ANALYSIS: Oversupply of production equipments on a falling market

The suppliers of professional equipments used for processing thermo-insulating joinery registered a continuous decrease of sales from the start of the recession. For 2012, current estimates indicate that revenues will record less than 5 million EUR. If a comparison is made between this level and the one reported in 2008, when industry revenues totaled nearly 40 million EUR, a realistic proportion of the decline in this sector can be shaped. The situation is understandable, given that almost immediately after the start of the economic crisis, all companies have focused on reducing costs, and the first expenses removed were the ones for investment programs r dedicated to technological modernization. A realistic analysis shows, however, that the Romanian market of construction equipments was oversized in terms of production capacity, when its value exceeded 1.3 billion EUR. A key characteristic of the current period is the competitive repositioning, many companies being in the stage of reorganizing their business or, worse, in a position to declare bankruptcy. The used equipment market received a considerable boost, being fed with quality products in all categories. Basically, the possibilities for a potential investor, who might decide to access this segment, are multiple, and such a businessman has an extensive array of options. Moreover, a new expediency appeared lately, which consists in leasing complete production facilities. This overbid exerted unwanted pressures on suppliers from all categories, but caused different reactions depending on the scale of operations in Romania. The first who withdrew were small manufacturers, which promoted machines with insignificant complexity at low prices. They were followed by some major companies which haven't identified a potential profit in the region. Finally, there were even some big companies that have taken the decision to close subsidiaries in Romania. However, the main suppliers active in Europe have successfully resisted, and even tried to consolidate their market shares.