North America Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET INSIGHTS

The North America compact construction equipment market was valued at 231.7 thousand units in 2022 and is expected to reach 317.9 thousand units by 2029, growing at a CAGR of 4.62%. The market is expected to grow robustly during the forecast period due to the rise in government investment in public infrastructure & housing projects.

Enormous Investment by the Governments in North American Countries

• There was a surge in government investment in various infrastructure development projects across North America post-pandemic in 2022. The investment was directed to various sectors, including public infrastructure and housing across the continent.
• In 2023, the U.S. government announced investments worth USD 1.2 billion in nine major infrastructure projects under National Infrastructure Project Assistance. These project aims to create jobs, strengthen the supply chain, and improve the mobility & safer transport system across the country.
• Some major infrastructure projects are USD 250 million for Brent Spence Bridge improvements in Ohio, Hudson Yards Concrete Casing - Section 3 (USD 292 million) in New York & Roosevelt Boulevard Multimodal Project (USD 78 million) in Philadelphia.
• Companies such as Tesla, Amazon, and Walmart are investing in expanding warehouse spaces across the U.S. in 2023. The growth in E-commerce prompts the investment in warehouse expansion projects in the U.S.
• The Canadian government has planned a sustainable recovery plan that includes investment in green infrastructure (USD 26.9 billion), public transit (USD 28.7 billion), trade & transport ($10.1 billion), and social infrastructure (USD 25.3 billion) in 2022.
• In 2022, the government announced the construction of over 10,000 new housing units by allocating a USD 2.5 billion fund under the Rapid Housing Initiative (RHI). These housing units would support vulnerable Canadians who are at risk of homelessness.
• Government investment in green mining technology to reduce carbon emissions during mineral production. Investments are also directed for lithium, nickel & copper extraction projects in 2023.

KEY HIGHLIGHTS

• Track loaders accounted for the largest market share of the North America compact construction equipment market in 2022. Construction end-users accounted for the largest North America compact construction equipment market share. Compact track loaders are growing rapidly in the market. This equipment is versatile & can operate on rough & muddy surfaces with great accuracy.
• Infrastructure upgradation projects such as the renovation of commercial buildings, railway stations, airports, repair of runways, and extension of roadways & bridges in rural parts of the region drive high demand for compact construction equipment in the North America compact construction equipment market.
• Compact track loaders & compact excavators have the highest demand in North American countries. This equipment generates nearly 68% of compact equipment sales in the market.
• The OEMs in North American countries have diverse product offerings and started focusing on compact electric equipment. For instance, Wacker Neuson announced to launch electric mini excavator, EZ17E, in North America in 2024, and Volvo CE launched the EC230 electric excavator in 2022.
• Track loaders challenge the market share of skid steer loaders due to their versatile uses compared to skid steer loaders. The limited use of a skid steer loader that can only operate better on even terrain restricts its demand.
• Compact backhoes and wheeled loader sales are growing steadily in the North American compact construction equipment market in 2023. Some major OEMs launched a new compact backhoe loader equipped with the latest technology in the North American market.
  • In 2022, New Holland launched B75D in the North American market.
  • Caterpillar offers side shift models 428, 432, & 434 in the North American market.
  • CASE launched 580 EV industry's first fully electric backhoe loaders in 2020. CASE also launched new models for compact backhoe loaders, such as 580SV, & 695SV, for the North American compact construction equipment market.
• The region is facing the challenge of labor shortage due to the aging population. The demand for automated compact equipment witnessed growth to tackle the challenge of labor shortage in North America in 2023.

MARKET TRENDS & DRIVERS

Investment in Housing Construction Project to Propel the North America Compact Construction Equipment Market

The government in North American countries is investing in affordable housing units to provide affordable housing to its people.

• In May 2022, the U.S. government released its Housing Supply Action Plan, which primarily focused on reducing the burden of housing costs over time and boosting the development of affordable and quality housing across the United States.
• The plan would also aid the renters with high rental costs by constructing housing for low- and middle-income families.
• Approximately 1,392,300 residential units were finished in 2022 across the U.S., a 3.8% increase compared to 2021. According to the U.S. Census Bureau report of December 2022, building permits were recorded at 1,330,000, which was 1.6% below compared to November 2022.

A rise in affordable housing projects in Canada in 2023.

• According to Canada Mortgage & Housing Corp., the country needs to construct 3.5 million homes by 2030 to achieve the goal of affordable housing for all.
• In budget 2022, a USD 150 million fund was allocated for the next two years to support affordable housing and infrastructure projects in the northern region of Canada. The fund was directed towards Nunavut Territory (USD 60 million), Northwest Territories (USD 60 million), and Yukon Territory (USD 30 million).

Growing Trend of Electric Equipment Use in Green Warehouse

• There is a rise in warehouse expansion projects across North American countries in 2023. According to the U.S. Department of Commerce, online purchases accounted for 15.1% of total U.S. retail sales in Q1 2023. Online shopping increased by 14.8% in Q1 2023.
• The rise in online shopping activities prompts investment in warehouse expansion projects in the North American region in 2023. The governments are also increasing their focus on eliminating carbon emissions from various sources to achieve the goal of carbon neutrality. Such factors trigger the rising trend of green warehouses and factories across the North American region.
• The rising trend of green warehouses & factories triggers demand for compact equipment equipped with electric technology in the North America compact construction equipment market. In 2023, Manitou Group launched MRT2260e, MRT 2260e Vision+, and MT 625e electric telehandlers.

Surge in Government Investment in Public Infrastructure Maintenance & Development Projects Supports the North America Compact Construction Equipment Market

• In 2022, the Minister of Innovation, Science and Industry in Canada announced an investment of USD 127 million to support the renovation and expansion of eight biocontainment facilities across Canada.
• More than USD 180 billion in funds was allocated under the Investing Canada Plan for public transit projects, green infrastructure, social infrastructure, trade, and the development of transportation routes over 12 years.
• Quebec announced an expenditure of USD 75.6 billion in 2022 for renovation and maintenance of infrastructure projects. It has stated an investment of USD 7.2 billion for the education sector to expand and refurbish the higher education institutions and increase the classroom space.

Power Generation Through Waste Management Triggers the Use of Compact Construction Equipment
With the rise in environmental safety concerns, the North American government focuses on electricity generation through waste. At the beginning of 2022, 60 Waste to Electricity plants were operating in the United States, with a total generating capacity of 2,051 megawatts (MW). Further, in 2023, the British Columbia Institute of Technology opened a new USD 1.5 million waste-to-electricity project center on the Burnaby campus. Compact equipment such as excavators & loaders are used for waste management and support the growth of the North America compact construction equipment market.

INDUSTRY RESTRAINTS

High Mortgage Rates Can Restrict Residential Construction Demand
The rise in mortgage rates is impacting residential construction projects in the North American region. The residential construction activities declined in the U.S. & Canada in Q1 2023. According to Canadian Statistics data, residential construction declined by 0.9% in Q1 2023. The U.S. residential building permits declined by 3.7% in June 2023 compared to May 2023. Furthermore, the decline in housing permits is due to rising mortgage rates in the North American market. The Federal Reserve System (Central Bank of U.S.) further predicted the mortgage rates to be at 4.6% in 2023, which is comparatively higher than the pre-pandemic levels.

Labor Shortage Expected to Restrict Demand for Compact Equipment

• According to the U.S. Bureau of Labor Statistics, the U.S. construction industry had approximately 440,000 job openings in April 2022. The investment of nearly USD 1.2 trillion was announced through the Infrastructure Bill in 2021 and requires over 300,000 laborers each year to meet the goal of rebuilding infrastructure projects.
• The Infrastructure Bill spending is expected to start in 2023 and continue till 2033. It has been estimated that the contractor's segment would witness a shortfall of 160,000 workers, whereas the materials sector would experience a scarcity of 145,000 workers and 40,000 workers in the engineering sector.
• Several factors are propelling the labor shortage in the region and affecting the North America compact construction equipment, for instance, the increasing aging population & skilled labor shortage. Young people prefer to join high-paying and safer workplace industries than construction.

VENDOR LANDSCAPE

• Kubota, Caterpillar, Hitachi Construction Machinery, John Deere, SANY, and Volvo CE are leaders in the North America compact construction equipment market. These companies have a strong industry share and offer diverse sets of equipment.
• Manitou, Doosan Bobcat, Liebherr, Wacker Neuson, CNH industrials, and Toyota Material Handling are niche players in the North America compact construction equipment market. These companies offer low product diversification and have a strong presence in the local market.
• XCMG, Zoomlion, LiuGong, Kobelco, JCB, and Hyundai Construction Equipment are emerging in the North American market. These companies are introducing new technologically advanced products to challenge the share of market leaders in the North America compact construction equipment market.
• In 2022, XCMG Construction Equipment launched a range of electric compact excavators in the North American market to cater to increasing construction projects.
• Yanmar, Develon, Terex, and Takeuchi have low product diversification; these companies are lagging in adopting new technologies in North America compact construction equipment market.