UK Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

The UK construction equipment market size was valued at USD 3.69 billion in 2022 and is expected to reach USD 5 billion by 2029, growing at a CAGR of 4.41% from 2022 to 2029. Rising government investment under UK’s plan ‘Build Back Greener’ and ‘Net Zero Strategy’ is expected to prompt construction equipment sales in the UK during the forecast period.

The UK construction equipment market by volume is expected to reach 81.9 thousand units by 2029. The government's growth strategy, 'Build Back Better,' has supported economic growth through significant investment in infrastructure, skills, and innovation. The increase in UK construction equipment market sales can be attributed to some of the substantial infrastructure projects, such as HS2, where the government has invested USD 87 billion. In 2020, the UK government announced an investment of USD 105.87 billion to boost growth and support the labor market. Over USD 61.40 billion of investment was confirmed for road and rail, USD 4.45 billion for the repair and maintenance of hospitals, and over billions of capital investment to provide 40 hospitals by 2030, upgrading 500 schools over the next ten years and delivering 18,000 novel prison places across England and Wales by 2025.

Additionally, the government invested USD 23.29 billion in High Speed 2, Europe's largest construction project. Approximately USD 21.17 billion investment was set aside for the Heathrow Airport Expansion would include the construction of a third runway (2,000 meters) to the northwest of the other two. It is estimated to be completed in 2050. The government has planned to invest USD 108 million in 2022 for the upgradation of Rail 530 Projects situated over the Eastern Bank. Further, to cut the dependence on fossil fuels and reach climate targets, the UK has targeted net zero emissions by 2050. For instance, developing two solar projects, with a combined capacity of 100MW by EDF Renewables, is expected to increase crane sales during the forecast period. Additionally, the development of the wind farm project Dogger Bank A (in three phases), situated between 130-190 km from the Northeast Coast of England, valuing USD 1.00 billion, is expected to boost crane sales in the UK construction equipment market.

KEY HIGHLIGHTS

• The material-handling segment holds the most prominent UK construction equipment market share. In the earthmoving segment, excavators accounted for the largest share.
• Excavator is used for digging, lifting, earthmoving & drilling. In 2022, the UK government increased investments in residential buildings, roads, and railways to drive the demand for excavators during the forecast period. The project Stag Brewery Regeneration in London, valuing approximately USD 1397.5 million, announced in November 2021, would comprise new homes, schools, retail, and green public spaces. The ongoing public infrastructure construction projects, for instance, the development of High Speed 2 Railway and Battersea Power Station Redevelopment, are expected to increase the sales of excavators in the UK construction equipment market.
• PUDL–Panattoni Park Aylesford Warehouse and Distribution Complex was the largest warehouse construction project in the UK with an estimated USD 247 million, which started building in Q1 2022. Suffolk is the longest in terms of the completion date, with construction expected to be completed in Q4 2026. The warehouse would consist of two buildings with an estimated 7,000 sq meters.
• According to Construction Equipment Association (CEA), construction equipment sales in the UK construction equipment market rose by 73% during Q1 & Q2 of 2021 compared to 2020. More than 18,000 units of construction equipment were sold during the first half of the year, including approximately 2,400 construction telehandlers, 3,400 crawler excavators, and 10,500 mini/midi excavators.
• UK’s plan ‘Build Back Greener’ and ‘Net Zero Strategy’ 2021 has prompted the development of the UK’s first decarbonized industrial cluster. Additionally, the UK government has also committed to unlock USD 95.92 billion for private investment by 2030 and support the development of green industries by 2050. The government has laid out USD 490.2 billion for the infrastructure in its National Infrastructure and Construction Pipeline. This would include USD 74.6 billion for the transport infrastructure and USD 45.8 billion for social structures like schools, housing, and healthcare. All these factors will propel the growth of the UK construction equipment market.

MARKET TRENDS & DRIVERS

UK Government’s Ambition to Build 300,000 Houses Per Year
With its Conservative manifesto (economic plan) of 2019, the UK government pledged to build over 3,00,000 houses annually. As a part of this pledge, the government has also aimed to lay out measures for effective planning systems and better use of land and vacant buildings to deliver the homes that communities need. ‘Future Home Standard’ published in 2021, focusing on energy efficiency, claimed that the houses built in 2022 will yield 31% fewer carbon emissions. Consequently, the homes built in 2025 will produce 75-80% fewer carbon emissions.

The government’s ‘Help to Build’ equity loan scheme, launched with 5% deposits and backed by USD 170.6 million of funding, has enabled people to outdo the extreme mortgage costs to build a home. This scheme is expected to boost the government’s ambition to build 300,000 homes annually and boost the UK construction equipment market growth.

Investment in Public Infrastructure Through the National Infrastructure Strategy and National Infrastructure & Construction Pipeline
The NIS aimed to transform UK’s infrastructure to achieve net zero emissions by 2050. Significant investment is planned in areas of the UK, which covers healthcare infrastructure, the transformation of bus and bicycle infrastructure, more robust flooding and coastal erosion protection, and better connectivity of the country via HS2 and an improved strategic road network. 

Additionally, the UK government announced its National Infrastructure and Construction Pipeline document in 2021, which laid out the plan with an approximate budget of USD 740 billion for infrastructure projects over the next ten years. The country's plans for the public infrastructure are anticipated to contribute to the UK construction equipment market. Further, the transport sector consumed the most significant part of the investment amount, receiving USD 81.46 billion between 2021-2025, and the energy sector received the second largest share.

Investment in Renewable Energy to Reach Net Zero Emissions
British Petroleum Company (BP) has planned to invest USD 20.22 billion in the UK’s energy system by the end of 2030. BP has committed to helping the country to achieve its ambition to boost energy security and reach net zero. It has also planned an investment of USD112.34 million to develop new ports, harbors, and shipyards, including the construction of four ships to aid the offshore wind projects across the UK.

The UK government funded USD 9 million for 24 projects under the Longer Duration Energy Storage (LODES) competition. This funding is projected to support the development of new energy storage technologies and help the UK transition to renewable energy sources. Additionally, the government has invested USD 41.5 million in 2022 for renewable energy transformation across the UK. This investment intends to scale up domestic renewable energy and increase biomass production in the UK through the ‘Biomass Feedstocks Innovation Program,’ which received funding worth USD 40.44 million.

MARKET RESTRAINTS

Acute Scarcity of Skilled Labour Workforce Has Raised the Labour & Projects' Cost
Brexit added pressure to the existing labor shortage situation in the country, as according to the Office for National Statistics (ONS), employment in the construction sector declined from 2.3  million in 2017 to 2.1 million at the end of 2020 in the UK, representing a 4% fall in UK-born workers and a 42% fall in EU workers. The mass exit of EU workers from the country has left the British construction industry facing a severe labor scarcity.

The new point-based immigration system, introduced by TCA, has restricted the entry of general laborers into the UK, leading to the acute labor shortage, which has driven up the labor and projects cost—further hampering the UK construction equipment market. Labor costs rose to approximately 6% in 2021 compared to 2020 due to a skilled labor shortage of tradespeople, including carpenters, groundworkers, bricklayers, plasterers, and plant operators.

Increasing Inflation Is Expected to Impact the Growth of The Construction Projects in the Country
According to Office for National Statistics (ONS), construction material prices rose by 25.2% YoY in April 2022 compared to 2021. The country's steel prices surged to high levels, including nickel prices, which increased by 97%, zinc by 16%, aluminum by 6.2%, and copper at 3.5% in the first quarter of 2022.

Additionally, ONS claimed that Britain's inflation rates surged to the highest level in 40 years in April 2022. The consumer price inflation rose to approximately 7% in the 12 months during April 2022, increasing the cost of living in the region. The Bank of England predicted that inflation would hit 11% by November 2022. There are approximately 16,755 construction companies in the country at a significant risk of closure which is a 54% rise compared to 2021. Such factors are likely to hamper the growth of the UK construction equipment market.

VENDOR LANDSCAPE

• Caterpillar, Volvo Construction Equipment, JCB, Liebherr, Kubota, & Takeuchi are prominent vendors in the UK construction equipment market.
• Other prominent vendors in the market are Kobelco, Hydrema, Mecalac, CNH Industrial & Hitachi Construction Machinery.
• Caterpillar has the most substantial share in the UK construction equipment market. Caterpillar, Volvo, Liebherr, & JCB are the market leaders in the UK industry and has a strong distribution network & have a diversified product portfolio.
• Hitachi Construction Machinery, Komatsu & Hyundai Construction Equipment are emerging strong in the UK construction equipment market. These companies are introducing innovative products to capture the construction equipment industry's share. For instance, in 2022, Hitachi Construction Machinery launched the first zero-emission five-tonne battery-powered excavator (ZX55U-6EB) in the European market.
• Kobelco and Mecalac companies have an established presence in the UK construction equipment market over a significant period. They generally lag in innovation and advanced technology products compared with their competitors. For instance, Kobelco has not introduced or included recent technology & equipment, whereas market leader Caterpillar recently introduced an advanced series of backhoe loaders (426F2 and 424B2) in 2022.