As construction machinery manufacturers increasingly sell connected products, the building sector looks set to build a new image for itself as a technology enthusiast and embrace digitization.
The construction industry has a reputation as a technology laggard, with dire repercussions for productivity and profitability.
Last year, researchers at strategy house McKinsey & Company singled it out as a sector “ripe for disruption”, calculating that large projects typically take 20 percent longer to finish than scheduled and come in 80 percent over budget. Worse still, productivity in the building industry has actually declined in some markets since the 1990s.
More digitization and the introduction of IoT technologies could do much to rectify the situation, McKinsey’s analysts say in their report, and this week there have been signs that the sector is starting to understand that. A report from Berg Insight forecasts healthy growth in the global installed base of construction equipment telematics systems, which reached 1.8 million units in 2016. By 2021, that number is set to reach 4.6 million units.
Berg Insight’s report, The Global Construction Equipment OEM Telematics Market, covers all construction equipment (CE) telematics systems offered by equipment manufacturers, either built in-house or developed in partnership with telematics specialists.
The European market accounted for almost 0.4 million units at the end of last year, with the North American market estimated to be slightly larger, and the rest of the world accounting for more than half of the global installed base.
“Most major CE OEMs [original equipment manufacturers] have introduced telematics offerings for its customers, either independently or in collaboration with telematics partners,” says Berg Insight’s report.
These are commonly factory-installed as standard, at least for heavier machines, it adds, with Caterpillar and Komatsu ranking as the leading OEMs in terms of the number of CE telematics systems deployed worldwide. These two companies together account for more than one million telematics units today, said Berg Insight analyst Rickard Andersson.
Other key players
Other key players include Hitachi Construction (based in Japan), Hyundai Construction Equipment (South Korea), JCB (UK), Volvo CE (Sweden) and Deere & Company (US). Smaller players include Doosan Infracore (South Korea), Liebherr (Switzerland) and CNH Industrial (UK).
“Notably, half of the top 10 OEMs have surpassed the milestone of 100,000 telematics units globally,” said Mr Andersson.
This is important, because these telematics systems can help construction firms locate equipment on busy building sites and assess their recent utilization and performance. Beyond that, the data collected can be used to detect maintenance requirements and send automated alerts for preventative maintenance.
In short, the construction industry has much to gain (and it seems, little to lose) by getting new insights into bulky and expensive machinery that firms typically hope to use for many years to come.