2009 Executive Forum Was Right on Target - From the Chairman
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SECTION: From the Chairman

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2009 Executive Forum Was Right on Target

By Bennett Closner

Article Date: 10-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.

Money, markets, mergers, and manufacturing were just some of the relevant topics that kept us engaged.

We missed seeing some of you at the Executive Forum this year. We recognize the attendance was a reflection of the economic conditions. For those who attended however, the frequent response was “the 2009 Forum was perhaps the best one ever!”

Here is my wrap-up of the topics we debated over the course of two days:

1.) The outlook for 2010 is causing great concern, with no significant improvement in volume predicted. Dealer inventories remain too high and retail pricing is very competitive. However, manufacturers appear poised to raise prices in January. This exposes a disconnect between their expectations and the reality at our dealerships. The outlook for 2011 appears more positive, as the economy will likely be healing, and contractor fleets will be aged beyond normal. However, it may take several additional years for our industry to thrive.
2.) We did not get into this economic predicament overnight and we will never fully recover as a nation if we don’t get back to the basics. Our free-enterprise system and the competitive spirit in our industrial manufacturing enabled our nation to produce 25 percent of the world GDP with only 5 percent of the world’s population. That ratio is now declining. Our government appears to be treating the symptoms and is not searching for a permanent cure. We must find a way to remain a leader in the competitive global economy. I can assure you that more taxes and regulatory pressure on private employers are not the solution.
3.) Financing is a key part of our industry. Lenders still want to lend, but they are now adding a risk premium, which they mostly ignored in recent years. Our industry must adapt to this new lending standard. In short, our dealers and retail customers must have positive cash-flows and strong balance sheets in order to achieve financing at reasonable rates.
4.) Do you want to be a buyer, seller or survivor? Whatever you choose, our industry has the specialists, consultants and financing mechanisms to assist you in meeting your goals. And these M&A fellows appear to be plenty busy – as our dealers and manufacturers continue to consolidate. We expect this trend to continue, if not accelerate, in the next 18 months.
5.) Dealers will continue to be relevant. Customers understand that we add value, especially with our skills, knowledge, product support, and manufacturer relationships. A team comprised of a customer, dealer, and manufacturer, can give the customer a very powerful advantage in the marketplace, allowing all team members to prosper. Customers (at least the largest and more sophisticated ones) want to move away from a “transactional buy-sell” relationship. They want to evolve into one that is more proactive and involves some serious partnering. Dealers cannot provide this without open communication and a trusting relationship with their manufacturers. A few manufacturers have seen this evolution and “get it,” but many are still in a transactional relationship with their dealers.
6.) Dealers must be strategic thinkers to survive and prosper in this highly competitive industry. We can easily get bogged down with the day-to-day challenges. The marketplace is evolving and we better see it coming. Get your best people together and focus on what makes your organization unique and valuable in the marketplace. Build upon that and find a long-term strategy that adds value to your customers and manufacturers. Then stick with it, as it takes years to really make a strategic shift.

In closing, it was a great Forum, in part because of the many dealers who participated in the debate. We hope you will consider attending next year and the economy will make your decision more possible.

As always, Toby Mack and I welcome your comments, so write to us both at: jtm@aednet.org and bennett@closner.com.
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