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European construction is under pressure under the weight of exorbitant prices and the lack of raw materials. The used machinery market benefits from such periods of restructuring.
Rising prices, shortages of qualified personnel, Coronavirus, interrupted supply chains – the construction sector has been hit hard lately. And now a wave of cancellations is sweeping through the construction sector as investors and builders cancel their orders. The situation is not much better with regard to new permits: investors with a financial motivation certainly continue to place orders; but the private sector is reluctant to invest in the uncertain situation.
The situation is better for public works
The construction industry includes the construction of buildings and accounts for around three quarters of total construction activity in the EU. The construction of roads, pipelines and canals, railways, bridges and tunnels are part of public works. Since public works are notably financed by public funds, they resist crises better than buildings. This has already been observed during the financial and economic crisis of the 2000s.
And the latest figures from the Ifo Institute (German) also show that public works are doing a little better than construction. In June, regarding 12% of construction companies and 9% of public works had to accept willy-nilly order cancellations. In June, 47% of construction companies and 40% of public works companies were affected by delivery bottlenecks. We expect this problem to persist for nearly three more quarters.
Flexibility as a solution
This is not only true in the building sector: in order to retain its ability to act, flexibility has become the most important factor. Some construction companies are considering resorting to partial unemployment or making up for the lack of staff by employing freelancers. In addition, time – despite the uncertain economic situation – is being used to carry out restructuring. These include upgrading its machine park and selling depreciated construction machines.
“At B2B auctions, one immediately thinks of insolvency. But more and more companies are deliberately opting for this type of sale for other reasons,” explains Ghislaine Duijmelings, member of the management and co-head of the construction sector at Surplex. “Many clients are currently in the process of restructuring and we can help them achieve optimal returns. Surplex is one of the highest-selling online auction houses in the used machinery market. More than 55,000 used machines change ownership every year, including many construction machines.
The trend is on the rise: the market for used machines is growing because it offers the necessary flexibility, unlike the sector of machine and plant construction. The latter is struggling to meet its full order books due to a bottleneck in terms of equipment and contractors are therefore faced with long delivery times when making a potential purchase of construction machinery. Duijmelings: “Many companies are therefore focusing on the used machine market. Indeed, the machines sought are immediately available and often still in very good condition. The prior professional assessment of the installations for sale guarantees transparency”.
Sale of machinery ensures short-term liquidity
European municipalities are reluctant to include price indexation clauses in current or new contracts. Thus, participation in tenders is not particularly attractive for construction companies – the economic risk is too high. But that means major funders are disappearing. Small businesses in particular are threatened with insolvency.
The sale of machines that are no longer used creates spontaneous capital. Because what one doesn’t need, the other needs.
The portfolio of Surplex.com, the industrial auction house from Düsseldorf, offers all interesting units for the construction industry: from standard construction machines such as hydraulic excavators and wheel loaders, to special machines for road construction such as pavers up to special systems such as drilling rigs. On request, depreciated installations can be sold directly to Surplex on fair and transparent terms. In this way, difficult times can be overcome in the short term and predictions of future collapse can be faced with firmness.
