Construction Equipment Industry In the Age Of Covid-19

The life-threatening effects of novel coronavirus have dramatically affected the business and economies. Where on one hand, certain industries are adopting new norms to stabilize their economies. On the other hand, some of the strongest industries including construction and equipment manufacturing are struggling to cope with the situation arisen from the unprecedented crisis. The construction industry has suffered immensely due to lockdown, and this eventually affected the construction machinery making companies.

The shutdown of construction activities has led to an increase in unemployment amongst huge masses. Not only the industry but millions of migrant and daily wages workers and their lifestyles have been affected by this crisis. In addition, the construction equipment manufacturing companies have been impacted enormously as well. The following are some of the impacts of the pandemic on the construction equipment manufacturing sector, all across the world.

Suspended investments affected cash flows-

Due to the lockdown measures and social distancing, the construction activities were put on a hold. The upcoming investments and projects were suspended as well. This affected the revenue generation and cash flow in the construction industry. This situation majorly affected the construction equipment manufacturing companies.

The shutdown of manufacturing processes and supply chain disruptions-

The equipment manufacturers have been ordered to shut down the processes due to social distancing measures. In addition, the supply chain disruptions have led to a shortage of raw materials. The decrease in demand affected the equipment manufacturers in terms of revenue. This resulted in workers’ pay cuts and job losses.

Decreased demand for construction equipment-

Due to lockdown, the other end users and supporting sectors including construction, oil and gas, and manufacturing have curtailed their businesses. This led to a huge drop in demand for construction equipment. On the other hand, supply chain disruption has been another major cause of the decrease in demand.

The industry is managing the impacts with new norms-

The governments in various regions, however, have imposed certain relaxations in order to stabilize economically. Though the industry would continue huge challenges ahead, however, the relaxations have offered certain assistance to the construction industry. With the nod given by the government, the equipment manufacturing companies have reinitiated their production on a lower scale, with respect to the specified directives for Covid-19. The developers in construction and other industries are also gearing up to restart activities at a slower pace. This would aid to increase the demand for construction equipment.

The developments and technological advancements have offered a wide range of construction equipment. On the other hand, the key market players are strategically marching forward for further investments to enhance the manufacturing processes with all due measures to curb the spread of the coronavirus. Although the construction sector is suffering through a slow-down, which is affecting new construction equipment sales, the market is expected to recover during the forecast period. According to a report published by Allied Market Research, the global construction equipment market is expected to reach $261,047 million by 2027.

The new norms adopted by the industries are aiding them to restart their businesses, though with a concern. Also, the industries are focusing on other ways to increase market growth. The construction market as well is growing focus toward public-private partnerships (PPP). These partnerships are considered a joint project between government and private sector companies for the construction of public infrastructure systems. These partnerships are growing majorly in several regions. As a result, it would also lead to an increase in the demand for construction equipment. Nevertheless, the growth in urbanization across the world leading to an increase in demand for construction of infrastructure including both residential and transportation. Thus, the new norms, restart of supporting sectors, and growth in demand for equipment would aid the industry to grow significantly, in the near future.

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