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2010 Volume 1 Issue 3
 
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Roger Lindley reports from the CEA Annual Conference
where key people from industry and Government gave their outlook for the future.

"Building Business Confidence"

Every year the CEA (Construction Equipment Association) holds a one-day conference to review the challenges facing the industry.

This year, the conference was particularly well attended, probably because many in the industry are still looking for guidance on where the economy is going and where, in the world, will recovery begin.

As is usually the case in such instances, there are clear indicators of where future growth will come from, but they, in turn, raised further questions.

 

David Phillips, Managing Director and founder of Off-Highway Research set out the global position and trends in his very matter of fact approach.

Markets have changed dramatically over the past few years. Western markets have declined markedly while China and India have maintained growth.

Markets have changed dramatically over the past few years. Western markets have declined markedly while China and India have maintained growth.

The figures left no one in any doubt as to the seriousness of the situation facing manufacturers with unit demands down by as much as 80% and little sign of any rapid recovery.

David Phillips said “One year ago, when I was addressing the same conference, we really did not know how bad it was and how bad it was going to be. Now we can see.”
However he took a pragmatic approach, which has also been voiced by many; not only in the construction industry but in general economic terms.

The fact is that we got used to the words ‘Never had it so good’ - markets were in growth, money was readily available and everything was positive. But, in reality everyone knew that it could not be sustained, but most had anticipated a fall back, not a total collapse of market confidence.

The pace of growth was too fast and it was time for the brakes to be applied. As we now know, the brakes were not applied but the engine stalled just when we needed the power.

“We will never go back to 2007 - it was a wonderful dream,” says David Phillips. With this in mind, he showed that taking out the highs of recent years, the severity of the current position does not appear to be so bad.

Of course, it is still having a devastating affect on the global economies trying to return to a more ‘normal’ market demand situation (if there is anything such as normal). As David put it “demand is ultimately based on building market confidence.”

Manufacturing Will Move East

David drew attention to two markets where growth has been maintained - China and India. Both large countries with vast populations and a need to develop infrastructures in order to enable economic growth.

 

The changing values of the different geographic regions shows the changes and the forecast growth.

The changing values of the different geographic regions shows the changes and the forecast growth.

India has ambitious plans to develop infrastructure with rail tracks and highspeed roads but such projects have a tendency to get delayed by excessive bureaucratic procedures.

China, on the other hand, has been able to compensate for decline in export markets by stimulating domestic demand. As an example of the speed at which China implements programs, David Phillips said there was a 2000 km long highspeed rail link between two cities that would be completed in 2 years. Most other countries would require that much time simply for discussions and planning stages alone.

That is not to say that China’s sometime seemingly ruthless approach to development is always the right one. But the fact remains that when necessary, China takes the appropriate measures to stimulate domestic demand.

This could have serious repercussions for western markets, where manufacturers generally are reducing investment, employing less people and slowing down product development.

ese manufacturers are benefiting from the high domestic demand to develop new products and build new, more efficient manufacturing facilities.

For example, Zoomlion is to open a factory with a capacity to build 20,000 hydraulic excavators a year. Further evidence of China’s ambitions will be at Bauma.

David Phillips advised “Watch China at Bauma 2010, where they are very strong and very determined.”

He also said that Chinese manufacturers have recognized their weakness - the ability to provide a viable after-sales support service - and are looking for European companies to acquire who can provide essential quality product and service levels.

[cont]

 


 
 

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