The year 2016 might be remembered as one of momentum, with news of industry innovations like IronDirect blended with a general sense of optimism about the construction economy for 2017.
The 2016 year-end wrap-up published by Equipment World magazine was a great example of this news blend. Among its top stories for 2016 was the September 15 launch of the IronDirect construction equipment platform. “Staffed with U.S. industry veterans, IronDirect took on the distribution conundrum. …The company’s solution: sell online and service locally, either through a customer’s preferred dealer or the company’s network of service providers.” The news summary referenced IronDirect’s value-priced equipment, including excavators and wheel loaders from Lonking and bulldozers from Shantui, as well as Paladin attachments and Berco undercarriage. The IronDirect news item ran under a large photo of a 345-horsepower Shantui SD32DQ dozer.
Indeed, IronDirect made big news throughout the latter half of 2016, as evidenced by our launch coverage and strong ongoing trade media presence as IronDirect released more details on its platform, people and innovative solutions. One of the most prominent mentions came in the pages of Engineering News-Record (ENR), which chronicled IronDirect’s aim to be “the largest equipment line with the most product types in the world.” Compact Equipment magazine named IronDirect a winner of its Innovative Iron Award for being the “ultimate online dealer network.”
Giving equipment buyers new choices in what they buy and how they buy and support their machines will be critical as the economy is poised for a rebound in 2017. At the end of its 2016 review, Equipment World editors made predictions for 2017. Tom Jackson wrote: “Equipment prices rise, demand skyrockets and inventories shrink in anticipation of a big infrastructure bill and more pipeline work. Get your orders in now.” Chris Hill predicted a “major infrastructure initiative” from President-elect Donald Trump.
Under the headline “Hope Grows in Equipment Sector for 2017 Dig Out,” ENR wrote that the potential for tax cuts and reduced regulations from Washington D.C. signals good prospects for 2017. It quoted market specialist Chuck Yengst as suggesting a potential uptick in equipment sales of 4 to 7 percent in 2017. “I can’t say how much,” Yengst cautioned, “but 2017 will be better.”
In a presentation at the annual meeting of the Association of Equipment Manufacturers (AEM), industry analyst Eli Lustgarten of Longbow Research noted the anemic nature of recovery from the 2007 recession. Recent business investment is weak and equipment spending has been volatile since late 2014, he said. Despite those tepid factors, Lustgarten said he expects factory expansion and industrial production to improve in 2017. The Trump election in November will be a growth catalyst, he said, driven by tax cuts, infrastructure stimulus, supportive energy policy and repatriation of corporate profits. Conditions for equipment sales should improve, especially in the second half of 2017, Lustgarten said.
In its 2017 Annual Report & Forecast, Construction Equipment magazine said four U.S. regions it surveyed expect a “very good” year in 2017, while four other regions expect a continuation of the “good” business performance from 2016. Editorial Director Rod Sutton reported that for the second year, equipment fleet strength “has improved in the face of cautious expectations for growth.” In the key nonresidential construction sector, the CE survey found, more than half of respondents project revenue growth for 2017, with only 11.5 percent expecting lower revenue.
David Phillips, managing director of industry analyst Off-Highway Research, predicted global construction equipment sales will rise to $89 billion by 2020, with continuing strength from excavators (half of all equipment sales), dozers and telescopic handlers. While the growth is welcome news, Phillips noted it will still be $10 billion shy of total equipment sales in 2007.
Dodge Data & Analytics predicts U.S. construction starts will grow 5 percent in 2017, to $713 billion. “On balance, there are a number of positive factors which suggest the construction expansion has room to proceed,” said Robert Murray, chief economist for Dodge. “The U.S. economy in 2017 is anticipated to see moderate job growth, market fundamentals for commercial real estate should remain generally healthy, and more funding support is coming from state and local bond measures.”
Joe Hanneman, Director of Industry Engagement for IronDirect.