Despite some lingering worries (which I’ll address a few paragraphs down) Equipment World readers have resounding optimism going into 2006, according to our annual industry pulse taken each fall.
First, 2005 has been good to them. When asked how their company has fared this year compared with last year, 63 percent of respondents to our 2006 forecast survey said they had experienced a minor to major increase. This compared with the 55 percent who answered this question positively in our 2005 forecast, and the 50 percent who did the same in our 2004 forecast.
Second, our respondents say additional increases lay ahead, with 72 percent indicating they expect minor to major increases next year. Finally, when we asked them to rate the overall condition of their companies, 83 percent of our respondents said it was either “good” or “excellent,” almost a dead heat with those giving the same answers in the two previous forecasts.
What markets give them so much optimism for the future? Those surveyed cited the following: housing developments, commercial projects, utility work, industrial projects and roads and bridges.
Our respondents indicated they would continue to make full use of all the equipment acquisition options open to them. These options include financing, which received a bump of almost 10 percentage points from last year’s survey, with 57 percent of respondents telling us they’d financed equipment this past year. When compared with answers from the two previous forecast surveys, those saying they would buy with cash also have steadily increased.
Contractors told us thay are increasing their fleets, with 11 percent more respondents in our 2006 survey saying they had bought more equipment this year than those who said they had two years ago. Accordingly, 59 percent of respondents this year say they will increase their fleet in 2006, compared with the 53 percent and 51 percent who said they would in the past two surveys.
Skid steers rose to the No. 1 position in earthmoving equipment acquisition plans, with 29 percent of respondents saying they planned to buy this coming year. Also high on respondents’ to-buy lists: excavators, backhoes, pickup trucks and over-the-road dump trucks.
Even though our respondents are looking into 2006 with optimism, they do have concerns about the economy, which displaced insurance costs as their major worry. The “cost of materials” option also made an appearance on the list of concerns this year, with 34 percent saying this was a worry. Rising material costs are especially troublesome in the New England area, where 71 percent of respondents cited this as a concern.
Since this survey was sent out before the unprecedented increase in fuel costs, it’s likely the cost of fuel also would have ranked high on the list, perhaps even rising to the top. Contractors today are grappling with how to effectively bid jobs when they have no idea how much fuel will cost nine months from now.