Just as Mark Twain famously said, “The reports of my death are greatly exaggerated,” the backhoe loader has not met its demise.
Yes, there has been significant erosion in numbers sold—roughly 50 percent in a 10-year period—but the market has stabilized.
According to long-time industry analyst Chuck Yengst, president of Yengst & Associates, sales of backhoe loaders in 2017 were just over 11,400 units, up some 200 from 2016. In 2015, 14,500 units were sold.
“The product demand last peaked in 2005 and 2006 with annual sales in the range of 29,000 annually,” Yengst says. “We are not going to see the market recover to those levels again, probably ever.”
Backhoe Loader Costs of Operation
Dig Depth Avg. price Hourly rate* <12' $47,479 $24.31 12' to <14' $90,369 $38.65 14' to <15' $93,890 $36.24 15' to <16' $104,531 $42.63 16' to <17' $123,354 $47.59 17' & deeper $175,633 $71.99
*Hourly rate represents the monthly ownership costs divided by 176, plus operating cost. Unit prices used in this calculation: diesel fuel at $3.01 per gallon; mechanic’s wage at $58.29 per hour; and money costs at 2.6 percent. Source: EquipmentWatch.com, 800.669.3282
Yet Yengst is predicting some growth. “The market for backhoe loaders is expected to grow modestly over the next few years, driven by improved construction markets and higher levels of building coming from the tax reforms and much improved economic growth in the U.S.,” he says.
“Concerning the trend for backhoes, there continues to be downward pressure from alternative machine forms, but it seems to me we’ve found some footing since the recent low in 2017,” says Brian Hennings, product marketing manager, backhoe loaders, for John Deere Construction & Forestry. “Overall, the industry is up strong single digits year over year, driven by construction, underground utilities, and independent rental company business,” he says.
Think, “A rising tide lifts all boats.” But more fleets are doing their sailing with CTLs, skid steers, and compact excavators these days.
In an exclusive Construction Equipment reader survey, 26 percent of respondents said they owned fewer backhoe loaders in 2018 than they did just two years ago.
Half of those respondents reported the primary reason was because they “can do the same jobs with other types of equipment.”
“Backhoe loader sales are being eroded by demand for compact track loaders, skid steer loaders, and mini-excavators, as these products are more popular with contractors now and each is easier to move logistically,” Yengst says. “And they are versatile and reliable.”
Jeff Jacobsmeyer, Kubota’s product manager for excavators, wheel loaders, and TLBs, says his company sells more than two-thirds of the machines that are considered “compact” backhoe loaders.
“‘Full size’ sales have slowed as many customers are replacing these with compact excavators and compact track loader/skid loader combinations,” Jacobsmeyer says.
“The TLB’s full functionality can be limited since job sites in most urban metro areas are very small,” he says. “Houses are built very close together and there are often sidewalks, fences, landscaping, air-conditioning units, and other yard obstacles to maneuver around. A compact excavator maneuvers well in tight spaces due to its size and also delivers comparable digging performance [to a backhoe],” Jacobsmeyer says.
“There’s no denying the compact machine industry is growing and challenges the backhoe market,” says Caterpillar product application specialist Dustin Adams. “Contractors are opting for smaller machines that may be easier to transport between job sites, and each compact machine has an application it thrives in. There is no one-size-fits-all machine out there. Quite frankly, it drives healthy competition.”
Transportation and individual contractor needs play a large part in the decision whether or not to buy a backhoe over a combination of compact equipment.
“There are distinct benefits to both strategies—the choice depends on more than just the machines themselves,” says Ed Brenton, brand marketing manager, backhoe loaders, for Case Construction Equipment.
“When fleet managers and equipment owners are considering purchasing a CTL or skid steer and mini-excavator combo over a backhoe, or vice versa, they are going to need to look at the applications, the operating capacities of the machines, and the skill level of their employees, as well as the needs of the business,” Brenton says.
“We’ve seen contractors decide to own two machines—a compact excavator and a compact track loader—instead of a single backhoe,” Brenton says. “This offers a number of advantages. Contractors can perform twice the work at the same time, whereas one end of a backhoe loader is always unusable as the other end works. Depending on the size and type of model, a contractor may also be able to own both machines for the same or lower purchase price compared to a single backhoe, and transport both machines simultaneously on the same truck and trailer they would have hauled a backhoe with. If they have the work and labor to support it, the dual-machine strategy has some advantages over backhoes.”
Deere’s Hennings points out that fleet owners are constantly re-evaluating the choice. “I think customers continue to re-analyze what their equipment needs are based on their applications, and their jobs, both currently and for the future,” he says.
“Some customers have gone to compact excavators, skid steers, and CTLs as they see value in being able to transport each easily, and to put them on a smaller trailer that’s connected to a one-ton truck,” he says. “Combined, it could keep a customer’s total system cost at a lower point.”
Cat’s Adams says although the backhoe market isn’t what it once was, it’s still healthy, and, “It challenges competitors to be more creative with product offerings and delivering value. The strong and creative will survive.”
To that end, manufacturers are looking at enhancements to the backhoe loader. We’ve already seen almost every backhoe OEM introduce a 74-horsepower version that avoids DPFs and other aftertreatments for the customers who want no part of them. Manufacturers have also taken out some of the bells and whistles and touted these bare-bones backhoes as “rental-ready” machines.
After the 74-horsepower rush, it seems performance-related tweaks are the new norm for the category.
“There haven’t been any groundbreaking machine innovations in the backhoe category in many years,” Case’s Brenton says. “However, Case has recently introduced a round of enhancements to our machines—from cab and drivetrain improvements to enhancements to the hydraulic and electrical systems.”
At the end of 2017, Case made a number of enhancements to its N Series, including a new Pilot Control hydraulic system, an updated drivetrain, and a fuel economy package with automatic idle and shutdown features.
Deere has added a precision mode to its L Series that allows reduced-speed hydraulic functions at the backhoe end of the machine. It also increased the metering range by 16 percent to generate more feel in the controls.
“We are walking a fine line between developing simple, powerful, cost effective diggers and introducing new technology like telematics and grade control,” Adams says. “Backhoes have a significant place in the market. Our challenge is to continue to balance performance and technology in a package the customer sees value in.
“For another point of view, the backhoe legacy was built on its versatility,” Adams says. “We need to take a hard look at the definition of versatility and challenge ourselves to take advantage of technology to place backhoes in more applications through the development of attachments and supporting machine features.”
Indeed, continued OEM investment and attention is the best confirmation backhoes will remain viable.
“There are still a lot of benefits to owning a backhoe in lieu of a CTL or skid steer and mini excavator combo,” Brenton says. “A backhoe will provide more power, more reach, and more height. As a larger machine with a bigger engine and more hydraulic power, a backhoe is capable of handling heavier work than the smaller machines.
“Specifically, a backhoe has a bigger bucket capacity than a skid steer or compact excavator. It also has more combined horsepower and hydraulic power to lift heavier loads when compared with the smaller machines,” Brenton says.
“Plus, it can lift those heavier bucket loads higher than a skid steer. Additionally, the boom and stick provides more reach than either a skid steer or compact excavator,” Brenton says. “Stabilizer legs also provide the stability needed to handle a wide variety of picks that would otherwise require an excavator. This is not the case with a skid steer or compact excavator.”