Out in the field…February 2010
I’ve spent the past few days calling on customers in Alabama and Georgia. Most were heavy equipment dealers and some were independent repair facilities. At best, cautious optimism rules the day.
The general sentiment seems to be that once the weather clears that logging activity will be up in the Spring over last year since the mills are in dire need of wood. Once their needs are met, there seems to be some sense that the price of wood will drop and the logging segment will fall back to last year’s levels.
It was surprising to hear that several dealers had sold all of their Skidders and were waiting on delivery of more. It was not a surprise to see how little new inventory was sitting on the lots. The most sales activity seems to be with 2 and 3 year old equipment.
If there were bright spots, it seemed to be with equipment that moves dirt, whether it be for road construction or mining. In general, the feeling was that 2010 may be the same as or just slightly better than 2009 and that the market won’t show marked improvement until 2011.
We want to know…what are you seeing in the markets you serve???
The Market…
What a year we have all gone through in 2009. Most of us follow the “market” or the “economy” and many of us read industry journals…more and more online. Where have we been, what happened and where are we going? We may not have all of these answers for years to come.
I think what’s important is that we get a more focused view of the markets we serve. I just read the other day where many technology and ecommerce stocks had a great 2009. Certainly, the performance of those blue chips affects the perception of what’s happening in the broader market, but is it really a good indicator for the markets we serve? Likely not.
Our view is that the Construction and Agricultural Equipment markets have bottomed with Construction being off nearly 50% since 2006 and some segments off 80 to 90%. The important variable for our business is equipment utilization rates. We estimate that telehandlers for instance peaked at 90% in 2006 and 2007 and fell to 10% in 2009. Optimistically, we are looking for telehandler utilization levels to double in 2010. We think that forestry fared far better in 2009, but only because that segment dropped in prior years before the overall market. Agriculture held up fairly well in North America…people have to eat!
We would like to hear from you…what are you seeing in your markets?
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