Sales of construction and mining equipment continued to improve during the first quarter of 2018, with sales of new equipment reaching levels last seen in the first quarter of 2015.
According to figures released by the Construction and Mining Equipment Suppliers’ Association (CONMESA), a total of 1542 units were sold during the period, an improvement of nearly 100 machines during the same period last year. It also extends the upwards trend that has seen equipment sales inch upwards since the beginning of last year.
CONMESA Chairman, Lawrence Peters, says the move is in line with the associations expectations and predictions at the beginning of the year. He adds that the second quarter should continue a similarly positive trend, but with the uncertainty of volatile exchange rates and rising fuel costs possibly weighing against a sharper increase in sales.
“The recovery has been steady, but slow due to the underlying challenges faced on both the mining and construction sides of the industry. While low commodity prices have weighed heavily on the mining sector the sluggish sales are also because of political uncertainty, as well as unease of the mining charter and its impact on mining investment in South Africa.
“On the construction front, we are still not seeing any significant infrastructural projects in the form of headline project and this means that the large and medium construction companies are not buying new machines to the extent that they had previously. Their fleets are being employed elsewhere on smaller projects thereby hindering sales to second and third tier companies,” says Lawrence.
Along with other executive members of the association, who are elected from member companies within the association, Lawrence represents the large multiagency equipment distributor, ELB Equipment, which has exposure in nearly all sectors of the mining and construction industries. His company experience also bears out the findings, where sales are improving across-the-board, rather than pointing to any one sector.
This is reflected by fellow board member and representative from Bell Equipment, Dale Oldridge, who says the company’s figures are better than expected in all areas with mining equipment performing particularly well.
He says that internally the company is also optimistic that construction equipment sales will improve during the latter part of the year as infrastructure projects are launched close to next year’s elections.
Barloworld Equipment’s, Dr Samantha Swanepoel, concurs reporting that sales are improving across all industries, but reminds us that the industry’s improvement is off a relatively low base. She adds that factors such as the implementation of the Mining Charter, as well as negative mining news headlines are still depressing aftersales business and margins.
One supplier who has been negatively affected by the lack of roads developments is Wirtgen South Africa. With a relatively small exposure to the market in compaction and roads, Wirtgen’s Calvin Fennell, says since 2013 to the end of 2017 the market has been decreasing in the number of units by on average 10% year-on-year. This is in The Roller/Paver/Planer/Mixer market category and the decline has been across the board.
“Until such time as large infrastructure works are awarded the reducing market with increasing numbers of competitors is going to be tough for us and the other established brands,” Calvin concludes.