Uncovering the Hidden Costs and Benefits of Circular Construction
Contribution of CE Material Efficiency Strategies to Overall Costs and Benefits
In the studied European countries, optimizing the reutilization of materials, using disassembly elements, and producing elements offsite are identified as the top factors influencing cost increases. While there is some variation within the European cohort, the primary impacts on overall costs remain associated with the recovery of construction materials, disassembly requirements, and offsite production. In non-European countries, similar results appear, with optimizing structural elements replacing 'using disassembly elements' as a top contributor to overall cost increases. Maximizing storage for reuse is also a significant factor in both regions.
Cost reduction can be achieved in the studied European countries by focusing on the reutilization of elements, which stakeholders consider the most significant contributor to overall costs. Other important factors include design for disassembly (DfD) and offsite production of structural elements. In non-European countries, concerns are similar, particularly regarding offsite production and optimizing reuse. However, CE practices are less developed in non-European regions, and the lack of a centralized, non-competitive recycling model may lead to recycling being seen as a less significant contributor to overall costs.
Cost Drivers and Benefits of CE Material Efficiency Strategies
Within the studied European countries, regulatory non-compliance resulting in fines and penalties is a top cost driver. Reduced work efficiency due to workers' resistance to change also significantly impacts overall expenses, along with maintenance costs and workflow disruptions. In non-European countries, waste treatment costs stand out, potentially indicating less-developed waste management infrastructure. Both regions face challenges in managing human factors in CE implementation, such as resistance to change, which affects work efficiency.
The findings also show differences in the significance of various factors between European and non-European countries. For example, non-compliance costs are a primary concern in Europe, while waste sorting was considered less important in this research but is gaining more attention. In non-European countries, stakeholders are concerned about expenditures related to staff expertise and transportation costs. By understanding these differences, targeted approaches can be developed to support CE implementation.
The results highlight the importance of adapting waste management strategies to each region's specific circumstances and priorities. By identifying potential risks and opportunities and considering stakeholder interests, governments and funding institutions can refine regulations and create incentives to support the implementation of circular economy principles in the construction sector.
Unveiling the Future of Construction and Mining
Lower Interest Rates and Their Impact
Cooling inflation enabling lower interest rates is set to have a positive influence on commercial and residential construction. In the U.S., for instance, this is supporting the sales of compact construction equipment. It shows how economic factors can shape specific sectors within the industry.Another aspect is the role of government spending. In the U.S., through initiatives like the Jobs Act, Chips Act, and Inflation Reduction Act, as well as in the EU with the new Green Deal, re-investment in infrastructure is driving growth. In countries like China with the One Belt, One Road initiative and India with the National Infrastructure Pipeline, infrastructure investments are not only ensuring domestic economic expansion but also increasing global leverage.Electrification in Construction Equipment
By 2030, electrification in construction equipment is not expected to have significant penetration. Cities requiring zero-emission vehicle (ZEV)-based construction projects within city limits will drive low to mid-single-digit penetration rates. For ZEV penetration to become more prevalent, the solution's versatility needs to evolve in line with battery performance and cost.Autonomous Solutions and Connected Services
There is a significant focus on autonomous solutions to optimize worksite performance. These solutions often experience customer pull as they improve efficiency and reduce labor dependency at construction sites. For example, collision awareness and avoidance systems are a case in point.Connected services also play a crucial role. A better understanding of machine problems and a proactive, maybe even predictive maintenance approach improves fleet uptime while increasing parts sales for original equipment manufacturers. Connectivity opens the door for fixed-rate maintenance contracts, enabling new business models.The Agriculture Market and Its Trends
While construction equipment has significant applications in agriculture, the market will likely be subdued in the next few years. The COVID-19 pandemic and the Ukraine war-induced commodity boom led to a robust market where farmers bought what they needed. But now, most farmers are being cautious due to a more challenging market environment and are postponing purchases.Mining Business Trends and Regional Variations
The main driver for growth in the mining business is a combination of global GDP growth and declining ore grades, requiring more equipment to move more material of lesser value. Regional trends vary, with a decline in coal globally offset by growth in metals and minerals, especially battery materials, copper, and iron ore.Autonomy and autonomous hauling solutions are well established in the mining industry and will continue to drive work site productivity gains by 2030. However, electrification's overall impact on equipment volumes remains moderate with less than 2% penetration.Considerations for Western OEMs
Given the industry's moderate growth prospects and increasing global Chinese competition, Western OEMs and suppliers should watch their costs while taking advantage of global growth opportunities. They need to prepare for stronger Chinese competition by understanding Chinese cost structures, strategies, and ambitions, as well as customer needs in emerging markets. Developing product and service offerings for these use cases and investing in service solutions to bind customers beyond product performance is crucial. Monitoring Chinese technological progress and customer value solutions is also essential.Continuing to invest in worksite optimization solutions both standalone and with partners is vital. The Chinese challenge is similar to the entry of Japanese and Korean players, but China's scale is significant. Western OEMs and suppliers have no time to lose in preparing for this competition.