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Economic review & forecasts
Chris SleightEditorInternational Construction
Contents
Global economic trends
Construction industry trends – global and US
Trends & cycles in the crane industry
Trends in the heavy transport sector
Outlook based on economic forecasts
Warning
Economic forecasts always have uncertainty We live in very uncertain times
If any forecast today turns out to be accurate it is pure luck
But forecasts have a valueShow broad trendsSummarise complex situations
Form your own opinion! What is important for your own situation?
World economic growth 2012
EU -0.4%US 2.2%
LAm 3.2%
S. AF 5.0%
CIS 4.0%
RoA 6.7%
WORLD 3.3%
MENA 5.3%
JP 2.2%
World economic growth 2013
EU 0.2%US 2.1%
LAm 3.9%
S. AF 5.7%
CIS 4.1%
RoA 7.2%
WORLD 3.6%
MENA 3.6%
JP 1.2%
World economic growth 2017
EU 1.7%US 2.6%
LAm 4.0%
S. AF 5.8%
CIS 4.1%
RoA 7.7%
WORLD 4.6%
MENA 4.5%
JP 1.1%
GDP trends
Strongest growth in emerging markets
BUT growth moderating in China & India
Developed countries remain weak
GDP trends & construction
Growth in construction is in line with GDP growth
Construction output ~ 10% of GDP
GDP data indicates size & trend of construction market
GDP & construction are key drivers for lifting & transportation industries
Global construction market
Global construction markets: growth trends
Global Construction outlook
Global: ~+4% growth this year
Europe: Return to recession
North America: Good growth from low base
Japan: Continued stagnation
Developing Asia: Strong growth – circa +7%. China & India slowing
Latin America: Strong growth – circa +6%. Inflation concerns
ME/AF: Generally strong – depends on commodity prices
US construction output – US$ billion
Crane industry trends
Manufacturers’ revenues & profitability
Stock market performance of crane manufacturers
Fleet sizes
Relation to wider economic trends
Source – World Crane Report
Unique study of the global industry
10-year study
Manufacturer trends
Owner trends
Insights into fleet composition
Links to wider economic trends
Manufacturers – 10-year revenue trend (US$ million)
Peak = US$ 31.7 billion
-25% drop in 2009
+6% - +8% growth since
Re-gain peak in 2014-15?
Chinese = 30% of total
Quarterly sales ($ million) –‘traditional’ crane manufacturers
2007 2008 2009 2010 2011 Q1-3 2012
Operating margin - selected ‘traditional’ crane manufacturers
Stock market performance – year to date
Manufacturers - conflicting indicators
Revenues & profitability recovering- Revenues up on 2011, but looking flat this year- Significant improvement in margin
Weak Chinese market deflating share prices- Chinese truck crane sales down ~ -45% in 1st half- Stock market weakness from May onwards – China, Euro Zone etc.
Total fleet – Top 50Total fleet = 21,896 mobiles & crawlers
Almost unchanged since 2008
Continued growth in Europe
North America more cyclical
Top 50 – wheeled mobile vs crawlerRatio of mobiles:crawlers 78:22 in 2012
All cranes 2003 201216,470 21,896(+33%)
Mobile cranes 2003 201213,118 17,022(+30%)
Crawler cranes 2003 20123,352 4,874(+45%)
Top 50 – total load momentChange 2003 – 2012
Total4.6 14.9 million tonne-metres (+225%)
~ 1.53 4.98 million tonnes lifting capacity
Per crane279 682 tonne-metres
~ 93 227 tonnes lifting capacity
North American fleet size – mobiles & crawlers
US fleet size & GDP - % change
Cranes vs economic cycle
Global fleet did not shrink in recession years- Capacity increased significantly!
US fleet has been more cyclical- Follows GDP growth with 1-2 year lag- Start of modest fleet growth in 2012- GDP does not look strong enough to trigger high fleet growth
Heavy transport
Trends in specialized heavy transport
Road transportation & fuel prices
IC&ST Transport 50 – global capacity (t)
Transport 50 – North American capacity (t)
Historic US retail diesel prices - $/gal
Oil price - $/barrel (WTI)
Heavy transport costs
Direct correlation between oil price & diesel price
Outlook for oil price:– US Energy Information Administration predicts -8% fall in 2013– Trending lower over medium term due to global economy
Equates to US$ 3.70 per gallon (~ US$ 4.00 in 2012)
Heavy transport trends
+17% increase in heavy transport capacity in 2012
US trailer-focussed market (79% trailers vs 21% modular)(Europe 14:86, World: 47:53)
Diesel prices softening, but staying high
Outlook for sector
Improvement in early 2012, but outlook has weakened
(Fuel) costs may fall
Reasonable recovery in US construction crane sales
Globla UncertaintyEuro-zone, China, US fiscal cliff
