Construction Equipment Manufacturers Expect Overall Growth

Construction equipment manufacturers expect overall industry growth to continue through 2006, but at a somewhat slower pace than in 2005, according to an annual business forecast conducted by the Association of Equipment Manufacturers (AEM).

In AEM’s latest outlook report, construction equipment business in the United States is expected to close on a strong note for 2005, with increases of 13.9 percent, followed by growth of 9.3 percent in 2006. For Canada, construction machinery sales are predicted to gain 13 percent by year-end 2005 and then increase 8 percent in 2006. The forecast for other worldwide markets is 8.4 percent growth for 2005, followed by 9 percent gains in 2006.

The report says that the state of the economy in general and the highway bill that President George W. Bush signed into law in August will be key factors affecting business in 2006.

“The housing market is a key driver of our industry’s sustained business growth,” says Charles Stamp, AEM chairman and vice president of public affairs worldwide for Deere & Co., Moline, Ill. “We continue to enjoy an exceptionally long period of historically low mortgage rates. Consumer confidence has remained moderately positive but could turn negative with rising interest rates and escalating energy costs.”

The impact of the highway bill on future business is also a major factor cited by manufacturers participating in the AEM survey, since the building and repair of highways, bridges and other public works is a significant component of overall construction.

Steel prices and availability have stabilized somewhat, but they still play a significant role in manufacturers’ ability to build and sell equipment, say AEM outlook survey participants.

Other top issues identified by respondents include the strength of the U.S. dollar and rental company business.

Each year, the North American-based AEM trade group polls its construction equipment manufacturer members on anticipated industry-wide performance of this multibillion-dollar industry.