The Parallels Of Economic Growth And Construction Equipment Growth
In recent years, growth of the construction equipment industry has been a popular topic in the news typically due to fluctuating economic conditions. For example, construction equipment sales are stagnant or even declining when the economy is slow or there's high unemployment. Growth of the construction equipment industry is often positively correlated with economic growth-- when one goes up, so does the other.
Although it may seem like a simple relationship at first glance, a look into how this correlation was arrived at and what it means for both parties involved reveals that it's not as straightforward as we initially thought.
Like any other industry, the growth of the construction equipment industry is dependent on a variety of factors and it is impossible to predict exactly how things will play out. The primary drivers of construction equipment sales are job creation, economic conditions (i.e., unemployment rate) and population growth among others. In addition to that, the demand for new construction machines has been directly linked to various government infrastructure initiatives such as housing, highways, airports and bridges.
Realize that a person who rents or purchases a new construction machine over a period of time may not act solely based on their financial needs but also based on their perceived needs from an investment standpoint.
How this works is that construction machine sales move in a cycle-- there are periods when growth is strong and periods when it's not. As sales take place, the perception of their need to owners, renters and potential buyers changes. During times when growth is slow, owners and renters will often hang on to their current machines even if they aren't fully utilizing them. A person's perception of needs typically changes at the same time they change their opinion of needs as well.
Here's an example: let's say that a person is in need of a new construction machine because their current one just isn't cutting it for them anymore. They make a financial decision to buy one since they have the cash available to do so. The time has come for them to purchase it-- will they do it based on what they need or what they think they need?
In the best of circumstances, the person would act on their perceived needs. In this case, they would go out and find the tool with the highest level of productivity, technology and performance that will fit their budget and perform the type of work that they need. On the other hand, this person may act on perceived needs rather than on perceived needs alone. Perception is everything in this type of situation because it could mean that this product isn't actually needed but rather wanted.
The fact of the matter is that a person can only buy what they need or want, but they can't do both at the same time. If enough people are buying a certain type of tool then it's almost certain that those with money to spend will take note. As a result, these people are also likely to purchase them as well.
A simple concept that you can apply to this situation is called "the law of supply and demand". In essence, people buy what they perceive as being scarce at the appropriate price. Since construction machinery sales typically rise/fall with the economy, buyers are more likely to act based on perceived needs if their perception rises/falls with it.
If you have any other construction equipment questions, feel free to leave a comment below. You can also follow me on Twitter @contemporarydane for more fun stuff!
If you're interested in writing articles like this for Contemporary Dane, please click here! ---------------> See an example of our work here.
Sources: Construction Equipment Sales Growth and Economic Growth, The Parallels Of Economic Growth And Construction Equipment Growth
By Bronson Dean, Contemporary Dane.com Contributor
Posted by Bronson Dean at 3:53 PM No comments:
An article that has been viewed 1,099 times. View more articles from Bronson Dean . View all articles by Bronson Dean .
Posted by Bronson Dean at 2:28 PM No comments:
An article that has been viewed 746 times. View more articles from Bronson Dean . View all articles by Bronson Dean .
The Parallels Of Economic Growth And Construction Equipment Growth
In recent years, growth of the construction equipment industry has been a popular topic in the news typically due to fluctuating economic conditions. For example, construction equipment sales are stagnant or even declining when the economy is slow or there's high unemployment. Growth of the construction equipment industry is often positively correlated with economic growth-- when one goes up, so does the other.
Posted by Bronson Dean at 2:22 PM No comments:
Bronson Dean ( 33 Posts I'm a regular guy that's big on personal growth and development. You'll most often find me writing about topics related to strength, personal finance, self improvement and construction equipment.
Posted by Bronson Dean at 8:11 AM No comments:
NEW CONTENT IS COMING SOON! This blog is going through some changes so you may have noticed a few problems with content or functionality over the next few weeks. Your patience and understanding is deeply appreciated. Please note that you're still able to comment on existing articles, but new comments won't be published until a few weeks from now when the new theme is live. I'm very excited about the new changes so stay tuned! Thanks for your support!
Posted by Bronson Dean at 2:05 PM No comments:
Bronson Dean ( 33 Posts I'm a regular guy that's big on personal growth and development. You'll most often find me writing about topics related to strength, personal finance, self improvement and construction equipment.
Posted by Bronson Dean at 6:18 PM No comments:
Bronson Dean ( 33 Posts I'm a regular guy that's big on personal growth and development. You'll most often find me writing about topics related to strength, personal finance, self improvement and construction equipment.
Posted by Bronson Dean at 9:48 AM No comments:
A simple concept that you can apply to this situation is called "the law of supply and demand". In essence, people buy what they perceive as being scarce at the appropriate price. Since construction machinery sales typically rise/fall with the economy, buyers are more likely to act based on perceived needs if their perception rises/falls with it.
Conclusion: Sales Volatility Is A Thing - If you're confused by the lack of sales on steroids, you're not alone. If you've seen a lack of sales for a particular brand, model or makes, consider the possibility that demand is being affected by economic concerns. To prove this point, I would encourage you to do some short research on one or two tool providers in your industry. It could be very revealing and lead to solutions for your problem as well.
In this case, demand was up but not meeting supply and sales were declining over the last year:
It would seem that demand is the higher.