For further information on the Construction Machinery industry in Australia, please contact Commercial Specialist Patricia Matt, U.S. Commercial Service Sydney on Tel: (+61-2) 9373-9211, Fax: (+61-2) 9221-0573, Email: patricia.matt@N0SPAM.mail.doc.gov

Overview

Government infrastructure spending will mitigate the effect of the current economic crisis on Australia’s engineering construction sector. Activity in the non-residential (commercial construction) building sector has decelerated, particularly in Victoria. Since 2003, residential construction has remained subdued.

Imported construction machinery dominates the Australian market. The construction/mining/extraction industries are the largest consumers of imported construction equipment in Australia.

According to the October 2008 Construction Outlook from the Australian Industry Group/Australian Constructors Association, engineering construction will underpin industry growth through 2010. Key sectors include: transport infrastructure, mining, electricity, telecommunications, sewerage and water supply, and “other” civil projects (including the construction and upgrading of freight and port facilities). To date, engineering construction has remained relatively unscathed from the global economic crisis, as a large pipeline of investment projects remains on the books. For the third quarter 2008, engineering construction rose ten percent over the second quarter 2008 to USD16 billion and was 19 percent higher than the corresponding period the previous year. Further development of Australia’s infrastructure is a key priority of the Australian government, which is fast-tracking its USD20 billion Infrastructure Australia program. Under this program, an advisory council is working in partnership with state and federal government representatives and business leaders to determine significant infrastructure requirements. The Australian government is planning to maintain robust levels of investment in infrastructure to correct years of under-funding and to “pump prime” the flogging economy.

Non-residential (commercial construction) building activity is decelerating, particularly in Victoria. Lack of credit and shattered confidence are bringing Melbourne’s longest building boom of ten years to a halt. According to the Master Builders Association Victoria, one billion dollars of business and approximately 300 jobs in Victoria have already been lost, due to scarce financing availability. The latest Construction Outlook forecasts Australian non-residential building activity to decrease by six percent and four percent in 2008-09 and 2009-10, respectively.

The Housing Industry Association (HIA) estimates a five decrease in housing starts, to 146,460 for 2008. New South Wales and Queensland are the lowest performing states. In Sydney, apartment development accounts for a high proportion of residential building activity and developers are facing tight access to finance. The recent lowering of the official interest rate to four percent is expected to stimulate a much-needed recovery in the residential building sector. An increase in government grants for first home buyers will also add momentum to the residential building industry’s recovery in detached house construction, as well as improve the funding availability for apartment development.

During 2008, the estimated value of machinery for the construction industry was one billion (USD), with imports from the U.S. valued at USD530 million. U.S. manufacturers, particularly those operating through wholly-owned subsidiaries or Australian agents, enjoy a positive reputation for the quality of their products. Major U.S. manufacturers supplying the Australian market include: Caterpillar, Case New Holland, John Deere, Ingersoll-Rand, Bobcat, Vermeer, Manitowoc, Terex, and Ditch Witch.

Japan and Germany are key, third-country suppliers. Komatsu, Hitachi, Kobelco, Kawasaki, Kubota, Sumitomo and Kato are the principal Japanese companies exporting construction equipment to Australia. Lieberr, Demag and Bomag are the main German brands in this market.

Australian manufacturing is mainly small amounts of customized products such as: attachments (buckets, tractor tires, cabs, wheels and rims), replacement parts and wear parts for incorporation into imported base units. While construction machinery prices range from a few thousand dollars to an excess of one million dollars, the local industry manufactures items at the lower end of the spectrum.

The Free Trade Agreement between the U.S. and Australia (AUSFTA) has eliminated import duty on construction machinery from the U.S. The import duty rate from other countries is five percent.

Best Prospects

Investment in heavy equipment is likely to continue over the next few years, popular to support federal and state government plans for growth in infrastructure construction. Equipment includes: off-highway dumpers, graders and levelers, self-propelled track laying bulldozers and angle dozers, front-end shovel loaders and scrapers.

Pricing, technology, and after-sales-service dominate the buying habits in this market. Australian end-users are willing to invest in technology that offers superior precision, flexibility, safety, and reliability features. Large construction machinery that consumes high levels of energy is at a disadvantage. Manufacturers and/or agents must provide on-call back up servicing programs and substantial product warranties.

Opportunities

Contact Patricia Matt for a listing of major infrastructure projects.

Trade Shows

AUSTRALIAN CONSTRUCTION EQUIPMENT (ACE) EXPO
Date: February 26-28, 2009
Frequency: Bi-annual
Location: Sandown Racecourse, Melbourne
Website: http://www.aceexpo.com.au

CIVENEX 2009
Date: May 21-23, 2009
Frequency: Annual
Location: Eastern Creek, Sydney
Website: http://www.civenex.com

INFRASTRUCTURE AUSTRALIA CONFERENCE 2009
Date: May 2009
Frequency: Annual
Location: Melbourne Exhibition and Convention Centre, Victoria
Website: http://www.infrastructureaus.com.au

INFRASTRUCTURE AUSTRALIA EXPO
Date: October 20-22, 2010
Frequency: Bi-annual
Location: Adelaide Showgrounds
Website: http://www.infrastructureaus.com.au

LOGOV EXPO
Date: October 2010
Frequency: Bi-annual
Location: Logan City, Brisbane
Website: http://www.logov.net