German equipment sector grows +13%

Sales of construction equipment and building materials machinery manufactured by German companies grew +13% in 20100 to € 10,6 billion and world markets are showing further positive signs this year.

The German Engineering Federation (VDMA) said growth was being driven by emerging markets, where a key ingredient to tapping demand was the ability to manufacture equipment in the target country.

According to the latest figures from VDMA, the construction equipment sector reported € 6,3 billion in revenue in 2010 while building machinery booked € 4,3 billion.

"During the second half of last year, demand grew significantly and orders are still coming in. Manufacturers of construction equipment currently have +56% higher orders, while those in building material machinery have seen a +34% increase compared to the start of 2010," the VDMA said.

And the trade association forecast growth of over +10% for the combined equipment and machinery markets in 2011, driven by demand from China and India as well as growing markets in the Middle East and Brazil.

This shift in markets is favouring companies that can operate internationally, said Klaus Beer, VDMA member and managing director of German building material machinery manufacturer Hazemag.

"It's not enough to only offer sales activities in locally booming regions," Mr Beer said, "You also have to produce where the markets are."

But while VDMA described 2010 as a "better year for the companies than they had expected", some stark differences emerged in different equipment sectors. Sales in earth moving machinery and road building machinery grew by +25% and +38% respectively, while building construction machinery sales fell -10%.

And the trade association warned that growing lead times in the supply industry were a factor slowing down the growth trend, with some components reportedly taking up to 32 weeks to arrive.

"Some manufacturers in the construction machinery industry fear not being able to fulfil projects," VDMA said, adding that rising raw material prices are also putting some pressure on the sector.

VDMA includes the glass and ceramics machinery sectors in its building equipment category.