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New World Order in Sales and Production of Construction Equipments Print E-mail
Written by James   
Wednesday, 30 November 2011
Bangalore: There is a new world order in sales and production of construction equipments as the market growth has been shifting from traditional markets of North America, Europe and Japan to China, India, Brazil, and Russia. Mr David Phillips, Managing Director, Off Highway Research, said that the value of global sales volume in 2007 was about US$ 100 billion. It fell to US$ 55 billion in 2009 before increasing to US$ 82 billion in 2011, and is likely to reach US$ 108 billion by 2015, with China, India and Brazil contributing to much of the demand.

He pointed out that in 2007, the market size of North America, Japan and China was about the same but following the global financial meltdown in 2008, and its aftershocks, the demand from developed countries plummeted, while the demand in China has grown in leaps and bounds.

Today, China accounts for about 50% of the global volume of equipment sale. He added that since 2005-06, the demand for construction equipment started increasing. Currently, India has about 15,700 backhoe loaders and about 7950 crawler excavators which is likely to reach 25,300 and 9,300 respectively by next year.

He predicted that since the Chinese construction equipment industry currently has the production capacity that is two times the size of the global demand, there would be a flooding of Chinese imports in many developing countries in the near future.

Vipin Sondhi, Chairman, Excon 2011, said that changes in land acquisition norms, special attention to speed up infrastructure projects of national importance, better dispute resolution mechanism, and skill development are some of the imperatives that the construction equipment industry looks forward to.

Quoting industry sources, Mr Sondhi said that if India gets the equation correct in infrastructure, it can reap several social and economic benefits such as an increase in per capita income by about US$ 150, creation of 30-35 million additional jobs, reduction in unemployment rate by 5-6%, and lifting of about 3-4% of people from poverty line, over the next ten years.

"Product innovation in the earthmoving and construction equipment industry is the key to address the growing energy efficiency and environmental concerns around infrastructure projects in India, ," Mr Subhash Chandra Khuntia, IAS, Principal Secretary to Public Works Department, Government of Karnataka, said.

Delivering his Chief Guest address at the inaugural session of the Conference on ECE Industry: Vision 2020 & Beyond, a two-day conference, being jointly organized by Indian Earthmoving & Construction Industry Association (IECIAL) and Confederation of Indian Industry, Mr Khuntia said that India’s product requirements are very unique, and diverse. The Indian customers are looking for more versatile, and cost effective products. Therefore the manufacturers have to disaggregate the market to meet the different types of customer needs.

He pointed out that the end users are becoming quality conscious. “About ten years ago, people in villages wanted some road access but today they are demanding us for quality roads,” he said. Karnataka alone is planning to develop 15,000 kms of State Highways in the next two years. The State government is pooling resources to fund the road project. It had obtained loans from World Bank, and Asian Development Bank, and floated Karnataka Road Development Corporation to focus on creating innovative methods of financing.

Mr Khuntia said that the demand for construction equipment industry in India is going to last for a very long time, as the country has to build thousands of kilometers of better roads, expansion and construction of a large number of ports, airports, power projects. He urged the equipment industry to train people by creating training, capacity development initiatives to meet the growing demand for jobs in the infrastructure sector.

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