VDMA: 7% sales increase in construction equipment industry in 2015

• 2016 highly risk-prone, yet slight growth is possible
• Exhaust emissions debate has developed into an environmental policy prank

Frankfurt, 17 March 2016 – Sales in 2015 nominally went up 7 per cent for German construction equipment manufacturers, reaching EUR 9 billion.
German manufacturers doing better than world market in 2015
While German manufacturers’ sales developed positively in this industry, the global market experienced a double-digit downturn. “German companies were not as much affected by the severe downturns, e.g. in China, Latin America and Russia. Instead, we participated in the above-average positive developments of the European, Middle East, and North American markets,” said Johann Sailer, Chairman of the Construction Equipment and Building Material Machinery Association within the VDMA.
Prospects for 2016, however, are mixed. Construction equipment manufacturers are expecting positive stimuli for their business in Southern and Central Eastern Europe and believe that the high-volume markets of Germany, UK, Scandinavia and Benelux will remain robust. Internationally, it is particularly the Indian market that is giving rise to hopes.

 
Uncertainties are even more complex this year
At the same time the risks are increasing, as a large number of uncertainties is being created by political and violent conflicts, excessively low oil and raw material prices with all their implications and numerous unsolved economic crises. “These risks,” says Sailer, “do not affect every market in the same way, and depending on where a company has its main business activities, it will be affected to a greater or lesser extent.”
As in the last two years, very little can be expected from Russia. The same is true for Latin America and China which is no longer the largest market in the world. Two former growth poles – North America and the Middle East – will experience the direct and indirect effects of oil and gas prices and will not continue to develop as positively as they did in the last years.
Still room for cautious optimism
Against this backdrop of enormous uncertainties, it would be wrong to take growth for granted on an individual company level in 2016. The industry as a whole, however, is expecting a slight sales increase of 3 per cent. This would be the third consecutive year of growth – and a strong success in a difficult global environment. “As manufacturers, we always feel positive about a year where there is bauma, and approach it with a good deal of optimism,” says Sailer.
Exhaust emissions debate is putting rapid modernisation at risk

A major backlash, however, can be expected from the political debate on exhaust emissions. According to the latest plans drawn up by Berlin’s Senate Department for Urban Development and the Environment, all construction equipment will need to be colour-coded to indicate its emission level. This is already being done for cars. When applied to construction equipment, however, the new regulations are threatening to put a stop to any modernisation. Machinery equipped with extremely complex and expensive exhaust emission after-treatment will be but in a worse position than ancient, inefficient machines retrofitted with diesel particle filters (DPFs) which only achieve good values when it comes to particulate emissions. The city state of Berlin is thus threatening to play an environmental prank, as the pollution caused by such outmoded machinery is several times higher. Moreover, it is twice as noisy, uses about 15 per cent more fuel and emits over 90 per cent more nitrogen oxides.
The managing director of the Association, Schmid, also sees this development as a direct consequence of the DPF retrofit debate, fuelled by Germany’s environmental organisation Deutsche Umwelthilfe (DUH): “Retrofitting can never be a satisfactory solution. It impedes the placing of state-of-the-art, environment-friendly equipment on the market. It has long been standard practice to ignore economic arguments, but we are now seeing a totally new level, where comprehensive environmental protection is being sacrificed to one-eyed arguments that focus on isolated details.”
Tables:
Development of sales and incoming orders of construction equipment – Download here.