Down But Not Out: Southeast Looks Ahead for Rebound - 2007 Regional Outlook
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SECTION: 2007 Regional Outlook

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Down But Not Out: Southeast Looks Ahead for Rebound

August 2007

Article Date: 08-01-2007
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

The soft housing market is impacting some equipment distributors more than others.

In Florida, new housing starts - from the development of large-scale, single-family subdivisions to high-rise multifamily projects - have slowed markedly. According to McGraw-Hill Construction's latest estimates through the first five months of 2007, the value of new residential project starts in Florida is approximately 51 percent behind last year's pace. As a result, distributors specializing in the equipment used in the development of residential projects are experiencing decreased business.

Chris Wilmot, president of Flagler Construction Equipment, Orlando, says his company is definitely feeling the impact.
"Contractors in the earthmoving side are reluctant to buy units right now because they're in a wait-and-see posture," he said. "Articulated trucks are really slow. And wheel loaders and excavators still have a diminished market number. It's totally related to the housing industry."

Meanwhile, Wilmot said highway work is a bright spot, with pavers, rollers and asphalt distributors still in demand. Sales to commercial construction and material handling and processing also remain robust.

Though the housing market in Florida is expected to be soft for a while, Wilmot says Flagler Construction Equipment - which covers most of Florida - is upbeat about the state's long-term prospects.

For the rest of '07, Wilmot says, "You just need to mind your Ps and Qs. I think the Florida market will stay flat. If you believe in the traditional strength of the Florida market, you've got to feel comfortable that it will rebound, probably in early to mid-2008."

Equipment dealers that aren't as dependent upon the housing market aren't reporting a slowdown.

"There really hasn't been a great increase, and we haven't experienced much of a slowdown," said Jeff Wearing, president of Ready Rent-All. "It's mostly steady." Ready Rent-All, headquartered in Decatur, Ga., covers a 10-county area surrounding Atlanta.

Wearing says his firm is still moving plenty of smaller loaders and mini-excavators, mostly to the commercial and industrial construction markets.

"We rent a lot of compressors and generators to the industrial market," he said. The construction of hospitals and schools, plentiful in his territory, is also driving considerable business activity.

For the rest of the year, Wearing remains upbeat.

"I believe there will be a slight increase this year," he said. "If we hold at 2 to 3 percent, I'd be happy."

-Scott Judy is the editor of
Southeast Construction.

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