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UK construction equipment manufacturers claim pole position in Europe | BUILDING MAGAZINE

UK construction equipment manufacturers claim pole position in Europe

A market study commissioned by the UK government and UK manufacturers has determined that the UK is the largest producer of construction equipment in Europe and the 5th largest in the world.

According to the study, more than 60,000 construction machines were made in the UK in 2018, earning manufacturers around £13bn in revenue, up 18% since 2013.

Only China, Japan, USA and India produce more construction machines (depending on one’s definition) than the UK – in unit terms – and half of India’s production is by a British company, JCB.

Rob Oliver, chief executive of the Construction Equipment Association, said: “We can proudly report that the latest figures show record revenue for the sector and that the UK remains a good place to both manufacture and supply construction equipment”.

However, the claims are open to challenge as the results of the study turn on definitions, with different countries defining ‘construction machinery’ in different ways. And some UK-made machines are more British than others, depending on supply chains.

One might also question the report’s implication that the average price of a machine made in the UK is approximately £220,000.

This study was conducted by research firm Knibb Gormezano & Partners (KGP) and paid for by the Construction Equipment Association (the UK manufacturers’ trade association) and the Department for Business, Energy & Industrial Strategy.

The statistics used in the UK include telehandlers – 8900 telehandlers were made in the UK last year – but not tower cranes. In Germany, telehandlers are not included in the VDMA construction equipment statistics, but tower cranes are. Germany makes thousands of tower cranes; the UK makes none.

The VDMA definition for construction equipment is earthmoving equipment, road construction equipment (compaction equipment, pavers, milling machines, and recyclers), and building construction equipment (concrete pumps, concrete truck mixers, batching plants, construction site hoists, and tower cranes).

The UK study includes excavators, wheeled and crawler loaders, skid-steer loaders, backhoe loaders, articulated and rigid dump trucks, dozers, asphalt finishers, telehandlers, rough terrain lift trucks, motor graders and crushing & screen machinery.

Sebastion Popp an economist with the VDMA, said, that if telehandlers are excluded, as 50% go to agriculture not construction, and compact wheel loaders (below 60 hp) are included, then German production is much higher than UK’s.

“However, again, many of the small loaders (‘hoflader’ in German) go into agriculture rather than construction”, he concedes.

The VDMA values German production of construction machinery (according to its own definitions) as 12.1bn in 2018. “I think the £13bn number published by the CEA only makes sense if you include upstream and downstream business of the value chain (component suppliers, after sales business of dealers and rental companies etc)”, Mr Popp said. “If you do the simple maths of dividing the £13bn by 60,000 units you come up with an average revenue of £220,000 per machines. Even if you include revenues from services and after sales that the manufacturers doubtlessly gain, the number would be way too high if we think of which machine types are the bulk of the volume (mini excavators, telehandlers, backhoe loaders, construction site dumpers) and these machines’ transaction prices”.

Another issue that is apparently not addressed by the CEA report is the question of UK value added. What percentage of componentry consumed by UK factories is imported? How much of the spend by equipment manufacturers in the UK stays in the UK and how much flows overseas?