Equipment makers predict smaller 2007 gains
Jan 1, 2007 12:00 PM
CONSTRUCTION machinery manufacturers are anticipating smaller gains in overall industry business in 2007, following expected double-digit growth in 2006, according to the annual “outlook” forecast conducted by the Association of Equipment Manufacturers (AEM). Growth is expected for US, Canadian and worldwide markets, with the strongest 2007 gains anticipated overseas.
Machinery manufacturers participating in the annual AEM outlook survey expect overall construction equipment business in the US to close out 2006 with increases of 11.2% compared to the previous year, and that business volume in Canada will gain 12.7% by year-end. Sales to other worldwide markets for 2006 are anticipated to grow 10.9%.
Looking to 2007, survey participants forecast increases of 3.9% for the United States and expect business volume in Canada to increase by 5.0%. They anticipate growth of 6.4% in other worldwide markets.
“Although the US economy is starting to show signs of slowing down, it has displayed surprising resilience,” says Gerry Shaheen, 2006 AEM Chairman and a Group President of Peoria, Illinois-based Caterpillar Inc. “For construction equipment manufacturing, the US housing market has leveled off, but this has been offset by strength in nonresidential construction, road building, and sales to global markets. We are cautiously optimistic that construction machinery sales will continue to grow through 2007, although at a more moderate pace than 2006.
”Not surprisingly, the state of the general economy, including interest rate levels and consumer confidence, are top factors expected to influence future sales cited by equipment makers. Housing starts and highway funding will also have a major impact on the continued strength of the industry. Other key issues are steel prices and energy costs.
“The strength of the US housing market has certainly been a major factor in the continued business growth of our industry. Higher interest rates have adversely affected this segment with a softening of residential construction,” Shaheen adds. “Building and repair of highways, bridges, and other public works is also a major contributor to overall construction activity, which makes it of primary importance to many equipment manufacturers. The certainty of highway funding for the next few years through passage of SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) legislation in 2005 has been a boon for business.”
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