UPS AND DOWNS ON THE WORLD MARKET: ITALIAN SITUATION STILL DIFFICULT - SAVED ONLY BY EXPORTS. NORTH AMERICA DOING WELL, EUROPE CONTRADICTORY, DOWNTURN IN CHINA

The world construction machinery market in the first six months of 2012 is patchy: some countries and geographical areas are growing again, while others - at times even unexpectedly - have posted a minus sign. The "market barometer" published by CECE every month shows an unusual 21.8% of European companies reporting a downturn in activity - month by month - since the beginning of the year. And a recent outlook by Off-Highway Research forecasts a decline on the European market of 3% this year and 5% in 2013. The overall number of machines sold should therefore settle in Europe at around 119 thousand units against 123 thousand in 2011. 

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The reasons behind this situation are fairly understandable. Europe is still experiencing a situation of uncertainty caused by euro crisis and national debts impacting the real economy through tight credit. This downturn involves France, Germany and Britain which alone traditionally cover about 70% of the market in Western Europe. Spain is also performing poorly, where there is likely to be a further fall of nearly 20% on a market already decimated in past years. The Italian market is not performing much better: the second quarter of the year fell back by more than 32% compared to same period 2011 in the earthmoving machinery segment (more specifically, almost 39% for bulldozers, wheeled or track-laying excavators or wheel loaders, and 30% for compact machines). The situation of total stagnation of the domestic market is partly offset by a resumption in exports that in the first four months of the year posted +18% compared to the same period in 2011. The forecast for the Italian market plagued by an unprecedented building crisis, unfortunately, is far from rosy and foreign markets for traditionally high quality Made in Italy products are the only lifeline for the country's firms. 

In Europe, it is well worth taking a look at the Polish market which, on a par with others markets such as Northern Europe, is showing positive signs and expectations. As much as 80% of the machinery used by Polish companies is imported. In particular, the Polish market requires "rotary loaders" and diggers (39%) as well as backhoes (25%), other wheel loaders and crawlers (20%), not to mention road rollers and compacting machines. Major road infrastructure projects initiated by the country in recent years have moved market demand towards this type of machinery. The situation is far from stable even looking beyond Europe. In North America all major manufacturers reported significant growth in sales in the second quarter of this year. Estimates on an annual basis all suggest significant increases in sales with expected growth of between 15% and 25%. Apart from the traditional earthmoving machinery field, the crane market is lively as well as the entire "crushing & screening equipment” sector. Moving over to Asia, manufacturers expect a stable market for 2012 in India growing at around 15-16% in 2013 when the 12th five-year plan (April 2012-March 2017) will begin to be implemented, whereby the Indian Government plans to invest one trillion dollars in infrastructures.

Data from China are surprising: the first six months of the year saw the construction machinery market fall back by 37% (about 196 thousand units sold). A setback that, by the end of the year, may well come to 30%. The sectors most affected are mobile cranes (-45%), hydraulic excavators (-41%) and wheel loaders (-35%). The compact machinery sector suffered less, with mini excavators posting a 20% setback. The crisis is mainly due to the credit crunch introduced by the Beijing Government and other policies intended to hold down inflation and curb a boom on the real estate market that could turn into a dangerous bubble.

Despite this abrupt slowdown, China will still be one of the main markets for the future, although probably no longer with the amazing growth rates of past years. Analysts envisage an upturn of around 10% in 2013.