Construction machinery market warming signal began to increase

Since March 2011, the operation of China's construction machinery industry has continued for 24 months. The five listed companies in the construction machinery industry disclosed the 2012 annual report, achieving a total net profit of 10.186 billion yuan, a year-on-year decrease of 18.37%; and an operating income of 98.032 billion yuan, a year-on-year decrease of 4.29%. According to the data from the China Construction Machinery Industry Association, the total sales revenue of the 13 major domestic companies in 2012 was 369.86 billion yuan, a decrease of 3.68% from 2011, and profits decreased by 22.343 billion yuan, a drop of 34.1%. At the same time, the overall profit margin of the construction machinery industry dropped from 8.83% in 2011 to 6.04% in 2012.

From the domestic market perspective, the large-scale infrastructure construction driven by investment in previous years has brought opportunities for the development of the construction machinery industry. However, in 2012, the relevant demand in the domestic market quickly shrank. At the end of last year, the country introduced a number of new infrastructure projects, and its pull effect has a certain lag. From the perspective of the international market, the export of construction machinery products is also increasingly affected by international trade friction.

In the downturn of the industry, many problems accumulated in the past rapid development were exposed. The key technologies for the development of the construction machinery industry are still controlled by foreign companies. The capital, manpower, and material resources for Chinese companies to invest in product research are insufficient. Most of the engineering machinery companies still have weak innovation capabilities and lack proprietary intellectual property rights. Compared with similar foreign products, domestic products have a large gap in durability and reliability. The problem of overcapacity in the construction machinery industry has become increasingly serious and the homogeneity has been prominent. Take crawler bulldozers as an example. At present, the global market demand is less than 20,000 units, and the productivity of domestic enterprises has already exceeded this figure. In the field of motor graders, there were only five or six manufacturing companies in the past few years and it has now increased to 14 companies. The melee of enterprises has triggered the disorderly competition in the industry. Some companies have adopted zero sales, low down payment, and other sales methods to compete for customers. They have even played a price war overseas, casting a shadow over the future development of the industry.

It is worth noting that the state has strengthened guidance and support in technological innovation and structural adjustment of enterprises. The industry has achieved success in the foundation, high-end attack, and strong management. A number of major equipment and key technologies have made breakthroughs; the country has provided relevant tax exemption policies, coordinated platform construction, and technical transformation project support, which will help enterprises enhance their innovation capabilities; After last year’s adjustment, the industry’s destocking progressed; the momentum of rapid growth in production capacity was inhibited, and the momentum of corporate expansion slowed down. Some industry companies in the past developed a three-phase plant construction plan, and recently reduced to a one-phase or two-phase plan. . Industry enterprises will mainly focus on technological transformation and scientific research and development.

At the same time, the market situation is gradually improving. Large-scale infrastructure construction and strategic emerging industries brought about by urbanization will directly drive the market demand for construction machinery. From the recent data, the market warming signal has begun to increase, and the number of new orders for industry companies has increased significantly.

At present, the construction machinery industry is in a relatively high pressure adjustment period, but it is not necessarily a new starting point for bottoming out. Industry enterprises should make good use of the “low season” period and focus on accelerating the transformation of development methods, strengthening technological innovation, and taking the road of sustainable development to meet the arrival of the turning point in the market.