A Conference Note From Jarrett Harris

Bauma Activity Beats Expectations
All but one source who attended the Bauma Europe fair said their activity onsite beat their March expectations; two sources -- one active with heavy equipment, the other with cranes -- said this Bauma fair was their most successful ever. This builds on the improvement OTR Global reported for Western European demand trends in its March 24 Heavy Equipment and March 15 Cranes reports. All German and French sources said fair attendance was strong and that demand was boosted by the usual Bauma incentives, as well as also improving construction market conditions and increasing confidence in both countries.

Quotes:

“This was the best Bauma ever. There was lots of optimism palpable during the fair. Many customers came to us that we had not counted on.” German heavy equipment dealer

“This was the best Bauma ever. We obviously had prepared some contracts that were ready to be signed at Bauma, but this time we had unexpected demand, more orders came in during the fair. There were lots of customer info demands also -- good vibes on the fair.” German crane lessor

“We met with large French customers, and the general mood is improving.” French heavy equipment dealer

“There was a lot of activity at Bauma. We saw a real will from potential customers to purchase cranes. The manufacturers I met were quite satisfied with Bauma, too.” French crane lessor

2016 Sales Outlook Only Slightly More Positive for Now

All French and German sources said they expect positive 2016 yy sales and order trends, in line with March findings, but they remained cautious and only three of six upgraded their outlook because of strong activity during the fair. German sources were concerned the stronger-than-expected Bauma activity might cause a stronger-than-usual post-fair hangover, while French sources remained cautious because of ongoing difficult economic conditions as well as political delays before the May 2017 presidential elections.

Quotes:

“I'm still skeptical that the picture will be significantly different from three months ago. We see the Bauma success also as pre-sales -- orders that maybe won't be placed in 2H16.” German Heavy Equipment dealer

“I think Western European 2016 sales will be flat-up 5% year to year.” German crane dealer

“I do not expect a significant change before the French presidential elections in 2017.” French heavy equipment dealer

“We see more activity, but prices remain low and competition intense.” French crane source

Chinese Presence Less Visible
Sources could not identify any heavy equipment or crane manufacturer gaining or losing share, as several said everybody was very busy. However, two French sources noted there were fewer Chinese manufacturers visible, also because they were more discreet. One said, “We noticed that Sany [Heavy Industry Co. Ltd. (600031 CH)] and other Chinese brands that were arrogant three years ago, with large displays, are now very quiet -- with the notable exception of Zoomlion [Heavy Industry Science and Technology Co. Ltd. (000157 CH)].”

Additional Quotes:

“Bauma was really good; there was much traffic.” German crane lessor

“For the first time in a long period, we saw customers again with courage and readiness to invest. Global markets are sluggish -- North America, for example. Brazil is weak at the moment, and Chile's economy suffers from low copper prices. We were really satisfied with Bauma.” German crane dealer

“Caterpillar [Inc.] did not push strong incentives for this Bauma edition, and the volume of orders was in line with expectations.” French heavy equipment dealer

“The Liebherr [Group] salespeople told me [they] were very satisfied. I see Terex [Corp.]  is lagging behind with their product developments.” German crane lessor 

Event Details:
What: Bauma is the world's leading trade fair for construction, building material and mining machines and construction vehicles and equipment
When: April 11-17
Where: Munich, Germany
Who: 3,423 exhibitors and 580,000 visitors