Across The U.S. and Canada, Dealers Assess Their MarketsBy Greg Sitek
Article Date: 08-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Many concur: Stimulus money fell short of promised jobs and construction growth, and the industry is dying, almost literally, for a new highway bill.
Today’s economy is fragile, showing signs of growth while still searching for something on which to sustain that growth.
How’s the recovery going? Slowly is probably the best single word that describes the situation for the nonresidential construction market across the country. Of the more than dozen AED dealers that have been interviewed by CED magazine, this is the case unless you’re in Canada, the Rocky Mountains, Oklahoma or Texas. There are some bright spots and indicators that some markets are improving.
The best way to examine this economy is through a kaleidoscope since there are so many facets. There are a number of consistent facts that were universally voiced by the cast of dealer interviewees.
Residential construction is slow in the contiguous 48 states and not expected to improve this year. Although the Associated Construction Publications (ACP) is not involved in this market, it does have a serious impact on the commercial, institutional and academic markets, which we do cover. The lack of developmental residential construction also slows the earthmoving, site prep, utility and landscaping ends of the business. All of the interviewees agreed that until unemployment is back down to an acceptable level housing and the reflective markets would continue to lag.
Another continuing problem is tight money. Credit is still tough unless the customer happens to be a large contractor or one with AAA credit. If your customers are medium- to small-sized contractors with a B, C – or, forget it, D rating – financing will be difficult or expensive with interest rates from 9 percent to as high as 14 percent. The same lending institutions that, two years ago, were anxious to give anyone with a pulse as much credit as they wanted are refusing anyone who’s a risk.
The sunny spots in the credit scenario are the dealers who are tied to major manufacturers that have their own financial divisions like Cat, CNH, Deere, Komatsu and Volvo, to name some of them. With these operations, financing is a little easier to obtain than with other lending institutions. Mark Romer, president of James River, a Deere dealer in Virginia, said that getting credit through banks and other lending sources has been tougher, but if you were “persistent and patient you can eventually get the financing through banks, but it’s a lot slower than it was.”
Rental activity is on an incline at both dealer and rental store levels. The difference on the dealer level is that it tends to be more of a solution to an immediate need rather than long-term or rent-to-own. Charles Snyder of Sunbelt Rentals says, “We are entering our fifth consecutive month of improvements in rental activity; they are marginal but improvements.” He notes, “The Northeast and Midwest have been the strongest for us, with the Southeast lagging, but now we’re starting to see a little bit of a pick up there. The West, Pacific Northwest and central states are still somewhat of a problem.”
Snyder continues, “We’re seeing a little improvement in a lot of markets rather than a lot of growth in a few markets. The demand for earthmoving products is leading the charge. There are more people doing excavating and moving dirt around.” Although it’s not construction, Snyder noted that there has been an increase in event business with a focus on NASCAR, concerts and disaster-related activities as a result of the floods and the effects of the oil spill along the Gulf coast.
He said that there has been an increase in rental activity in Gulf coast area with requests for pumps, generators, light towers and most recently dozers and loaders. Temporary housing and feeding facilities are being erected for the crews that are working on the clean-up project.
Romer describes the geographic area his operation serves, and we are considering as part of the Southeast, as showing signs of growth with his business up over June of ’09. He notes that although business is up there is really no new construction for his customers, and being up over last year is relative. Highway and heavy construction are showing signs of improvement, as are forestry and biomass. He says that railroad construction and maintenance has picked up as well.
According to Romer, there has been some evidence of stimulus money for milling and paving but not enough for new construction and increased employment. “There is some work on military bases and government installations, but not a lot. It’s hard to find,” he said.
“In contrast to last year, when a contractor had two machines he’d work one until it was worn out, now he’s worked off the inventory and has to do some buying and some repairing,” said Romer. “As a result, we’re seeing a shortage of good equipment in some areas.” He makes an interesting observation: “We’ve worked our way through a surplus inventory but there has been no underlying increase in construction. This is probably what accounts for the improvements.”
He believes that equipment rental is up for the same reason, filling an immediate need. Romer commented that the rentals are for much shorter periods and that contractors are not keeping the equipment for longer than necessary.
One of the most interesting comments he made echoed a similar comment made by another dealer in the Midwest, “I think that ’80, ’81 and ’82 were worse because of the interest rates, but the nice thing then was you knew what would fix things. You knew when the interest rates came down it would trigger a reaction and the economy would take off. It’s not so clear now.”
In Tennessee, Reggie Dill, president of Thompson Machinery, a Caterpillar dealership, says that there are some improvements in the industrial and rural site prep markets and explains, “When I say industrial I’m including landfills, steel and scrap, and these markets are getting a little better. Our markets are driven by residential and commercial construction, the site development and related infrastructure, and there doesn’t seem to be anything going on in these areas.”
Dill explains that their historical markets have not recovered from 2009, continuing at their low levels. “There’s more activity in used equipment, and rental is up because contractors are looking at that as a short-term solution, not knowing what the future looks like,” he said.
One of the problems concerning Dill is a developing shortage of new equipment. There has been some difficulty in getting some machines, and he has been faced with longer lead times. “Fortunately we have dealer share,” he said, “so we can go online and look for the machines we need, but the shortage is a developing problem and can get worse fast if there’s an increase in demand.”
Looking ahead, Dill doesn’t feel that 2010 will be much better and thinks that it will be March or April of 2011 before his operation sees noticeable improvements. He credits the operations’ diversification into the agricultural and forestry markets for helping them survive. “At this time, we are feeling our way back and rebuilding our inventory as the need grows,” he said.
The situation doesn’t change a lot as we move to the Northeast section of the country, and if anything, it gets a little more depressing. According to Dave Fackler, president of Asphalt Care Equipment & Supply headquartered in Bensalem, Pa., “Dirt work in our area is at a standstill. Asphalt is down but not dead; it’s running at about the same level as last year. On the western side of the state, gas drilling is going great guns and the dealer there can’t keep a roller in stock.”
Since Fackler’s customer base is the mid- to small-sized contractor he says, “These guys have gotten a real squeeze by the financing companies. They’re backing out either because of the high interest rates or just not able to qualify; not everybody but some.” He notes that some have been offered rates as high as 12 percent and one customer as high as 14 percent.
Used equipment sales are going well according to Fackler, “especially overseas. We are shipping a lot of product to regions of Asia and Africa.” The company is selling the used equipment through an Internet site that it has been operating for 10 years.
Parts sales are steady but service is off. He feels that customers are doing more repairs themselves to keep employees busy. But he does expect to see parts and service pick up as the economy improves. Rental volume is up but on the short-term basis. As Fackler says, “They rent equipment and then return it quickly rather than hanging on to it.”
Fackler participated in the AED Fly-in earlier this year and came back feeling that this year will end up down, mostly because of Congress’ failure to pass the highway bill. He doesn’t expect it to be passed in December and is of the opinion that it will be sometime next year before it goes through. In spite of current conditions, Fackler contends, “There are boom years coming. The inevitable does have to be addressed. Sooner or later roads, bridges and infrastructure will have to be replaced. As contractors patch up their old machinery and make do, there will be some weeding out of contractors and dealers. The ones who survive will be much stronger and better able to meet the coming boom years.”
Chadwick-BaRoss is a Volvo and multiline dealer that covers Rhode Island to the tip of Maine, except for Vermont. Stuart Welch, president and CEO of the operation says, “Sales of new equipment are up slightly this year and seem to be gaining some momentum, and rental activity has picked up this year over last year. Used equipment is active with particular interest in small wheel loaders so we’re taking advantage of that as much as possible.
“Our parts and service business is strong,” he continued, “because we have a substantial equipment population and we’ve reached over into other industry segments and are providing service for manufacturers who don’t have servicing dealer networks. We made a number of innovative improvements; we’ve entered into a lean continuous improvement program that we expect to produce efficiencies that will carry us into the future; we’ve opened our paint shop because people aren’t buying, but they’re fixing.”
Commercial and residential building are virtually nonexistent, but the area is getting some paving and some bridge, water and sewer work, projects that are funded with government money. In New Hampshire and Maine there are some school jobs as well. Nonconstruction fields, such as scrap, are a good market for Welch’s operations. The heavy highway segment has been good for parts, service and rebuilds but not particularly for the sale of new equipment.
Availability of credit matches the rest of the country for customers, with contractors who have A or B ratings able to get 48 months at 6 percent on nonmanufacturer subsidized loans, while the Cs and Ds are looking at 9 percent. Welch is concerned about the future, though. “With the stimulus falling away and not having created new jobs, there’s no increase in consumer spending and employment isn’t picking up. Consequently, building construction will have a tough time gaining traction. Our customers still have machines sitting. As for our inventory, we are like most dealers; we have too many of the wrong things. We were geared to the housing and commercial market with an equipment inventory to match and that segment is not active at the moment.”
Looking at 2011 Welch feels that, “If we can avoid a double-dip recession, 2011 could end up being a better year. We need the Highway Trust Fund bill to get passed in Congress. This will fund much needed infrastructure work, in particular highways and bridges. For example, just in the state of Maine we are roughly $3 billion behind in our highway needs.”
In the South Central region, some segments of the industry are showing improvements. According to Glen Townsend, vice president and general manager of Kirby Smith, a Komatsu dealer covering the Oklahoma and Texas markets, “Business is better. We’ve seen energy rebound. The years ‘07 and ‘08 in our area were driven by all areas of the marketplace, in particular energy. In ‘09, all areas slowed down but toward the end of ‘09 energy began a comeback and has remained steady through the first half of this year.”
There has been some wind farm activity, which makes use of cranes, not only for the erection of the windmills but also maintenance. There is also a need for access roads and utility construction, installing power lines and the like.
Townsend says that this year all segments of their business are up, they are selling new and used equipment, and experiencing increases in rental and parts and service. A concern is that they are experiencing shortages for some equipment with lead times of three or four months.
There is a concern that when the stimulus money runs out, some of the projects that are currently underway will stop when the money does. The residential housing market is probably better than most areas of the county. “For the most part, we didn’t have the crash of home values in most of our markets. We did have a dramatic slowdown in building and of course the infrastructure that surrounds homebuilding. But the level of homebuilding we do have, though diminished, isn’t bad compared to what we’ve seen in Florida, Nevada, Arizona, etc.,” Townsend said. “We expect to see things continue improving for the balance of the year and we will end up ahead of last year. As for next year, it’s still a flip of the coin. There’s a lack of confidence in the future and there are too many factors that can cause change. I think because of the debt it’s going to be lean for several years while we try to get ahead of it.”
Head and Enquist, based in Baton Rouge, La., has operations in 28 states. Brad Barber, H&E’s chief operating officer, said, “Economic conditions are still relatively uncertain. Some segments, oil and gas, if you exclude the Gulf with the moratorium, have picked up for us. Mining is at a better level than last year, and mineral prices are better. There are some new roads and paving opportunities as a result of the stimulus funding.
“It’s really hard to see where the stimulus money has been beneficial,” Barber added, “because we don’t see it in equipment sales or increases in the number of jobs it’s created.”
Barber points out that housing in markets like Las Vegas, Phoenix and Florida were hit early and are still suffering. “The stimulus money for buying homes helped a little, but as soon as that ended so did the increase in housing starts.”
He notes that the energy markets are showing some signs of improvement but that wind farm activity has dwindled as a result of government funding coming to a halt. “Wind farms aren’t profitable unless there’s a government subsidy, and as soon as that goes away they shut down,” Barber said. “Along these lines, we’re seeing expansion on some of the nuclear plants and that could be an indicator of things to come.”
Discussing H&E’s inventory, Barber commented, “We have our inventory levels under control, although it’s taken a while to get there. I have to say that the manufacturers and distributors have been disciplined in keeping the distribution network healthy. The manufacturers aren’t trying to unload surplus equipment on us, and several manufacturers have opened Internet portals where dealers can go and where equipment is available if they are looking for something. It helps them and us.”
According to Barber, rental rates have stabilized, although at a low level; but there has been an increase in activity. With respect to parts and service Barber states, “This is the first time in the 30 years we’ve been in business that we’ve seen such a degradation in our parts and service. Typically it has been anticyclical, but not this time. I think the drop is a result of equipment sitting and not being used. We are starting to hire technicians again, so I think it’s an indicator that things are starting to change.”
Tom Udland, president, Murphy Tractor & Equipment, a Deere dealer in Wichita, Kan., told CED, “The governmental markets have continued to perform throughout the economic cycle. We believe part of that is due to the introduction of the interim Tier 4 engines and the associated increased cost that will be seen next year. Cross-country pipeline work continues to provide a significant opportunity for equipment sales and rental. There have been continued opportunities for sales of milling machines, asphalt lay-down equipment, and asphalt compaction equipment caused by the immediate need to use stimulus funds, which were used in overlay projects.”
He added, “New equipment market potential has declined significantly, but our new equipment sales are relatively stable, resulting in an increase in marketshare. There continues to be extreme pressure on margins.
“Used equipment sales are up significantly from last year in both the retail and wholesale sectors,” Udland continued. “Our margins are stable, but that is probably due more to our pricing process through the trough of the cycle more than market pressure. We expect sales, values, and margins to continue to increase.
“We have seen some reduction in our customers fleets, primarily large customers in areas dependent on housing. Our new equipment inventory levels are below last year’s levels. Our used equipment inventory levels are slightly up from last year primarily due to a couple of large governmental rollouts.
“Parts and service have both increased from last year. We believe this to be a result of our increased marketshare and the aging of some fleets that historically would have turned over by now. Our used equipment success is also responsible for the increased product support sales.
“Rental is beginning to come back,” said Udland. “Our pure rental sales were down significantly early in the year but have begun to outpace last year.” Of interest, he says, is the recent return of large equipment rentals, for example scraper trains, articulated trucks, and large excavators.
“There were a number of projects attributed to the stimulus package but realistically those projects were on the books anyway and were only looking for funding (aka shovel ready). There have been a number of projects announced in the past few months that were “stimulus” projects but they haven’t started yet. I think the stimulus package gets a lot of press, but hasn’t had a lot of impact yet.
“I guess our largest problem is lack of customer purchasing,” said Udland, “aside from the fact that the intense price-cutting by our competitors continues to depress margins.
“The required move to interim Tier 4 and final Tier 4 engines is going to create some price increases that customers may find dampens their enthusiasm for updating fleets unless the federal or state governments force a change. These mandated changes are going to create some very interesting inventory challenges as we strive to meet the demands of pre-interim Tier 4 customers and interim Tier 4 customers.
“Our forecast for the balance of this year is to be ahead of last year and 2011 even better.”
Rexco operates in Iowa and Nebraska with four Bobcat and heavy equipment facilities and two that are heavy equipment only. Steve Smith, who partners with his brother Rex, says, “The economy in this area is stagnant following a record year in 2008. In 2009, business was off 40 to 50 percent over ’08, and we don’t expect this year to be any better. There is no dirt being moved, and although you sense that the economy is coming back, you don’t see it happening. When you see dirt being moved you know that it won’t be long before water, sewer and other utility work will follow or that you’ll see cranes setting steel. But, it’s not happening.”
Smith said that they are seeing some improvement in scrap and agricultural contractors. For example, the LICA contractor was doing some agricultural land improvement work. It helped some, Smith observes, but not a lot. With respect to stimulus money, Smith says, “The overlay people have been doing O.K., but I don’t see where the stimulus money has had an effect other than maybe saving a few jobs. It certainly hasn’t added any, and it hasn’t helped the equipment business.”
Smith’s comments on credit, rental, rates and housing paralleled the other dealers. He doesn’t expect this year to improve by any noticeable margin and thinks it will be the end of the first quarter or beginning of the second quarter or 2011 before we start seeing improvements.
Roland Machinery is a Komatsu dealer serving Illinois, Wisconsin, Michigan, Eastern Missouri and Northwest Indiana. Matt Roland, president, said, “We’re not in any real recovery mode as far as unit numbers go, but we have benefited from stimulus money with regard to overlay paving projects, especially in the state of Illinois. The Illinois milling and paving markets are strong but we don’t know for how long.” Chicago was the center of a major construction strike in July.
Stimulus funds are keeping paving contractors busy, but there’s very little going into anything else. “As far as dirt work, it’s still depressed, said Roland.” He noted that last year’s stimulus funds helped a small segment of the industry, too, and that the funds are expected to last a year or two. The large paving contractors have enough work to carry them into next year and are confident that there will be more work in 2011. Roland points out that this does not impact the industry as a whole and affects only a few of the big paving contractors.
Describing his customers and how they relate to the current economy Roland explained, “I think customers fall into categories. You have the new-equipment buyer, rental buyers, aged-rental-equipment buyers, and used-equipment buyers. Through this downturn I’ve seen a shift down a notch with the traditional new equipment buyer, wanting to spend a little less money, is now buying more rental equipment; the rental equipment buyer is buying aged rental equipment and so forth.”
Roland is currently buying equipment to keep the rental fleet at the proper level. Rental is stagnant from last year and rates are very competitive.
“We’ve had an acceptable first half of year,” Roland said. “We’ve met our expectations and have been able to grow our revenue over ’09. We will grow revenue this year even with a strike hanging over our heads. Private markets are down in 2010 and the governmental markets are flat.”
Honnen Equipment, representing Deere, Wirtgen and Manitowoc, to name a few, covers Colorado, Wyoming, Utah and Southeast Idaho. Mark Honnen, president, said, “Energy and minerals have been doing better. On the mineral side this area has coal, potash, uranium and oil shale, and for energy we have natural gas, which is showing improvement. There is also some wind farm activity and it is expected to increase in Wyoming.
“Probably the thing that has helped us in ’09 and ’10 is that we’ve focused on the governmental markets. We deal with four states and, of course, the counties, cities and municipalities. We’ve also focused on developing large national customers and have had success with both of these for new equipment sales.
“We’re now in a position where we’re starting to go net-positive and hire throughout our region, Honnen continued. “We had our peak year in 2008 and have sold down our inventory for the past 18 months. We are now starting to order machines for stock again. I don’t think we ordered a handful of machines for stock in ’09. We’re in good shape, but there are certain models or size groups that we’re short on, or the machines are old and need to be updated.“
In 2011 Honnen expects to see housing pick up in all the states they cover and feels that mining and energy will continue to improve. According to him, the market that will present new challenges will be the governmental segment because of declining tax dollars. “We need more top line revenue,” he said. “Our business and expenses are right-sized. We have to shake more profit to the bottom line.”
Intermountain West is not doing well. Dealers in the area say that it’s off as much as 80 percent from what it was three years ago. The problems are the same as across the rest of the country, starting with financing and bonding, a lack of residential and commercial construction, and as a result, contractors have no reason for buying new equipment. The gaming areas, Las Vegas and Reno, are still suffering with high unemployment across the board and especially high in the construction arena. Mining does help and is going reasonably well, especially in Wyoming.
Looking across the country, there are bright spots with good indication that the economy is starting to respond and construction is starting to improve in some markets as well as geographically. The consensus is that stimulus dollars haven’t done a lot to help improve the construction economy because its application has been mainly for maintenance-type projects that don’t reduce unemployment numbers or increase equipment sales. The need for passage of a new highway bill is an imperative that can’t be ignored.
The balance of 2010 could improve some, and the potential for 2011 remains hidden, depending on a number of factors that include the November elections, the highway bill, tax revenues, unemployment and credit requirements – just a few of the problems the industry and the U.S. as a country, in general, face.
As noted throughout this report, the U.S. economy is a little better this year than last, but as participating AED dealer interviewees have made clear, the “better” is marginal, spotty and uncertain. When compared to the Canadian economy, it’s dismal.
The Canadian Version of Economics
Canada has started to enjoy a growing economy with a dollar that continues to strengthen. Minerals and natural resources are the primary driving forces, and it looks like this trend will continue.
One of the most surprising differences between “the lower 48” and Canada is the expressed concerns over Tier 4 engine requirements that go into effect in January 2011. The dealers interviewed all felt that this could have a positive impact on this year in that contractors might buy equipment to avoid buying Tier 4 products next year. The downside is that sales in the first part of 2011 may drop because of the new engine regulations and that the price increases may discourage contractors from buying. Similar concerns were expressed by a few of the U.S. dealers. Understandably, the U.S. dealers have more to worry about than their “North-of-the-boarder” counterparts.
We used “slow” to describe the U.S. economy; for Canada we’ll have to use “steady and growing.”
Garry Frelick, president, Douglas Lake Equipment, a British Columbia based dealer, says, “Canada is a little different than the U.S., where the meltdown was a little more severe than up here. You can’t buy a house in Canada without a down payment, and our banking laws are different. I guess you’d have to say that our system is stronger.”
Western Canadais so diverse and a huge geographic area that is resource-driven with a small population density. British Columbia is about the size of California. According to Frelick, although Canada is better than the U.S. it’s still not good, but he believes that it has bottomed out. “The coast and Alberta have been a little bit better because commodity prices have been good,” Frelick commented. “Oil, gas and gold have been strong so there’s a lot of mining activity. And we had the Olympics here recently, so we’re still benefiting from the build-up since there are still some big infrastructure projects being completed.”
Credit isn’t as bad as it is in the U.S., but so many of the companies doing business in Canada are U.S. based that there was an impact – just not as severe. GE Financial was a major financial lender to the construction industry but pulled out in January 2009, and while back now, not as aggressively, sources observed. Wells Fargo and Travelers replaced GE in Canada. Frelick noted that there were a lot more repossessions in the U.S. than in Canada.
Equipment sales are flat, but compact and smaller equipment has picked up with the entry-level contractors. Everyone bought equipment during the good years and many have full fleets, which they are trying to keep working. Parts and service have been steady, with the customers servicing the machines to keep them going rather than replacing them. There is no shortage of good mechanics due to the numbers that had been laid off. Frelick cites his own operation as an example saying, “We had a significant reduction in service technicians. When the equipment is still under warranty, the customer comes to the dealer or buys the parts from the dealer. Once it’s out of warranty, they’ll go where it’s less expensive.”
Frelick thinks this is the worst recession that he has gone through. It happened faster, is lasting long and has been global. Currently the Canadian prime is at 2.5 percent, and as a result, long-term mortgages are up and housing is starting to show signs of improvement.
Neil Manning, president and CEO of Wajax, which has 33 mobile equipment locations and 20 power systems locations across Canada, says, “At the end of the first quarter of this year, construction markets were up, forestry was starting to rebound and mining has been robust. In the mining sector we have the oil sands, coal and some hard rock. The oil sands have been particularly strong. Looking at the general construction markets, they are starting to improve, coming off of very low levels last year. What’s really driving it is residential, commercial and infrastructure, but mostly infrastructure. Last year’s stimulus funding is just now starting to hit the markets. We see the back half of the year continuing to strengthen and carrying forward into 2011.”
Continuing, Manning said, “Equipment market demand is up and we expect it to continue on into 2011. Although the large-dollar items are going into mining, the other sectors are also beginning to show strength. I’d say we are doing better than we did last year in the construction markets. We had a good year in the mining markets last year, mainly living off of backlog, and we’re matching that this year based on the strength of order activity due to better market conditions.”
Rental activity is up for both rent-to-rent and rent-to-own. There are two reasons for this, Manning says. “First, the improvements in the economy and, second, there is a shortage of new construction equipment and there are longer lead times for some products. There is also a shortage of good low-hour used equipment.” He added, “Lead times are becoming a problem for all of us. Manufacturers don’t have inventory and aren’t ramping up production. They still consider the markets to be somewhat uncertain.”
So how’s business? Manning stated, “We’ve seen sequential improvements in the first quarter of the year and expect the balance of the year to continue to improve, and I think that sets us up for a decent 2011.”
Tim Kramer, president of Kramer CAT, Saskatchewan, Canada, said, “Everything is stronger than 2009, and everything is stronger than the first half. Saskatchewan is flat like Kansas. The bottom third is agriculture and the top two-thirds is mining. Agriculture has been going along very well and mining has been very strong. We have potash (potassium carbonate [K2CO3]) and they’re spending billions of dollars here developing mines. Rio Tinto is going to spend $10 billion over the next 10 years developing greenfields.
“It’s all underground, but we’ve been making great strides in developing that market. We do handle the Cat line of underground equipment. We’re still neophytes in the business and haven’t developed a complete understanding of the market. We’re focused on being a product support company because we believe that product support is what leads to the next sale.”
Kramer added, “Product support is the most important element in our business. Without it you can’t sell anything. If you look at the cash flow and margins that come off of product support, sales pale by comparison. We solve product problems for products other than Caterpillar and when we fix or solve a problem, the customer thinks, if they can solve this problem and it’s not their equipment, they must be really great at solving their equipment problems. The service department is our most important department.”
Kramer had been renting the traditional way and has only been in the full rental business for about a year and a half. He comments, “According to the ‘Kramer accounting system,’ it isn’t doing very well but according to rental store accounting it’s doing fine.”
He expressed concerns over the advent of Tier 4, feeling that there will be delays in product delivery. “We’re already seeing a shortfall of equipment and not just in Canada, but all over the world. Lead times are starting to stretch, and some of the large mining machines are out to a year. This is probably a good sign that mining is gaining momentum.
“Saskatchewan has become a ‘have province,’ and Ontario a ‘have not,’ which is a complete role reversal. Saskatchewan and Newfoundland are now having to pay into the government to help Ontario.”
Projecting into the future, Kramer added,“Here in Saskatchewan we pretty well missed much of the recession and will do fine. I don’t think I can say the same for Ontario and Quebec. BC is becoming very strong with forestry coming back. You can pretty much judge the Canadian economy on the price of oil and gold; if oil goes down two dollars everything slows; if it goes up two dollars everything goes up.
“The biggest challenge we face is educating the customer on Tier 4 technology, helping them understand what the various technologies mean and how these will effect them,” said Kramer.
One thing this recession has done is point out the weakness and strengths in our economies. Although the U.S. and Canadian economies are tied closely together, there are differences that cause them to react differently. Looking ahead to the end of this year, the economy looks better on both sides of the border, but comparatively, it looks a lot better to the north. Going into 2011, there are fewer factors that can disrupt Canadian growth versus what the U.S. faces. With challenges come opportunities, and we live in a time when we have more opportunities than ever,”
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