Slowdown in Europe’s Construction Equipment Market: Russia is one of the Growth Engines for Europe

Moscow, 4 June 2013, “Compared to other markets in Europe, Russia is doing fairly well for the European construction equipment industry”, says Ralf Wezel, Secretary General of CECE, the European Construction Equipment Association at CTT, the major construction equipment trade show in Russia taking place from June 4 to 7 in Moscow.

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One out of three tower cranes produced and sold in Europe are currently going to Russia. Governmental and private projects in the oil and gas industry and in the infrastructure and housing sectors stimulate demand. Building hoists, truck mixers, concrete batching plants, mixing systems and concrete pumps are currently also most sought after. However, sales of road equipment have decreased considerably in the first quarter of this year. “Despite this, Russia remains to be one of the growth engines for our industry”, states Mr. Wezel.

The situation in Europe has not changed much in the first quarter of 2013. While Southern Europe is waiting to see some light at the end of the tunnel, Western and Northern Europe are remaining better off. According to recent CECE figures, sales of earthmoving and road equipment dropped by 20 and 30 percent compared to the same period the year before and the bottom is not yet hit in some Southern European countries. Back in 2007 the combined market share of Portugal, Spain, Italy and Greece accounted for almost 25 percent of  European sales, in 2013 this number only amounts to a mere 3.5 percent. Building construction equipment remains the only sub-sector where slight growth is observable at the moment, though this growth only comes from some regions like Russia, Scandinavia, Turkey or Germany. 

The industry expects the situation to improve significantly in the second quarter of this year, as the longwinter had delayed construction activity and investments. Companies also reported a very good order intake at and after bauma. The recent CECE business barometer confirms this positive trend. Increased confidence of European companies about future sales pushed the business climate index of May over the zero line. However, even under an optimistic scenario with good growth in the next quarters, it will be difficult to compensate the early deteriorations over the year, particularly for earthmoving and road equipment.

In 2012 the European construction equipment industry increased their turnover by 3.4% reaching a volume of 25 bn Euro. For 2013 it is expected that the overall sales will stay on the level of 2012.  European manufacturers are expecting to compensate the drop in European demand by increased sales outside Europe where most markets are supposed to show an upward trend.

CECE and AEB advocate equal treatment of all manufacturers

The European construction equipment industry pledges for a fair competitive environment of the industry and open markets. Only under these conditions, the best technology can be taken to the countries to improve infrastructure, living and working conditions, to save costs and to lower bad impacts on the environment. At the moment in Russia non-Russian companies are currently suffering from the disposal fee that the Russian government has imposed in September 2012, which are payable for each wheeled vehicle imported to Russia or manufactured in Russia. Although CECE supports the approach of  the Russian government to ensure ecological safety in the Russian Federation subject to balanced and economically justified rates, however CECE, via the national Russian member association AEB, also advocates equal treatment towards all manufacturers. In addition, CECE identifies the need for revision of the Government Resolution taking into consideration specificity of the construction equipment manufacturing, recycling processes, and economic effect of the disposal fee rates for this machinery on the Russian economy. For this reason CECE and AEB are currently working with the Ministry of Trade and Industry on amending the legislation and developing a more balanced one.  Andrey Komov, Chairman of the AEB Construction Equipment Committee, commented, “We hope that the Russian Government takes into consideration the AEB recommendations and corrects shortcomings of the resolution on recycling fee with respect to the construction equipment industry”.

AEB
In 2009 the Association of European Businesses in the Russian Federation (AEB) became member of CECE. AEB represents the interests of more than 600 European companies conducting business operations on the territory of the Russian Federation. It actively works to improve the country’s investment climate and bolster the status of Russia as one of the world’s leading business centers. The Construction Equipment Committee plays one of the most important roles in the AEB and is represented by nine members: Bell Equipment, Caterpillar, CNH, Hitachi, JCB, John Deere, Komatsu, Liebherr, Volvo. The committee aims to provide a forum for the industry to discuss common subjects and to act as a single body on shared issues in the Russian Federation.

CECE

The Committee of European Construction Equipment (www.cece.eu) is the recognised organisation representing and promoting the European construction equipment and related industries in order to achieve a fair competitive environment via harmonised standards and regulations. CECE is a European network consisting of a secretariat in Brussels and 16 national association offices in 14 different European countries. The industry behind CECE comprises 1,200 companies. In 2012, these equipment manufacturers had a total turnover of 25 bn € and employed 130,000 people directly. European construction machines represent around 20% of the worldwide production. Manufacturers include large European and multinational companies with production sites in Europe, but the majority of companies are small or medium-sized.

Anja Schnieder
Tel.: +49-69-6603-1257
E-mail: anja.schnieder@cece.eu
Web site: www.cece.eu