ValuStrat’s Industrial Consulting department is very actively involved in providing various consulting services to clients dealing in purchase or leasing of heavy equipment, especially valuation, appraisals and brokerage of used equipment in the global secondary markets.
The heavy equipment business in the Middle East has emerged as a recognizable industry only in the past 20 years and most certainly during the UAE construction boom after 2000. Contractors began to realize the advantages related to purchasing and/or borrowing equipment for medium/long-term uses and rental companies started to increase their range of product to supply all types of industries.
Earth moving equipment includes a wide range of machinery such as:
- Piling Rigs
- Tower Cranes
- Mobile Cranes
- Wheel Loaders
- Tractor Heads
- Motor Graders
- Air Compressors
Some of the large rest equipment manufacturers include Caterpillar, Japan’s Komatsu , CNH Global (created in 1999 through the merger of New Holland N.V. and Case Corporation. CNH today comprises three construction equipment brands: Case Construction Equipment; New Holland Construction; and Kobelco), Terex Corp (diversified global manufacturer operating in four business segments: Aerial Work Platforms, Construction, Cranes, and Materials Processing), JCB (USA)) and a few others. All these brands are represented and/or imported in the Middle East.
The two basic segments of the market for which contracting and leasing companies provide heavy equipment’s are public and private:
Private heavy construction activities include commercial and industrial projects that are completed with the intent of generating a profit for the owner of the project. Examples of private heavy construction projects include residential and office buildings, manufacturing facilities, hotels and other commercial buildings, golf courses, oil wells, private utilities, hospitals, etc.
Public heavy construction activities for which equipment are used are completed with public/government money, and not necessarily with the intent of generating a profit. Examples of such projects include schools, highways, water works, public utility plants, dams, railroads, canals, prisons, hazardous waste site clean-ups, landfills, etc.
In addition to favorable economic environment in GCC, the heavy equipment industry was helped by the UAE’s construction boom in the period 2000-2008. While the amount of heavy equipment available in the country increased during this period, a majority of contractors continued to purchase their machinery and lessors thus enjoyed only a minor share of the entire equipment market. However, rents for construction equipment fell by about 30% in early 2009 due to slowdown in construction activities and tight liquidity. This situation created an oversupply of equipment in the UAE market. The situation is however improving now with a revival of the market in UAE and Saudi Arabia.