Spain: Public works, construction and mining machinery sector

Spain: Public works, construction and mining machinery sector ICEX sector reports one two three four five six Sector definition Spanish sector overview Foreign trade Leading companies Trade fairs Useful addresses

The public works, construction and mining machinery sector one The Spanish construction, public works and mining machinery sector covers equipment in the following subsectors: Machinery for highways Equipment for producing, transporting and delivering concrete and mortar Lifting, transport and maintenance equipment Quarry, mining and recycling machinery Earth moving machinery and equipment Equipment for temporary on-site tasks Auxiliary construction machinery and equipment Spanish sector overview two The Spanish sector is divided into various subsectors, of which the largest is the lifting, transport and maintenance equipment segment, which represents 34.4% of the market. This segment is dominated by light machinery (cutting and sawing machines, etc.) and tower cranes, which are the most representative areas of the Spanish sector, being the items best known worldwide from this sector in Spain. SUBSECTORS Lifting and transportation Auxiliary machinery Quarries, mines Temporary on-site tasks Earth moving Other Source: Anmopyc % 47% 13% 11% 11% 10% 8% This industry is primarily made up of small and medium companies which are predominantly based in north east Spain (Aragon, Navarre, the Basque Country and Catalonia). This concentration can be explained by the traditionally industrial nature of these regions. However, other autonomous regions are increasingly joining the sector, such as Madrid and Valencia. YEARS Companies Jobs Sales* * millions 2007 113 12,825 3,300 2008 114 11,500 3,213 2009 112 10,200 2,273 2010 111 9,500 2,329 Source: Anmopyc 2

Geographic distribution Region Aragon Basque Country Catalonia Madrid Other Source: Anmopyc % 28% 20% 18% 12% 22% The construction, public works and mining machinery sector in Spain has been affected by a very complicated situation since 2008. The foreign markets are the ones helping Spanish companies ride out the domestic market situation. The international financial instability in the sector in 2009 seems to have been left behind. Technological evolution (R&D+i) Spanish companies have invested heavily in R&D+i in recent years, as they are ever more aware of its importance in order to develop their equipment and make it more competitive in the increasingly uncertain international environment. In addition to the technological improvements incorporated into Spanish equipment in recent years, there has also been a continuous effort by manufacturers to adapt to standards and directives issued by the European Union and entities such as AENOR in areas such as occupational safety and environmental protection. The sector has also created the Construction Technology Platform www.construccion2030.org, to channel the R&D+i needs of Spanish companies. Evolution, by most representative products - Tower crane. This product, together with cement consumption, is probably one of the clearest indicators of the state of the sector, since there is generally one at every building site. The current situation in the tower crane segment is very different to that experienced up until 2008. Residential construction has been totally paralyzed, meaning that the number of cranes sold over the past two years in the domestic market has fallen dramatically. The four tower crane manufacturers account for approximately 85% of the domestic market. Companies had invested in improving their products, in order meet the large demand that existed up until 2008, and in order to export. Currently, the production capacity of these companies greatly exceeds the number of cranes required by the market. - Scaffolding and formwork. Also dragged down by the bursting of the real estate bubble in the domestic market, Spanish manufacturers of equipment for temporary construction work are experiencing grave difficulties. 3

However, recent competition in hanging scaffolding, mast climbing platforms, higher steel prices and the difficulty of exporting these products have forced companies to face these difficulties by improving their local production process, and to adopt an aggressive policy abroad. - Mast climbing equipment. This is one of the most technologically innovative products in the sector. It is spreading very quickly due to its ease of assembly, its versatility for both new construction and refurbishment works, greater safety and productivity on the job. Mast-based working platforms are gaining ground over traditional scaffolding, and their use is expected to continue to grow in tandem with the modernization of the sector. Internationally, mast climbing equipment also has excellent potential for export, especially to countries that traditionally build upwards. - Light machinery for on-site use. These are the products that most companies manufacture, and which involve high turnover during building works. This covers everything from cutting machinery for construction materials to tools and implements (manual fork lifts, boots, wall chasers, etc.) to generators, compressors, hoists, cement mixers, etc. In many cases these products are spearheading exports in the Spanish sector. Light machinery for use on construction sites is also the source of business for many companies that subsequently went on to diversify their products into other subsectors of this industry. - Machinery for prefabricated concrete products. Along with the spectacular growth of the concrete market in previous years, concrete molding has become one of the pillars of new construction. Its use has extended to all areas of construction, such as public works infrastructures (embankments, bridges, piping, curbs, etc.) and non-residential buildings. Even residential buildings are expanding its use. Nowadays, concrete is an economic, solid construction solution and, although sales have dropped sharply in Spain, it is important to note that this machinery is being accepted well on the foreign markets. - Dumpers. Dumpers (from 1.5 to 10 metric tons) are the solution most used in Spain for transporting sandy materials or rubble on surfaces that are difficult to access. Aside from the rigid dumper, Spanish manufacturers have invested in innovation in their products, incorporating latest-generation technical advancements. They have developed self-loading, multi-purpose, rotating and high-level discharge dumpers, etc. designed for various uses and situations. Spain s dumper manufacturers are, with the British, world leaders in this sector. Sector strengths The construction machinery sector is dominated by large multinationals with an international presence all over the world. These companies are, to a great extent, American, German or Japanese. However, depending on the subsector, it is common to find Spanish manufacturers with important market shares. 4

In this context, Spanish equipment offers a good quality-to-price ratio; on the one hand it includes a high level of technology, while on the other hand it offers more competitive prices than German, Japanese and American products. It also offers very high specifications in the areas of occupational safety and environmental protection, as it complies with European legislation, which is much more advanced than that of most other countries. Today, Spanish brands are increasingly recognized, they have greater international presence and in many cases they are the leading brands in the sector and although exports of Spanish equipment fell off in 2009, it is true that in 2010 has seen a return to growth. In this sense, Spain s growing presence in markets such as the Middle East, the United States or Asia is particularly noteworthy. Foreign investment in the sector Given the high number of manufacturers in this sector, investment by foreign groups in proprietary equipment manufacturing in Spain is rare. Only the German groups Liebherr, Putzmeister and Rothenberger and the Tractel group from Luxembourg have invested to manufacture some of their products in Spain. The low presence of foreign capital in the manufacturing sector contrasts, however, with the dominance of the distribution companies for this type of equipment, a large number of which are subsidiaries of major multinational groups, especially German, Japanese and American. Factors that affect the sector Given the specific nature of this industry, the construction machinery sector is affected by a range of critical factors. After-sales service is a key factor to success in sales operations. Unlike other sectors, a commercial transaction does not end once the sale of the equipment has been completed, since this generates a series of derived and continuous sales throughout the useful life of the equipment. This means that the supply of spare parts and technical assistance plays a very significant role, and can spell the difference between a product s success or failure. In general, except for products with a high turnover rate, this sector tends to manufacture to order. Normally, the equipment can be used for a variety of functions despite its high level of standardization, since clients needs can be very specific. The manufacturing process is therefore usually preceded by a study of the requirements in order to subsequently selected the option that is best suited. In terms of large-scale facilities and equipment, it is necessary to provide comprehensive solutions, since in most cases these are turnkey projects. The sector is undergoing continuous evolution. In order to achieve excellence, it is vital to incorporate the latest technological and product design advances, in order to achieve a differentiated product and provide the greatest level of added value possible, thereby boosting competitiveness. It is also worth noting that international markets are increasingly competitive. The increasing opening up of countries to international trade has led to a dramatic growth in manufacturers seeking international clients across wide swathes of the world. The development of electronic tools, the ease and immediacy of communication and the decline in transport prices over the past decade have all enabled international equipment manufacturers to access markets that had previously been extremely difficult to enter. 5

To this must be added the entry of new equipment manufacturing countries such as China and India, which offer products of an inferior quality, at lower prices. These countries, which are increasingly active at international level, have placed additional pressure on traditional manufacturers in foreign markets, forcing them to compete through technological innovation and added value in the products they sell (such as after-sales service or credit facilities). Sector associations ANMOPYC Spanish Manufacturers Association of Construction and Mining Equipment www.anmopyc.es This association represents 94 members, equivalent to 80% of all construction and public works equipment manufacturers in Spain. ANAPAT Spanish Association of Leasers of Aerial Work Platforms www.anapat.es Created in 1993, it represents companies that lease elevating work platforms, representing over 25,000 lifting platforms and 43 companies around the country. AEM Spanish Maintenance Association www.aem.es This association covers all companies related to the industrial maintenance sector and represents the European Federation of National Maintenance Societies (FEM) in Spain. ASEAMAC Spanish Association of Construction and Industry Machinery Rental Companies www.aseamac.es This association includes the main auxiliary machinery leasing companies for construction, industry and services, without operators. It represents 74% of the auxiliary machinery fleet and it is the Spanish representative of the European Rental Association (ERA). SERCOBE Spanish Association of Manufacturers of Capital Goods www.sercobe.es This association represents the manufacturers of equipment and services for the sectors covering electricity, chemicals and petrochemicals, oil, gas and mining, construction and civil engineering, agriculture, fisheries and food, iron and steel making and metallurgy, telecommunications, transport, water and environment, education and health, and manufacturing industry. There are a total of 140 individual members and seven sector associations. 6

Foreign trade three Spanish trade balance of the public works, construction and mining machinery sector 4,000,000 3,000,000 2,000,000 1,000,000 0-1,000,000-2,000,000 2007 2008 2009 2010 2007 2008 2009 2010 Exports 1,387,082 1,590,482 1,225,698 1,298,045 Imports 2,816,868 1,895,774 946,595 943,574 Balance -1,429,787-305,292 279,103 354,471 Data in 000s Source: created internally based on Customs data Country ranking of Spanish exports by the public works, construction and mining machinery sector Ranking 1 2 3 4 5 6 7 8 9 10 Country Portugal Germany Morocco France Brazil Chile United States Australia Algeria Italy Total top 10 Other countries Total exports 2007 118,842 87,854 47,083 87,096 15,605 142,861 84,669 38,963 30,632 37,949 691,555 695,527 1,387,082 2008 185,566 118,150 92,600 81,914 22,941 36,189 73,975 44,388 54,424 41,795 751,942 838,540 1,590,482 2009 135,646 110,807 106,099 55,149 32,524 36,987 34,308 44,846 40,804 24,105 621,275 604,423 1,225,698 2010 102,800 92,385 73,593 70,917 49,040 45,251 44,277 41,870 41,405 33,720 595,258 702,787 1,298,045 Data in 000s Source: created internally based on Customs data 7

Product ranking of Spanish exports by the public works, construction and mining machinery sector Ranking 2007 2008 2009 2010 1 40116300 - CONSTRUCTION OR MAIN- TENANCE OF VEHICLE AND MACHINE TIRES 221,539 229,566 174,052 218,312 2 73084090 EQUIPMENT FOR SCAFFOLDING, SHUTTERING, PROP- PING OR PIT-PROPPING 140,469 151,838 117,182 142,508 3 84749090 OTHER PARTS FOR MA- CHINERY FOR SORTING, WASHING, CRUSHING... STONE 89,308 111,247 107,919 129,414 4 87051000 - CRANE TRUCKS 63,271 115,663 87,876 96,615 5 84314980 - PARTS SUITABLE FOR USE PRINCIPALLY WITH MACHINERY OF HEADINGS 8426, 8429 OR 8430 120,760 138,290 75,531 90,665 6 84262000 - TOWER CRANES 145,923 158,825 55,885 69,229 7 84748090 - MACHINES FOR AGGLO- MERATING, SHAPING SOLID MINERAL FUELS, UNHARDENED CEMENTS, PLASTERING MATERIALS, ETC 72,355 80,160 81,630 53,204 8 84791000 MACHINERY FOR PUBLIC WORKS, BUILDING OR THE LIKE 60,335 85,884 39,795 40,828 9 87054000 CONCRETE MIXER TRUCKS 17,677 38,153 41,662 39,578 10 84295199 MECHANICAL SHO- VELS, EXCAVATORS AND SHOVEL LOADERS 27,288 47,600 37,074 36,952 Total top 10 products 958,924 1,157,225 818,606 917,306 Other products 428,158 433,257 407,092 380,739 Total sector exports 1,387,082 1,590,482 1,225,698 1,298,045 Data in 000s Source: created internally based on Customs data 8

Leading companies four The leading companies in the sector by volume of sales are the following: ULMA CONSTRUCCIÓN STEN AUSA LIEBHERR PUTZMEISTER ALSINA GH JASO GESAN COMANSA www.ulma-c.es www.sten.es www.ausa.com www.liebherr.com/lh/es/ www.putzmeister.es www.alsina.com www.ghsa.com www.jaso.com www.gesan.es www.comansa.com Source: Anmopyc Trade fairs five SMOPYC International Show of Public Works, Construction and Mining Machinery Zaragoza, Spain www.smopyc.com CONSTRUMAT International Construction Fair Barcelona, Spain www.construmat.com 9

BAUMA International Trade Fair for Construction Machinery, Building Material Machines, Mining Machines and Construction Vehicles Munich, Germany www.bauma.de INTERMAT International Exhibition of Equipment, Machinery and Techniques for the Construction and Building Materials Industry Paris, France www.intermat.fr CONEXPO CON/AGG International Construction Equipment and Machinery Fair Las Vegas, United States www.conexpoconagg.com BATIMAT International Building Exhibition Paris, France www.batimat.com CEMAT World Intralogistics Fair Hannover, Germany www.cemat.de 10

BAUMA CHINA Shanghai, China www.bauma-china.com WORLD OF CONCRETE Las Vegas, USA www.worldofconcrete.com CEMAT ASIA Shanghai, China www.cemat-asia.com CTT Moscow, Russia www.ctt-moscow.com SAIE Bologna, Italy www.saie.bolognafiere.it 11

SAMOTER Verona, Italy www.samoter.com MASZBUD Kielce, Poland www.maszbud.pl M&T EXPO Sao Paulo, Brazil www.mtexpo.com.br BICES Beijing, China www.e-bices.org BIG 5 SHOW Dubai, United Arab Emirates www.thebig5exhibition.com 12

Useful addresses six CECE Committee for European Construction Equipment www.cece-eu.org CONSTRURED Portal on construction in Spain www.construred.com AEDED Spanish Association of Demolition Business Owners www.aeded.net E-MAQUINARIA Platform for the public works and earth moving sector www.e-maquinaria.com 13

Spanish Institute for Foreign Trade (ICEX). Pº de la Castellana 14-16 28046 MADRID 902 349 000 Report prepared in 2011 by the Information Dept. of the Industrial Products and Technology Division. www.spaintechnology.com www.icex.es www.spainbusiness.com