With hopes that the Trump administration will make a serious investment in U.S. infrastructure and scattered economic indicators hinting at an uptick in construction, equipment manufacturers are looking to call attention to the latest advancements in construction technology at this year’s CONEXPO-CON/AGG trade show. As the crowds descend on the triennial construction-equipment trade show in Las Vegas on March 7-11, expect to see a mix of technology-laden machines demonstrating the virtues of telematics and connectivity next to moderately priced iron for the rental market.
ENR’s Fourth Quarterly Cost Report noted that industry analysts are predicting a modest increase in construction-equipment sales in 2017, with some confident of at least 4% growth. But with many larger manufacturers digging themselves out of a year of weak sales, there’s a question of whether customers are looking to buy. “A lot of people are looking to this new administration for some government investment in construction,” says Frank Manfredi, publisher of the Machinery Outlook newsletter. “But without a clear indication of what will be in this infrastructure spending, the market is going sideways.”
The producer price index maintained by the U.S. Dept. of Labor’s Bureau of Labor Statistics has shown a steady rise in construction-equipment prices for a half decade. Manfredi attributes this rise to the costs associated with meeting the Environmental Protection Agency’s Tier 4 Final emissions requirements. But rising prices have some customers delaying fleet upgrades, instead turning to the used market or extended rental arrangements. “The unintended consequence of these EPA regulations is that they’ve really shrunken the market.” says Manfredi.
CONEXPO will reflect this trend. Manufacturers will offer either new machines— loaded with high-tech features and telematics subscriptions to bring repeat business and justify the price tag—or ready-to-rent, no-frills models for the dollar-conscious contractor.
But after a somewhat lackluster show three years ago, organizers are looking to turn the page on a sluggish equipment market by focusing on recent advances in construction-equipment technology. “We’ll be showcasing the future of construction,” says Sara Truesdale Mooney, show director for CONEXPO and vice president for exhibitions and business development at AEM. “Our new Tech Experience is bringing to life the theme of ‘Imagine What’s Next.’ ”
- High Tech as the New Normal
- Looking for Reliable Sales
- High Prices and Growth of Rental
- The Long Tail of Telematics
- Always More To See
At the last CONEXPO, drones were a mere curiosity. At the 2017 event’s Tech Experience, unmanned aerial vehicles (UAVs) will have their own “drone aviary.”
Drones on construction sites had been operating in a legal gray area until mid-2016, when the FAA approved its first set of regulations for commercial UAV usage. The result has been a cottage industry of drone companies targeting construction and earthmoving applications. Further, more than a few equipment makers have released their own drones. A recent Goldman Sachs analysis estimates that construction industry investment in drones is expected to top $11 billion in the next five years, and companies are fighting for their share of this new market.
But while anyone can put a camera on a consumer-level drone and buzz a jobsite, the real value is in the collection and integration of data into project planning. Longtime surveying-equipment manufacturers, such as Trimble and Topcon, have used drones as part of their comprehensive jobsite-tracking solutions. CONEXPO attendees can expect many firms to use these buzzing Trojan horses as a way to bring jobsites onto their project-management software platforms.
Recent shifts in the equipment market have some larger players looking for more reliable revenue streams. Caterpillar CEO Doug Oberhelman will be retiring this year, part of a management shakeup following a year of disappointing sales. Management changes also have seen a shift in the company’s product portfolio, with a greater focus on equipment that can provide higher-volume sales.
This shift to ongoing sales over the higher-margin, low-turnover specialty equipment will be reflected in Cat’s CONEXPO offerings, which will include a lineup of the company’s compact equipment. Cat may also choose to feature its recently launched line of consumer-grade home generators.
“Cat’s getting into the DIY [do-it-yourself] market with its new home generators,” observes Machinery Outlook’s Manfredi. “That’s pretty easy for other companies to replicate, if you have the right channels for that. I’d expect to see more of DIY and consumer equipment at CONEXPO this year.”
The increase of equipment rentals is another side effect of the costs associated with buying and maintaining new equipment that has emissions controls. Companies that previously would refresh their fleets roughly every seven years are finding they can rent newer equipment as needed, without taking on the extra maintenance and resale uncertainty that some Tier 4 equipment can bring.
But even the big rental companies need to refresh their fleets once in a while, and that may lead to more manufacturers putting out models targeted to the rental giants. “Rental companies can be quite large these days. United Rentals has a fleet worth $9 billion,” observes Manfredi. “Assuming a depreciation of every seven to eight years, that’s roughly a billion dollars of new equipment every year.”
The result is that some categories of machines popular with rentals, such as skid-steer loaders and telehandlers, are seeing models that have a bare minimum of features compared to other types of equipment.
With a new telematics standard unifying the data that equipment will share across platforms, manufacturers are looking to draw in customers with special features and even more elaborate fleet-management options.
Deere, Komatsu and Caterpillar have all reported steady increases in sign-ups for their respective telematics systems, and this trend shows no signs of slowing.
While the ability to track usage and specific performance data can be of great use to fleet managers in charge of lots of iron, there also may be signs of a new rental model coming from the rich data. “In the future, we could see the development of ‘power by the hour’—a majority of people just stop buying machines and just [rent them] by the hour,” muses Machinery Outlook’s Manfredi. The performance data taken from telematics systems is already being used to find more efficient ways for operators to use their machines, and real-usage data is challenging the idea of downtime. “Why would someone want to own the machine, taking on the risk of the asset? For the equipment user, it’s cost containment,” he notes.
CONEXPO 2017 will be about more than the eternal tug-of-war between ownership and rental. Amid the bustle of tower cranes and earthmovers drawing all the crowds, expect smaller displays to boast some real innovations. The Illumagear Halo Light was first introduced at the 2014 CONEXPO show (ENR 3/3/14 p. 34). Today, the redesigned work light is fully cordless and far more lightweight than before. While the light was a bit of an oddity at the last show, Illumagear reports strong sales among highway contractors and DOTs, citing the visibility it provides road-crew workers in high-traffic areas.
Road and bridge equipment makers also are expected to make a strong showing at CONEXPO, drawn by hints of possible investments in infrastructure. FAYAT Group will be displaying the BOMAG BM220, its most powerful cold-milling machine. There also will be a host of rough-terrain cranes on display, with Tadano America showing off nine models and Liebherr Group launching its own entries in the 110-ton-capacity category.
“Attendees will find more new products, exhibitors and education at this year’s show,” says AEM’s Sara Truesdale Mooney. “All signs point to this being our most successful CONEXPO-CON/AGG.”