Emerging from a market coma worsened by the pandemic, the new and used equipment sectors are in the midst of a high-demand cycle. If the heavy machinery market can navigate its way through supply-chain and labor issues, it should experience smooth sailing through 2023 and beyond.
At its second-quarter earnings conference in early August, Alta Equipment Group outlined a corporate optimism expressed by other construction companies across the United States.
“Demand for both new and used equipment continues to be at high levels and sales backlogs remain at record levels,” said Ryan Greenawalt, chairman and CEO. “Our organic physical rental fleet utilization and rates on rental equipment continue to improve and tightness of supply continues to buy inventory values across all asset classes.”
He attributed the rosy picture to “industry tailwinds” from the passing of the Bipartisan Infrastructure Bill, saying it is driving further demand for construction machinery.
“In our material handling segment, labor tightness and inflation are driving the adoption of more advanced and automated solutions while also driving the market to record levels,” said Greenawalt.
Multiple Factors at Play
The U.S. construction equipment market specifically is experiencing a high compound annual growth rate (CAGR) because of increased building activities for infrastructure development.
That is the conclusion of a study conducted by India-based market research firm BlueWeave Consulting.
“The U.S. construction market is estimated to grow at a CAGR of 6 percent during the forecast period of 2022-2028,” researchers reported. “The growing demand for construction equipment in this region is fueled by increased construction activities for infrastructural development as a result of government and private investment.”
Because of this considerable investment, the infrastructure segment of the construction equipment market holds the biggest market share, said BlueWeave.
In fact, “explosive” is how one industry legal expert terms the global growth in demand for heavy machinery.
He attributes the explosion to economic and geopolitical developments.
Chief among industries seeing a significant uptick in machinery demand is the mining sector, said attorney James. R. Waite.
The uptick is driven by demand for lithium, graphene, cobalt, nickel and other components for batteries, electric vehicles and clean technologies, he said.
“Further bolstering the mining industry is increased demand for precious metals and traditional commodities, especially in Latin America, Asia and Africa,” Waite said in an article in Engineering News Record. “In construction, demand for equipment and parts continues to skyrocket as countries around the world begin a new push to update roads, bridges and other infrastructure.”
But, he said, upgrades are especially pressing in the United States, where roads, bridges, rail and other infrastructure projects are finally starting to receive significant government funding.
“That will directly benefit the heavy equipment industry, but it also will see logistical issues mount and supply shortages become more acute,” said Waite.
He predicts the war in Ukraine and sanctions against Russia will drive up energy costs in the United States and elsewhere.
Post time: Mar-01-2023