Europe ‘troubled but good’ in 2014

By Sandy Guthrie13 March 2015

The European construction equipment industry found 2014 to be a troubled, yet good, year, with sales on the European market growing by 9% compared to 2013, according to CECE (the Committee for European Construction Equipment).

It said that exports showed some growth momentum. Coming behind North America, the European construction equipment market was the second most dynamic region in 2014.

Sebastian Popp, economic expert at CECE, said, “This is a positive development, but we have to bear in mind that the good performance was just enough to recover what had been lost in 2013.

“The market is still more than 40% below the record levels seen in 2007.”

Yet again, there were huge disparities, according to CECE. It said Southern Europe remained at very low absolute levels, whereas markets such as the UK and Germany were not that far away from pre-crisis levels.

CECE said that in Europe, the industry experienced an entire economic cycle within a single year. Starting strongly after a very mild winter, it saw an extended summer slump followed by another pick-up in demand towards the end of the year.

There was a great deal of diversity between countries. The UK saw sales growth of a third compared to an already strong 2013, while Turkey and Russia suffered a devastating year with market declines of 25% and 37%, respectively.

CECE reported that in 2014, 135,000 units of earthmoving equipment were sold in Europe (including Russia and Turkey) – an increase of 6% which put the sector back to the levels of 2012.

On an aggregate level, the industry lost momentum over the year, and CECE said that the negative impact was particularly attributable to Russia. It said another problematic market had been France where the economic scenario of the industry worsened significantly over the year.

“Tremendous” growth of 32% pushed the UK earthmoving equipment market into second place in Europe, behind only Germany, it said. The German market, already on comparably high levels, was said to have been stable and managed to grow by almost 10%.

Nordic countries were equally robust last year, according to CECE, and grew by 10.5% on average.

In Western Europe, the Netherlands (+35%), Belgium (+11%), and Austria (+14%) were strong.

Southern Europe finally delivered some sign of life, said CECE, albeit at an extremely low absolute level. The Spanish earthmoving market grew by 54%, the tiny Portuguese market jumped by 69%. Italy, the only remaining volume market in Southern Europe, saw sound growth of 20%.

Compact equipment

CECE’s research showed that in terms of products, compact earthmoving equipment performed more strongly than heavy equipment – particularly when it came to mini excavators and compact wheeled loaders. Heavy equipment sales also grew in 2014, but the weakness of the mining and quarrying sector, lack of infrastructure investment, and the Russia crisis all took a toll.

Road construction equipment was the best-performing of all sub-sectors, said CECE. In 2014, the total sales growth of road construction equipment rose 19% compared to 2013. Rates of growth were similar across product groups, it said, with light compaction equipment sales increasing by 20%, sales of self-propelled rollers 16% above 2013 levels, and sales of asphalt pavers growing by 21%.

However, CECE said the picture looked much less friendly for building construction equipment, with a flat building sector in Europe after two consecutive years of decline, and strong growth of equipment demand in 2013. Total sales of concrete equipment in 2014 were 13% below previous year’s levels in European markets. Tower cranes business developed in line with concrete equipment.

Prospects for 2015

CECE felt the prospects were not too bad for 2015. Popp said, “It is likely that recovery will continue, however the extent of it is more questionable. The European construction industry should be on a recovery path, with all three sectors of construction having a positive growth forecast.”

CECE said the mining and quarrying sector might have weathered its crisis and could stimulate demand. It added that there was a great deal of uncertainty from political crises, with the Russia-Ukraine conflict being probably the most severe for the European equipment industry.

The flaring up of the Euro crisis could further impede the readiness of customers to invest, it added. Against this backdrop, a flat market or a slight growth appears to be the most realistic scenario for Europe in 2015, it said. According to the recent CECE Business Barometer, manufacturers of earthmoving and road equipment remained the optimistic ones, whereas concrete equipment manufacturers were more hesitant.

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