June 2022 Edition

June Podcast Explores Consolidation and More

Listen in for some food for thought on whether you’ll eat or be eaten if the supply chain remains unchanged a year from now.

Along with the rest of the world, the equipment business is becoming a strange twilight zone in which independents are experiencing price euphoria on the one hand and evaporating inventory to sell and rent on the other, not to mention the scarcity of parts and labor. Jarrett Harris, director of Cyclicals Research at OTR (Off the Record), returns to the program to put some perspective on what’s happening in terms of pace of sales, zany pricing, global events, contractor behavior, and more. We may see more occurrences of a rental company or independent dealer being acquired so the buyer can gain some assets to rent and machines to cannibalize for parts. LISTEN TO PODCAST>> 

April Construction Equipment Activity Was Down 53.4% Compared to March

Contractors are holding on to equipment longer, (1) anticipating increased activity later in the year and (2) to offset high gas prices and brace themselves for a potential recession.

Commercial construction activity is picking up, and the construction equipment market reflects that change. Average FMV was up 9.9% over April 2021, and 6.6% over April 2020. Prices ticked up slightly—1%—over March 2022. Activity levels continued to trend down, with April 2022 activity being 31.4% lower than April 2021, and 55.8% below 2020. Even though historical trends indicate April volume is generally down due to large volume in the secondary market in February and March, the current inventory shortage is very clearly a major issue for our industry. READ FULL CONSTRUCTION REPORT>> 

Could The Rental Business Be An Opportunity

To correct today’s problems management must find “current” ways to lead their company to the other side of this mess. By Garry Bartecki

Equipment dealers work in a complex environment. The first topic which encouraged me to get involved with the industry relates to rental activities. The second was the dealer management’s ability to juggle the sales silos to produce a profit. As my industry experience grew it became easier to recognize the dealers that were above average. The above-average dealers were able to recognize problems before they become critical. Whether the problems were internal or brought about by external issues similar to what we are encountering now, they would take steps to find solutions to mitigate the problem as well as educate management on why the problems occurred and what steps will be taken to reduce any risk to the company. In the end, the entire management team learned a lesson they will put to effective use at some time during their career. READ FULL STORY>> 

Recession Potential

JP Morgan Chase CEO says economic hurricane is coming our way.

By Thomas C. Schleifer, Ph.D Everyone agrees that the COVID-19 world-wide economic shutdown, interrupted supply chains, Russia’s barbaric invasion of the Ukraine, fuel shortages, and persistent rampant inflation all add up to, at the very least, economic uncertainty. However, no one wants to use the “R” word. The word shouldn’t scare us because we have to manage our businesses through every economic cycle, but recession may well be coming. There is certainly the potential. What it will look like for the construction industry however is indeterminate. READ FULL STORY>> 

Pipeline Opponents Driving America’s Electric Bills Higher

With gasoline prices already sky-high, a double whammy is now arriving.

By Toby Mack A new wave of energy price hikes is now hitting consumers and businesses. This time it’s in the form of higher electric bills. The culprits are the opponents of natural gas pipelines and the misguided regulatory policies that empower them. Until this changes, our electric bills will rival the cost of gasoline purchases. With gasoline prices already sky-high, a double whammy is now arriving, and it’s about to get much worse. It’s the even faster rising costs that power plants pay for natural gas to produce the electricity that runs our air conditioners and businesses. The reason: fossil fuel opposition groups have stopped key new pipelines, importantly contributing to the tripling of the cost of natural gas over the last 12 months. READ FULL STORY>>