Midwest’s Mega Projects Offset Housing Slowdown - 2007 Regional Outlook
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SECTION: 2007 Regional Outlook

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Midwest’s Mega Projects Offset Housing Slowdown

August 2007

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

The market for construction equipment in the Midwest is flat.

"Rental sales are up, but new-equipment sales are flat to down slightly," said Chris MacAllister, president of Indianapolis-based MacAllister Machinery.

He attributes the upswing in rentals to mega-projects in Central Indiana, including the $1 billion- Indianapolis International Airport expansion, the $675-million Lucas Oil Stadium, the $275-million expansion of the Indiana Convention Center, and ethanol facilities.

Aerial lifts, says MacAllister, are particularly in demand because of these major projects. Skid-steer loader and scraper sales are also good.

Still, some dealers are reporting softening sales.

"The market in our area is down," says Mike Soley Jr., president and CEO of Sussex, Wis.-based Miller-Bradford & Risberg. "Depending on the product, you're looking at 7 to 14 percent declines."

McGraw-Hill Construction reports starts in first-quarter 2007 were down compared to 2006 throughout the region: Milwaukee was down 77 percent; St. Louis was down 23 percent; Chicago was down 13 percent; and Indianapolis was down 4 percent.

"Residential is continuing to work through inventory," said Soley.

The climate in first-quarter and early second-quarter 2007, when the buying season kicks off, also impacted the market, says Dennis Kruepke, president and CEO of Addison, Ill.-based McCann Industries. It was cooler and wetter this year compared with 2006.

"Contractors didn't get going as soon this year as last," he said. "Plus, the decline in housing affected some of our rental products."

On the upside, commercial construction is strong in the region and is expected to stay that way as long as interest rates are stable. Public works projects also continue steady.

Even in a slower market, some dealers are finding a way to stay competitive.

"For our company, equipment sales are tracking higher than a year ago," said McCann's Kruepke. He attributes the increase to extensive training of salespeople, better alignment of inventory with demand, and a recent open house.
Similarly, MacAllister has aggressively grown its business, opening two stores in 2006 and two this year.

"I suspect we've taken a bit of share from our competitors," says MacAllister.

-Craig Barner is editor of Midwest Construction magazine.

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