Attending the Intermat Show is always a lot of fun because of where the show is held - April in Paris is always a wondrous event. The sun is warm; the leaves are on the trees; flowers are seen everywhere; and the sidewalk cafes are crammed.
We have been attending Intermat since the late 80s and the show has been an international gathering of construction and industrial equipment suppliers and support vendors every three years. This year, roughly 1,500 exhibitors were showing their products, and organizers indicate that about 173,000 visitors attended the six-day show with roughly 30 percent of the crowd coming from outside France. A Metro slowdown for part of the show probably held attendance numbers down some, but that was more of an inconvenience than a complete disaster in getting to and from Paris to the exhibition site. (The attendance count seemed high to me considering very low attendance and empty halls the first day and the fact that I got counted at least 8 times coming and going from the show during the days I attended, which I am sure was likely multiplied many times over for the numerous exhibitor personnel and people like myself attending for more than one day.) Overall, the show, I am sure, was a success from the organizer’s standpoint and for the many exhibitors that participated.
Two of the big machinery suppliers in the industry – Caterpillar and JCB – were not present this year, which was a surprise. Let me amend that – JCB Drivetrain Systems was present, but not the machinery side of JCB’s business. (Atlas Copco was also missing I believe, as were probably several other well-known suppliers, which I did not see.) However, I found it interesting that these two giant companies, both very well known in Europe, would take a breather from the biggest European show this year, saving beaucoup dollars in show expenses, and perhaps attending the show with a limited number of people to see what the rest of the competition was doing. I doubt that either company was negatively impacted by their “absence” as they both get plenty of exposure through their respective dealer networks and advertising. Yes, they were missing, but “no” they did not lose any business from not being there from my viewpoint.
I did not see any earth-shaking new equipment on display, and I walked the whole show inside and outside. I am not trying to short-change the many people that put lots of work into newly developed products and modifications made to existing products shown at the event. There are always a few innovations and improvements such as hybrid or all-electric machines to talk about, but nothing was off the charts new that I need to digress on here. Engines were somewhat of a highlight, as Europe is getting ready for Stage V emission regulations in 2019. Deutz, Cummins, John Deere, JCB, Kubota, Yanmar and others all had displays of new, improved engines to come along related to the Stage V development front. And meeting the Stage V requirements was talked about, particularly in the corner of the show where all the engine suppliers were stationed.
Something that was clear during Intermat is that the economic outlook in Europe is certainly uplifting this year compared numerous sloppy economy years since the big downturn in 2009, and there is more confidence in business, which was felt and visible in the attendees. This is always a very good omen for manufacturers and vendors for the future, as machinery sales are largely driven by good economic conditions.
It was also obvious that the rental equipment activities in Europe are moving forward. Companies in that industry are expanding and getting stronger through consolidation and the addition of new locations. I talked with rental companies who had exhibits and I spoke with other industry contacts made during the show. One last thing – Intermat organizers had one day dedicated to Equipment Rental, aimed at discussing market growth and trends in the rental equipment industry. This same type of program was included in 2015. I was unable to attend that day-long meeting because of other commitments. All-in-all – Intermat was fun to attend, but the escargot in Paris made the trip special.
Backhoe Loaders – A Market of Limited Growth Potential
I have covered backhoe loaders as a product for a long time. Demand for these machines in North America 10 – 15 years ago ranged from 20,000 – 30,000 units annually – no questions asked! Last year, sales were just over 11,000 units and the best year since 2009 was 17,000 units. Get the picture? Needless to say, the market has “hit the wall” and is not growing when markets for other machines are gaining speed and healthy.
What has changed? As I said the last time I wrote about backhoes, customers are making a trend change to compact equipment - compact track loaders, mini-excavators, and skid steer loaders. These smaller machines can often do most of the work of a backhoe loader and they are easier to move around from one job to another. Topping it off, the compacts are operationally low cost and generally low maintenance machines. Need I say more?
I won’t expound on the competitive aspects of backhoes here. Market shares have not changed much. There is just less market to play with. I want to make the point that the growth in sales for these machines looking forward in time is low and may remain that way for the coming five years or more. There will likely always be a market for backhoe loaders, but they won’t be the backbone of any company’s product line like they were in the 80s, 90s or even in the 2000s. Those days are gone for the suppliers that benefited highly from sales including Case, John Deere, Caterpillar, JCB, and New Holland.
One exception — Kubota, which only offers compact backhoes will likely not be impacted like the suppliers offering standard machines. I look for the smaller backhoes to hold a presence in the marketplace, growing as a percentage of the overall market in coming years. Terramite and Waldon, lesser players in the small machines, will continue to be involved, although neither is a threat to Kubota.
Understand, however, backhoe loader sales will continue to hold on and I am actually expecting some modest growth in demand over the next few years in line with improvements in construction and the domestic economy, which I have discussed a number of times in recent months. Total sales including compact backhoes could hit 14,000 to 15,000 units over the next five years, but modest annual growth is what is expected, not explosive growth back to 25,000 units like we once enjoyed.