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What the Budget Statement means for Construction Equipment
Within the first 24 hours after the Chancellor’s Budget Statement, the reaction from the media at least was fairly positive – seen as necessary strong medicine for the ailing patient. However, conventional wisdom is that a Budget that gets good reviews at the time doesn’t look so good in hindsight. The objective was to share the misery around, but for our sector there are many that feel that we have had enough misery for the last couple of years without any further penalties. Three tests of whether this Budget meets its longer term aim to reinvigorate the economy, and in turn our businesses, will come in the areas of; 1) capital investment; 2) export performance; and 3) the effects on departmental programmes from the autumn spending review.
The last Labour Budget confirmed £100 billion of cuts in capital spending over the next five years. The Osborne Budget speech reconfirmed these in just one line – and there was no real mention of the distinction between public spending as investment (as in roads and infrastructure) and general current spending (as in welfare benefits, etc). The BIS post Budget statement confirmed the establishment of Infrastructure UK to work with the Treasury to enable greater private sector investment in infrastructure – in other words the government isn’t going to pay for any more. At a company level, we have seen some further tinkering with the capital allowance regime, providing a further (albeit marginal) disincentive to invest in construction equipment.
Economic recovery is predicated on the idea that the Budget sets the scene for a rebound in investment and exports. A persistence of low interest rates will help the investment part of the aspiration but it will take more than a competitive exchange rate to boost international trade. UK construction equipment manufacturers have a proud record of exporting over seven out of ten of the machines they produce – but to get the volumes up we need a sustained recovery in mainland Europe and North America. With many of the continental governments going through the same pains of economic retrenchment it is difficult to see anything but a widespread scarcity of publicly funded construction projects in the coming years.
The real cuts battleground will be the Comprehensive Spending Review due to be completed by this October. Non-protected government departments will have to fight it out to mitigate their share of a general 25 per cent reduction in finances. We have been used to the salami slicing of government programmes when things get tight but this time it is different. HMG will have to remove itself as a player from non-core activities (just as private companies have had to do) which will inevitably mean further cancelled programmes and the reorganisation or abolition of whole departments of government and their agencies. The CEA will be particularly keen to see the retention of support for exporters, with the continuation and strengthening of UKTI as a priority.
The overriding test, of course, is whether the Budget helps to stimulate business confidence to a level that customers feel able to invest in greater numbers. It will be particularly interesting to see how the plant hire sector reacts here in the UK. The potential downside is that users will see the Budget as a reason to further batten down the hatches, which will hasten the much-feared “double dip”.
Rob Oliver
Chief Executive
Construction Equipment Association
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Other Budget Reactions
EEF – Click here
BIS – Click here
Construction Products Association – Click here |
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New Initiative to Coordinate Lobbying
The CEA plans to play a part in influencing government policy with this autumn’s Comprehensive Spending Review in mind. We already work closely with the EEF and other trade associations within the Manufacturing Alliance. However, the target is to better focus and coordinate our work – so that all members and other contacts can feel part of the same lobbying drive. This, in turn, will help to further raise the profile of the Association. The Management Council has asked Perkins Engines’ Nigel Baseley to head a working group to draw up plans for this new approach.
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Engine Emissions: Stage IV NOx Control Requirements
In order to meet the Nox levels for Stage IV, engines will require technologies such as urea injection into the exhaust. This means that machines will need a tank and an injection system. There is an obvious risk that such systems would not be maintained, including that the reagent (urea) would not be refilled as needed. Because of this requirements are being drafted for revision of Directive 97/68/EC which would require a series of on-board systems to detect malfunction of the system and to reduce machine performance, or shut it down, in such an event. Further details of these proposals are available from Tim Faithfull – tim@admin.co.uk.
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Biofuels
Member states are due to decide how they plan to reach an EU-wide target – agreed in 2008 – to replace 10 per cent of the traditional fossil fuels with renewable energy by 2020. However, the European Commission is under pressure to alter these targets as its own internal studies have proven that biofuels have a negative impact on the environment and food production. EU energy Commissioner Guenther Oettinger is reconsidering the policies towards increasing the use of biofuels gained from crops such as rapeseed and palm oil, as they can lead to mass deforestation and food supply disruptions, as reported by Financial Times Deutschland. The EU leaders would still be in favour of biofuels, but capping the “sustainability” level at 5.6 per cent of traditional fossil fuels, suggesting that a higher percentage would harm the environment and endanger food crops, as they would compete for the same farmland. Mr. Oettinger's office has not concluded anything yet but the EU’s bio-diesel production, mainly from rapeseed, is worth billions of Euros. |
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Non-Compliant Machines
During the Bauma Fair, CECE members visited a wide range of stands to check that the machines being displayed were either CE compliant or displaying a sign that they were not available for sale into the EU. A standard questionnaire covering the main aspects of non-compliance was used. Many non-compliant machines were found, particularly wheel loaders (around 30 per cent) and hydraulic breakers (almost half). The non-conformance check was fairly superficial, covering CE marking, labels and a few obvious technical points. A report was made by CECE at the Bauma Press Conference on 21 April and the German market surveillance authority (BG Bau) was informed of the non-compliances. |
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Algeria CEA-UKTI Scoping Visit, November 2010
As a rapidly developing country, with the world’s fifth largest natural gas reserves, Algeria has a huge need for construction equipment. The CEA is running a scoping visit to Algeria in November 2010. The visit will include a day at the SITP exhibition in Algiers (07-10 November). The visit will also include a networking event, meetings with buyers and ministries and a planned site visit to a local construction project (security permitting). Although there is no specific UKTI funding for individual companies, the CEA will make all the visit arrangements on behalf of UK companies. UK manufacturers may be able to obtain market visit funding via their local Business Link and are encouraged to speak to an international trade advisor – asking for a market visit support grant.
Algeria’s economic promotion for the period 2010-2014 includes an investment of approximately 30 billion US$ for infrastructure development projects. Further infrastructure projects involve construction and modernisation of airports and harbours, reconstruction of 14,000 km of roads and construction of the Trans-Sahara highway (Algiers-Lagos). Imports are expected to rise, as major import goods are construction machinery, building materials and services of engineering and consulting. Algeria has been showing a stable GDP for several years. After the worldwide economic downturn in 2009, the GDP is estimated to reach 3.9 per cent again in 2010.
The SITP Exhibition is North Africa’s leading show for the construction equipment sector and run by SAFEX-SPA Algeria in conjunction with IMAG Munich – the Bauma people. The show’s exhibitor index includes:
Construction vehicles.
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Drilling, ramming and drawing equipment.
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Sewer construction and maintenance systems.
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Compressors, compressed air and hydraulic tools.
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Compacting machinery for earthworks and road building.
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Machinery and facilities for concrete, bitumen, waterway and railway line construction and for road repair and maintenance.
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Construction equipment and tools.
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Building site facilities.
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Machinery and installations for the cement, limestone, plaster, sand, clay, gravel and ballast industries.
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Machinery and installations for the recycling of building materials.
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Machinery and installations for the manufacture of cement, limestone and plaster-bound construction elements.
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Lifts, elevators and escalators.
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Installations, machinery and equipment for obtaining and processing stone and concrete.
The CEA can facilitate exhibition space for companies wishing to exhibit at the show. Places on the scoping visit are limited – contact Joanna Oliver for more details – joanna@aslnorth.co.uk. |
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UKTI Grant Support at Exhibitions
Have you ever wondered if you might be eligible for UK Trade & Investment Tradeshow Access Programme (UKTI TAP) grant aid at overseas trade shows – but not known how to find out? UKTI have just launched a clearer and more up to date website to allow exhibitors to assess their eligibility – and see which exhibitions are offering grant aid. For further information Click here.
The CEA's grant funded exhibitions (£1,400 per eligible company) to the end of March 2011 are:
Bauma China (23-26 November 2010) Shanghai
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bCIndia (08-11 February 2011) Mumbai
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Conexpo (22-26 March 2011) Las Vegas
The CEA has a limited number of grants at the above exhibitions – and you do not need to be part of the UK Pavilion to claim one. For a grant application pack contact joanna@aslnorth.co.uk or download from the CEA website www.coneq.org.uk. |
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CEA Discussion Forums
Have you joined the CEA’s discussion forums on the website? Once registered, CEA members can use the forums to share and exchange information. There are three discussion areas for the exclusive use of CEA members – Technical, International and Business. The registration process is very straightforward, but if you run into difficulties, please either e-mail
cea@admin.co.uk, or call Kim Fitzpatrick on 020 8253 4502. |
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