuverability of the excavator allows the user to mow and mulch in difficult terrain conditions effectively.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 296 Forecasts to 2015

ANNUAL REVIEW

The Oz Mulcher 50EX flail mulchers are designed to safely cut and mulch grass, scrub or small trees up to 100mm in diameter.

October 14, 2011: AAE Advanced Auxiliary Equipment introduces FlexMed Series hopper loaders AAE Advanced Auxiliary Equipment Inc. introduced the new FlexMed Series hopper loaders with self- contained electric motors. The new loaders include all of the FlexMed standard features. The standard PLC control utilizes an industrial PLC to control the loading cycle, filter cleaning and material proportioning valves. The Flexmed series hopper loaders are available for rates up to 1,000 pounds per hour. FlexMed Hopper loaders come complete with flex hose and material wands for loading up to 12 feet and glass tube options for just in time loading for small to large machines.

The loader can be controlled by a mercury free level switch or an adjustable switch reading through the glass tube. The six inch glass tube is optimal for medium and large machines. A 3 inch glass tube will be available in the first quarter of 2011 for small machines.

September 27, 2011: Sunward launches new SWE230S hybrid excavator China-based Sunward launched the SWE230S hybrid excavator, which is now commercially available in China. The SWE230S hybrid excavator is the first machine that actually rolled off the production line in September, after five years of RandD by Sunward. Sunward‘s new machine uses 20% less energy than a traditional excavator and is 50% quieter during slewing. It also meets Tier 3 exhaust emission requirements.

September 21, 2011: US DoD awards US$641.2 million equipment contract to Caterpillar The US Department of Defense (DoD) awarded Caterpillar Inc. a US$641.2 million contract to manufacture 909 wheeled tractor scrapers. The wheeled tractor scrapers will be built at the Caterpillar's facility in Decatur, Ill. It is the largest single contract Caterpillar has won through the defense department in terms of dollar value. Work on the 621G wheeled tractors is expected to be completed by Aug. 14, 2020. The machines will be used by the US Marine Corps and the US Army for construction and engineering projects.

August 19, 2011: JCB India to start manufacturing engines for backhoe loaders Construction equipment manufacturing company JCB India has announced that it will soon begin manufacturing its own ‗JCB 444‘ engine line specially suited for Backhoe Loaders. JCB had been outsourcing JCB 444 engines from Kirloskar Engines and Cummins India, which are engine manufacturing companies based in Pune, India. The proposed facility is slated to be operational by the end of 2010.

JCB has also launched the JCB 3DX Super and JCB 3DX XTRA backhoe loaders as part of the celebration for manufacturing and selling 100,001st machines manufacturing and selling 100,001st machines in India.

August 17, 2011: Kobelco launches new 215SR and 235SR ACERA excavators Kobelco Construction Machinery America has launched new 215SR and 235SR ACERA excavators in the company's short-radius excavator line. The 215SR and 235SR are designed to offer higher performance with lower noise and exhaust emissions. They are suitable for urban settings and tight areas. The excavators feature the Kobelco Integrated Noise Dust Reduction system (INDR), a state-of-the-art technology to deliver superior air filtration and a top-of-the-line engine and hydraulic cooling system. This also allows the INDR system to lower noise levels by up to 5 dBA. The excavators are Tier III-certified engines with 6% higher fuel efficiency than previous models for lowered total cost of operation. They feature quiet, in-line hydraulic pumps, combined with the Kobelco Intelligent Total Control System (ITCS).

Their power-mode selection allows the operator to choose from four different modes, depending on the job.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 297 Forecasts to 2015

ANNUAL REVIEW

While both use the same engine, the 235SR ACERA provides more breakout force than the 215SR and features a heavy-duty boom, arm and undercarriage as standard. A high and wide undercarriage is also an available option for special construction, demolition and forestry applications.

August 6, 2011: Bobcat launches new 324 compact excavators Bobcat, the North Dakota-based construction equipment manufacturer, launched its new 324 compact excavator with 1.5-ton capacity. The 324 excavator is a conventional tail swing unit in the 1.5-ton operating class. The excavator also features a lighter yet durable boom fabrication with cast pivot joints.

The 324 offers a maximum dig depth of 8 feet 6 inches, reach at ground level of 14 feet and dump height clearance of 8 feet 8 inches. The excavator is powered by a 13.9-horsepower, Tier 4 water-cooled diesel engine and two travel speed ranges are standard. The engine is equipped with a hydraulic system similar to the larger Bobcat excavators. Bobcat also claims that the system‘s torque-limiting piston pump is able to sense and react to hydraulic loads, for better use of the engine‘s torque curve.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 298 Forecasts to 2015

APPENDIX

20 Appendix

Methodology

Progressive Digital Media‘s company reports are based on a core set of research techniques which ensure the best possible levels of quality and data accuracy. The key sources used include: Company websites Company annual reports SEC filings Press releases Proprietary databases

Notes The company‘s financial information is taken from the most recently published annual reports or SEC filings. The financial and operational data reported for the company is in accordance with industry-defined standards. Revenue is converted to US$ at average annual conversion rate as of fiscal year end.

Disclaimer

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Progressive Digital Media.

The data and analysis within this report is driven by Progressive Digital Media from its own primary and secondary research of public and proprietary sources, and does not necessarily represent the views of the company profiled.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Progressive Digital Media delivers are based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such, Progressive Digital Media can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

Earthmoving Equipment – Market Opportunities and Business Environment, Analyses and Page 299 Forecasts to 2015