Thursday, 7 July 2011

The Future of the Construction Equipment Market in Japan to 2015

The Japanese construction equipment market is expected to experience substantial growth to reach a value of approximately US$18 billion in 2015. However, as the future of the construction equipment market remains linked to economic factors, industrialization, increased standards of living, and rising population in Japan, the market may be subject to further fluctuations.

London – June 30, 2011 – The performance of the Japanese construction equipment industry is closely correlated to the performance of the country’s construction industry, and therefore during the recent boom period the market recorded high gross sales growth, before significantly reducing production during the global economic crisis.

According to a study by WMI, the market was affected by a decreased number of housing starts, reduced consumer confidence, unemployment and the fluctuating price of construction equipment during the review period (2005–09), resultant from reduced Japanese government investment in the public sector. The construction of residential and business buildings is typically financed on credit, and as such, interest rates and access to credit also have a considerable impact on demand for construction equipment.

As a result of a combination of the above factors, the Japanese construction equipment market experienced a CARC of approximately -12% throughout the review period. However, the construction equipment market is expected to improve during the forecast period as a result of infrastructure developments in the country.

Construction industry overview
The Japanese construction industry is the third largest in the world after the US and China, however, throughout review period, the industry experienced a decline and registered a negative CARC. During 2008–09, private sector capital investment further declined as uncertainty in the economic environment resulted in a loss of investor confidence. Public sector investment also continued to decline as the Japanese government reduced public expenditure in order to reduce the country’s fiscal deficit, and the overall business environment of the construction industry remained weak, resulting in a decline of approximately 8% in industry value in 2009.

Demand for Japanese construction equipment
There is significant relationship between demand for Japanese construction equipment and the growth of infrastructure construction, such as ports, pipelines and roads, and developments in the steel, power, mining and construction sectors, and consequently the Japanese equipment market is competitive in the excavators, bulldozers, crawler cranes and loaders sectors.

Japanese construction equipment is a popular choice for building contractors worldwide, due to the flexibility of design and its comparatively lower price when compared with American products. However, despite its popularity in the global marketplace, the market declined in 2009 and a number of construction equipment companies, such as Komatsu, attempted to regroup the sales structure of their construction equipment business and stimulate reward sales for sustainable growth and business expansion in Japan.

Exports growth
When choosing construction equipment, quality is the most important consideration for end-users in Japan, and advanced technology has led to a tremendous growth in demand for Japanese construction equipment. In 2008–09, the exports value of Japanese construction equipment increased considerably, before declining in 2009 to a value of approximately US$5 billion. Earth moving equipment and material handling equipment were the most exported categories of Japanese construction equipment during the review period, and throughout the forecast period WMI expects the market to record a substantial growth in exports value.

Advanced technology
The Japanese construction equipment market is at the forefront of the mechanization of construction work. The development of recyclable construction equipment is a key challenge currently faced by the Japanese construction equipment market, and as a result, the market is currently conducting research into construction equipment with improved recyclable potential.

To purchase the full version of the report, ‘The Future of the Construction Equipment Market in Japan to 2015’, please click here.

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