When something is in high demand, its inherent value rises through new-found popularity as the product or service becomes more covetable to consumers. The monetary value of the product or service then increases proportionately to reflect its desirability, a pattern that is consistent across all industries.
Every market ebbs and flows with the economy; companies will experience waves of prosperity followed by periods of stagnation or downswings – all a normal part of business. The heavy machinery industry is no stranger to this fluctuation, but the global construction market has been trying to recover from a slump that has spanned over the last eight years. Low commodity prices, a weak economy, and various political events have caused heavy machinery sales to plummet from $102 billion in 2011 to $69.8 billion in 2016.
This downturn lasted much longer than anticipated, but the long-term direction for equipment sales is already on the upswing, so much so that it is predicted the industry will be up 28 percent by 2020. Dump trucks and excavators will see the quickest rise in value, but the demand for heavy machinery will continue to grow over the next four years.
The surge comes from the industry’s need to offset the issues resulting from the aftermath of the last financial crisis. The effects of the crisis not only hit North America hard, the rest of the world felt its consequences as well.
This projected growth answers to the growing population; as the population expands, more properties will need to be erected in order to accommodate more citizens, especially in developing countries across the globe. What this means for heavy machinery is this: a high demand for equipment means more valuable machinery. The best thing you can do for your business is to get an up-to-date valuation of all your equipment, used and new.
An equipment appraisal will benefit you in two ways: it creates a bargaining opportunity for you within the market to forge your own growth, and it also provides you with accurate documentation.
As the construction industry hits another peak, the market will become more saturated. If you get ahead of this growth, it will give you a competitive advantage. It will also ensure that no one else profits off of your gain, i.e., if you see a hike in taxes just because your equipment is more valuable.
In response to a prosperous market, more machinery will start being manufactured; this new equipment will be a commodity for some. On the other hand, used equipment may be just as, if not more, valuable in certain circumstances. Heavy machinery can be a hefty investment at first, which makes used equipment more desirable. You can do the same quality of work without having to make a huge financial sacrifice at first.
Being in the world of heavy machinery, it’s your due diligence to take advantage of this market at the start of a booming – and prosperous – future. An equipment valuation will benefit your company as you poise yourself for success.