What is the prospect of the construction machinery industry and what opportunities do they hold for certainty?
Observing the development of the industry and observing the future trend
The construction machinery industry is one of the main pillar industries of China's machinery industry. According to the statistics of the China Construction Machinery Industry Association, construction machinery can be divided into 18 categories: earthmoving and transportation machinery, excavation machinery, lifting machinery, industrial vehicles, road machinery, compaction machinery, rock drilling machinery, pneumatic tools, concrete machinery, piling machinery, municipal engineering and environmental sanitation machinery, decoration machinery, steel reinforcement and prestressing machinery, line machinery, military engineering machinery, elevators and escalators, specialized construction machinery, and specialized components for construction machinery.
01
Industry Overview
The construction machinery industry is a typical strong cyclical industry, showing obvious periodicity in product sales. Construction machinery belongs to the high-end equipment manufacturing industry, which requires very high investment scale and technical level,Its production characteristics are multiple varieties and small batches, belonging to technology intensive, labor-intensive, and capital intensive industries.
The global construction machinery manufacturing industry is mainly concentrated in four regions: the United States, Japan, Western Europe, and China, accounting for over 80% of production share. There are around 2000 construction machinery production enterprises of a certain scale worldwide. After years of competition, mergers and reorganizations, more than ten large multinational companies have been formed.
International market construction machinery manufacturers are mainly concentrated in regions such as the United States, Japan, and Northern Europe. At present, large multinational manufacturers such as Caterpillar, Komatsu, Terex, Liebherr, Volvo, John Deere, Hitachi Construction Machinery, Case New Holland, Ingersoll Rand, etc. control 70-80% of the global construction machinery market. These large companies lead the industry development with strong economic strength, advanced technological level, and management experience.
After more than 50 years of development, the Chinese construction machinery industry has basically formed a complete system, capable of producing 18 categories and over 4500 specifications of products, and has the ability to independently innovate and upgrade products.
At present, China has become a major producer and one of the main markets for construction machinery in the world. Its production of construction machinery is second only to the United States and Japan, ranking third in the world. The total domestic market accounts for nearly 1/6 of the world market.
However, due to the adjustment of national industrial policies and the acceleration of industry opening up, the construction machinery industry has become a completely competitive industry. Private and foreign-funded enterprises have entered this field one after another, and some construction machinery products have experienced overcapacity, such as loaders and forklifts, increasing market competition pressure.
02
Overview of Industry Development in China
1) Overall situation of the industry
Since 2018, with the decline in China's economic growth rate, the continuous increase in real estate regulation policies and the slowdown in infrastructure investment growth have had an impact on the short-term development speed of the construction machinery industry. Since 2020, with the continuous intensification of countercyclical adjustment policies, downstream industries have increased their demand for various types of construction machinery products.
In the future, with the growth of the stock of construction machinery products leading to the release of demand for updates, and the tightening of environmental policies accelerating equipment upgrades, the demand space for construction machinery products is expected to be maintained.
In May 2020, the 2020 Government Work Report was presented at the National People's Congress and the Chinese People's Political Consultative Conference, outlining the overall deployment of government work for the year against the backdrop of significant uncertainty in the global economic and trade situation.
The government work report clearly proposes that "active fiscal policies should be more proactive and proactive, and prudent monetary policies should be more flexible and moderate." The fiscal deficit ratio for 2020 is planned to be above 3.6%, and the fiscal deficit scale will increase by 1 trillion yuan compared to the previous year; Implement the strategy of expanding domestic demand and increasing effective investment.
In 2020, it is planned to arrange special bonds for local governments worth 3.75 trillion yuan, a significant increase of 1.6 trillion yuan compared to 2019. The proportion of special bonds that can be used as project capital will be increased, with a focus on supporting the "two new and one heavy" construction that promotes consumption and benefits people's livelihoods while adjusting structure and increasing momentum. The main focus will be on strengthening the construction of new infrastructure, developing new generation information networks, expanding 5G applications, building data centers, and increasing charging piles, battery swapping stations, and other facilities.
In August and September 2020, local government special bonds were issued with a total of 719.929 billion yuan and 508.314 billion yuan, respectively, which is another high point after May's special bond issuance of 103.0965 billion yuan. As of the end of September 2020, a total of 3696.697 billion yuan of local government special bonds have been issued, completing 98.58% of the annual plan (375 billion yuan).
The Ministry of Finance stated that it will ensure the issuance of new special bonds by the end of October. The issuance of local government special bonds accelerated from August to October 2020. Special bonds can be used as capital projects to expand the scope, and the proportion of investment in infrastructure will significantly increase. The rebound in infrastructure investment growth rate directly drives the demand for construction machinery.
The China Construction Machinery Industry Association disclosed excavator sales data. According to its statistics on 26 excavator manufacturing companies, 16869 excavators of various types were sold in December 2022, a year-on-year decrease of 29.8%. Among them, 6151 were sold domestically, a year-on-year decrease of 60.1%; 10718 units were exported, a year-on-year increase of 24.4%.
From January to December 2022, 26 excavator manufacturing companies sold a total of 261346 excavators, a year-on-year decrease of 23.8%, marking the first time since 2016 that the annual sales growth rate of excavators in China has turned negative; Among them, there were 151889 units domestically, a year-on-year decrease of 44.6%; 109457 units were exported, a year-on-year increase of 59.8%. Against the backdrop of high export growth in 2021, the export volume of excavators in China is still accelerating in 2022.
2) Characteristics of Industry Development
(1) Leading companies in the industry have outstanding competitive advantages
In the main products of construction machinery, such as loaders and bulldozers, there is a trend of gradually concentrating market share towards leading companies, while the market share of weak enterprises is constantly being compressed.The competitiveness of industry leaders is stronger, and an increase in industrial concentration is conducive to leveraging the advantages of economies of scale.
(2) Product line extension, expansion and growth space
In recent years, major companies in the industry have entered other segmented markets, extended their product lines, and added new performance growth points in the context of their existing products becoming leaders in segmented industries. Based on the universality of components and key technologies, as well as the transplantation of management models, the diversified development of engineering machinery products is conducive to achieving economies of scale and scope.
The mutual penetration of different segmented industries not only intensifies industry competition, but also enables advantageous enterprises to gain more market share.Industry leading companies with strong comprehensive competitiveness will ultimately win and maximize the benefits brought by the rapid growth of the industry.
(3) The supporting system of key components is gradually improving
The key components of construction machinery in China, such as hydraulic components, transmission systems, engines, etc., mostly rely on imports. The import cost of key components in the main engine of construction machinery accounts for more than 40.00% of the manufacturing cost, and nearly 70.00% of the industry's profits are occupied by imported components.
For a long time, the dependence on imported core components has become a bottleneck factor restricting the development of China's construction machinery industry. With the increasingly mature development of China's construction machinery industry, this bottleneck is expected to be gradually improved.Some industry leaders have begun to venture into the research and production of core components.
3) Industry Distribution
The global construction machinery manufacturing industry is mainly concentrated in four regions: the United States, Japan, Western Europe, and China, accounting for over 80.00% of production share. There are around 2000 construction machinery production enterprises of a certain scale worldwide. After years of competition, mergers and reorganizations, more than ten large multinational companies have been formed.
International market construction machinery manufacturers are mainly concentrated in regions such as the United States, Japan, and Northern Europe. At present, large multinational manufacturers such as Caterpillar, Komatsu, Terex, Liebherr, Volvo, John Deere, Hitachi Construction Machinery, Case New Holland, Ingersoll Rand, etc. control 70% -80% of the global construction machinery market. These large companies lead the industry development with strong economic strength, advanced technological level, and management experience.
4) Industry competition
In recent years, the demand for construction machinery industry has grown rapidly, and various manufacturers have been continuously expanding their production capacity and product lines. At the same time, some foreign manufacturers have shifted their construction machinery industry to China in order to reduce costs and improve competitiveness, and foreign construction machinery products continue to enter the domestic market.
Construction machinery industry competition is becoming increasingly fierce. With the expansion of the production and sales scale of major enterprises in the industry, the concentration of the industry has been continuously improved. The main backbone enterprises have occupied the leading position of various products in the construction machinery industry, while the sales of small and medium-sized enterprises are declining.
Therefore, the concentration of the market to leading enterprises will become the development trend of industry integration in the next few years. Enterprises with small market share are increasingly difficult to survive and are constantly being eliminated by the market. In the plan for the revitalization of the equipment manufacturing industry, the state also clearly supports the joint reorganization of key equipment manufacturing enterprises.
Through the analysis of the competitive structure of the construction machinery industry, it can be seen that the current competitive situation of the construction machinery industry presents the following characteristics:
1, due to the manufacturers are constantly expanding production capacity, expand product lines, the rapid penetration of international construction machinery giants,Competition among existing companies in the industry is fierce.
2, parts supporting enterprises are mixed, construction machinery enterprises have more choices in the purchase, bargaining power is strong.
3, construction machinery industry outside the enterprise to enter the industry to face higher barriers to economies of scale, brand barriers, channel barriers, technical barriers, capital barriers; industry sub-industry conversion costs are not high.
4, construction machinery as infrastructure construction, real estate construction and other basic equipment, functional replacement is difficult, while the technology upgrade space is large.
5, China's construction machinery industry manufacturers more, market share to the advantages of enterprises concentrated trend. After years of development, the competitive strength of Chinese construction machinery industry enterprises has been continuously enhanced, and the degree of internationalization has been continuously improved.
Some Chinese construction machinery enterprises have initially possessed the core competitiveness to become the world's top construction machinery manufacturers. Among the top 50 global construction machinery manufacturers in 2020, 11 Chinese companies are on the list. Among them, Xugong Group ranks fourth in the world, and Sany Heavy Industry and Zoomlion have entered the top 10 in the world at the same time.
Overall, the construction machinery manufacturing industry has basically formed a market competition pattern in which large enterprises dominate the market segments and each other's products and market penetration.With the continuous promotion of market competition and penetration, the construction machinery industry will further give birth to a large construction machinery group with a more comprehensive product series and a larger enterprise scale. It is expected that in the next few years, large-scale mergers and acquisitions, large-scale reorganization and mergers and acquisitions of construction machinery companies will continue to appear, and the market concentration of various products will be further improved.
5) Industry prospects
At present, the main problems facing the industry are: rapid changes in market demand; serious structural overcapacity; post-market services and order need to be standardized, and related management systems need to be strengthened; innovation systems need to be improved, and innovation capabilities need to be improved; product reliability and durability Sex needs to be further improved; the development of key components needs to be accelerated; green, pleasant, and intelligent still have huge room for development; large and super-large earthwork machinery lack competitiveness.
The demand for product technical performance in the "13th Five-Year Plan" four strategic target markets is quietly changing. Emerging markets need to be developed urgently. The traditional market is worth looking forward to. The market potential of construction machinery is huge, and the international market will continue to grow steadily.
In addition to service, the customized and personalized demand of construction machinery will also be a key point for enterprises to make breakthroughs. In the future, with the popularization of construction machinery industry in people's daily life, working conditions will become more diverse, and customer needs will be more abundant. For example, mines and docks also need loaders, but the requirements are different; the same is an excavator. The requirements of planting trees and flowers in their own gardens are far from those of construction sites.The customized service of market segment is still in its infancy in China, and the future development prospect is promising.
According to data released by the National Bureau of Statistics, from January to December 2022, national fixed asset investment (excluding farmers) was 57,213.8 billion billion yuan, an increase of 0.9 percent over the previous year. Among them, private investment in fixed assets was 31,014.5 billion billion yuan, up 0.9 percent. Large-scale investment in fixed assets has created a good external environment for the development of the construction machinery industry.
Infrastructure and real estate investment is expected to remain steady during the 14th Five-Year Plan period, with the urbanization rate target raised to 65% by 2025, which will lead to a continued expansion of construction machinery and equipment holdings. With the aging of the population, the construction machinery and equipment represented by small digging has spawned a large number of machine substitution demand, and the tool-based properties are becoming more and more obvious, providing strong support for the medium-and long-term growth of excavators and smoothing the cyclical fluctuations of the excavator industry.
In the opening year of the 14th Five-Year Plan, high growth is expected, and in the medium and long term, the volatility of the industry cycle will be significantly reduced. Infrastructure and real estate investment is expected to maintain a steady rise during the 14th Five-Year Plan period, and put forward a specific urbanization rate target, the urbanization rate continued to rise will bring about the continuous growth of construction machinery ownership.
Under the background of carbon neutrality, environmental protection policy is tightening, replacement and capacity replacement demand is expected to be released one after another, the industry sales center will continue to improve, which is conducive to further smoothing the industry cycle fluctuations. With small digging as the representative of the construction machinery and equipment machine substitution space is vast, is expected to increase the proportion of sales to 70%-80% of the level, engineering crane tonnage is expected to continue to move up, sales revenue growth rate is higher than sales growth rate.
In the future, the domestic construction machinery industry market is still full of opportunities. In the face of market changes, leading companies in various industries that have traditionally been known for their manufacturing capabilities are actively introducing intelligent concepts and opening up new markets."Intelligent manufacturing" is becoming a new direction for the development of a group of Chinese manufacturing enterprises.It is understood that by 2025, the key areas of the manufacturing industry will be fully intelligent, the operating cost of pilot demonstration projects will be reduced by 50.00, the production cycle of products will be reduced by 50.00, and the rate of defective products will be reduced by 50.00.
As an important part of the equipment industry, the construction machinery industry is highly related to various industries and has a strong ability to support employment. It will play a pivotal role in the context of counter-cyclical adjustment. The severe global economic and trade situation has an impact on the construction machinery industry,Looking to the future, "intelligent manufacturing", "industrial Internet", "big data" and other future is expected to reshape the industry ecology.
The construction machinery industry is characterized by diversified equipment products, discrete production processes and complex supply chains,The future will be towards unmanned, digital, intelligent further upgrade trend is obvious.
Leading enterprises will accelerate the pace of intelligent transformation, comprehensively improve the intelligent level of R & D and design, manufacturing, supply chain management, remote operation and maintenance, customer service and other links, and promote the development of the construction machinery industry to a higher value level.
In addition, at present, the overall product ownership of the construction machinery industry is at a relatively high level, many products are gradually entering a period of upgrading, superimposed environmental protection policies are gradually tightening, and emission standards are constantly improving. under the background of product upgrading, machine replacement of labor, and internationalization from quantitative change to qualitative change, it is expected to promote the continuous improvement of industry demand.
"Intelligent manufacturing" is becoming a new direction for the development of Chinese manufacturing enterprises, and the trend of further upgrading towards unmanned, digital and intelligent will be obvious in the future. Then for manufacturing enterprises, it is not feasible to rely solely on traditional methods for management because of cumbersome changes in orders, difficulties in cost accounting, production scheduling and quality tracking.
Information source: Zhibang Machinery Industry Research Institute (WeChat Public Number)
