Survey: Dealers Hit Hard by Housing - Public Policy
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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SECTION: Public Policy

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Survey: Dealers Hit Hard by Housing

By Christian Klein, AED vice president of Government Affairs and Washington counsel

Article Date: 06-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

Findings from the 2008 Government Affairs survey - including a market pulse and dealer legislative priorities - underscore the urgency of AED's policy goals.

One of the primary objectives of AED's Washington program is to help lawmakers in the nation's capital better understand the equipment industry. That's why AED's annual Government Affairs Survey has become such an important part of the association's public policy program.The survey fulfills a number of important roles. First, it provides data about how policy issues affect equipment distributors. AED's lobbyists use this data to support the association's advocacy efforts on Capitol Hill and strengthen the case for AED's policy positions. The survey also helps the Washington staff better understand our members' legislative priorities, allowing us to target limited resources to the issues that matter the most to our members.Finally, the survey provides important information about economic and market issues that affect our members so we can be on the lookout for new threats and opportunities on the policy front.AED's 2008 Government Affairs Survey yielded important information in all three areas. The survey was conducted over an eight-day period from March 26 to April 3. Ninety-seven (the highest number ever) of AED's approximately 650 dealer member companies responded, resulting in a survey margin of error of approximately nine percent.The following were among the survey's key findings:
  • Ninety-three percent of respondents said that the downturn in the housing market has had an impact on their companies with 46 percent saying the impact had been "major." This data reinforces the importance of the leadership role AED has been playing in efforts to convince Congress to enact a home purchase tax credit to revitalize the residential real estate market.
  • AED members are enthusiastic about the new capital investment incentives included in the Economic Stimulus Act. Approximately three-quarters said they plan to take advantage of the recently enacted depreciation bonus to make capital investments in their own companies this year (e.g. purchasing equipment for rental fleets). Eighty-seven percent plan to use the depreciation bonus and Sec. 179 increases as marketing tools in 2008. Eighty-nine percent expect the capital investment incentives to have a positive impact on equipment purchasing in the months ahead. And perhaps most significant, more than a third of survey respondents (34 percent) believe the depreciation bonus and higher Sec. 179 expensing levels have already had a positive effect on equipment purchasing.
  • Survey respondents believe that resolving the looming highway funding crisis is very important to their companies' long-term stability and profitability. Of the various solutions to the highway funding crisis, survey respondents generally regard a user fee increase as the most practical source of new revenue for the highway program. These findings reinforce the importance of AED's efforts to protect and increase federal highway investment in the context of the upcoming reauthorization.
  • The top four legislative issues for AED members are (1) enacting legislation to reduce small business health care costs, (2) increasing federal investment in highways and (3) water infrastructure, and (4) permanently resolving the uncertainty surrounding the death tax. Preventing the federal government from competing with equipment distributors, enacting product liability reform legislation, making increased small business expensing levels permanent, and preventing LIFO repeal were also high on the list.
  • Ninety-four percent of survey respondents had at least some revenues from direct government sales in 2007, and 98 percent reported revenues from indirect government business (e.g., business from contractors working on government projects). Seventy-six percent of survey respondents who reported indirect government business derived more than 10 percent of their 2007 revenues from government contractors; 34 percent said that government contractors were the source of more than 25 percent their revenues. These findings underscore the importance of AED's efforts to repeal the withholding tax on government contractors set to go into effect in 2011.
  • The technician shortage continues to plague the equipment industry, with 80 percent of survey respondents saying that they have had trouble finding skilled technical workers in the last two years. The Washington office is searching for policy solutions to help supplement the AED Foundation's work on the workforce development front.
  • The most important markets for equipment distributors are (1) commercial and industrial construction, (2) water utility construction, (3) residential construction, and (4) highway construction and maintenance. Other important markets include other utility, landscaping, airport construction, mining and quarrying, and power generation.
  • Consistent with prior surveys, close to 80 percent of respondents identified themselves as Republicans. From the remaining presidential candidates, survey respondents overwhelmingly favor John McCain (89 percent). Seven percent favored Barack Obama and one percent favored Hillary Clinton.
Thanks to all the AED members who participated in the survey. You've helped us ensure that we're focusing our government affairs resources on the right issues and given us valuable data to use in our lobbying efforts on your behalf.
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