Construction equipment industry demands cut in excise duty

The construction equipment industry has sought cut in excise duty from the government in the wake of a severe drop in demand due to slow execution of infrastructure projects.

Indian Construction Equipment Manufacturers Association (ICEMA) has asked the government to implement relief measures as the "industry has already witnessed a negative growth of over 30 per cent during the past two years and is recording new lows every month in sale of equipments."

"The ICEMA has demanded excise duty cut from the government on earthmovers and construction equipment in order to help survive the adverse scenario," ICEMA President Amit Gossain told PTI.

He said the industry has been playing a pivotal role in building infrastructure but has been hit due to a sharp decline in execution of infrastructure projects in the past two-three years.Land acquisition issues, absence of environmental clearances and severe deterioration in financial health of companies in the space has hit the sector's growth and many firms have already approached the corporate debt restructuring ( CDR) cell.

"The severe slowdown in demand has led to glut of inventory of equipments with the manufacturers and its authorised dealers. It has now reached a stage that is forcing the industry players to resort to periodic shutdown at their manufacturing facilities, leading to low morale and sombre mood among the workforce," he said.

Gossain is also the Chairman of CII Committee on Solid Waste Management.

News Source : http://articles.economictimes.indiatimes.com/2014-02-16/news/47379787_1_excise-duty-infrastructure-projects-construction-equipment

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Komatsu and GE Transportation sign agreement to establish joint venture for development of next generation mining equipment

Komatsu and GE Mining, a division of GE Transportation, have announced a new collaboration to develop next generation mining equipment.

By combining their expertise in mining equipment and propulsion systems, the companies will help meet the needs of customers and partners worldwide, with an initial focus on developing solutions to increase customer productivity and safety for underground mines.

The new company, Komatsu GE Mining Systems, LLC, will be located at the GE Transportation facility in Erie, PA and operations will begin in April 2014. Komatsu and GE will each own 50% of the new company.

Komatsu and GE Transportation have been partners for Komatsu electric dump trucks for use in open-pit mines, for which GE has supplied electric drive systems. By further building on the existing partnership, the new company will combine GE’s electric power expertise, electric drive systems, and battery technologies with Komatsu’s vehicle and ICT technologies for mining equipment to deliver innovative solutions to global mining customers.

Komatsu Ltd. (TSE: 6301) is a leading international manufacturer of construction and mining equipment as well as industrial machinery. In the construction and mining equipment business, it operates 42 plants in 13 countries. Komatsu is also the industry’s pacesetter in ICT applications, such as KOMTRAX (Komatsu Machine Tracking System) equipped in over 330,000 construction equipment working around the world, Autonomous Haulage System with unmanned mining trucks deployed in Chile and Australia, and GNSS-guided intelligent Machine Control dozers. For more information, visit the company’s website at www.komatsu.com

GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website atwww.ge.com

GE Mining, a division of GE Transportation, can help carry your business through every step of the mining process, offering mining products, services and solutions in surface and underground mining. From the delivery of reliable power in remote regions, to water supply and management, to maximizing the output of your equipment our solutions are catered specifically to your business’s challenges in the most productive, most efficient, and even more importantly, the safest way possible. GE Mining offers global customers AC & DC electric drive systems for heavy- and medium-haul off highway vehicles, tethered electrical and battery vehicles and support equipment for intrinsically safe underground applications and a suite of additional equipment, services and solutions to solve your business’s needs. For more information, visit www.getransportation.com Komatsu Australia is the Australian and New Zealand distributor for Komatsu construction and mining equipment.

Source : http://www.miningweekly.com/article/komatsu-and-ge-transportation-sign-agreement-to-establish-joint-venture-for-development-of-next-generation-mining-equipment-2014-01-30

HEAVY MOBILE EQUIPMENT MARKET TO IMPROVE IN 2014

The heavy mobile equipment industry is expected to show steady improvement in 2014, according to a report from Great American Group Inc. The heavy mobile equipment industry is expected to show steady improvement in 2014, according to a report from Great American Group Inc. The report notes that the expansion of domestic oil and gas operations and commercial construction rebounds helped the industry thrive in 2013.

“The various sectors of the heavy mobile equipment market demonstrated growth in the fourth quarter of 2013, and are expected to continue to do so in 2014,” said Michael Petruski, executive vice president and general manager of Great American Group’s Advisory and Valuation Services division. “While new regulations do present challenges, the domestic market for heavy mobile equipment is strong and dynamic, and continues to climb toward pre-recession levels.”

Fracking has had a major impact on domestic manufacturers as the low-cost ethane found in these deposits has made the U.S. competitive on a global scale. These developments have spurred a number of new chemical and plastic construction projects to expand existing facilities and bring new processing and manufacturing plants online.

For more information about industry trends in cranes and lift equipment, construction equipment, intermodal and rolling stock, download Great American Group’s latest Heavy Mobile Equipment Monitor.

Source : http://www.constructionequipment.com/heavy-mobile-equipment-market-improve-2014

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WEBSITE : WWW.INFRAENGINEERSINDIA.COM

Volvo Construction Equipment Rounds off 2013 with Sales Up 3%

A slowly recovering global market helped Volvo Construction Equipment round off 2013 with sales up 3% in the fourth quarter, deliveries up 9% and improved market share, especially in compact equipment, while demand in the mining segment remains soft.

In the fourth quarter of 2013, Volvo Construction Equipment reported that net sales increased by 3% to SEK 13,005 compared to SEK 12,572 in the same period of the preceding year. When adjusted for currency movements, net sales increased to 6%. These improved figures are due largely to higher sales of smaller equipment, helping to boost deliveries by 9% during the quarter. Demand for larger machines, especially in the mining segment, remains subdued, however.

Operating income was up 16% during the period, at SEK 272 M, compared to SEK 235 M in the same period of the previous year. Operating margin also saw improvements in the fourth quarter, at 2.1% – up from 1.9% in Q4 2012.

Late improvement rounds off challenging year

Despite the sales increases in the final three months, for the full year 2013, Volvo CE saw sales decrease by 16% to SEK 53,437 M, compared to 63,558 M in 2012. Operating income was also down during the year, a result of tough price competition, weak product mix, low capacity utilization and unfavorable exchange rates, to SEK 2,592 M, down from SEK 5,667 M in the preceding year. Operating margin was also affected, slipping to 4.9% in 2013 from 8.9% in 2012.

These figures reflect the general weak market conditions experienced during the year.

Growth in 2014

The prospects for 2014 are expected to show some improvements as global markets recover. For 2014, the total markets in China and Europe are expected to increase in the range of 0-10% measured in units, while North America, South America and Asia (excluding China) are all expected to be in the range of minus 5% to plus 5%.

“For 2014 we expect a slight improvement in market demand, mainly driven by China and Europe,” commented Martin Weissburg, the incoming president of Volvo Construction Equipment, who joined the company on January 1, 2014.

NEWS SOURCE: VOLVO CONSTRUCTION EQUIPMENT FEB 7, 2014

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Komatsu profit up 26% in first 9 months due to increased demand for construction equipment

Despite impact from a low demand for mining equipment, Komatsu saw increases in both sales and profits for the first nine months of its fiscal year. The company reported net sales of $13.6 billion (1.38 trillion yen), up 3 percent over the same period in 2012. Operating income rose 10 percent to $1.6 billion (165.6 billion yen). The company’s fiscal year ends on March 31, 2014. Profit for the company saw a huge increase, up 26.6 percent to $1.1 billion (115.3 billion yen). The company attributes the gains to increased demand for construction equipment in Japan and China as well as other regions. The Construction, Mining and Utility Equipment division saw net sales of $12.2 billion (1.25 trillion yen), an increase of 3.6 percent. The division scored a profit increase of 10.6 percent to $1.6 billion (164.1 billion yen). Despite the increases, Komatsu has not made any changes to the projections for the full fiscal year it made in October. That outlook cut the forecast for profits by 26 percent year-over-year to $1.39 billion (136 billion yen) and decreased the forecast for net sales 9.3 percent to $19 billion (1.86 trillion yen).

- See more at: http://www.equipmentworld.com/komatsu-profit-up-26-in-first-9-months-due-to-increased-demand-for-construction-equipment

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Construction Equipment Industry Forecasts a Growth Trend

The direct correlation between increasing economic activities and the prospects of the machinery industry evokes in us a confidence in the industry right on the heels of anticipated economic growth worldwide.

Recovery, though gradual, from the 2008 global crisis has raised demand for industrial products and has in turn boosted the need for new/advanced machinery. The major end-markets for the machinery industry include agriculture, construction, mining and energy industries, among others.

The world economy will likely grow by 3.6% in 2014, according to the International Monetary Fund’s (IMF) World Economic Outlook, published in Oct 2013. Growth in advanced economies and emerging and developing countries are projected at 2.0% and 5.1% for 2014, respectively.

The world economic growth projection was a slight moderation from what was predicted by the IMF in Jul 2013 due primarily to weak demand and slower-than-anticipated growth in emerging markets. Admittedly obstacles still persist but the overall growth picture may not materially deteriorate or deviate from the IMF’s Oct 2013 forecast.

A brief discussion on the future prospects of the machinery industry among different nations has been provided below.

Prospects in the United States

One can have a fair idea of the growth prospects for the Machinery industry, one of the most attractive industries in the United States, from the performances in the recent past. In Nov 2013, industrial production in the United States edged up 1.1% from the previous month while on a yearly basis it recorded growth of 3.2%. Manufacturing output increased 0.6%.

According to the U.S. Census Bureau report, published in Jan 2014, machinery shipments in the 11 months ended Nov 2013 increased 3.0% year over year while new machinery orders grew 7.3%. Machinery order backlog was up 2.3%. Shipments for construction and industrial machinery rose by 3.4% and 12.3%, respectively, while that for mining equipment and farm machinery dipped 5.6% and 2.0%, respectively.

Export demand has been considered crucial for the future growth prospects of the U.S. machinery industry. According to a report published by the Association of Equipment Manufacturers (AEM), the United States’ construction equipment exports fell 21% in the first half of 2013 while agricultural equipment exports registered a 9.5% decline.

In the years to come, the U.S. is expected to witness growing international demand for technologically advanced construction and agriculture equipment. In this respect, it is worth mentioning that the U.S.-Russia trade bill will boost U.S. exports of construction equipment to Russia, the 11th largest export market for U.S. construction equipment. The IMF expects the United States to grow 2.6% in 2014.

Unemployment still seems to be a disturbing factor. As per the latest report by the Bureau of

Labor Statistics, job addition in Dec 2013 was well below expectation at 74,000 and below 241,000 additions made in Nov 2013. Average monthly job additions for 2013 were at 182,000 compared with 183,000 in 2012. However, the unemployment rate came in at 6.7% versus 7% in Nov 2013. This latest report has put a question on whether the Federal Reserve will opt for a second round of $10 billion cut in its quantitative easing program from $75 billion to $65 billion.

Despite the disturbing labor market statistics, there is a glimmer of hope emanating from evidences of strengthening demand in the housing as well as durable goods markets. Conditions in the credit markets are also improving slowly.

Japanese Markets

The recovery seen in the Japanese economy in the past few quarters was primarily triggered by economic policies undertaken by the government, recovery in capital spending and higher machinery orders from private sector and manufacturing industries. The country is now on the verge of implementing a sales tax hike of 3% in Apr 2014 with a view to curb its ballooning debt levels. This measure combined with the stimulus promised, if successfully implemented, is expected to drive growth in the medium to long term.

The latest report by Japan’s Cabinet Office shows that total machinery order in the month of Oct 2013 fell 4.6% from its previous month. However, the main highlight of this report was a 0.6% increase in private-sector machinery order (excluding volatile orders from ships and electric power companies) driven by an 11.5% increase in orders from non-manufacturing industries. This increase has sparked hopes for a hike in capital investments by companies, anticipated to be a key driver for the country’s growth.

Also, in a release in Dec 2013, Japan’s Cabinet Office approved a forecast of a 3.3% increase in industrial production in fiscal 2014, an increase from an estimated 2.4% for fiscal 2013. The Japanese economy is projected to grow 1.2% in 2014, according to the IMF.

Emerging Nations

China: The Chinese government is focused on rapid urbanization and has planned major investments for this. Domestic demand is strong in the country while exports are also on the rise. Further, efforts in improving trade relations with Brazil, Russia and other countries are expected to boost growth.

In 2013, the world’s second largest economy recorded a 7.6% year-over-year increase in its foreign trades. Exports were up 7.9% while imports grew 7.3%. Trades with the European Union increased 2.1% and with the U.S. were up by 7.5%. Industrial production in Nov 2013 grew 10% over the year-ago month.

Growth in 2014 is expected to be driven by investments and recovery in demand from the U.S. and Europe. According to the IMF, the Chinese economy is projected to grow 7.3% in 2014.

India: Industrial production in India in Nov 2013 fell 2.1% year over year due primarily to weak domestic consumption. According to the IMF, the country is projected to grow 5.1% in 2014. Rise in domestic and external demand, expectation of policy improvements and better monsoon conditions are the prime drivers of the country’s growth.

Brazil: The country is fast growing as the favourable destination for foreign direct investments. With a population of over 200 million — according to data released by the Brazilian Institute of Geography and Statistics (IBGE) — the country’s hunger for better infrastructural and agricultural requirements are on the rise. Industrial production in Nov 2013 has grown 0.4% from the year-ago period.

Industries like tourism, steel and electricity, among others offer promising growth especially as the country is gearing up to host the upcoming 2014 FIFA World Cup and 2016 Olympics. In the third quarter of 2013, the country’s gross domestic product (GDP) grew 2.2% year over year.

The Brazilian government, under its Growth Acceleration Program or PAC – phase II, has major investments planned for the development of ports, railroads, airports, wind farms and roads. Other areas of focus are sanitation, energy and logistics. Also, to boost its export businesses with other countries, roughly 24 Free Trade Zones (FTZ) are being set up across 20 Brazilian states.

According to the IMF, the country is expected to grow 2.5% in 2014.

South Africa: The country is making progress and a sequential increase of 0.7% was recorded in its GDP in the third quarter of 2013. In Nov 2013, South Africa’s industrial production increased 0.3% from the comparable period a year ago.

The government is focused on improving its mining, manufacturing chemicals, and agricultural sectors. Huge public investments, amounting to R4 trillion, have been announced under the infrastructure development programs. Also, the country is keen on expanding its trade relations with its largest exporter cum importer country, China.

According to the IMF, South Africa is expected to grow 2.9% in 2014.

Other Major Players

Korea’s industrial production in Nov 2013 decreased 0.3% from the previous month while it increased 1.2% from Nov 2012, according to the latest data released by Statistics Korea. The country seems to be recovering slowly from the impacts of weak exports caused by uncertain economic conditions in the Eurozone.

Thailand’s industrial production declined 10.6% in Nov 2013 from the year-ago period, as reported by the Office of Industrial Economics. The country is making huge investments, both domestic and foreign, to improve its service and public utilities, metal products industries as well as machinery and transport equipment related industries. To further enhance its exports, the government is laying emphasis on infrastructural developments and free trade agreements. However, the continuing political unrest, if unresolved for long, will hamper growth prospects of all industries in the country.

Eurozone — Showing Signs of Improvement

The Eurozone’s industrial production (excluding construction) in Nov 2013 grew 1.8% from Oct 2013 while it increased 3.0% year over year, according to data released by the Eurostat in Jan 2014. On a monthly basis, industrial production in Nov 2013 increased 11.7% in Ireland, 6.4% in Sweden, 3.8% in Malta and 2.5% in the Netherlands.

According to the VDMA Machine Makers’ Association, German machine tool orders in Nov 2013 increased 7.0% year over year. Domestic orders were down 1% while international orders grew 12%.

Important Players in the Machinery IndustryDeere & Company’s (DE - Analyst Report) fiscal 2013 (ended Oct 31, 2013) results were impressive. For the fiscal year, equipment sales rose roughly 4%, with price realization contributing 3%. This agricultural and forestry equipment provider is expanding globally to leverage benefits from the growing global farm industry.

Management anticipates equipment sales to decrease 3% year over year in fiscal year 2014. Net earnings for the year are projected to be approximately $3.3 billion.Caterpillar Inc. (CAT - Analyst Report) posted a 19% decline in Machinery and Power Systems sales in the third quarter of 2013. For 2013, the company expects revenue to be approximately $55 billion, down from the $56–$58 billion range expected earlier due primarily to weak demand for mining equipment. The company is slated to report its fourth quarter results on Jan 27, 2014.

Other top players in the agricultural, construction and mining industry include AGCO Corporation (AGCO - Analyst Report), Toro Co. (TTC - Snapshot Report), Terex Corp. (TEX - Analyst Report) and Kubota Corporation (KUB), among others.

Prime companies operating in machinery industries other than agricultural, construction and mining are Rockwell Automation Inc. (ROK - Analyst Report), Illinois Tool Works, Inc. (ITW - Analyst Report) and Manitowoc Company, Inc. (MTW - Analyst Report), among others.
Zacks Industry Rank

Within the Zacks Industry classification, Machinery is broadly grouped into the Industrial Products sector, one of the 16 broad Zacks sectors.

More than 260 industries are ranked in the 16 Zacks sectors based on the earnings outlook for the constituent companies in each industry. To learn more visit: About Zacks Industry Rank.

As a guideline, industries with Zacks Industry Rank of #88 and lower are considered to have a positive outlook, those between #89 and #176 have a neutral outlook while the ones with #177 and higher possess a negative outlook.

The machinery industry is further sub-divided into five industries at the expanded level: machine tools and related products, machinery – construction and mining, machinery – electrical, machinery – farm and machinery – general industries.

The Zacks Industry Rank for machine tools and related products is #94, machinery – construction and mining is #95, machinery – electrical is #97, machinery – farm is #98 and machinery – general industries is #99. Looking at the Zacks Industry Rank of all the machinery related industries, it can be deduced that the sub segments of the machinery industries have a neutral outlook.Earnings Trend of the Sector

Considering the performance of 4% of the companies within the Industrial Products sector, it can be concluded that until Jan 7, 2014, the results were good on a year-over-year basis. Earnings in the fourth quarter grew 8.8% and revenues went up by 7.9%. Both earnings and revenue beat ratios (percentage of companies coming out with positive surprises) were 100%.

The trend seems positive for the Industrial Products sector, as earnings in the fourth quarter of 2013 are anticipated to grow 2.1% as against 1.3% growth recorded for the third quarter. Further increase is predicted with growth rates reaching 8.6% in 2014 and 12.2% in 2015.

On the top line, a wider fall of 2.9% in revenues is projected for the fourth quarter versus a 1.2% decline recorded in the third quarter. The downtrend is predicted to worsen during 2014, with some relief expected in the final quarter of the year. Overall, a meagre growth of 0.7% is expected in 2014 while growth of 3.8% is anticipated in 2015.

In view of all the Zacks sectors combined, total earnings growth rate in the fourth quarter of 2013 is anticipated to be 6.3%. Revenue growth is predicted at 1.5% with a modest gain anticipated in margins.

For more information about earnings for this sector and others, please read our 'Earnings Trends' report.
OPPORTUNITIES

Fiscal government expenditures play a counter-cyclical role curbing the ill effects of slower economic development and a tight credit market. China’s structural stimulus package, government spending on social welfare, construction of low-cost housing, and completion of infrastructure projects on agriculture, forestry and water resources received special attention.

Also, the U.S. Congress had a stimulus package designed in 2009 that had money flowing into infrastructure spending. Also, The American Energy & Infrastructure Jobs Act (H.R. 7) will boost spending in infrastructure projects. Approximately $260 billion will be allocated to fund roads, bridges and highway projects over five years.

Russia, which became a World Trade Organization (WTO) member in 2012, will open the gates for companies worldwide to meet the growing needs for modernizing the agricultural, transport and infrastructure sectors of the economy.WEAKNESSES

We remain wary of rising raw material costs of some of the major players of the machinery industry. Steel prices along with energy, especially coal and fuel prices, remain the prime causes of concern.

Research and development costs are also on the rise for machine makers as they seek to manufacture more sophisticated and technologically advanced machinery. Availability of funds remains a stumbling block as some major nations are still struggling to bring stability to their own economies.

Favorable commodity prices are a boon, although government policies affecting prices along with export and import policies and trade relations with other countries impact the machinery industry at large.To Conclude: Prospects are Bright

Albeit economic uncertainties still persist in many parts of the world, still efforts on implementing better policies, growing trade relations and a burgeoning population are prime catalysts for driving demand for better infrastructure, modernized methods of agriculture and mining/manufacturing methods. All these will eventually boost demand for technologically advanced equipment in these industries. Moreover, looking ahead, the growth path widens for the emerging and developing nations, which will inevitably be attractive destinations for machine makers worldwide.

Article Source : http://www.zacks.com/commentary/30912/machinery-industry-stock-outlook---jan-2014

Need for Skilled Manpower is on Rise

RECRUITMENT researcher Hays says specialist engineers will be among Australian mining’s most wanted this year, with most roles being temporary contract positions.

“Although there has been a slight up-swing in hiring, we don’t foresee the resources industry returning to the boom days in the near future,” the report said.In its resources and mining “hotspots” report for January-March, Hays noted demand would be most acute for engineers specialising in safety, reliability, business improvement, mechanical, electrical and mining engineering.

“We are not seeing a drop in salaries, but offers are at the lower end of the spectrum.

“Despite a continued lull in hiring across the mining industry, pockets of activity in some areas around the states are having a positive influence on hiring decisions.

“Employers are ideally looking for local candidates who can drive-in drive-out to site as FIFO is too expensive and coal production companies are still cutting costs in Queensland.”

In Western Australia, Hays tracked an increase in recruitment over the past few months due to an increase in demand from the iron ore industry.

This shift in experience shortage from gold to iron includes a higher demand for process engineers, crusher operators, mining engineers and supervisors in the state.

 

The Northern Territory, meanwhile, has seen an increase in demand for trades and labour candidates from mining contractors.

This quarter is expected to result in an increase in NT candidates due to Rio Tinto's decision last November to suspend its alumina refinery operations in Gove.

There are currently 1500 employed at the refinery.

In Queensland, maintenance planners in regional centres such as the Bowen Basin are in increased demand as companies are looking to reduce their FIFO workforce.

Other positions identified as being in shortage for the first quarter included experienced shutdown planners.

“Most candidates opt for maintenance planning over shutdown planning due to the high pressure and fast turnaround times involved with shutdowns,” Hays said.

“However, quality shutdown planning is a crucial skill-set and is always in demand.”

Source : http://www.constructionindustrynews.net/storyview.asp?storyid=801880741&sectionsource=s0

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