CEDMag.com - August 2012 Articles
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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CEDMag.com - August 2012 Articles

Questions or feedback?
Contact Kim Phelan at (800) 388-0650 ext. 340.


AUGUST 2012
  • Highway Bill is First Step in National Infrastructure Conversation
    Policy
    By Jason Langford
    AED lobbying and grassroots work finally paid off, and now, it's back to work again.
    On July 6, 2012, President Obama officially put an end to the battle for a new surface transportation law, inking his signature to the congressional conference committee report for the Moving Ahead for Progress in the 21st Century (MAP-21) (H.R. 4348). The new law comes nearly three years, 10 extensions, and more than 1,000 days since the expiration of the last highway statute, ending a tumultuous period of intense lobbying by AED and our construction industry allies.
    [ read more ]
  • Midyear Business Survey: Niche Strategy, Rentals, and Energy Keep Dealers Moving in The Industry's Game of Musical Chairs
    Midyear Business Survey Report
    By Kim Phelan
    Many predict softer sales for second half of 2012 and boost rental fleet investments.
    Even though most dealers attained higher revenues by this June than they collected at midyear 2011, far fewer anticipate new and used equipment sales to increase in the second half of 2012, and the majority who responded to CED's recent business survey (62.9 percent) predict the rental side of their business will increase for the remainder of the year – namely because their customers are cautious about the risks associated with owning iron. Fifty-six percent of dealers are benefiting from the energy sector, and pockets of homebuilding, scrap and demolition, agriculture, material handling and aggregates are keeping some dealerships busy – but consensus is strong that construction is just plain weak.
    [ read more ]
  • The Changing Face of Contractors
    Markets
    By Joanne Costin
    Hispanics are a growing force in the overall economy, representing 16 percent of the U.S. population and $1 trillion in purchasing power. But what you may not have realized is that Hispanic businesses are an even bigger economic force in the construction industry.
    One incredible statistic came out of the last "Survey of Business Owners: Hispanic Owned Businesses 2007" (released in 2010) that should make every construction equipment dealer stop and think about the future. Hispanic-owned businesses are growing at a rate that is twice as fast as the national rate of 18.0 percent. Construction is the largest single industry segment. More than 340,000 Hispanic construction firms with sales of nearly $57 billion were identified in the survey produced by the U.S. Census Bureau.
    [ read more ]
  • The Possible Isolating Impact of Tier-4
    Regulatory
    By Frank Manfredi
    U.S. EPA emissions regulations could cause major disruptions in the used equipment marketplace of the future.
    U.S. equipment markets finally recovered after the three tumultuous years of the "great recession." Most expectations are that markets will continue improving, albeit slowly, for the next couple of years. Since World War II, every economic recovery has been led by a housing recovery – except this one. The result is a change from the normal consumer-led recovery to an industrial-sector-led recovery, which has meant tepid economic growth. Uncertainty in the future and small job backlogs are causing equipment users to exercise extreme caution before buying equipment. A lot of users are opting to only replace fleet units when absolutely necessary or to rent rather than buy. The recovery of the U.S. equipment markets is tenuous. All the manufacturers and many dealers are concerned about the direction of the market in the second half of 2012. The impact of emissions regulations is one more thing everyone has to worry about.
    [ read more ]
  • Revenue Concepts Our Government Should Consider
    From the Chairman
    By Larry Glynn
    I’ve been to Washington enough to form some opinions. See if you agree.
    Washington, D.C., is a very expensive town in every aspect. This spring, I was sitting at one of our political breakfasts with a representative from Illinois who told me that to "do it right" it cost him $5 million to run every two years. My representative from St. Louis, Lacy Clay, told me he spends a half-hour daily making telephone calls looking for money in order to run. The money it costs to run an election has gone totally out of control. The politicians’ focus is on getting re-elected. They admit that the grace period they used to have after getting elected to do the right thing is gone. As soon as one election is over, everything they do is with re-election in mind. When getting re-elected is the priority, gathering the required money is the goal.
    [ read more ]
  • What Will History Say About Us?
    Editor’s Note
    By Kim Phelan
    Will you help write that chapter or read the (fiscal) cliff notes?
    On the third Monday in July I hopped an eastbound train into downtown Chicago – nearly missing the 8:45 thanks to my slight underestimation of parking near the station. I cabbed over to the Drake Hotel near the lake to listen in on the luncheon keynote speakers featured at the National Association of Asphalt Pavers’ midyear meeting. I admit I was already planning to parlay something from the event into this month’s column, so I was paying close attention, as always!
    [ read more ]
  • Rounding Third Won't Be Easy
    On the Numbers
    By Garry Bartecki
    Plenty of obstacles on the field, plus perhaps another 18 months before real recovery
    We are rounding third for 2012, but the question is, are we rounding third on this extensive negative business cycle? As far as I can tell nobody has a clue. Even Eli Lustgarten has to admit it has been a tough call. At the last CFO Conference in May of this year he had to admit this is the third meeting where he projected construction recovery in the next 18-24 months. Heck, that pushes it out to potentially the spring of 2014! Even the dealers in the energy belt, who are all doing well, are feeling the negative impact of this depression because manufacturers are reducing production or holding back on production, thus producing long lead times for both equipment and parts.
    [ read more ]
  • Construction Equipment Spending: Will Politics Abort the Recovery?
    Business Outlook
    By Eli Lustgarten
    Sales are firm for now, but bright spots are more difficult to find. Rental is one of them.
    The saga continues. Virtually every major region of the world remains engulfed with significant political issues with minimal progress as the months fly by. Since my last writing: Europe volatility continues. Financial concerns remain elevated, and the new socialist government in France may foreshadow a change in leadership in Germany (Spring 2013). n China’s turmoil continues with economic bubbles in an opaque economy amidst a major changeover in the Politburo. Their economic slowdown is more severe than anticipated. Brazil continues to be plagued with a strong currency and government turmoil. U.S. politics are heating up as we get closer to the major elections in the fall of 2012. Still no progress on a potential FY2013 budget stalemate in October, and a mandated sequestering of funds and massive tax hikes on Jan. 1, 2013.
    [ read more ]
  • Proactive Customer Contact
    Aftermarket
    By Ron Slee
    Initiating the contact – not waiting for the phone or a walk-in. What a concept!
    All of us have seen and been in many parts departments over the years and know what to expect: the counter and the telephones, the warehouse, shipping and receiving, yard storage, maybe even in-store merchandising. If the customer chooses to order parts from us, they can call into the dealership, go there in person, or maybe place an order online. A couple of months ago I wrote about our being complacent in the parts business, again. I meant it. We wait for the phone to ring or the door to open. And coincidentally, I read a book called "What Matters Now," by Gary Hamel. In this book the author tells a story about when he spoke to students the end of a second-year MBA course in London, and he lists five things that he would like them to consider in their new work lives. I want to concentrate on two of the five.
    [ read more ]
  • Health Care Law Must be Repealed in Full
    View from the Hill
    By Congressman Adrian Smith (R-NE)
    'Constitutional' doesn't make it good policy.
    In the aftermath of the Supreme Court's decision to uphold most of the president's health care law, Americans deserve to know what the decision means and what steps Congress will take to repeal the law in full to lower health care costs while increasing access to care. The Court ruled on a 5-4 vote that the federal mandate compelling individuals to purchase health care was constitutional under Congress' power to tax. I respectfully disagree with the decision, in part because the requirement to purchase minimum health coverage was clearly written as a mandate, not as a tax. Even the president and other Democrats have argued strongly the mandate is not a tax.
    [ read more ]
  • Got a Million Bucks in the Bank for an HR-Related Lawsuit?
    Inside AED
    No? Better attend Forum for an update on the rapidly changing labor laws arena and find out how to protect your business.
    The AED/INFOR Executive Forum is pleased to present labor and employment attorney Jim Hendricks on Sept. 6, who will take you through the legal changes and recent cases that pose the most threat to your business. Whether you have 10, 50, or 500 employees, you probably consider them the lifeblood of your business. Their skills and their daily interaction with customers is what you depend on to differentiate your dealership and provide exceptional service. And you probably consider yourself a fair and even generous employer. But your good intentions aren’t enough to keep your company out of legal hot water these days. And ignorance of the laws simply won’t cut it.
    [ read more ]
  • Steer Your Team to Be Stronger with Business War Game: Test Drive
    Groundwork
    Simulation dealership event packs years of experience into two days, Oct. 2-3.
    The AED Foundation and PriSim Business War Games are once again partnering to bring a unique and sophisticated business simulation program to AED members: Test Drive. With the help of computer simulation, Test Drive puts the keys in the hands of each team in this mock market environment. Each dealership team has important decisions to make. Daily decisions affect all dealer departments, as well as dealer performance in the marketplace. Who will you hire? How will you train? Who is your target customer? Can you stock your inventory to sell, price competitively and still make a profit? Can your service department handle the demand?
    [ read more ]
  • Light Utility/Work Trucks, Trailers Stolen Most
    Industry Beat
    Lojac report estimates equipment theft could be a $1 billion industry.
    According to Lojack’s 12th annual Construction Equipment Theft Study, light utility/work trucks and trailers topped the list of stolen construction assets. California had the highest theft rate among the states. Theft remains a local issue with 95 percent of stolen equipment recovered in the state in which it was stolen, usually in storage or in use on a jobsite. In 2011, $8.8 million worth of LoJack-equipped construction assets were recovered.
    [ read more ]
  • Reducing Material Handling Injuries in the Dealer Workplace
    Play It Safe
    By Randy Dombrowski
    The dealership pays the price when employees 'put their back into it.'
    Manual material handling can expose a dealership's employees and profit margin to serious risk. Material handling injuries can occur in a variety of ways and often account for significant expense. Consider these cases: n A service mechanic was injured lifting an 80-pound part from floor level. The medical diagnosis included severe lower back pain, muscle strain and a hernia. Time lost exceeded two years and costs were nearly $250,000.
    [ read more ]
  • Survival of the Fittest
    Best Practices
    By Lina Skafvenstedt and Niall Edworthy
    Editor's Note: Republished with permission from Volvo Construction Equipment's "Spirit" magazine, Southeast edition/June issue; our thanks to the editors for supplying this month's special edition of Best Practices.
    Adapt your operations to the changing environment or lose out to the competition. That has been the message that has come through loud and clear during the global downturn. Many companies have struggled in recent years. Not so, the authorized Volvo Construction Equipment dealer, ASC, which responded rapidly to the difficult market conditions and reshaped its modus operandi. In acting fast and acting boldly, it saved itself and many customers from disappearing. In western North Carolina lies the picturesque town of Asheville, home to one of ASC's six regional offices in the U.S. Their customers can go there whenever they have questions or require spare parts, but in practice, it's usually the other way round. "We think it's important to go out to our customers and assist them on site," said Brad Stimmel, president of ASC Construction Equipment. "We are a very customercentric company and good customer service is always our main focus. Nothing else even comes close to that and we must always try to give our customers the best solutions available. That's what keeps our market share growing."
    [ read more ]
  • Construction Outlook: Some Contractors Do Well(s), Others Go in the Hole
    Midyear Industry Overview
    By Ken Simonson
    Shale gale and Panama expansion will have wide-reaching affect beyond drill sites and port regions.
    Construction activity appears to have passed its low point at last, but not everyone is on the up escalator. The outlook for the next several quarters appears similarly mixed. Contractors who are doing best are doing wells – or, at least, wellrelated construction. The boom in oil and gas drilling known as "fracking" is helping a variety of construction types in numerous parts of the country, even though the drilling activity itself counts as mining, not construction. Each of the thousands of well sites, typically occupying three to five acres, first requires some sort of access road, site preparation, a large pad for the drilling equipment and a pond for the water that is injected down the well. The gas and liquids that come back up need pumping, storage and processing facilities on site, as well as pipeline, trucking or rail connections.
    [ read more ]
  • Midyear Pulse Check: AED Directors Sum Up Local Business Activity
    Regions
    CED shares insights contributed from eight AED Board members, who prepared their reports in April.
    After a strong December [2011] market, January too was quite robust. A slight letdown occurred in February but March picked up nicely for dealers in New England. Increases in parts revenues and profits continue in 2012 along with strong service labor sales and increased rental machine utilizations. Generally, most large and mid-sized road, utility, and even site contractors have a good backlog of work, with an increasing portion being with nongovernmental owners. Customers are requesting quotes for fleet replacement, and more are requiring larger machines for heavy infrastructure projects and expansive site development.
    [ read more ]