Demand for Big Iron Starting To Show Signs of Slowing Down
For the first time in four years, the supply of new construction equipment is catching up with demand. While the softening housing market has put a damper on new machinery sales, some heavy machines will remain in tight supply in 2007, say manufacturers. Contractors will likely buy even more machinery next year, but various estimates indicate that the average rate of increase in the U.S. will probably fall below 5%, a sign that the construction industry has enough equipment to keep up with backlogs. Declines in single-family housing have already dragged down small equipment sales, such as skid-steer loaders, but nonresidential construction will continue to keep large equipment, such as lattice-boom crawler cranes, in high demand through next year, say manufacturers.
Contractors and rental companies operating elsewhere—Canada, Latin America and Asia, for example—will need to buy slightly more equipment next year than others will for U.S. projects, according to Milwaukee-based Association of Equipment Manufacturers. It forecasts U.S. sales to grow 3.9%, following this year’s estimated 11.2%. But other international markets, AEM says, may grow as much as 6.4% after posting 10.9% gains this year. “There’s no question that this is far more of a global market than it was 10 to 20 years ago,” says Charles Rentschler, an investment analyst for New York-based Foresight Research Solutions.