Heavy Global Industry - Construction

The global demand for heavy construction equipment has increased dramatically over the preceding years. This demand of heavy construction equipment is highly accredited in part to the recovery from a recession in assorted Asian countries, as well as in Latin America, Russia, and Africa. Regardless of the fact that the heavy construction equipment industry is not as heavily concentrated as it had been in previous years, acquisitions are still going strong and substantial partnerships between competing companies are on the rise.

As technical advances in the heavy construction equipment design and security help marketing efforts get ahead, the price increases have a tendency to remain modest in retrospect. This also speaks for all new, used, rented or leased heavy construction equipment alike. Each year the heavy construction equipment industry is meeting a global demand of turnout at about six percent each year. The heavy construction equipment industry has been sharing in the worldwide drive with a number of countries to construct new projects and to restore older public and private structures.

Heavy construction equipment mainly consist of the following main categories: mixers, cranes, loaders, trucks, tractors, graders and rollers, just to name a few, as well attachments and parts. All heavy construction equipment is used in a wide range of applications from major infrastructure projects to office buildings and from housing to factories, power plants and mining. The extent of use of heavy construction equipment is so broad that key measures in demographics, such as the population growth, along with ample growth in economics, are the main influence of the demand for heavy construction equipment in the world today.

Projects that require the sporadic use of heavy construction equipment also call for significant amounts of capital investment. In privately funded projects, investors seem more receptive when interest rates are low and when there is a reasonable rate of return. Most public works programs are ventured upon during recession as part of a broader financial turnout. In developing countries, the rate of sustainable economic growth is a major concern as sporadic trends tend to be shorter and more under consideration in mature markets. This may influence a country's ability to attract external capital or to generate its own.

Heavy construction equipment and its components can be manufactured in fewer locations to service the global market. Heavy construction equipment can now move without any obligation between mature markets, while some emerging countries still require exports to qualify for liberated imports.

Construction World

Take any home building project which may require customized construction, customer satisfaction is a must and without which, the trust that has been placed in the builder slips away drastically.

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Construction Financing Sources

While most contractors are generally not directly involved with the financing of a construction project, understanding the process of financing and how it relates to a construction business is extremely important. The following outlines many of the most common sources for obtaining construction loans.

Commercial Banks:
Commercial Banks make single-family short-term and a limited number of long-term loans. They are generally the largest construction lenders on multifamily and commercial projects. They also make short-term loans to mortgage banks and to real estate investment trusts (REITs).

Savings and Loan Associations:
Savings and Loan associations are the largest of all lenders of both construction and permanent or long-term loans on single family housing. They also make a considerable number of construction loans for multifamily residences such as apartment houses and condominiums.

Mutual Savings Banks:
Mutual Savings Banks are generally located within the northeastern United States. Their mortgage investments are generally concentrated in single family permanent mortgages. They tend to make only a limited number of construction loans, but do make long-term loans to mortgage bankers and to real estate investment trusts which in turn make construction loans.

Mortgage Banking Companies:
Mortgage Banking companies make a significant number of loans for construction and land development but are mainly intermediaries between borrowers and lenders.

Life Insurance Companies:
Life insurance companies do a minimum amount of temporary construction lending. Their principle commitments are long-term loans on commercial and multifamily projects.

Real Estate Investment Trusts:
These trusts provide long-term mortgages on commercial and multifamily projects and a limited amount of construction loans.

Government Agencies:
Approximately every sixth house built in the United States is financed by the GI loan program. The Veterans Administration (VA) makes construction loans on housing for veterans, their dependents, and other beneficiaries of deceased veterans. The Federal Housing Administration (FHA) insures mortgage loans made by approved lending institutions, however, FHA does not lend money.

Other Sources for Loans:
Finally, miscellaneous sources of loans which should not be overlooked include individuals, syndicates, service organizations, and Community Housing Authorities.

Lenders need assurance that a contractor is financially responsible, of good character and reputation, and able to carry out the work stipulated in the specifications and construction documents.

A full financial statement from the contractor stating his or her assets and liabilities, investments, property owned, life insurance and other pertinent information, including a credit report is generally requested by the lender. In addition, a complete set of drawings, plans, and specifications as well as the names of all the subcontractors and their specific tasks are also generally required.

Finally, the lender appraises the site of construction and compares it with the contractor’s final cost estimate. Once this is in place, the lender submits the application to the loan committee for approval.