Riding the fiscal elevator

While celebrating the close of 2012 and the start of 2013, I was speaking to a newcomer to the Gulf who had just arrived from the UK. “Really I would have been stupid not to have come over,” he said and amid the talk of fiscal cliffs and shrinking growth in other parts of the world it was easy to see his point.

To a certain degree we exist in a bubble in the Middle East construction sector. The celebrations in the US over the resolution of how it was going to tackle its fiscal cliff may have been an outpouring of relief, but as the Chinese news agency Xinhua was almost gleeful to state, the Republicans and Democrats have only managed to kick the can a little further down the road. The US could be facing a fiscal abyss, it said cheerily.

China enters 2013 looking at 7% growth, a figure that would make the Greek government treat itself to something special for the weekend, but way off the type of growth rates it needs to help the machinery sector stay profitable. Some observers warn that as the picture becomes ever more clearer of how its local governments spend their money – or more exactly lose money – then the construction industry faces even greater hardship. It could be the sort of 1-2 punch combo that forces consolidation in the market.

My time spent time with the head of Bauma China makes me suspect he was happy that the event took place in 2012 and not 2013.

We’ve already seen manufacturers group the Middle East and Africa with Latin America and the CIS as a region that provides hope for the future. Saudi for instance – which will again be the most active market in 2013 – is accelerating its spending seeing a 50% increase year on year in the second half of 2012. Business Monitor International predicts the construction industry will see 5.6% growth over the next four years.




I’ll applaud the effort of Chinese industry to make the biggest wheel loader or crane as seen at Bauma China, but I would much prefer that they follow the example of Shantui and LiuGong, say, in making equipment that’s up to the job of working in the remote sites of southern regions of the Kingdom.




It occurs to me that we’ve often been sold short by the global industry in terms of ensuring we have the best equipment. Sometimes we’ve been derided as having a taste for less sophisticated kit and not interested in long term value.




As much of the rest of the world flounders and customers are in short supply, maybe it’s time that you make sure you get the very best support out of your dealer’s suppliers and that they realise how important you are.



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