• EU Country Analysis Spain December 2022

The Spanish construction equipment market has experienced profound changes over the last 20 years, possibly more than any other market in Europe. From the heights of the extraordinary boom period in the early part of the 21st century to the long years of depression which lasted until 2014, when signs of a recovery were finally perceived, the sector has had to contend with huge contrasts in its fortunes.

By 2019, the market was reaching a level which was more commensurate with the size of the country, but there was still ample room for expansion. The arrival of Covid-19 in early 2020, followed by the start of the conflict between Russia and Ukraine, created a whole new set of circumstances which have once again rocked the market, except this time the implications have been felt not only across Europe but on a global scale. This was all happening against a background of change brought about by the drive to reduce carbon emissions and dependency on fossil fuels. In short, companies have witnessed change in the last three years that have once again had a profound effect on the industry. Rather than mention these changes in the context of each type of equipment, and repeating the same message over and again, a summary of these is detailed below.

Covid-19 resulted in multiple lockdowns, which affected the global economy on a scale which had not been experienced before. Factories closed, office-based staff worked from home, while the travel and hospitality industries and tourism sectors were hit extremely hard, especially in countries such as Spain, which depend heavily on tourism. Covid-19 also highlighted the true extent of the shift away from Europe in the manufacturing of both equipment and components. The attraction of purchasing from lower cost suppliers meant that Europe had become increasingly dependent on supplies from outside the continent, and primarily from China. When these supply chains suddenly stopped, this had a profound effect on Europe’s ability to both supply and manufacture equipment, with lead times stretching far into the future. Supplies of spare parts were also severely hampered.

At the same time, the cost of shipping soared, increasing prices at a time when companies were struggling to survive. As countries virtually ground to a halt, economic growth plummeted, and governments were forced to provide financial assistance for both businesses and private individuals.

Yet, despite all these challenges, the Spanish construction equipment sector flourished in 2021, increasing by 29 per cent compared with 2020 and just 4.6 per cent short of the 2019 total. By the end of 2021, vaccination programmes combined with a general weakening of the virus meant that a degree of normality was starting to return. The mood was upbeat, and growth was expected to continue in 2022. Then, in February 2022, the inconceivable happened when Russia invaded Ukraine and the stability of Europe was thrown into disarray. As a consequence, Europe lost one of its major steel plants (in Mariupol), energy supplies were disrupted and energy and food prices soared, resulting in increased inflation in all economies. In addition to the tangible effects, the war has also created a feeling of uncertainty about the future, which in turn slows economic growth.

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EU Country Analysis Spain December 2022

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