Heavy Vehicle Manufacturing
enced mixed fortunes during the period. Exports, which gen- erate nearly one-third of industry revenue, have declined at an annualized rate of 14.1% from 2011 to 2014, due in part to the dollar’s appreciation. As such, market research firm IBISWorld estimates that industry revenue has slipped an av- erage 2.3% per year during the past three years. Meanwhile, an increasingly stringent regulatory environment at home has encouraged suppliers to ramp up investment in R&D of lower- emission machines, which are more costly to produce. Consequently, manufacturers face a tricky operating environment. While domestic construction activity has been robust during the past three years, demand abroad has been subdued and has dragged down industry revenue overall. Re- cent price increases and supplier consolidation have helped raise profit margins, but not overall revenue. These mixed trends are expected to continue over the next three years as growth in domestic construction remains strong and the dollar appreciates further.
Market Conditions and Globalization
In the US strong growth in the value of construction, high equipment utilization rates and persistently low interest rates have increased the benefits of investing in new equipment during the past three years. Because the economy is on the rebound, buyers are also upgrading preexisting facilities and structures at a swift rate, in addition to undertaking new con- struction projects. As a result, annualized growth of 6.9% in aggregate private investment during the period is pushing up demand for construction machinery.
Spending on construction is expected to continue on a healthy upward trend from its Great Recession low point.
The industry is also undergoing considerable consolidation with some of the largest players, such as Caterpillar, pursuing acquisitions to improve their foothold in major and emerg- ing markets. Larger suppliers are able to leverage vertical integration, brand equity, economies of scale and their global presence against potential entrants to the business. Consoli- dation activity has reached global proportions, evidenced in Caterpillar acquiring MWM Holding GmbH in 2011. Merger and acquisition activity among major players has increased domestic market concentration. However, the normal gains in supplier pricing power that generally occur in a consolidating industry have been partly offset by competition from imports. Domestic manufacturers face considerable competition from Japanese suppliers, such as Komatsu. Expansionary
88
ManufacturingEngineeringMedia.com | October 2014
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164