At six per cent growth in the economy, infrastructure typically grows at 12 per cent which in turn, fuels the growth of the construction equipment by 20 per cent. Equipment India finds out the trends in the earthmoving industry.
The demand for construction equipment is co-related to with the development of road infrastructure, growth in the real estate sector, development of ports, pipelines, airports, power and other infrastructure projects, mining, building and material handling. This is expected to attract an investment of more than $ 500 billion over the next five years; from the present $ 2.5 billion dollar infrastructure industry to $ 12-13 billion industry by 2015. At six per cent growth in the economy, infrastructure typically grows at 12 per cent which in turn, fuels the construction equipment growth by 20 per cent. What further fuels this segment is that the government has sanctioned Rs 1.73 lakh crore in infrastructure upgradation for the Eleventh Plan.
"We see a very buoyant trend for earthmoving equipment in the next five years. The government investments have been articulated clearly for the 11th and 12th Year Plans and when these investments in value are translated into equipment worth, it clearly signifies the emanating demand of equipment. Seeing the demand ahead, many OEMs have either invested further in their local facilities or planned some new investments in start-up facilities. We will see the demand and supply situation even out in the future," says GVR Murthy, Joint Managing Director- TIPL.
Says Vijay Sharma, Executive Director, Terex Equipment, "According to various sources, India will need an infusion of nearly $ 1 trillion investment during 12th Five Year Plan (2012 – 2017) to build more airports, seaports, highways, power plants, railways, and dedicated freight corridors, etc. Hence, there is a lot of opportunity for capital equipment manufacturers like us. We sincerely believe that the overall earthmoving industry in India will grow by at least 10-15 per cent over the next five years. In this background, Terex definitely wants to ride the bandwagon and be a part of this tremendous growth story. This is why, along with the Greater Noida facility, we have set up another state-of-the-art facility at Hosur, near Bangalore, which is spread over a huge area of 45 acres. We are also revamping our product portfolio as we see a strong demand for a heavy product line in forthcoming future."
"The potential is really huge. Development of infrastructure will play a major role in India's GDP growth in the next ten years as there is a huge gap in demand and supply. The government is well on its track and has put greater emphasis on implementation of various infrastructure projects in a time-bound manner. This sector will continue to grow in the coming years exponentially; we expect that this industry to grow at 20 per cent CAGR till 2015 – 2016," states D V Junnarkar, Head – Marketing, L&T-CASE.
As per industry inputs, the excavator market is growing fast; there has been a shift from a generic backhoe segment to bigger and specialised equipments; mini-excavators, wheeled loaders and backhoe loaders are still maximum in demand. There have been tremendous technological advances in these equipments to reduce wear- and- tear, high performance levels, and tailor-made to suite requirements and lowdown time.
As per the inputs from Off-Highway Research, the maximum sale is expected in the excavator, (including crawler / wheeled and mini excavator) segment, which expected to grow around 115 per cent, from the estimated 10,605 units in 2010 to 22,905 units by 2014. Close on its heels are motor graders with a projected sale of hundred per cent, from 450 units to 900 units. Then comes wheel loader with a projected growth of 88 per cent, from 2,500 units to 4,700 units, pavers and compactor from 4,050 units to 6,400 units, a growth of 58 per cent, and dozers from 700 units to 1050 units, and back hoes from 23,000 units to 30,000 units, a growth of 30 per cent.
Says Murthy, "Quality, speed and costs of executing the project are increasingly becoming more focused areas for every customer in the industry. The differentiator for the user is technology and high quality product support. Therefore in our business too, apart from making efficient, robust and reliable machines, we are also equipping them with high-end user-friendly technology solutions which allow the operators to perform at best efficiency. We strongly believe that technology built into machines and add-on technology solutions will create the paradigm shift in the industry."
Murthy further adds, "The market is dually structured with both mid-sized and large equipment having a strategic role depending on the application needs of the customer. In the road construction and highway segment, we would tend to see more of the mid-sized equipment and where we see more of the smaller size contracts being executed. However, when we move up the value and application chain and specifically in the mining segments, the shift is more to the higher class and large sized equipment. We do see an underlying trend where the industry is going in for larger equipment given the fact many projects are executed on a back-to-back basis, whereby the investments in larger machines become more practical and commercially justified."
Overall market in terms of numbers and value for medium- sized equipment :
* Forecast Source: Off-Highway Research