Of all the European countries, the UK is one of the hardest hit by the recession. The property boom, notably in the south-east of England over the last five years has spiraled into the depths as banks dry up and new builds as well as redevelopments get cancelled. This is bad news for the construction machine industry, as Derek Hampshire, proprietor of the UK-based import and export company Hamshire Equipment laments: “At the moment there is nothing moving.”
Getting the money is a problem for firms, even if the need for more equipment is there according to Hampshire; “Even though there are companies that could do with the stuff, they can’t get the funding, particularly on the very heavy equipment.
This makes it all the more frustrating when the firm finds clusters of equipment that only a short time ago would have had a queue of ready buyers.
“I’m just being asked about packages of equipment in Kazakhstan for instance at the moment where the logistics of getting the machines out are a problem, but the biggest thing is that there is nowhere to go with it, absolutely nowhere to no with late model low hour equipment” Hampshire explains.
However, there are areas around the world where equipment is moving. Hampshire has seen some positive signs in the US, and in a surprising sector. “House building, believe it or not. is already beginning to move stateside” Hampsire explained, sharing surprise that the industry and market blamed for getting the world into the crisis should be the first one to show signs of recovery.
“There are small, specialist machines that are moving in the American auctions at the moment – albeit at low bucks. When I say specialized, I mean things like landfill compactors and various tools related to construction.” Still, it is a good sign, at least.
Hampshire adds that while internationally specialist and light equipment is just starting to show signs of recovery, the heavy end is not.
“Copper mines are virtually shutting down” he said adding, “Anything to do with iron ore or chromium is shutting, people are just prepared to mothball things at the moment.” A few mining sectors are still going, though; “Coal mines are still active and anything to do with fuel or gold (with it being 900 dollars an ounce) remain profitable” he said.
There’s some good news on the logistics front, if you need to move your machines in containers, according to Hampshire.
“Shipping rates are pretty strong, but container rates are way down, because anything to do with containers are in the same sort of market as commodities, or washing machines or whatever and those sort op people have been demanding that container prices come down but the bulk carrier prices have come down, but when it comes to ro-ro (roll on-roll off), there are no cars for them to move as such so for in order for them to operate is to charge money. If anything, those prices are static – they are not falling.”
Timber is a market for machinery which contractors in the Gulf could be forgiven for overlooking. However is picking up in West Africa due to some stability returning to countries such as Liberia and traditional timber markets such as Indonesia focusing on open cast mining instead.
It is also due in part to the ‘green shoots’ the US construction industry has been showing.
This paves the way for a glut of new and used forestry equipment to be exported to the country. Interestingly, the Chinese government have invested in the country recently, with Chinese-backed infrastructure work on roads and hospitals.
This also means new Chinese-built machinery is finding its way into West Africa, but with this trend comes problems, warns Hampshire: “I worried a bit when I saw the number of Chinese machines going into Liberia, and I class it as being short sighted” he said.
Equipment from emerging far-eastern markets is easy to source – that was always part of the appeal during boom times of course. However, getting hold of parts, even service items can be tricky in a country with very little logistical infrastucture.
“When a Chinese machine breaks down, it is going to be much harder to get the spares out there (in West Africa) then it is to fix a Caterpillar or a Volvo or Komatsu or whatever. The Chinese machines are cheap to buy, but when they break down, that is a whole heap of money sitting there going rusty. That is a big concern” he said, adding that there is a trend for logging contractors to use refurbished big-name equipment as their primary tools.
Finally, Hampshire said that the main problem with the machinery market generally was that of self-belief, both on the part of he banks and the would-be buyers.
“Confidence is what is lacking” he said. “If people just thought to themselves ‘it is just a little hiccup’ everything will come back and if everybody thought a bit more positive then it would come back a lot quicker.” Let’s hope he is right.