UK Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET OVERVIEW

The U.K. compact construction equipment market was valued at 36,143 units in 2022 and is expected to reach 48,505 units by 2029, growing at a CAGR of 4.29%. Regions across the U.K. heavily invest in infrastructure development projects, including repairing and renovating airports, railway lines, roadways, and highways. The government increased its focus on upgrading public infrastructure, which includes railroad stations. In 2022, an investment of USD 3.9 million was planned to develop airports across the UK. In addition, USD 491.6 million was allocated for building eco-friendly stations by installing solar panels and smart LED lighting. During the forecast period, a surge in infrastructure development projects is expected to drive the U.K. compact construction equipment market.

Increased Investment in Public Infrastructure Projects

• The UK government planned to invest USD 106.8 billion under the National Infrastructure Strategy for 2022-2025, focusing on developing transport infrastructure and renewable energy generation across the country. In addition, the growth in mining and road construction projects is expected to drive the demand for compact excavators in the U.K. compact construction equipment market.
• The UK government has emphasized the country’s transition to sustainable energy. Investment in energy projects accounted for 26.4% of all industrial investment in 2020 and amounted to USD 19.4 billion in energy industry investments.
• In 2022, the U.K. government invested USD 186.63 million in coal mining in Whitehaven, West Cumbria region. Surge investment in coal mining projects to reduce the dependency on imports from other countries, such as Russia, is expected to boost the sales of compact backhoe loaders in the U.K. compact construction equipment market.
• The government has increased its focus on upgrading the public infrastructure, resulting in the demolition of old infrastructure. For instance, the government planned to replace the Salzbach Valley bridge as it could not cope with the current traffic demand because the structure had grown old. A budget of USD 578 million was allocated to improve bridges across the country in 2022.
• In 2022, the U.K. government planned to invest USD 213.7 million in building sidewalks, pedestrian and bicycle paths, and crossings. In addition, the government has invested USD 58.7 million to upgrade Hampton Loade water treatment near Bridgnorth in the Shropshire region in 2022. These projects are expected to drive the demand for backhoe loaders in the U.K. compact construction equipment market that can operate efficiently on rough & muddy surfaces.
• The government increased the investment in renewable projects, resulting in a 6.5% rise in renewable energy generation capacity in 2022 compared to 2021. The country aims to produce 100% of its electricity from renewable energy resources by 2035; as a result, the country will witness high investments in its energy sector.

KEY HIGHLIGHTS

• Compact excavators accounted for the largest share of the U.K. compact construction equipment market in 2022. Application of compact construction equipment in the material handling segment accounted for the largest share in 2022. Rising investment in housing, warehouse expansion, and public infrastructure projects is expected to drive the demand for excavators in the U.K. compact construction equipment market.
• The growth in the e-commerce and logistics industries in the U.K. drives the demand for warehouses. In 2022, the government investment doubled to USD 7.9 billion to expand warehouses in the Northwest, East Midlands, and West Midlands. The growth in logistics and e-commerce industries is expected to positively impact the demand for compact forklifts in the U.K. compact construction equipment market.
• In Feb 2023, construction on the new Weyburn General Hospital started. The new facility will include an Emergency Medical Services garage and an adjacent heliport to support safer and more efficient patient transport. The new hospital will replace the existing Weyburn General Hospital and include a 35-bed new facility with an approximate building area of 9,730 square meters.
• In June 2023, Case skid steer loader TV370B and CASE G21G wheel loader were used in the UK's coastal cleanup project (Beach Care Project). The machines were used to assemble and load plastic waste from the sand on the beaches. Skipway Waste Management & Recycling (Belfast-based waste management firm), in Feb 2023, purchased two new HD Hyundai Construction Equipment A-series wheel loaders (Hl960A). Moreover, Komatsu introduced WA475-10 wheeled loader and waste guarding package in March 2023.
• In 2022, the UK government invested in public infrastructure, including roadways, railways, and airport development. In 2021, the government invested USD 4.3 billion in developing 40 hospitals across the UK. Affordable housing projects and maintenance of roads, bridges, and traffic signals are planned for 2022.
• In 2022, the U.K. government invested USD 6.6 billion to install solar panels and heat pumps in new and existing buildings across the U.K. under the decarbonization fund. A few upcoming projects, for instance, the new 935 ft skyscraper in London, would become one of the largest skyscrapers in the UK. It comprises a 60-story structure with an estimated project value of USD 681.50 million in 2022. The growth in building redevelopment and rehabilitation projects is expected to drive demand for compact aerial platforms in the U.K. compact construction equipment market.
• In 2022, the government increased its focus on renewable resources and electric vehicles. The demand for tin and lithium is expected to grow due to their requirements in solar farms and electric vehicle batteries. The demand for compact construction equipment, such as excavators and loaders, is expected to grow in the mining industry.
• The government invested USD 427.6 million to develop offshore wind generation projects in 2022. Around USD 34.1 million is allocated to increase biomass production. Furthermore, USD 5.3 million supports innovative technologies that generate hydrogen from biomass and waste.

MARKET TRENDS & DRIVERS

A Surge in Investment in the Residential Sector to Support the U.K. Compact Construction Equipment Market Growth

• The government introduced an affordable housing delivery plan for 2022-2025 in Bristol City in 2021. By 2024, the project aims to build 1,000 new affordable housing units in one year. This project is an updated version of the previous housing delivery plan for 2017-2020. In addition, the government planned to invest USD 4.8 billion over five years for affordable homes in London in 2021-2026.
• According to the recent data published by the government, the Bank of England expects a slight increase in the mortgage rates in the UK, which will force housing prices to decline as borrowing will become costlier and eventually fall.

Investment in National Healthcare Plan to Prompt the Demand for Compact Excavators

• In 2021, the U.K. government introduced the Health Infrastructure Plan (HIP), a five-year Programme for investment in health infrastructure, including capital to build new hospitals. In 2022, the government plans to invest more than USD 2 billion in healthcare in the next four years.
• The HIP project will aim to modernize the existing ones & construct new hospitals. The government has allocated USD 542.9 million to upgrade accident and emergency departments, USD 482.6 million for improving mental health facilities, and USD 723.9 million to upgrade and refurbish National Health Service hospitals.

Investment in Renewable Energy to Reach Net Zero Emissions Is Expected to Boost the U.K. Compact Construction Equipment Market

• BP has planned an investment of USD 112.34 million to develop new ports, harbors, and shipyards, including constructing four ships to aid the offshore wind projects across the UK. BP has claimed to build two large-scale hydrogen production facilities (H2 Teesside & HyGreen Teesside), expected to produce 1.5GW of hydrogen by 2030.
• The UK government funded USD 9 million for 24 projects under the Longer Duration Energy Storage (LODES) competition. This funding is projected to support the development of new energy storage technologies and help the U.K. transition to renewable energy sources.

The Country’s Objective to Reach Net Zero Emissions Is Expected to Drive the Demand for Electric Compact Construction Equipment

• Under new regulations, CO2 emissions from new construction of homes must be around 30% lower than current standards, and emissions from other buildings, including offices and shops, must be reduced by 27%.
• The government mobilized USD 29.44 billion of capital investment for the green industrial revolution. Additionally, the country received USD 6.57 billion worth of investment through foreign investment in green projects.
• The U.K. government also funded USD 4.42 billion for decarbonizing heat buildings, including USD 509.51 million in a 3-year Boiler Upgrade Scheme, so homes and buildings are cheaper to heat.

Integration of AI & Robotics in Compact Construction Equipment to Increase the Efficiency of the Equipment

• Hitachi Construction Machinery, for instance, developed ConSite Mine, which helps resolve problems at mine sites by remotely monitoring mining machines on a 24/7 basis using IoT and AI-based analysis of equipment operations data. 
• Similarly, the HERON project is an enhanced robotic road maintenance and improvement platform. The autonomous robot is developed to perform maintenance and upgrade roadworks, such as sealing cracks and patching potholes.
• These developments in the K. compact construction equipment market are gaining traction with the industry players, directly affecting the projects' quality, productivity, and timeline.

Use of Hydrotreated Vegetable Oil (HVO) Replacing Red Diesel to Support the Demand for Compact Construction Equipment
Switching to hydrotreated vegetable oil has significantly reduced carbon emissions from carbon machinery. Hydrotreated Vegetable Oil (HVO) is a paraffinic bio-based liquid fuel from various vegetable oils, such as rapeseed, sunflower, soybean, palm oil, and animal fats. In 2022, UK-based GAP Group announced that hydrotreated vegetable oil (HVO) fuel is fully compatible with all its plant and machinery products. There is no need to clean the fuel tanks before switching; customers can refill them with HVO and continue operations without damaging machinery.

INDUSTRY RESTRAINTS

Increasing Construction Costs Will Harm the Sales of Compact Construction Equipment
According to the Building Materials and Components Statistics, construction costs to create new houses increased by 4.5% from May 2022 to May 2023, and the renovation and repair costs increased by 1.2% during the same period. Further, the price of insulating materials increased by 28.8%, ready-mixed concrete by 18.7%, and fabricated structured steel by 24.2%. Other input materials such as timber, cement, plywood, and roof tiles witnessed high prices due to their limited supply.

Shortage of Warehouse Spacing Is Expected to Impact the Demand for Material Handling Equipment
The U.K. is expected to run out of warehouse spacing after the boom of eCommerce post-pandemic. The available warehouse spacing in the country has decreased below 50 million square feet. Telford is one of the worst affected areas in the U.K. by the warehouse space shortage, with 33,293 square feet for the 6,105 registered businesses in the area. This chronic shortage of warehouse space has seen rents rise 61%, more than twice the inflation rate.

Skilled Labour Shortage in the Country to Hamper the Pace of Construction Projects

• In Aug 2022, ONS surveyed 13.3% of the businesses witnessing labor shortage. The industries with the highest percentage of businesses experiencing worker shortages in Nov 2022 were Accommodation and food services (35.5%) and Construction (20.7%).
• Between September and November 2022, there were 1.19 million vacancies across the UK.
• The aging population and early retirements are other threatening causes of labor shortage in the country. In 2022, the ONS surveyed adults aged between 50 and 70 who had left the workforce since the beginning of the pandemic.

VENDOR LANDSCAPE

• Caterpillar, Volvo CE, Komatsu, JCB, Takeuchi, and Kubota are front runners in the U.K. compact construction equipment market. These companies have a strong industry share and offer diverse sets of compact equipment.
• Caterpillar, Komatsu, Volvo CE, and JCB account for the highest revenue in the U.K. compact construction equipment market.
• Kobelco Hyundai Construction Equipment, Mecalac, and Hydrema are niche players in the U.K. compact construction equipment market. These companies offer low product diversification and have a strong presence in the U.K. industry.
• Hitachi Constriction Machinery, Liebherr, and CNH Industrial are emerging in the U.K. compact construction equipment market. These companies are introducing new technologically advanced products to challenge the share of industry leaders in the U.K.
• Yanmar, Liugong, and Manitou have low product diversification; these companies are lagging in adopting new technologies used in construction equipment.