U.S. Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET OVERVIEW

The U.S. compact construction equipment market is expected to reach 269,862 units by 2029, growing at a CAGR of 4.64%. The government planned to invest USD 1.2 trillion under the U.S. Bipartisan Infrastructure law in 2021 for the next ten years. USD 550 billion was allocated for infrastructure development projects for the next five years. An investment of USD 284 billion and USD 266 billion was planned for transport & public infrastructure development, respectively, in 2021. According to the National Association of Realtors (NAR), the housing market in the U.S. is expected to remain strong in 2023. The U.S. compact construction equipment market is projected to be driven by government investment in the real estate sector and other infrastructure development & maintenance projects during the forecast.

KEY HIGHLIGHTS

1. Track loaders accounted for the largest market share of the U.S. compact construction equipment market in 2022. Construction industry end-user accounted for the largest share of compact construction equipment in the United States. Compact track loaders are growing rapidly in the U.S. compact construction equipment market. These equipment are versatile & can operate on rough & muddy surfaces with great accuracy.
2. Infrastructure upgradation projects such as the renovation of commercial buildings, railway stations, airports, repair of runways, and extension of roadways & bridges in rural parts of the country drive the U.S. compact construction equipment market.
3. The Federal Aviation Administration (FAA) announced an expenditure of USD 3 billion for 3,075 U.S. airports to improve their terminals. The US Army Corps of Engineers (USACE), on the other hand, floated USD 3.9 billion to improve supply chains and strengthen ports and waterways. It includes over 16 construction projects across 10 states.
4. The growth in the country’s E-commerce industry prompts investment in warehouse expansion in the U.S. industry. The surge in warehouse expansion projects supports the sales of compact forklifts & telehandlers in the U.S. compact construction equipment market.
5. The country is facing the challenge of labor shortage in various industries. The demand for automated compact equipment witnessed growth to tackle the challenge of labor shortage in the U.S. in 2023.
6. The government invests in renewable energy resources, aiming to produce 95GW of power from renewable resources such as solar, wind, and geothermal by 2025, fueling the demand for compact construction equipment market.
7. Track loaders challenge the industry share of skid steer loaders due to their versatile uses compared to skid steer loaders. The limited use of a skid steer loader that can only operate better on even terrain restricts the demand for it in the U.S. market.
8. Compact backhoes and wheeled loader sales are growing steadily in the U.S. compact construction equipment market in 2023. Some major OEMs, such as JCB & Caterpillar, launched a new compact backhoe loader equipped with the latest technology in the market in 2023.

MARKET TRENDS & DRIVERS

Surge in Government Investment in Infrastructure Upgrades

The U.S. government is increasing investments in the construction sector to support economic activity, employment, and infrastructure development. In 2022, the U.S. Department of Transportation invested USD 906 million in redevelopment projects across the country under the Infrastructure for Rebuilding America program. Compact construction equipment is well suited for urban repair and redevelopment projects because of its ability to operate efficiently in confined spaces.

The government planned 20 projects across different states to upgrade major highways, bridges, ports, and railroads. In 2022, the U.S. Department of Transportation’s Federal Transit Administration also announced USD 400 million in funding for transit projects in Arizona, Indiana, Missouri, and New Jersey.

The U.S. Department of Transportation (USDOT) and the Federal Highway Administration (FHWA) allocated approximately USD 120 billion during 2022–2023 to improve and restructure highways and bridges, creating additional demand for construction equipment.

Bipartisan Infrastructure Law Investments Propel Demand for Compact Equipment

In 2021, the Biden administration signed the Bipartisan Infrastructure Law (BIL) to strengthen U.S. infrastructure and competitiveness by supporting the redevelopment of roads, bridges, ports, and airports during 2022–2026. The legislation also includes investments in rail systems and cleaner, more affordable energy infrastructure.

The Federal Aviation Administration (FAA) announced USD 3 billion in funding for 3,075 airports across the U.S. to support terminal improvements. Meanwhile, the U.S. Army Corps of Engineers (USACE) allocated USD 3.9 billion toward strengthening supply chains and upgrading ports and waterways, covering more than 16 construction projects across 10 states. These infrastructure investments are expected to support demand for compact construction equipment across multiple applications.

Labor Shortages Drive Demand for Automated Compact Equipment

According to the U.S. Bureau of Labor Statistics, the U.S. construction industry had approximately 440,000 job openings in April 2022. Infrastructure investments announced under the 2021 Infrastructure Bill are expected to require more than 300,000 workers annually to support infrastructure development. Spending under the legislation is expected to continue from 2023 through 2033, further increasing labor requirements across the construction sector.

The construction industry is expected to face significant workforce shortages, with an estimated shortfall of 160,000 workers in the contractor segment, 145,000 in the materials sector, and 40,000 in the engineering sector. These labor constraints are encouraging contractors to adopt automated and productivity-enhancing compact equipment to improve operational efficiency and reduce dependence on manual labor.

Landscaping and Gardening Activities Boost Demand for Compact Track Loaders

Demand for compact track loaders in the U.S. compact construction equipment market has increased due to their versatility and suitability for landscaping and gardening applications. Compact track loaders provide better stability and traction on rough terrain compared with several other types of compact equipment. Their compatibility with multiple attachments also allows them to perform tasks such as digging, grading, loading, and material handling.

The equipment exerts relatively low ground pressure, making it suitable for muddy, soft, and unpaved surfaces. In addition, landscaping and gardening activities gained momentum following the pandemic. According to the National Gardening Association, approximately 18.3 million new gardeners were added in the U.S. in 2021, supporting demand for compact equipment used in residential and commercial landscaping applications.

Industry Restraints

High Mortgage Rates Restrict Residential Construction Demand

High mortgage rates and rising construction material costs have negatively affected residential construction activity in the U.S. In October 2022, the average mortgage interest rate reached 7.06%, while house prices increased to approximately USD 525,000, representing a 40% increase from 2020. The Federal Reserve also projected mortgage rates of around 4.6% in 2023, remaining above pre-pandemic levels.

Higher borrowing costs have reduced housing affordability and weakened demand for new homes as buyers face increased monthly mortgage payments. Mortgage applications declined by approximately 38%, reaching their lowest level in 25 years. The slowdown in residential construction and housing activity can limit equipment utilization and constrain demand for compact construction equipment in residential applications.

VENDOR LANDSCAPE

1. Caterpillar, Hitachi Construction Machinery, John Deere, SANY, Komatsu, and Volvo CE are leaders in the U.S. compact construction equipment market. These companies have a strong industry share and offer diverse sets of equipment.
2. Manitou, Kubota, Liebherr, Bobcat, & Toyota Material Handling are niche market players. These companies offer low product diversification and have a strong presence in the local U.S. compact construction equipment market.
3. XCMG, Zoomlion, LiuGong, Kobelco, JCB, and Terex are emerging in the U.S. compact construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of market leaders in the U.S. market.
4. In 2022, XCMG Construction Equipment launched a range of electric compact excavators in the U.S. compact construction equipment market to cater to increasing construction projects.
5. Yanmar, Sumitomo Hyundai Construction Equipment, and Takeuchi have low product diversification; these companies are lagging in adopting new technologies used in compact construction equipment in the U.S. market.