Italy also struggling in the wake of cuts in public works
The world construction market in 2010 saw a contradictory situation. Above all, one cannot speak of a single market but only distinguish between different geographical areas: while the far from rosy situation continues in Europe, made all the more uncertain in recent months by the financial weakness of countries such as Ireland and Portugal joining the already well-known difficulties of Greece and Spain; there is a contradictory stage in the United States, where the economy grew by 1% this year but the construction sector is still shrinking. Elsewhere, in Asia and South America. on the other hand, the crisis seems to be definitively over: China continues to explode and especially India and Brazil are growing significantly. It is by now very clear that once this period of crisis is finally over, the world economy scenario will be profoundly different: the guiding countries will be those that we still insist on defining as “emerging”; the truth of the matter is that there are already stars in the front line.
If the trend in the economy has inevitable consequences on the construction market, the latter has similar repercussions on the production and sale of site and earth moving machinery.
On a world scale, in accordance with analysis Off-Highway Research after the significant growth in production of earth moving machines and vehicles in the three-year period 2005- 2007 stimulated by easy credit access and the growth in Chinese demand (about 1 million units sold in 2007) there was a drastic down-sizing in 2009 with sales collapsing to just 570 thousand units. 2010 should close with a slight recovery to 686 thousand units sold, worth around 65 billion dollars. Market analysis by geographical area highlights growth in China, where demand has expanded from 18% of demand to an impressive 43%, while at the same time North America dropped from 28% to 13%.
Forecasts for 2011 suggest a slight recovery that should then improve in following years. The analysts also emphasise that coming years will change the market not only from an economic but also a structural point of view. A distinct shift in production and purchasing centres from western to eastern countries is underway: inasmuch, Off Highway Research analysts envisage that sales in Europe and North America in 2014 will respectively be 123,500 and 128,500 units (levels similar to the two-year period 1988-1989) but in the same year China alone will purchase 326,000 machines and India 63,000 compared to just 29,000 in 2009. The implications of these changes will involve all the players in the value chain, from production to components through to distribution and logistics. In this scenario, Europe reflects the data and changes already seen on the world market: 2007 is already a long time ago – the golden year for the market with as many as 162 thousand earth moving machinery units sold; after the dreadful two-year period 2008-2009, preliminary data for 2010 indicate a slight recovery.
In Italy, on the other hand, the situation is still negative. Initial analysis of the year about to end suggests that forecasts made only 12 months ago should be reviewed downwards: turnover in the construction machinery industry – no longer sustained by exports down by 13% – should close at around 2.38 billion euros, a further drop of 8.5% compared to 2009. A two-figure fall in turnover was already seen in 2009 (-35%), on a par with exports (-39%), but prospects for an inversion of the trend at the end of this year vanished as it became progressively evident that there was no recovery in the construction sector, highlighted all the more by the further cut in finance for public works and the payment difficulties experienced by public authorities themselves. Moreover, finance effectively released has focused on a handful of major works involving a limited number of large companies, leaving small-medium constructions companies – the true backbone of the sector in Italy – in a state of uncertainty.
No significant improvements are expected for 2011: production will grow by 2.1 compared to 2010 and exports will see a modest upturn of +0.7% compared to 2010.
The earth moving machinery sector is stagnant: in the first nine months of the year, the market grew by 2% compared to the same period in 2009 but final results may not confirm this small positive signal. In any case, there is no doubt that +13.2% growth seen in the first half-year was the unfortunately transient effect of the last sales sustained by the “Tremonti ter” legislation. In total, 9791 earth moving machines were sold in Italy in the first nine months of the year, while road-building machines (rollers and vibrating finishers) improved by 2.3% with 352 new units sold. Quarry and site vehicles also experienced hard times: analysis of data for the number of road circulation logbooks issued by the Ministry of Transport as of 30 November 2010 – consequently very up to date – indicates a fall in the overall number of vehicle registrations during this year compared to 2009. 1916 as of 30 November this year, against 2254 in 2009. This loss has struck all brands, a sign that the market is still stagnant. The results seen only a few years ago, when around 5000 vehicles were registered every year, are far behind us. It is by now evident that for quarry and site vehicles, as for other machinery associated with the construction world, the recovery of market volumes achieved prior to the crisis is an objective moving further away as time goes by.
Source: Samoter Press Room
2010 – A Two Speed Year: Asia and South America Up, Europe and North America Still Down
Italy also struggling in the wake of cuts in public works