At present, construction equipment sector is mainly dominated by heavy earth moving equipment. In this segment also, it is the Backhoe Loaders (BHLs) which constitute more than 65 per cent of heavy earth moving equipment sales. Its demand is expected to grow further as it is a highly versatile machine and can be employed for numerous applications including digging, demolitions, excavating, breaking asphalt, laying roads, transporting materials, levelling, loading and much more at the job site. They have the capacity to easily duplicate the work of bulldozers, front-end loaders and excavators and are useful in farming, construction, mining and infrastructure services. In fact, BHLs can be easily used in urban engineering as well as construction projects which hugely drives the growth of this equipment. BHLs generally come with various easily attachable attachments which further increases its utility at the jobsite.

Given their usability, backhoe loaders are high-selling equipment all over the world. Earlier, their demand was majorly seen in the developed nations but with the increase in the number of infrastructure projects and construction activities in the developing countries, BHLs demand is increasing there too.

With globalisation, India and China, the two fast growing nations have become the major activity centre. With villages and farmlands giving way to more industries and buildings, there are whole of lot construction activities that are happening here and this is posing good demand for BHLs. Basically, huge number of infrastructure projects like canals, dams, roads, power projects etc., to match up to the West that are being carried out by these two countries is setting up the pace for BHLs’ growth. It goes without saying that for all these activities, backhoe is a key component.

Reasons for the growth of BHLs in the developing countries

There are many reasons driving the growth of BHLs in emerging economies. These include:

1. Investment in infrastructure by the government in emerging economies is the major underlying factor driving BHL sales.

2. New infrastructure funding, reforms and procedures are also likely to stimulate the growth of the BHL segment in emerging economies.

3. The undertaking of highway and rural road development programs in developing nations is also paving way for the demand for BHLs.

4. Agriculture and irrigation projects are also providing momentum to the growth of the backhoe market.

5. Land development, building construction and industrial development projects are also adding to the growth of global BHL market.

6. Unlike other CE, demand for BHLs is supported by the fact that they are highly multi-purpose equipment and can perform variety of tasks with ease.

7. The re-emergence of the rental sector is further expected to drive the growth of the market.

8. Shortage of manual labour in the developing nations is another significant factor which is likely to contribute to the growth of BHLs in the long term.

9. Last but not the least, as against manual labour and traditional methods, BHLs lead to improved quality, timeliness, better project financials and safety. Gradually, developing nations are also realising this fact and hence are showing more interest in employing BHLs.

Key trends related to increasing BHL demand in developing markets

• The Asia-Pacific market including developing countries like India account for much of the growth in the global heavy construction equipment sector as construction activities continue to increase in these regions. The Asia-Pacific construction equipment market including the backhoe segment is supposed to grow at a CAGR of 10.2 percent during 2015 to 2020.

• The Asia-Pacific region, with China at the forefront is expected to be the key region for aggregate demand of BHLs due to its huge government-led investment in new transport and other vital infrastructure development.

• The other developing countries constituting the BRIC are also showing a growth in demand for BHLs. If you were to rank them in order of highest to lowest demand, then China is the leader, followed by India in second place, then Brazil and Russia.

• The demand for backhoe is set to rise in Malaysia and other Asian countries as well.

Demand for backhoes in India

Particularly, if we talk about India, then it is by far considered to be the largest growing BHL market in the world with this equipment accounting for almost 50 per cent of all CE sales in unit terms. As per Off-Highway Research, “There is an active population of 195,000 BHLs in India.”

Growing at a rate of close to 37 per cent CAGR over last few years, the pace of backhoe market is likely to continue in the coming years too. This segment is perhaps the only one in the CE sector in India that has reached the stage of maturity and scale where exports could be considered.

All the BHLs sold in India are manufactured in the country and JCB India and Mahindra Construction Equipment are the clear market leader with a share of over 70 per cent followed by other players like Caterpillar India, ACE, Escorts, Terex Equipment and few more.

In future, BHLs are expected to account for over 68.23 per cent of total sales of CE by 2018. Further, sales of BHLs in India is expected to increase from the 21,192 units sold in 2015 to 28,000 machines by 2020, a +32 per cent increase, according to Off-Highway Research.

Opportunity for growth for the construction equipment manufacturers

Overall, the huge demand for heavy construction equipment from emerging economies due to infrastructural development and increased spending on construction activities is expected to accelerate the overall growth of the BHL market. BHL manufacturers in the developing countries can definitely take advantage of this trend.

Keeping this trend of growth of BHLs in the developing markets, the next few years can be the right time for building construction equipment manufacturers to launch new products not only in the domestic but international markets. They can adopt various strategies to take advantage of the projected growth in infrastructure construction in the various countries and aim to export their building construction equipment to these markets. They can look at expansions, agreements, contracts, joint ventures and partnerships in the sector to garner a larger share in the market. Moreover, collaborating with other equipment companies could act as a key to success. Alliance across industry due to the entry of more diverse and technology-driven products into the marketplace can also help the building construction equipment manufacturers in the developing markets to gain a larger share not only in the domestic but global markets.

Hence, the growing demand for BHLs in developing market is ringing in good news for many. In future, this demand is only going to increase further.