Heavy Equipment

The heavy equipment industry tends to rely on construction trends and industry growth. As a result of slowing construction trends, when we look at the figures we find that sales and shipments of heavy equipment from United States factories is declining as well. Such shipments experienced a 43% decrease in August as compared to other years. The records indicate that shipments are down at least 60% of what they were in 2006. Although domestic shipments appear to have even a larger decrease but are offset somewhat by slightly stronger export sales.

Prices for heavy equipment also fell by o.6 % but they are expected to fall even lower with the volume of excess inventories and increasing low inflation rates for manufacture and distributer expense. Even with the low shipment rates there is no expectation of a price collapse as cost pressures on production will begin to rise in the next few months.

A drop in construction material cost in the heavy construction industry will no doubt increase jobsite activity. The price index for August for these construction products is 12.8% below the same cost one year ago. It should also be noted that a pullback in energy related construction and the developing bankruptcy of the federal Highway Trust Fund will create a major decline as well. Drastic spending limitations will be applied to many state budgets.

As the recession comes to a much anticipated and hoped for end construction projects such as highway construction will see spending growth. Stimulus funding and price spikes on metals and paving products will no doubt offset the collapse of the highway trust fund financing system. Reports show that highway and bridge projects increased by a record high of $5.4 billion in the United States in July then another $7.3 billion in August.

Medium and heavy duty truck prices showed a small increase in price in August and July and only a modest increase is forecast in 2011. Lowered demand and difficult financing seem to control the pricing but it is believed that these factors will gradually subside in the following year. Costlier engines and more expensive steel will be the pricing factors in 2011.

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