Equipment manufactures like Caterpillar and Manitowoc depend equally on the farm and construction industries for their income, producing everything from tractors to backhoes. Unfortunately, both of these areas had a lot of obstacles to face in 2009. First, farming incomes fell, and the farming equipmentiIndustry showed a proportional drop. The burst of the housing bubble in the last year also led to decreasing residential construction. Finally, the Obama healthcare bill also led to tax raises for many industries. However, many companies were still able to show an improvement in sales.The reason for this is economic recovery in both sectors and rising crop prices in the farming arena. Caterpillar was able to beat analysts’ expectations when it released its Q2 earnings last week, showing an increase of 91 from the same time last year.One of the big issues facing construction and farm equipment makers this year is the new emission standards which will start in 2011. These will affect high horsepower machinery such as four wheel tractors, making them more expensive, so many people are buying now. Interests outside the U.S. have also been paying off for Caterpillar, in particular, as they opened up a new small wheel loader/backhoe loader facility in Brazil, where crop prices are also rising. There are also numerous construction possibilities in Russia, as they possess arable land in about the same abundance as America, but lack mechanization.Construction crews know that without the right machinery, a job can become downright impossible. It will be interesting to see what the future brings for these companies as construction opportunities begin to open back up.
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