Trendlines: Be thankful for dozers
By Peter Yengst05 December 2022
My favorite time of year is now well underway – the holiday season. For me, it always starts with Halloween and shoots out through New Year’s Eve. And while I’m not a big fan of navigating the maniacal crowds at the mall, the season just can’t be beat as it brings out the best in people and reunites friends and family
Still, now that we’re firmly in the final quarter of 2022, it’s becoming ever more apparent that challenges lie ahead. The housing market is beginning to cool off after two wild years of gains. Much of the chill is due to the fastest-rising interest rates ever and limited supply.
At the same time, a positive note for the domestic construction equipment markets is the infusion of infrastructure funds that is expected to push nonresidential construction spending to a higher rate than residential construction, a reversal of the trends of the last few years. Residential construction drove much of the spending in recent years, growing by 15% in 2020 and 23% in 2021. This was driven by historically low mortgage rates, millennials entering their prime home-buying years and the strong economic position of highly skilled remote workers.
Nonresidential spending, by contrast, fell by 1% in 2020 and by 3% in 2021. However, that pattern was reversed in July when nonresidential building outgrew housing construction.
The infrastructure bill’s funding has been welcomed by the construction economy, especially as we anticipate that equipment markets will be relatively slower because of the expected residential softness ahead. Thus, my recent attention is drawn to equipment that more infrastructure spending will favor, like the crawler dozer.
Crawler dozers have always been a key machine on jobsites throughout the world. Even today, it’s one of the best ways to smooth and push dirt and other materials around. Not only are dozers commonly found in road construction projects, but they’re widely used in both residential and nonresidential construction. Even outside the realm of construction activity, dozers are utilized in agricultural and surface mining environments.
Wherever they toil, these machines truly excel at pushing mountains of earth, debris or whatever needs pushing. It may not be the belle of the ball among machines, but there will always be a need for what it does best.
One aspect that is notable to the dozer market is the limited number of suppliers. Currently, there are four major players accounting for more than 95% of sales in 2021, making the segment one of the smallest markets in terms of participants in the construction machinery sector.
The ranking in market share for North America from largest to smallest is Caterpillar, Deere, Komatsu and Case, and that order has not changed in many years in a market that today totals around 10,000 machines a year. In many respects, the limited number of companies reflects the general stability of the segment in that, until recently, few companies have entered or exited.
Interestingly, two very well-known OEMs – Doosan and Tigercat – are entering the North American crawler dozer market during these challenging times. Normally, two companies entering a particular market is not earth-shattering news. But considering that the number of suppliers has not changed much over the last 20 years and that the overall economy has been shrinking from a GDP standpoint, it is unusual.
On one hand, the challenge of establishing a market presence could be considerably daunting as just two companies, longstanding leaders Caterpillar and Deere, account for about 85% of yearly sales. On the other hand, both Doosan and Tigercat have participated and sold other types of machinery in North America for many years and thus are not new to the business by any respect. In fact, these two manufacturers have long established a strong reputation over time for high-quality products. So, the entry of these dozer market newcomers differs greatly from companies with limited experience and/or dealers in place.
The remaining market suppliers include Liebherr, Dressta (Liugong) and Struck, which have a much more limited presence than the top four when it comes to shares of the overall dozer market. Although the German manufacturer Liebherr is a well-established company with a substantial international presence, its North American market share has been limited over the years.
Time will tell how this picture plays out, but one thing is guaranteed – crawler dozers will continue to be an essential piece of equipment in all segments of construction. They’re the epitome of earthmoving machinery and that’s something to be thankful for during this holiday season.