The construction equipment manufacturing industry will probably close out 2002 with business declines in most markets, and expect sluggish growth in 2003, according to an annual forecast of construction machinery manufacturers conducted by the Association of Equipment Manufacturers (AEM).

The AEM survey predicts a 5.6-percent decline in 2002 from 2001 in the United States and a 2.8-percent decline in Canada by year-end. Survey participants forecast a 2-percent increase in the U.S. in 2003, with a 3.2-percent increase in Canada.

The construction machinery manufacturing industry has followed the general economy in experiencing a slowdown during the past 18 months or so, said AEM vice chairman Arthur Kaplan, president of Metso/Dynapac, Schertz, TX. Consumer and investor confidence has been shaken, and this has led to a continued wait-and-see attitude from customers when it comes to equipment purchases.

Housing starts have helped keep the construction machinery industry recession relatively mild, said AEM, and manufacturers are concerned with the effect of a slowdown in non-residential construction, as consumers and businesses scale back expansion plans.

Manufacturers cite future levels of state and federal transportation funding as a key to industry growth, especially with TEA-21 legislation up for reauthorization in 2003.

The availability of credit to finance purchases also was cited by survey respondents as a factor affecting future sales. High inventory levels continue to be a problem for the construction equipment industry.

The respondents also cited sluggishness in rental markets as a factor in reduced sales, as rental companies account for an increasing share of equipment sales.

Forecasts call for increases of 1.5 percent in the U.S. and 2.4 percent in Canada in earthmoving equipment in 2003; a 3.2-percent drop in U.S. sales and 0.8-percent drop in Canada for the lifting segment; and a 0.5-percent increase in the U.S., 2.1 percent for Canada and 27.8 percent in worldwide markets for the bituminous machinery segment including cold planers, asphalt plants, rollers and asphalt pavers.

The concrete and aggregate equipment segment is predicted to increase 4.3 percent in the U.S. and 3.5 percent in Canada in 2003, and the light equipment market should rebound with gains of 4.2 percent in the U.S. and 5.9 percent in Canada.

More information on the survey is available at www.aem.org.

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