by Heavy construction equipment refers to heavy-duty vehicles, specially designed for executing construction tasks and are also known as heavy equipment, heavy machinery, or heavy vehicles. Some common types of heavy construction equipment include excavators, backhoes, dozers, scrapers, loaders, motor graders, dump trucks, compaction rollers, concrete pump trucks and cranes. The U.S. heavy construction equipment market has witnessed considerable growth despite facing many challenges.
Growth in Infrastructure Development
One of the major factors propelling the growth of U.S. heavy construction equipment has been the increased investments in infrastructure projects like roads, bridges, utilities etc. The American government has realized the importance of infrastructure in the overall economic growth of the nation. As per the estimates of American Society of Civil Engineers, around $4.5 trillion is required by 2025 to significantly improve the country’s infrastructure. Various projects under initiatives like the Infrastructure Investment and Jobs Act are further expected to drive demand for heavy machinery. Construction of major roads, bridges and utilities have kept the original equipment manufacturers (OEMs) as well as rental companies engaged.
Advancements in Technology and Automation
The heavy construction equipment industry has benefited significantly from the latest technological advancements. Integration of technologies like GPS, telematics, autonomous functionalities have enhanced productivity and efficiency of machines. Advanced driver assistance systems (ADAS) have made operations safer. Automated construction equipment reduces dependency on labor and increases precision of tasks performed. 3D printing technology is enabling localized production of spare parts. Use of lithium-ion batteries and hydrogen fuel cells is paving way for electrified machinery reducing emissions. Machinery with advanced analytic capabilities can remotely monitor performance and predict maintenance needs. Such trends are improving profitability and lowering total cost of ownership.
Rise of Equipment Rental Industry
The rental industry has emerged as a lucrative business opportunity within the U.S. heavy construction equipment market. Many infrastructure projects require heavy machinery only for a specific timeframe. Contractors prefer renting equipment rather than purchasing them to avoid substantial capital costs. This has boosted the rental industry. Leading equipment rental companies command large rental fleets of latest machinery across various horsepower ranges. Their services include delivery, maintenance and fuel/other expenses. This hassle-free model has gained strong favor among smaller construction businesses. Even major companies opt for rentals occasionally for temporary workload surges. It has made quality machinery accessible to all.
Infrastructure Bill Impact on Equipment Sales
With heavy fund allocation in the recent Infrastructure Investment and Jobs Act, demand for construction equipment is projected to rise substantially. The implementation of infrastructure projects will require thousands of new machinery over the coming years. Per estimates, over $45 billion is expected to be spent annually by governments on infrastructure till 2030. This stimulus in construction spending is anticipated to favor both new sales as well as rentals of heavy loaders, excavators, cranes, dozers, graders, crushed and screening equipment etc. Leading domestic manufacturers like Caterpillar, Komatsu, Volvo, Hyundai, Hitachi, Liebherr etc. are gearing up their production capacities to cater this expected rise in demand.
Challenges of Labor Shortage and Rising Input Costs
However, the industry is not immune to influences of broader economic challenges. Severe labor shortage in the construction sector has impacted operations and progress of infrastructure projects to some extent. Machinery manufacturers and rental companies too have felt pressure in meeting demands due to limited availability of trained workforce. Sharp rise in input costs of raw materials, fuel and logistics has also put pressure on profit margins of companies. Steel, rubber and resin prices grew rapidly during the pandemic affecting production budgets. Non-availability of microchips stalled output of some models for a while. Rising interest rates recently have made project financing slightly difficult. Addressing these economic headwinds will be a key task for the industry players.
Outlook – Growth Expected to Continue
despite supply chain and cost hurdles, the fundamentals of U.S. heavy construction equipment market remain positively positioned. Massive investments committed for improving mobility, connectivity, energy and other infrastructure will sustain demand for earthmoving, material handling and transportation machinery. In the long-run, technological solutions can help overcome labor constraints as well. With economic recovery gaining traction, input cost pressures are also expected to stabilize gradually. Original equipment manufacturers are launching new models catering evolving industry needs. Overall, industry experts project heavy construction machinery sector in America to witness consistent growth over next decade backed by infrastructure expansion drive of the government. Timely completion of infrastructure projects will determine near term pace of equipment demand though.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
About Author - Money Singh
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc. LinkedIn Profile
