As we approach Iron Capital’s one year anniversary in North America, the similarities between the civil construction industry in Australia and North America are stark.
Opportunity vs Labour
In Australia, many of our customers are reporting a healthy work program in front of them and plenty of opportunity to win business, however the ongoing lack of available skilled labour to do the work is the biggest constraint in the market. Many customers would increase their fleet of equipment if they could source the additional operators with the relevant experience and training to get the job done. Canada and the US are experiencing similar issues, work is abundant in many states and territories, but a lack of operators and labour is holding back growth. The situation is slowly improving in both regions, however it is a slow burn and the general feeling is that 2023 will be another tough market for labour.
Equipment Pricing and Supply
On both sides of the Pacific, larger new and low houred quality equipment is still very hard to come by, although the market for newer smaller gear is noticeably improving as factories ramp back up from Covid related delays. Many of the issues with third party suppliers and shipping delays have resolved for manufacturers. Most OEM’s have lifted pricing by more than 20 per cent in the past 18 months due to increased supply chain pressures, which in turn has pushed up the value of used equipment. The replacement and acquisition costs of new and used machines are increasingly tough for businesses to justify, and therefore the rental market is thriving, with rentals rates having not risen in line with the increased capital costs. As a result, rental is still a very viable option, particularly in the southern states of the US where there are many large rental companies competing for business. In short, customers are hanging onto their iron keeping used values high due to lack of supply and forcing customers to consider older machines to increase their fleet capabilities.
In all regions, the cost of living including food, fuel and energy prices, are forcing up central bank interest rate pricing and putting pressure on household incomes. Fortunately, the construction and mining sectors are in good shape both in Australia and North America, with good work prospects and high commodity prices keeping our sectors somewhat shielded from the noise. Governments in all regions are spending on infrastructure, trying to stimulate the economy and improve the employment opportunities – although there are seemingly very few people around to take up the jobs on offer!
The Iron Capital journey
As our Australian business enters its eighth year, we continue to grow and help new customers acquire equipment across all our regions. Each month new customers come to us looking for equipment solutions via our RPO product and help to grow their business by taking advantage of the workflow that continues to be created across all states. In North America, we have put together a crack team of experienced salespeople who are actively spreading the word about Iron Capital and the RPO product.
We are learning that the winters in the northern hemisphere can be harsh, and some brands are more prevalent in Canada and the USA than here in Australia, but for the most part, the similarities between our regions are far greater than often thought. Our business is being well accepted in North America and results are very pleasing – one year in and so far so good.