AED Convention A Harbinger For A Good Year - Market Lines
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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AED Convention A Harbinger For A Good Year

Written By: Frank Manfredi

Article Date: 03-01-2005
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.


The only grumbles were from distributors not being able to get machines.

The recent AED Convention in San Antonio was notable for the good cheer expressed by everyone. CONDEX was well attended. Attendance at all the events was excellent. And in general, dealers, manufacturers and suppliers all had smiles on their faces. What a change from just a few years ago when the market was shrinking and no one was happy. The only grumbles I heard were from distributors complaining about not being able to get machine deliveries to satisfy customer orders. Manufacturers were still complaining about price increases from their suppliers, mostly for steel.

Most dealers I spoke with said their customers have finally accepted the fact that they are going to have to wait for new machine deliveries. They finally believe the long delivery stories are true and not made up by distributors who are trying to squeeze one more dollar out of a deal. And customers are finally starting to accept the fact that prices are going up.

Delivery backlogs are uneven. Big machines used in mining and sand and gravel extraction are still in short supply. Four to six months is not unheard of. One manufacturer told me they have sold out of articulated trucks for 2005 and are now taking orders for 2006.

But there appears to be lots of small equipment readily available, especially for brands that have just introduced compact equipment product lines and are waiting for customer acceptance. "How many skid-steer loaders do you want and what day would you like them delivered?" is a common question from dealers for those brands.

Manufacturers have started to report fourth quarter and year end results. So far they are still optimistic. Caterpillar, for example, raised its 2005 outlook. The company had been expecting an increase of 5 percent to 8 percent for the year, but now is forecasting a gain of 12 percent to 15 percent.

Based on my discussions with dealers and manufacturers, I am getting a sense that inventories of small and medium sized machines are getting back in balance and are more reflective of current and near-term selling expectations.

We can expect solid, continued growth from the housing sector. Non-residential building should become stronger throughout the year as companies gain confidence and begin investing in facilities. The only questionable segment will be the governmental market, which is facing spending cutbacks at least on the federal level.

Overall, I am still sticking to the forecast I made in December for an increase of between 5 percent and 10 percent. I believe when the first quarter results are announced in April, we are going to hear that business was "flat to down" compared with 2004, primarily because the first quarter last year was so good.

But I think the market will improve sufficiently enough in the last three quarters of the year to end "up."

Expect a good 2005. In 2006, we can probably expect a continuation of growth; however, it is likely to be at a lower level than this year.



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