Graeme Macdonald, chief executive officer of JCB, offered a cautious assessment of the global equipment market during the manufacturer’s international press conference.
Macdonald points out that although – on the whole – developed markets are in good health, emerging regions have faltered amidst numerous geopolitical crises.
Despite his caution over business in 2014, the JCB chief emphasised that the British manufacturer will continue to adopt a long-term strategy for growth, and that he remains optimistic for the future.
“The global market remains very challenging due to the extraordinary geopolitical times that we live in,” said Macdonald.
“For example, the Russia-Ukraine crisis, what’s happening in the Middle East, the recent and forthcoming elections in India and Brazil…all of which are creating huge uncertainty in our markets,” he added.
Macdonald continued to offer a downbeat assessment of the global construction equipment market, during which he showed that emerging territories were struggling amidst regional uncertainty.
“For the first six months to June 2014, Brazil was down 23% compared to the same period last year,” he said.
“Russia was down 22%, India was down 20%, and China was down by 8%. Other emerging economies are also struggling.
“The CIS countries were down by 39%, Turkey was down by 31%, Latin America down by 20%, and Asia and Africa were down by 17% and 8% respectively,” explained Macdonald.
Even so, it’s not all bad news on the international stage. Macdonald told his audience that demand for construction equipment is relatively healthy in more developed economies.
“For the first six months of 2014, the UK and Ireland – our home market – was up by 44%, but the growth is slowing. North America – the second-largest market in the world – was up by 10%,” he said.
“Germany and France – the two largest markets on mainland Europe – were both up by 10%. And Europe’s smallest markets, Spain and Portugal, are growing by 41% and 48% respectively, but from a very low base,” he added.
This disparity between struggling, emerging economies, and resurgent, developed economies, has impacted equipment demand in different ways, according to Macdonald.
“In the first six months [of 2014], demand for backhoe loaders was down by 19% due to falling demand in markets such as India and Brazil,” he explained.
“Conversely, demand for telescopic handlers was up by 15% due to strong growth in developed markets such as the UK and Ireland. Demand for compact excavators is up by 10%, but demand for heavy excavators is down by 6%. Demand for wheel loading shovels has remained broadly stable,” said Macdonald.
In light of the lacklustre market, Macdonald said that JCB remains “extremely cautious” about the rest of the year. He pointed out that the anticipated return to growth in China has not yet materialised, and that India’s recovery has yet to gather pace following the May 2014 election of Prime Minister Narendra Modi.
“But we remain very optimistic,” Macdonald emphasised.
“Despite all the uncertainty, JCB takes a long-term view of our business, and we continue to invest in the future. In November, we plan to formally open our new $100mn factory complex in Jaipur, India. There are two factories covering 65,000m2 on a 114-acre site; all part of JCB’s plan to remain India’s number one in construction equipment.
“Last year, we announced plans to invest $240mn right here in the UK. These are important steps we are taking to consolidate JCB’s position as number one in the UK, Europe, India, and Russia CIS – and to grow as number one in backhoe loaders and telescopic handlers,” he concluded.
Macdonald’s speech was delivered during JCB’s international press conference, which took place last week at the firm’s world headquarters in the UK. For full coverage of the event, including details of the manufacturer’s latest products, check out the October 2014 issue of PMV Middle East.
