Large Skid Steers Weather Shifting Markets

By Walt Moore, Editor | March 27, 2014
Large Skid Steers Weather Shifting Markets

At the risk of boring you with statistics, we begin with a short summary of recent sales trends in North American for the skid steer loader (SSL) and its track-mounted counterpart, the compact track loader (CTL).

According to Construction Equipment’s best numbers, last year’s overall North American market for the SSL, at 37,000 units, was down slightly from 38,000 in 2012, but better by far than 2010’s 26,000 units. Models at the larger end of the spectrum—those with a rated operating capacity (ROC) of 2,200 pounds and above—accounted for about 40 percent of 2013 sales (roughly 15,000 units). CTL sales were some 29,500 units in 2013, up substantially (about 14 percent) from 25,500 units in 2012.

We cite these statistics because some in the industry say that market dynamics are afoot that might significantly change these numbers, both in terms of the mix of SSL sizes sold in a given year and in terms of the ratio of SSL-to-CTL sales.

First, sales of the CTL have been strong in recent years—much better than most expected, in fact—and those sales, to some degree, have come at the expense of SSL sales. More small-machine buyers have been opting for the CTL, it seems, reasoning that—although more expensive to own and operate than a comparably sized SSL—the CTL usually works more days, lifts more, and pushes more.

The popularity of the CTL is bringing it close to a 1:1 sales ratio with the SSL; less than 10 years ago, the SSL was outselling the CTL 5:1.

John Deere Construction & Forestry’s Gregg Zupancic, product marketing manager, is of the opinion, however, that the numbers for SSL and CTL sales might be changing and will result in a long-term, steady-state ratio of perhaps 2:1 in favor of the skid steer. He bases his opinion on possible buyer reaction to the cost of technology required to control emissions at the Tier 4-Final level.

“Controlling emissions is adding significant cost to machines,” says Zupancic, “and in many instances, depending on the model, a Tier 4-Final machine might be up to 25 percent more expensive than its Tier 4-Interim counterpart.”

Zupancic’s thought is that the cost of emissions-control technology, added on to the already-higher price tag for the CTL, might prompt a number of CTL buyers to consider moving to a less-expensive (relatively speaking) SSL. Small-machine buyers tend to be price-sensitive, he says, and the price disparity could work in the SSL’s favor.

Regarding the mix of SSL sizes sold in a given year, Zupancic says that, historically, the majority of long-time SSL users have moved up to larger units when old models are retired. But now, he says, the added cost of Tier 4-Final technology could prompt a significant number of SSL users to consider smaller, less-powerful, less-expensive models—provided, of course, that their scope of work and production potential would not be compromised.

But the other side of that coin, and as somewhat of a counter to the effect of a potential downward migration in machine size among long-time SSL users, both Zupancic and Bobcat’s Mike Fitzgerald also see a movement of buyers of larger machines—small wheel loaders, in particular—toward larger SSL models.

This shift could be significant, says Fitzgerald, as users of larger, more-expensive machines look to improve the efficiency of their operations with highly capable, highly versatile machines that can be acquired with a smaller investment. But beyond that, he says, a certain segment of long-time SSL buyers still seem to be moving up to large-frame models simply to get more work done.

Warren Anderson, brand marketing manager, Case Construction Equipment, is of like opinion: “Stretching job capacity is an important factor in securing new work, and some contractors are buying machines that exceed 3,000 pounds rated operating capacity so that they never have to worry about falling short. Larger machines have increased lifting capability and can run hydraulic attachments at peak performance—and these gains often are achieved in a footprint comparable to models in the size class below. Larger machines do, however, often have significant increases in cost and weight—and the added weight affects owning-and-operating factors, such as tire life and fuel efficiency.”

Jamie Wright, product manager, Terex Construction Americas, also sees the 3,000-pound-plus category as a growing market segment, particularly among users who need to lift heavier loads higher, or move more material faster, in such applications as hardscaping, highway construction, masonry, and production-oriented earthmoving. Most of these models, he says, are configured as vertical-lift.

Deere’s Zupancic makes the further point that larger contractors who aren’t buying machines at present might increasingly look to rental as a source of capable (in terms of lift capacity and lift height) machines at affordable rates. If so, he says, this demand could prompt an increase in the number of larger-frame SSLs in rental fleets. Numbers vary, but estimates are that about 30 percent of 2,200-pound-plus SSLs currently are sold into rental fleets.

Buyers for larger SSLs, whether end-users or rental firms, have a wide selection from which to choose, with nearly 50 models meeting or exceeding a 2,200-pound ROC, and nearly 20 of those exceeding 3,000 pounds. Kelly Moore, product and training specialist for Gehl, which has models rated at 3,300 and 4,000 pounds, says that the 3,000-pound-plus category is growing, albeit at a slow pace, as buyers discover the increased lifting capacity, higher lift heights, and overall higher productivity of these models.

Perhaps the best that can be said at this point is that the SSL market is “fluid”—with long-time SSL buyers moving within the size scale; CTL buyers debating about price premiums and perhaps opting for the SSL; buyers of larger machines looking hard at the SSL as a viable, economical alternative; and small-machine users of all sorts looking increasingly to rental, perhaps causing an expansion of sorts in both the number and size of SSLs in rental fleets.

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