| March 02, 2011 |
So where do we go from here? The editors of Randall-Reilly’s Construction Division – including Equipment World, Better Roads and Aggregates Manager – take a hard look at that question in this issue’s special report.
Before we even attempted to delve into this subject, however, we felt it was important to look at the past 11 years – a decade-plus-one of stratospheric highs and lows in this industry. Providing us our in-depth retrospective was Randall-Reilly’s Equipment Data Associates, which tracks financed equipment in minute detail. This allows us a unique look at the entire construction equipment market, since an estimated 30 to 80 percent of machines are financed, depending on equipment type.
EDA data gives us the ability slice and dice a number of pertinent points: How financed new and used equipment sales compare, when sales peaked, what type of contractor is financing what types of machines, which regions seem to be hot beds for certain types of equipment and if the mix of popular machine sizes has changed. As part of this special report, we then took this information and asked manufacturers in eight of the top machine categories to comment on past and future trends.
Lead article author Kirk Landers, editor emeritus of Better Roads and a columnist in this magazine, points out how all this big-picture information can translate to into your equipment planning. This slow slog of a market recovery is going to create a situation unlike any we’ve experienced for a long time – if ever. One line struck me in Landers’ article: “Since today’s new machines are the main source of high quality, low hour machines in three to five years, new machine sales are an almost unerring forecaster of the used machine markets of the future.”
This slow slog of a market recovery is going to create a situation unlike any we’ve experienced for a long time – if ever.
While this may seem obvious, it’s a statement that shines a bright spotlight on equipment trends for the next few years. Because the market has contracted so much – 2010 financed new machine sales figures are about one-sixth of what they were at the market peak in 2005-2006 – this portends a weak used equipment in the offing, says Landers – and most likely during the expected mid-decade recovery years.
So what’s an equipment-savvy contractor to do? First and foremost, pay attention to the age of your fleet. You’re probably keeping your machines longer (and putting fewer hours on them), so an orderly equipment acquisition plan becomes even more important if there’s a dearth of used equipment available that can meet your production demands.
Keep a sharp eye out on local rental prices and availability. Rental is expected to be a leading recovery indicator – but more important, it will give you a snapshot of what’s happening with specific machines in your local market.
Also note any spending bump in the U.S. market. Although it’s unlikely we’ll see Congress suddenly get religion about infrastructure spending, any uptick in program outlays will see a responding surge in equipment buying – and may predict spot shortages.
This crazy roller-coaster ride may still have a few loop de loops left, but we hope this report gives you a solid perspective as you review your future equipment needs.