Construction equipment industry

Industry Snapshot

GENERAL INDUSTRY: Manufacturing

CAREER CLUSTER: Manufacturing

SUBCATEGORY INDUSTRIES:Bulldozer Manufacturing; Crane Manufacturing; Crushing Machinery Manufacturing; Dredging Machinery Manufacturing; Excavator Manufacturing; Grader, Roller, and Compactor Manufacturing; Mixer and Paver Manufacturing; Pile Driver Manufacturing, Front Loader Manufacturing, Tractor Manufacturing

RELATED INDUSTRIES:Heavy Machines Industry; Highway, Road, and Bridge Construction Industry

ANNUAL DOMESTIC REVENUES: US$44.1 billion (IBISWorld, 2023)

ANNUAL GLOBAL REVENUES: US$136.3 billion (Statista, 2022)

NAICS NUMBER: 333120

Summary

Construction equipment comprises a large variety of powered, heavy machines, which perform specific construction (or demolition) functions. The engine is usually an integral part of the machine; however, it is sometimes a separate piece of equipment, such as in the case of a towed grader or cement mixer. Construction equipment is classified by its function: drilling, excavating, grading, hauling, hoisting, paving, or pile driving. No new categories have evolved since the middle of the twentieth century. Present-day design emphasis is on modifications that increase speed, efficiency, and accuracy. In addition, new machines have reduced emissions, lower noise levels, and increased operator comfort and safety. Virtually every industrialized nation on the planet has a significant construction industry, so there is a stable market for equipment as well as employment opportunities in a wide variety of career paths.

History of the Industry

The use of construction equipment began as early as ancient times, in Rome. In De architectura (ca. 27 BCE; The Architecture, 1771), the Roman engineer Marcus Vitruvius Pollio provided detailed descriptions of construction equipment, cranes, and hoists, as well as war machines such as catapults and siege engines. He also described the aeolipile, which was the precursor of the steam engine.

The modern industry, however, can be traced back to the nineteenth century. Various sectors of the construction equipment appeared or expanded following the Industrial Revolution, which had its onset in the eighteenth century in Europe. The industry then spread throughout Europe, North America, and the rest of the globe. It was marked by major changes in agriculture, mining, manufacturing, and transport; this phenomenon had a profound impact on socioeconomic and cultural conditions, as much of the world’s population began to migrate from the country to urban areas for industrial occupations.

In 1836, John Deere manufactured a polished-steel plow for use by pioneer farmers in the American Midwest. By 1870, his company was producing plows, cultivators, harrows, drills, planters, wagons, and buggies. In the 1880s, steam tractors appeared; they were replaced thirty years later by gasoline-powered tractors. In 1931, the first diesel-powered tractor rolled off the assembly line at Deere & Company in East Peoria, Illinois. By 1940, the Caterpillar Tractor Company produced motor graders, generators, and a special tank engine used by the United States during World War II. In 1963, Caterpillar and Mitsubishi Heavy Industries formed one of the first joint ventures in Japan, Caterpillar Mitsubishi (later known as Shin Caterpillar Mitsubishi). In the 1960s, Deere & Company also took steps to become multinational, establishing small tractor plants in Mexico, France, Argentina, and South Africa.

A basic piece of earth-moving equipment is the bulldozer. It is not known for certain who invented the first bulldozer; however, the bulldozer blade antedates any form of earth mover. Before the Industrial Revolution, two mules were harnessed to a frame with a blade attached to the front. The mules pushed the blade into a pile of dirt, which was dumped from a cart. The dirt was spread over a depression in the earth to fill it. In 1904, American inventor Benjamin Holt patented and manufactured the first crawler type of tread tractor, which was powered by a steam engine. The continuous tread spread the weight of heavy earth-moving equipment over a large area, thus preventing it from sinking into the ground. Richard Hornsby, an English inventor, improved on the design. In 1914, the Hornsby Company manufactured its powered tractor, known as a “chain track,” which was steered by controlling the speed of each track. This was a marked improvement over Holt’s machine, which was steered by a tiller wheel located in front of the treads. Hornsby’s steering method is used by modern bulldozers and military tanks.

One of the key developments in the production of all machines was the assembly line, which made it possible to produce equipment more efficiently. Before 1900, machinery was produced at one location, one unit at a time. Although the origin of the assembly line is often linked with Henry Ford, the Olds Motor Vehicle Company factory implemented an assembly line concept in 1901 that was originally patented by Ransom Olds.

The concept was, however, vastly improved on by Ford. His improvement of the assembly line involved moving work, via conveyor belts, from one worker to another while the worker remained stationary; each worker had a particular task to complete on the building of a unit, or part, of an automobile, and he became expert at that task and would perform it repeatedly. As the work moved forward, each task was completed by its expert worker or workers, until the unit was completely assembled. These units were then moved, at the right time and the right place, to a final assembly line, which produced the finished product. As a result of Ford’s assembly line improvements, an automobile came off the line every three minutes. Previous assembly lines had produced vehicles at a rate of about two per hour and required significantly more manpower. Ford also implemented safety procedures, which involved assigning each worker to a specific location rather than allowing him to roam about the work area; this dramatically reduced the rate of injuries.

The Industry Today

The construction equipment industry is dominated by large, multinational companies that produce a wide range of products. More than 80 percent of the industry’s revenue is generated by these large companies. In the early 1900s, construction equipment was primarily produced in the United States and Western Europe; however, much of this production has shifted to Asia, including India. The industry is highly susceptible to the state of the economy and rates of economic growth. Inasmuch as the equipment is designed for construction, when new construction experiences a slowdown, these companies are affected. Strong export sales are essential for the survival and growth of companies in the industry, and hence the market is extremely competitive. However, many companies that manufacture construction equipment also manufacture agricultural equipment. Equipment produced for farm use is affected to a lesser degree because of the constant need for agricultural products worldwide. Major subindustries supported by the construction equipment industry are maintenance and repair, sales, leasing, engine manufacturing, and tire manufacturing.

Technology has markedly affected the industry, which is emphasizing manufacturing high-quality machinery. Machines being introduced to the marketplace feature modifications that make them more efficient and faster than older models. Operator comfort and safety are stressed, harmful emissions are being reduced, and the machines are quieter. Many of these machines are expensive and can cost from $100,000 to well in excess of $1 million. Thus, selection of a piece of construction equipment is affected by economics. Price, efficiency, and the ability of a machine to accomplish a needed task have to be considered before purchase. Availability can be a major factor for larger and more specialized pieces of equipment. Transportation costs can be more than $1 million if the product must travel a significant distance from manufacturer to purchaser.

Construction equipment is often categorized by its function: drilling, excavating, grading, hauling, hoisting, paving, or pile driving.

Drilling equipment bores holes into the earth’s surface. It includes augers, bore-tunneling machines, compactors, and pile hammers. Drills are classified according to how they penetrate: rotary, percussion, or rotary percussion. These machines range in size from small, portable equipment that can be operated by a single person to massive structures containing drilling equipment that can bore a passageway for the extraction of water, oil, or natural gas. This equipment can be used for sampling mineral deposits as well as installing underground utilities. When drilling rigs first appeared in the nineteenth century, they were often left in place after the completion of drilling. In modern times, the equipment is frequently moved from one work site to the next. The smaller machines are mobile and moved intact from one location to the next. The larger rigs must be disassembled for relocation, a process that often takes weeks.

Excavating equipment is manufactured for either land or marine use. Land excavation involves the use of machines that dig up earth and rock and place it in a dump truck or other device for transportation to another location. Types of excavators include backhoes, cranes with attached buckets, continuous bucket excavators, draglines, excavating belt loaders, power shovels, and trenchers. Some equipment involves both excavation and relocation of rocks and earth. Examples are bulldozers, scrapers, and front-end loaders (also known as skip loaders, motorized devices with a digging/carrying bucket located on the front end). Dump trucks can move materials over large distances and are designed for road and off-road use. Some dump trucks have a bottom dump, which allows for the slow release of material so that it is dispersed over an area. Conveyer belts are sometimes used to move materials between areas too small to permit the passage of even a small truck.

Marine excavators are commonly referred to as dredges. They are mounted on a barge or a boat. Clamshell and bucket excavators are similar to their land counterparts. Some dredges employ a movable suction pipe, which is lowered to the bottom. The pipe usually contains a sharp cutting head, which dislodges material for suction as the dredge is propelled forward.

Graders are vehicles with a leveling blade mounted between large front and rear wheels. They are commonly used for the fine grading of an area. They can also produce an inclined surface and a V-shaped channel for drainage. Another use of graders is for snow removal.

Hauling equipment includes dump trucks, which transport loads of materials, and excavating equipment, which also transports the material it dislodges from the earth. Examples include skip loaders, backhoe loaders, and skid steer loaders.

Hoisting equipment raises or lowers objects from one elevation to another or moves materials from one location to another over an obstruction. The main types of hoisting equipment are cableways, cranes, conveyors, derricks, and elevators. Hoisting devices range in size from small cranes for lifting an automobile engine out of a vehicle to large devices that can lift very heavy loads for construction of ships and large buildings. Some of these devices are fixed to one location; however, most are mobile (on tracks or wheels). An extreme example of a mobile crane is the aerial crane, which is a specialized type of helicopter.

Pavers apply paving materials, then smooth and compact them. Paving material is usually fed to them from a dump truck. Concrete pavers use a vibrator to level the surface. Asphalt pavers contain tamping pads to compress the applied material. After asphalt is laid, a separate machine, the roller, is used to further smooth the surface.

Pile-driving equipment drive piles into the earth; they include both land- and water-based machines. The three main types of pile drivers are the diesel hammer, the hydraulic hammer, and the vibratory pile driver. The diesel hammer is a very large two-cycle diesel engine, which transfers the combustion energy to the pile head. The hydraulic hammer elevates water, which then falls in an enclosed cylinder; the force drives the pile downward. The vibratory pile driver consists of an electric motor, which turns unbalanced weights that produce a vibratory, downward force.

Industry Outlook

Overview

The market research firm IBISWorld noted that the US construction machinery manufacturing industry saw negative growth from 2014 to 2019, with revenues and employment also declining. This was largely driven by foreign competition and volatile conditions for exports. The market has been described as being volatile from 2017 to 2022 when improving demand for domestic and international demand for construction equipment made it in general a period of growth. However, the COVID-19 pandemic devastated the industry because the construction industry, along with many other industries, was brought to a halt. Despite this, though, during these years, the industry grew about 0.9 percent annually, and in the United States had a revenue of about $41.1 billion. According to Statista, the market is poised for significant growth, and the global revenue of $136.3 billion in 2022 is projected to grow to $235 billion by 2030.

The outlook for the construction equipment industry often reflects broad economic trends, including the complex forces of globalization. For example, mergers and acquisitions have increased the size of dominant companies and forced many smaller players out of the market. Outsourcing is a further concern that can both harm and benefit US companies as well as their international competitors; a significant portion of the construction equipment industry is already based in Asia, and growth trends in China and India in particular are major drivers of industry performance. The ongoing trend toward automation in manufacturing also remains an important issue, as does the shifting power of labor unions.

Another industry trend is the emphasis of energy efficiency; new equipment may combine diesel, electrical, or natural gas usage with renewable energy sources. Considerable research is focused on increasing energy efficiency and reducing emissions. As greener products are released on the market, end users ranging from companies to individuals will be motivated to purchase them if they have an interest in using a machine that is both more efficient and less polluting.

One sector of the industry typically profits in times of economic downturn: the repair sector. In unstable economic situations, consumers are much more likely to have existing equipment repaired rather than to replace it with a new device sporting state-of-the-art features.

Employment Advantages

Although the construction equipment industry as a whole has faced declines and uncertainty, especially during the COVID-19 global pandemic, it is expected to grow in the future. Heavy equipment is an essential component of any industrialized nation, and a demand for construction equipment will always exist. These machines are subject to heavy use, and components will need to be replaced or a new unit purchased. Most companies in the industry are large, global, and produce a wide variety of products; thus, they offer a degree of stability not found in smaller companies or those that do not produce essential products. The industry can support workers in a wide variety of careers, including managerial, technical, and sales professionals as well as skilled laborers. In addition, this large industry often allows employees to make lateral transfers within a company, should they desire an alternative career path. An employee may also derive satisfaction from working for a company with a well-known brand, as they may pass a construction site and be able to point to equipment they have played some part in.

Annual Earnings

Despite the industry's devastation during the 2020 COVID-19 pandemic, the construction equipment industry remains a multibillion dollar business. IBISWorld estimated industry-wide domestic annual revenues at $44.1 billion in 2023. Earnings for individual employees ranges widely depending on the specific job. As an example, the median annual salary for heavy vehicle and mobile equipment service technicians in 2022 was $58,350, according to the US Bureau of Labor Statistics (BLS).

Bibliography

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"Construction Machinery Manufacturing Industry in the US - Market Research Report." IBISWorld, Oct. 2023, www.ibisworld.com/united-states/market-research-reports/construction-machinery-manufacturing-industry/. Accessed 24 Mar. 2024.

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