‘India, China to drive global construction equipment industry growth’

November 24th, 2011 - 5:48 pm ICT by IANS  

Bangalore, Nov 24 (IANS) The multi-billion dollar global construction equipment industry is betting on India and China to rev up the sales growth hit by the slowdown in the US and Europe’s financial, an industry expert said Thursday.

“The global construction equipment industry is witnessing winds of change with growth momentum shifting to emerging markets like China and India from matured markets (North America and Europe), where finance has become scarce and business confidence is low,” global consulting firm Off-Highway Research managing director David C. Philips said at a trade conference here.

Though the industry worldwide staged a modest recovery in 2010 from the impact of global recession in 2008 and 2009, rules of the game have changed during the last three years with China, India and Brazil making up for the declining growth in the developed countries.

“Thanks to China and India, the global construction equipment industry has recovered to project sales revenue of $82 billion in 2011 as against $77 billion in 2010 $55 billion in 2009 after peaking at $100 billion in 2007,” Philips said at the sixth international conference of the earthmoving and construction equipment (ECE) industry trade fair Excon 2011 here.

With sales revenue declining 50 percent in the matured markets post-2008 global meltdown due to liquidity crunch and declining demand, the industry has set its sights on developing countries to push sales revenue to $100 billion in 2013 by meeting their growing infrastructure demand.

“Global majors have started shifting production to developing countries so as to capitalise on the opportunities unfolding in emerging markets where pro-active government policies, access to financial and human capital and infrastructure deficit will drive the industry’s growth in this decade,” Philips asserted.

As the world’s largest market, China accounted for about 50 percent of the volume growth in 2010 while share of US and Europe shrunk below 50 percent.

Going forward, sales revenue in China will peak to $40 billion by 2015 when India is projected to generate $5.8 billion, accounting for around five per cent of the estimated global sales of $108 billion.

“It will not be fair to compare the industry’s growth pace in India with that of China as the enabling factors vastly differ. India will continue to grow at its pace and in its own way as decision-making is decentralized and slow unlike in China where it is centrally controlled and quick,” Philips said giving an industry overview and global trends in the construction equipment sector.

Noting that India was emerging as one of the most exciting markets in the world, Philips said the infrastructure deficit across the country would force the government and the industry to put the sector on fast track and attract long-term investments in building and expanding roads, highways bridges, dams, ports, airports, power plants and
housing.

“Recovery coming from BRIC countries (Brazil, Russia, India and China) as traditional and matured markets (North America and Europe) struggle to grow due to slowdown and sovereign debt crisis drying up funds,” Philips noted.

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