U.S. Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET OVERVIEW

The U.S. compact construction equipment market is expected to reach 269,862 units by 2029, growing at a CAGR of 4.64%. The government planned to invest USD 1.2 trillion under the U.S. Bipartisan Infrastructure law in 2021 for the next ten years. USD 550 billion was allocated for infrastructure development projects for the next five years. An investment of USD 284 billion and USD 266 billion was planned for transport & public infrastructure development, respectively, in 2021. According to the National Association of Realtors (NAR), the housing market in the U.S. is expected to remain strong in 2023. The U.S. compact construction equipment market is projected to be driven by government investment in the real estate sector and other infrastructure development & maintenance projects during the forecast.

KEY HIGHLIGHTS

• Track loaders accounted for the largest market share of the U.S. compact construction equipment market in 2022. Construction industry end-user accounted for the largest share of compact construction equipment in the United States. Compact track loaders are growing rapidly in the U.S. compact construction equipment market. These equipment are 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 country drive the U.S. compact construction equipment market.
• The Federal Aviation Administration (FAA) announced an expenditure of USD 3 billion for 3,075 U.S. airports to improve their terminals. The US Army Corps of Engineers (USACE), on the other hand, floated USD 3.9 billion to improve supply chains and strengthen ports and waterways. It includes over 16 construction projects across 10 states.
• The growth in the country’s E-commerce industry prompts investment in warehouse expansion in the U.S. industry. The surge in warehouse expansion projects supports the sales of compact forklifts & telehandlers in the U.S. compact construction equipment market.
• The country is facing the challenge of labor shortage in various industries. The demand for automated compact equipment witnessed growth to tackle the challenge of labor shortage in the U.S. in 2023.
• The government invests in renewable energy resources, aiming to produce 95GW of power from renewable resources such as solar, wind, and geothermal by 2025, fueling the demand for compact construction equipment market.
• Track loaders challenge the industry 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 the demand for it in the U.S. market.
• Compact backhoes and wheeled loader sales are growing steadily in the U.S. compact construction equipment market in 2023. Some major OEMs, such as JCB & Caterpillar, launched a new compact backhoe loader equipped with the latest technology in the market in 2023.

MARKET TRENDS & DRIVERS

Surge in Government Investment for Upgrading Infrastructure

• The U.S. government is investing in the construction sector to strengthen economic activities & employment. The U.S. Department of Transportation invested USD 906 million for redevelopment projects across the country under Infrastructure for Rebuilding America program in 2022. Compact construction equipment is an idle choice for repair and redevelopment projects in the cities as it can operate in confined places.
• The government planned twenty projects in different states to improve major highways, bridges, ports & railroads across the country. The U.S. Department of Transportation’s Federal Transit Administration announced USD 400 million in 2022 for transits in Arizona, Indiana, Missouri & New Jersey.
• The U.S. Department of Transportation (USDOT) and the Federal Highway Administration (FHWA) liquidated approximately USD 120 billion to restructure the highways and bridges during 2022–2023.

Investments Under the Bipartisan Infrastructure Law Propel Demand for Compact Equipment

• In 2021, the Biden government signed the Bipartisan Infrastructure Law (BIL), which focused on promoting the country’s infrastructure and competitiveness by rebuilding roads, bridges, ports, and airports in 2022-2026. It also included upgrading rail systems and providing cleaner and cheaper energy.
• In addition, the Federal Aviation Administration (FAA) announced an expenditure of USD 3 billion for 3,075 airports across the US to improve terminals. The US Army Corps of Engineers (USACE), on the other hand, floated USD 3.9 billion to improve supply chains and strengthen ports and waterways. It includes over 16 construction projects across 10 states.

Labor Shortage Triggers the Demand for Automated Compact Equipment in the U.S. Compact Construction Equipment Market
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 announced through the Infrastructure Bill in 2021 requires over 300,000 laborers each year to meet the goal of rebuilding infrastructure projects. Furthermore, the 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.

Landscaping & Gardening Trigger Use of Compact Track Loader
The demand for track loaders in the U.S. compact construction equipment market has grown sharply recently. The equipment can better hold the ground on rough terrain than other compact equipment. Track loaders are versatile equipment that can be used with various attachments and efficiently apply digging & material handling. This equipment puts low pressure on the ground. Therefore, it can be used on muddy and unpaved surfaces. There is a rise in gardening and landscaping activities post-pandemic in the U.S. According to National Gardening Association data; there were 18.3 million new gardeners added in 2021.

INDUSTRY RESTRAINTS

High Mortgage Rates to Restrict Residential Construction Demand
Residential construction in the country declined to its lowest in 2022 due to high mortgage rates and increased construction material prices. In October 2022, the average interest rate was 7.06%, and the house prices reached USD 525,000, a 40% increase compared to 2020. The Federal Reserve further predicted the mortgage rates to be at 4.6% in 2023, comparatively higher than the pre-pandemic levels. Moreover, high rates have crushed house demand because buyers must pay more for mortgages. The mortgage application declined by 38%, the lowest in 25 years.

Warehouse Shrinkage in the U.S. Expects to Restrict U.S. Compact Construction Equipment Market Growth
The U.S. warehouse development is expected to slow down in 2023. Therefore, U.S. industrial and leasing activities are set to decline between 10% and 15% during the same period. The average warehouse vacancy rate increased to 3.2% in the second quarter of 2022. Rent rates in the warehousing sector have increased drastically due to increasing labor costs. The rent of warehouses near the ports has increased. For instance, the Southern California Inland Empire rent increased by 24% in 2022. The shortage of warehouses is expected to disrupt the logistics sector. In September 2022, Amazon canceled its plans to build a dozen warehouses across the United States.

VENDOR LANDSCAPE

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