A Not-So-Smooth Dance - Editor's Note
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: Editor's Note

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Contact Kim Phelan at (800) 388-0650 ext. 340.

A Not-So-Smooth Dance

By Kim Phelan

Article Date: 07-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.

Survey reflects the predictable pain - now what to do about it.

Recently, while engaged in a fun-filled evening listening to live music, I noted with amusement a couple dancing whose feet were not in complete agreement with each other. Having been on the receiving end of a gentleman’s enthusiastic stomp at one time or another, I was sympathetic to the lady’s efforts to follow the erratic directions of her partner’s lively steps.

I thought to myself: Even when you’ve got rhythm and experience, it’s tough keeping your feet out of harm’s way when you just can’t predict where things are going.

As a construction equipment distributor, you are likely dancing a dance of business survival this year, moving deftly to keep in step with the many factors both national and local that are affecting your customers and hence your dealership. The landscape has changed and thus skilled, experienced dealers are making necessary changes to adapt, but the dance floor is pretty slick.

In May, CED partnered with Equipment World magazine to gauge what’s happening on a broader scale among distributors, and frankly, the results are not terribly surprising, though I was encouraged in some spots. Of the 162 dealers who responded, 48 percent specialize in heavy equipment, nearly 36.9 percent in medium equipment, 6.3 percent were rental companies, and 8.8 percent were industrial dealers. Some highlights from the survey included: (1.) Major concerns right now (checking as many options that applied): Local economy and U.S. economy – 77.6 and 77 percent respectively; maintaining a decent level of profitability – 63.4 percent; direction of the new administration – 60.2 percent; credit crunch – 54 percent; inventory levels – 45.3 percent; engine/emissions regulations – 11.2 percent. (2.) Actions you have taken (or may take) to address today’s market: Delay 2009 raises – 78.5 percent; lay people off – 69.6 percent; decrease or eliminate bonuses/profit sharing – 64.6 percent; decrease owner/management salaries – 56.3 percent; none of the above – 5.7 percent. (3.) All actions you are presently considering or have implemented in 2009 (top five listed): Increasing emphasis on parts and service – 84.9 percent; increasing emphasis on rental – 66 percent; increasing emphasis on used equipment – 57.9 percent; representing an additional manufacturer – 41.5 percent; closing one or more branches – 18.9 percent. (4.) Overall condition of your company today: Excellent – 16.7 percent; good – 41.4 percent; fair – 32.1 percent; poor – 9.9 percent. (5.) Predicted new equipment sales this year: Significant increase (more than 4 percent) – 1.3 percent; minor increase (up to 4 percent) – 3.8 percent; remain the same – 9.6 percent; minor decrease (down to 4 percent) – 12.1 percent; significant decrease (more than 4 percent) – 73.2 percent. (And yet look how many rate their companies with optimistic rankings in Question 4!) (6.) Predicted parts and service sales this year: Significant increase – 11.8 percent; minor increase – 22.4 percent; remain the same – 20.5 percent; minor decrease – 17.4 percent; significant decrease – 28 percent. (7.) Your best market opportunities this year (top three listed): Roads and bridges – 78 percent; all other government projects – 50.9 percent; water/sewer – 43.4 percent.

Wherever you may see yourself in this snapshot, may I be so bold as to encourage you to enter a zone of dialog and fact-gathering coming this fall: The AED/QUALCOMM Executive Forum. I invite you to send me your questions about markets, credit, strategy, OEMs, customers, Washington, and more – I’ll make sure they’re covered. 

Thanks for reading.

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