TRENDLINES
CHARLES YENGST
Mini Excavator Sales
Slowly Recovering
CHARLES R. YENGST IS
PRESIDENT OF
YENGST ASSOCIATES,
WILTON, CONN.
Mini excavators should be one of the first machines to get mov- ing in terms of demand if and
when the market for machines really
comes back. The market hit its peak in
2006 at nearly 30,000 units and last year
in 2010, the industry was able to move
about 40% of that total. The low point in
the market happened in 2009.
The rental equipment industry appears to be the biggest supporter of new
sales of these machines. Rental houses
are throwing out older units and updating fleets. I think they see something on
the horizon that I don’t see, but that’s OK
as long as they have some cash. Capital
expenditures for the rental houses have
been moving upward since mid-2010,
and the industry is hot to be ready when
the next construction boom begins.
Following the rental industry, landscapers and small and medium-sized
contractors are the next best buyers of
these machines. Some of these users
are remarkably still finding something
to do and need to replace old machines
that aren’t cutting it any longer.
Kubota, Deere and Bobcat are the
current front-runners in the mini excavator race these days and about 60%
of last year’s sales were covered by
that Big Three. Deere has been doing
a great job of growing its share of the
industry, picking up 10 points during the
past five years, which is not bad considering how poorly the overall market has
behaved. Caterpillar and Takeuchi of
Japan held up the fourth and fifth spots
on the pecking list of important suppliers based on 2010 results.
In all, roughly 17 suppliers were out
there grinding away at each other com-
petitively, a large majority with little or
no noticeable market existence.
With the exception of Bobcat, all the
participants in the North American mini-excavator market import their products.
The machines are manufactured in Japan, France, the United Kingdom, Austria, South Korea and the Czech Republic. The bulk of mini excavators sold in
the U.S. and Canada are imported from
Japan, with Kubota, Hitachi, Deere,
Takeuchi and Caterpillar the biggest
suppliers from that country.
Of course, with Bobcat the only domestic manufacturer, exports are pretty
small relative to imports. The rest of the
world has plenty of mini excavators so
exports by Bobcat are primarily to Latin
America, the Caribbean and a few to
the Pacific region. The Latin market for
mini’s — including Brazil, Mexico, Argentina, Colombia, Chile and all other
countries — had sales of fewer than
900 units annually last year and Brazil
represents 65% of the total. The Brazilian market, however, may zoom along
in the next few years as lots of construction is happening in that country with the
World Cup and Olympic Games coming
up in 2014 and 2016, respectively.
We have market recovery in progress
and we are getting back to more positive
results. We may be 60% below where
we would like to be, but look on the
bright side little steps are being taken
now and bigger steps will come later on.
We aren’t going to see another 30,000-
unit sales year soon, but let’s be satisfied with 13,000 and 14,000 units until
construction activity starts to come back.
Shifting gears to the larger end of the
machine spectrum, Caterpillar recently
completed its merger with Bucyrus
International, a deal that has been
pending since last year. With virtually
no real overlap in products between
the two companies, Caterpillar has
become the largest mining equipment
supplier in the world, dominant in big
rigid haulers, the leading manufacturer
of electric cable shovels and massive
cable draglines and a strong contend-
er in large-sized hydraulic excavators
used in heavy construction projects
and mining. This deal is one of the best
to come along in a long time and will
reap benefits for all involved for de-
cades to come.
