The third week of 2017 was busy for shareholders in the heavy construction equipment industry, with financial institutions and asset management groups cutting down their stakes in the shares of leading manufacturing companies. Despite the rollercoaster ride, Wall Street expects some attractive profit figures by the end of the last quarter of the 2016-2017 financial year. The optimism is tied to the profit tracking of financial releases for the prominent vendors in the industry.
The Importance of Tracking Engagement
The internal business scenario for the global heavy construction equipment market is highly dynamic. Amid the recent rise and fall of financial ratios, the overall performance of the industry has managed to stay steady during the past few years. The topical surge in demand for equipment has been a result of the increase in the number of public and private infrastructure projects.
According to data released by the World Urbanization Prospect, about 54 percent of global population was located in urban settlements in 2014. This figure is projected to increase up to 66 percent by the end of 2050—indicating the immediate requirement of fresh commercial and domestic spaces. The construction equipment industry would experience simultaneous growth in the net demand volume over the same period.
Per market survey, more than 75 percent of the business strategies adopted by market players include product launches, leading to an additional increase in the total quantity of equipment in circulation within the demand-supply channel. The vendors or machine owners distribute their products through direct sales or rental services. Users at the end of the supply chain make heavy investments to procure the equipment. The rented-out machines are charged based on the time duration for which they were employed on a project, along with the type of job they served. In addition, any maintenance or upgrades provided during the tenure of service is charged accordingly.
These preliminary parameters are inadequate on multiple grounds. The vendors need to ensure that their products have been handled correctly and have been put to work under optimized working conditions. Tracking whether the equipment is being used to its full capacity includes both the idling and working time for each machine. Tracking and monitoring the equipment engaged in the field becomes critically important for the vendors to finalize the sum that needs to be charged. This is where asset management tools are most relevant.
Asset Management Tools
Both manufacturers and contractors use asset management software tools to ensure the streamlined engagement of resources. A project management team can identify the exact requirement in terms of financial budget and capital resources, schedule the runtime for each engaged machine, and then decide when to terminate its employment.
On the other hand, the lenders stay updated on the location-based and functional status of their equipment. A continuous operational assessment helps the owners stay aware of the malfunctions encountered during field engagement, and their root cause.
The tools maintain historical records, including data related to the operative behavior. Predictive analysis suggests the type and time of maintenance routines to be performed. Manufacturers also use market survey information to form decisions for future product design and specifications.
The Route of Progress
The global heavy construction equipment market is estimated to hit the $193 billion mark by the end of 2020. The growth rate of 7.6 percent looks quite promising for the industry to achieve its target. Enterprises at both ends of the demand-supply chain anticipate garnering serious profit margins with judicious asset management.
The industry has begun employing big data analytics, telematics, sensor-based guidance and IoT-based machine-to-machine connectivity. Companies in the premium league, such as Caterpillar, already understand the industry is not all about iron; digital efficiency is taking center stage. As the buzz of autonomous vehicles grows in density, industry veterans have begun full- fledged discussions on what possibilities are on the horizon.
It is up to manufacturers in the heavy construction equipment industry to decide which route of progress they agree on: collaborative or cooperative.
Anamika Kumari is a content writer for Allied Market Research. For more information, visit alliedmarketresearch.com.