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Manufacturers Predict Strong Sales Growth Through 2005

Construction equipment manufacturers are predicting robust business growth in 2004, followed by more moderate gains in 2005. Manufacturers participating in a survey by the Milwaukee, Wis.-based Association of Equipment Manufacturers expect construction equipment markets to close out 2004 with 16.1-percent gains in the United States, with 14.3-percent gains in Canada. The manufacturers expect worldwide increases of 8.8 percent.

The manufacturers predict solid but slower growth for 2005: an 8.4-percent jump in the U.S., a 6.6-percent increase in Canada and a 7-percent boost worldwide.

The AEM survey notes that equipment rentals continue to be a major factor in construction machinery market growth. “Approximately one-half of construction machinery sold is estimated to enter the rental market,” said AEM chairman Charles Stamp, vice president public affairs worldwide for Moline, Ill.-based Deere & Co. “There remains pent-up demand from our customers, who have been replacing aging fleets now that the general economy is growing.”

The manufacturers cite commodity costs — particularly steel prices and availability — as the primary reason growth will slow in 2005. “When the U.S. government lifted steel import tariffs late in 2003, industry experts expected prices would stabilize and perhaps fall,” said Stamp. “But other factors affected the marketplace in 2004. These included world demand from China, a weak U.S. dollar, shortages of scrap steel, rising costs of other raw materials and higher logistics costs. In addition, increased oil and gas prices will also affect our cost of doing business.”

The increase in 2004 is led by earthmoving equipment, sales of which for year-end 2004 are forecast to increase 27.4 percent in the U.S. and 28.2 percent in Canada, with worldwide growth topping 15.3 percent. Business volume growth in this segment for 2005 is expected at 7.8 percent in the U.S.; 6.9 percent for Canada and 5.6 percent for other export markets.

In the recovering lift segment, year-end sales are expected at 14.7-percent growth in the U.S., 11.5 percent for Canada, and 7.2 percent worldwide. Gains for 2005 are expected at 8.7 percent for the U.S., 9.7 percent for Canada and 5.9 percent worldwide.

Bituminous machinery sales, including asphalt plants, rollers, asphalt pavers, cold planers and soil stabilizers, are expected to show gains of 15.7 percent in the U.S. and 10.3 percent for Canada, and 7.8 percent in 2004. Projections for 2005 are for 10.4 percent, 6.5 percent and 9.5 percent respectively.

Business volume of concrete and aggregate equipment projects 12.3-percent increase in the U.S., 5.2 percent for Canada and 10.1 percent worldwide. Light equipment for 2004 should increase 8.6 percent, 6.5 percent and 5.5 percent.

The complete report can be accessed at www.aem.org; click on Industry Trends.

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