In dollars and cents, wheel loaders represented just over $2.5 billion in annual sales in North America based on 2016 industry demand. The market for the machines has been expanding since the recession in 2008 - 2009, although 2016 sales were slightly below those achieved in 2015 which was the most recent industry peak in sales since the last peak in 2006.
What kind of volumes are we talking about? Well, in 2006, the market exceeded 22,000 units overall (all sizes), and suppliers just topped 22,000 units again in 2015. Demand in 2016, like I said earlier, was slightly lower than in 2015, actually down about 12 percentage points coming from a number of various reasons ranging from uncertainties in the market during an election year and a lot of unknowns surrounding domestic issues, lower investment in the non-residential construction market, and continued “zero growth” in the mining sector.
Looking forward, I am projecting that 2017 is going to be a better year for wheel loaders than we saw in 2016. And, there is a brighter future ahead after this year is over. Why? Well, the economics are starting to get better for one thing. We are looking at an economy that finally hit 3 percent growth during the second quarter and we are soon to find out how the third quarter growth has done. (Personally, I believe we are going to be doing well through the third quarter and I’m looking at more growth in the fourth quarter as well.) There is a lot of pent up work to be done and both the U.S. and Canada are in need of infrastructure improvements. (Canada has already established plans for its work to be done and the U.S. is gearing up slowly to doing the same thing.)
The economy means everything in the machinery business and it needs to be stronger than 2 percent plus or minus for real advancement to take place. I think we are on the cusp of hitting a better longer-term environment, some of which is being helped by de-regulation by the Trump administration and, of course, anticipation of higher growth following changes to our antique tax code and possibly a stimulus infrastructure program to get our country back on track. Investment will be the result if either of these issues gets addressed properly in the next year or two.
Getting back to wheel loaders—let’s talk about the major players. It probably comes as no surprise that Caterpillar and John Deere are the two leading suppliers in the U.S. and Canadian wheel loader markets. Together these two companies accountd for over half of all loaders being sold annually in recent years. Then comes Komatsu, CNH (Case and New Holland), and Volvo. These top five companies accounted for over 80 percent of total industry sales in 2016, leaving less than 20 percent for the remaining ten-to-fifteen companies in the field. These stats have not changed very much in recent years and I don’t look for any major shifts in the business during the next five years.
Some of you are probably wondering who the many suppliers in this market are. The names of many are quite familiar, but I’ll list the ones I remember just off hand: Kawasaki, JCB, Yanmar, Waldon, Wacker Neuson, Liebherr, Swinger, Laymor, Manitou, Schaeff (now part of Yanmar), Coyote, LeTourneau (now part of Komatsu), SDLG, LiuGong, Sany, XCMG, and Avant Tecno. All of these companies work hard to bring good products to our domestic market and none are second tier by any measure.