The German construction equipment and building material machinery industry is in an optimistic mood as incoming orders are currently up by seven per cent.
Compared to the previous year, turnover of the German construction equipment and building material machinery industry declined slightly in 2013 by six per cent to the current figure of Ç11.7 billion. Nevertheless, the industry is entering 2014 in an optimistic mood. Incoming orders for construction equipment are currently up by seven per cent. ´We can look back on a satisfactory business year overall, given all the heterogeneity of our sector,´ says Johann Sailer, Chairman of the VDMA´s Construction Equipment and Building Material Machinery Association, commenting on the result of the economic survey at his association´s executive board meeting in mid-February in Frankfurt.
Despite a continuous improvement in the course of the year, at the end of the day the construction equipment industry still had to contend with a moderate sales decline of three per cent to a current total of Ç7.7 billion. In contrast, in the building material machinery sector, the turnover clearly declined by a total of 13 per cent to the current level of Ç4 billion.
Less demand for building material machines in the BRIC nations
In view of the splendid situation in the domestic construction industry, the German market painted a surprisingly weak picture for construction equipment manufacturers, with the exception of civil and structural engineering machines. In Europe, France and Switzerland as well as Scandinavia impressed.
Business in the Middle East and North America continued to develop well. The BRIC nations and the hope-bearing markets such as South Africa and Indonesia, generated too few impulses. In 2014, the manufacturers expect an improvement here. The same applies for the European market; in southern Europe, the economic recession is now seen to have finally bottomed out. The indications for 2014 are generally of an upward variety.
Exchange rate impact on building materials machinery market
As far as the building materials machine manufacturers are concerned, it is Russia, the Middle East and the countries of South-East Asia in particular where business is currently going well. However, this is not sufficient at the moment to compensate for the declines in other regions. In this connection, there is a halt to investment for sectors with excess capacities, which also include the cement industry. In several threshold countries, projects have been put on hold also due to the worsening of exchange rate, because they are simply becoming too expensive for local investors.
´Nevertheless, in 2013 some really good orders were also received,´ says Sailer, adding that due to the longer processing times compared to standard machines, they will not make an impression in terms of sales until later during this year.
EU emissions directive causing a stir in the market
A topic of constant worry for the construction equipment manufacturers is the implementation of the EU emissions directive. In some companies, this issue has tied up R&D capacities by almost one hundred per cent. As a result, innovations in other sectors have fallen by the wayside. A further challenge is the recent new complexity, i.e, the diversity of the products offered per manufacturer. ´There is currently a product renewal process like never before,´ Sailer points out. Because various transitional periods are also used in different ways by the manufacturers, the market is responding correspondingly. For the customers, the new machines produced at extremely high development costs did not automatically mean greater benefit or product improvement. To that extent, it was difficult, he says, to convince them to pay a higher price for the machines. Many manufacturers have thus suffered.