WHAT IT MEANS
These results reflect the overall health of the construction industry and the global demand for its services. The challenges the sector faces – rising inflation, the skills shortage, supply chain issues – are genuine issues, but there is more demand for construction machinery and contractors to take on work than there is supply.
Many OEMs have reported robust sales
These strong results are also a reflection of two things: that, broadly speaking, growth is occurring across the whole world (with China being an exception) and also that the North American market has been particularly strong. Volvo CE reported that in the fourth quarter of last year sales in this region increased by 54% – the OEM said that one of the reasons for this was strong activity in the infrastructure segment.
Caterpillar also saw sales rise strongly in North America, up by 34% in the fourth quarter of 2022 compared to the same quarter of last year.
Sales in North America for the final quarter of the year totalled US$3.5 billion for the OEM.
One of the consequences of this demand has been long lead times for equipment – over a year isn’t uncommon for some types of machines – and fewer contractors bidding for projects. With more work to go around than they can manage, contractors are being more circumspect on what they bid on, leaving some projects that might be less profitable or technically challenging with much less choice about which bid to choose.