Slump in equipment sales

Sales in the Australian mining equipment market fell nearly 30% in the first six months of 2009.

Sales in the Australian mining equipment market declined 28.8% in the first six months of 2009 compared with the same period in 2008, according to figures released by the Construction and Mining Equipment Industry Group (CMEIG) and ERG International.

The decline follows a rise of 15.7% in 2007 and a drop of 6.5% in 2008.

According to CMEIG chief executive John Reid, almost all product categories and market areas were affected during the period.

“However, the rate of decline in the markets has slowed somewhat in June, probably as a result of the impact of the revamped Government investment allowance initiatives,” he said.

Reid believes the investment allowance initiatives had a major impact on sales of the smaller machine types, such as skidsteer loaders and backhoe/loaders, which were mainly purchased by small contractors.

“These small contractors benefit most from the allowance and they appear to have reacted positively towards these initiatives by purchasing new machines,” he said.

Over the period, sales of backhoe loaders fell by only 16.9% while sales of skidsteer loaders decreased by 20%.

By comparison, larger equipment, such as hydraulic excavators and wheel loaders, fell by 30.3% and 34.5% respectively.

Reid said finance for new equipment has been more difficult to obtain in 2009, particularly for smaller contractors.

The fall in demand for the major export commodities and the uncertainty in overseas markets have also resulted in lower demand for mining equipment.

“However recent announcement by Federal and State governments of major increases in spending for infrastructure projects should have a positive effect on equipment markets and sales levels should improve in the second half of the year,” Reid said.

“Overall sales for 2009 are still expected to be around 20% lower than in 2008.”

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