IDA Universal

IDA Universal January - February 2025 24 Mid-Term Outlook on Construction, Mining Industries The construction and mining industries are growing and much of it is happening outside the United States, which should make companies consider new strategies. e mid-term outlook for the construction and min- ing industry up to 2030 is positive. Inflation-adjusted growth is projected at a com- pound annual growth rate (CAGR) of 4 and 1%, respec- tively. ere are many drivers of this positive development. Lower interest rates enabled by cooling inflation promise to impact commercial and residential construction pos- itively, the latter supporting sales of compact construction equipment such as in the U.S. Government spending is a significant factor in the development of the con- struction industry. is is driven by the regionalization of critical supply chains and considerable industry policy considerations. For example, In the U.S., it is happening via the Jobs Act, Chips Act and Inflation Reduction Act. In the EU, it is happening through the new Green Deal, are re-investing in infrastruc- ture. Other nations, such as China, via the One Belt, One Road initiative, are leveraging infrastructure investments to ensure exports for their domestic industries while increasing global leverage. Countries like India, via the National Infrastructure Pipeline, also are investing in catching up with demand while positioning the country as a future manufacturing alternative to China. India's investments are an excellent example of the rise of the Global South. Many emerging countries need infrastructure investments to build a more robust basis for economic expansion and job creation. However, this increase in demand is a mixed bag for many Western origi- nal equipment manufacturers (OEMs). Western companies face competent Chinese com- petition due to cost sensitivity and differentiated customer requirements in Latin Ameri- ca, Africa and Southeast Asia. Chinese companies, facing economic hardship at home, are increasing their market presence in these geogra- phies. Given significant trade relationships between many emerging markets and China, they oen enjoy a "place of production" benefit. Combined with aggressive pricing, an increased focus on aermarket and market-ade- quate products augurs well for their future. Western players need to revisit their globaliza- tion strategies for emerging markets. However, the strategic read- justment must also include home markets, as Chinese competition that builds scale in emerging markets can be a formidable foe at home. is is likely to be the case in Europe, where tariff non-tar- iff barriers towards Chinese products promise to be less stringent than in the US. Industry Trends to Con- sider for the Future Electrification in construc- tion equipment will not lead to significant pene- tration by 2030. We expect Story Continued on page 26 Trends and TidbitsContinued from page 22

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