2014 Construction Equipment Sector Report launched
Commissioned by the CEA, first report in 10 years shows off-highway sector in good health
THE 2014 Construction Equipment Sector Report was formally launched at the Construction Equipment Association’s Innovation and Engineering Conference on 10 June at Loughborough University. The report was commissioned by the CEA with the support of the Department for Business, Innovation & Skills (BIS).
The report shows the off-highway equipment sector in good health – despite facing a number of challenges.
Business Minister Michael Fallon said: ‘The results from CEA’s latest survey clearly show that the construction and off-road vehicle industry remain a key contributor to the UK’s prosperity. With UK company sales now over £11 billion for the first time, it is important that we continue to provide the right conditions so industry can continue to thrive.
‘That is why we are investing over £1 billion jointly with industry through initiatives such as the Advanced Propulsion Centre (APC) and a planned Technology Strategy Board (TSB) project, to ensure companies across the sector have the support they need to develop the technologies of the future.’
The report revealed that the UK industry’s output, in value terms, is close to or exceeding pre-recession levels, although in unit terms it continues to be well below. Despite the recession that saw UK production, in unit terms, fall more than 50%, the industry has remained resilient.
Total revenue is estimated at more than £11 billion in 2013, with OEMs dominating revenues, followed by importers and distributors. Excluding the latter, revenues are around £8 billion. Component, services and related products account for more than £2 billion. Manufacturing therefore accounts for more than £7 billion of the total.
Companies throughout the supply chain are optimistic about future demand and sentiment is very positive, with most companies reporting that they are much stronger than before the recession.
Improved productivity has resulted in limited employment growth, but companies are now investing profits resulting from higher margins. Although employment is lower, companies are seeking to continue to hire, albeit skills requirements are different to pre-recession.
Markets have evolved too, with emerging markets accounting for most of the growth in sales and traditional markets remaining depressed. Having faced one of the most severe economic downturns this generation, the industry has now recovered and is working to grow again, while still facing many global economic, legislative and commercial challenges.
China and other emerging markets will account for around 50% of industry revenue in 2014, according to some figures.
Despite the continued Eurozone recession, the UK industry remains one of the world’s largest exporters, with a significant 10% share of global production of major pieces of equipment.
Future innovation will require training and education in new skills and at the conference the CEA launched its CEA Skills Advisory Panel – which is a new initiative to address skills issues in the construction equipment sector.
Machines are gaining more and more electronic functions, switching from purely mechanical functionality, which is driving a need for new electronic engineers, and creating opportunities in the supply chain.
The future needs collaborative development and investment. The UK industry will have to focus on maximizing the benefits of its key strengths and invest in the opportunities to mitigate any weaknesses and current and emerging threats.
Report author Alex Woodrow (pictured), managing director of researchers Knibb Gormezano and Partners, said: ‘Our interviews with companies in the sector, show that there has been a growing influence of automotive methods and technology since the last formal report was produced a decade ago.
‘A majority of R&D spend has been directed to regulatory compliance, much of it around the European engine emissions agenda. There is also a common concern that attracting the right skills mix to the sector is a major challenge – there are new jobs which require an amalgam of engineering and IT skills that did not exist 10 years ago.’
CEA chief executive Rob Oliver added: ‘The report is a useful piece of work which will help set the CEA’s work programme going forward, and we are grateful for the sponsorship of BIS in making it possible. As a result of the feedback we have received from CEA member companies, we have initiated a Skills Advisory Panel, drawn from different stakeholders in and around the industry, to see how we can make a better collective impact on the issue.’
The Report also focuses on the application of newer technologies in the sector. The Technology Strategy Board (TSB) confirmed that it will be launching a new multi-million pound competition for funding innovation projects in the off-highway sector, which aligns with the recommendations of the Report.