German manufacturers of construction equipment turned over €8.4 billion in 2014, 8% higher than the previous year and about the same as the turnover achieved in 2006.
“Turnover is one thing, profit is another,” said Mr. Joachim Strobel, Deputy Chairman of the Construction Equipment and Building Material Machinery Association of the German Engineering Federation (VDMA) and Managing Director of Liebherr EMtec GmbH, putting the figures in perspective. High investment has been put into the development of solutions to meet new European exhaust emissions regulations. In 2015, the German construction machinery industry is only expecting a sideways trend in total, as the businesses in very good and less prosperous markets tend to equal out.
Hardly any predictability
Mr. Strobel does not see any immediate threat to the existence of these manufacturers, though he did admit that long-term planning is becoming increasingly more difficult: “In former years, we were used to seeing 7-year-cycles – this is a thing of the past.” In 2014, there was a strong spring, a long summer slump and finally a significant improvement of the situation towards the end of the year. At the bottom line, incoming orders were 7% higher than in the previous year, seen mostly in the earth-moving and road construction equipment, while large equipment suffers from the downturn in the global mining industry. The building construction machinery area is recovering rather slowly and is still 50% lower in turnover today than in boom years.
German market stable – dark clouds in France
In 2014, the German market exceeded all expectation with its growth of 9% and showed stability once again. Companies are expecting the market to also develop in a positive way in 2015, even though there is not too much room for improvement on the domestic market, Mr. Strobel said. Overall, sales in construction equipment in 2014 increased by 15% across Europe, though some markets performed better than others. Portugal and Spain are slowly emerging again, while France is seeing little new investment. The highest demand across Europe was for road-building machinery.
Traditional markets a glimmer of hope
Business with the USA is improving, with sales in this region increasing by 19% in 2014.The year ahead also looks positive. The same is true for the MENA-countries, particularly Saudi Arabia. In contrast to this, the BRIC nations under-performed. In China, the industry had to cope with a double-digit decline, while the seeming improvement in India’s construction industry has not yet had an effect on sales. South America as well as the African continent is still behind expectations; only Egypt provides boost with the expansion of the Suez Canal.
Industry investing again immensely in environment technology
In the year ahead many manufacturers of construction equipment will again have to invest immensely in order to implement the European exhaust emission levels as required by 97/88/EC. Currently the regulations are being reviewed; voting in the European Council and Parliament has yet to take place. According to Strobel, the so-called level V therein prescribes new limits that are doable; the main focus of the discussion is on the deadlines to implement these new regulations. He said that a deadline of 1 January 2020 for mobile machinery comprising the categories from 56 to 130 kW, as well as 1 January 2019 for all other machines in all categories, is rather ambitious. “With development periods being five years and in light of the technical developments required, these deadlines are far too tight,” said Mr. Strobel. The industry is therefore fighting in Brussels to achieve a prolongation for the deadlines to implement and more predictability and possibility to plan. Since the regulations were first introduced in 1999, mobile machinery’s emissions have already been decreased by more than 95% for NOx and PM. This was possible thanks to enormous technological improvements as well as investments. Now, another large amount will be required to keep up with the necessary developments, without significant refinancing in sight.
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/18022015/german-construction-equipment-industry-356/