Mining, Plus Oil and Gas Keep Rocky Mountain Region BusyBy Mike Quirk
Article Date: 01-01-2008
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Rocky Mountain Region
Depending on what market segments a dealer participates most in will likely have a profound impact on business in 2008. Mining, oil and gas, and highway construction look to remain solid. Commercial development and construction will soften somewhat, and housing will remain weak in most metropolitan areas. The performance of each segment will have a varied effect on the operating areas of our dealerships.
The robust mining activity in the Rocky Mountain Region will continue to provide great opportunity and challenges to dealers. Mineral production is very high and reclamation projects abound. Machine sales, parts, and service operations remain challenged to keep up with demand. Oil and gas drilling, extraction, distribution, and reclamation activity remain strong in New Mexico, Colorado, Wyoming and Utah but are beginning to show signs of slowing in some areas.
Highway and infrastructure investment will continue at decent levels throughout the region with some areas benefiting more than others. Funding in 2008 should increase slightly overall compared to recent years, but long-term funding for deteriorating highways remains a priority. Dealers need to become more engaged with their legislators to keep this issue in the forefront.
Commercial construction activity has so far remained good. Since much of this activity follows new residential construction, it is expected to weaken as the effects of 12 to 18 months of steadily declining housing starts are felt. This is the case in most metropolitan areas where new housing developments remain rare. Housing and commercial development are at the core of most dealers' business but especially the small to midsize operations. That makes this segment critical to monitor. Forecasts for a housing recovery in 2008 are not forthcoming, but there is reason for optimism. Interest rates, employment opportunity, and quality of life advantages place the Rocky Mountain Region in a position to recover quickly as surplus housing units are sold.
Most dealers are forecasting a decrease in new machine deliveries in the 10 to 15 percent range. Additions to rental fleets have declined and used inventories are building. Parts and service sales in most areas are expected to remain flat or decline slightly, but demand for experienced technicians continues. There is recognition that greater management skills will be required of the dealer management teams in 2008. This has inspired a back-to-basics approach to training and development that many dealers have been too busy to address in recent years. Overall, there is a sense of cautious optimism that we are not looking at a deep or extended downturn, but rather a manageable cycle with recovery beginning in 2009.
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