Let The Beer Flow And The Business Get Better
CHARLESR. YENGST IS PRESIDENT OF YENGSTASSOCIATES, WILTON, CONN.
10 DIESEL PROGRESS NORTH AMERICAN EDI TION April 2010
if you are looking at North America and the mobile crane market, well, go back to sleep and wait another year or two for busi- ness to start coming back. If it’s work platforms, same story. Backhoe loaders might have a slim chance of sales improvement in 2010 and maybe a little boost in 2011. That’s in the North American market — in Europe, backhoe sales might be really ugly in 2010, with a glimmer of hope for improve- ment in 2011. That shows how the story might be different from one product to the next, one market to another. I am sure that I will get the question, “Is there light at the end of the tunnel?” Sure, your company will benefit if you were closed down for most of 2009 and now have some inventory-filling to do. Some might be looking for business to explode 15 to 20% this year, or even more, which is a hell of an improvement considering the fact that factory output will still be far below what it normally would be doing at the end of a recession. But bragging about per- centage increases from near-zero condi- tions is not cute and certainly does not impress anyone who is keeping track of what is really happening. Going from 100 widgets sold per year to 20 and then hav- ing a 20% improvement to 24 widgets, well, that’s bogus. What really matters is how long that fan- tastic growth will last and will the real output get back to “normal” (whatever that may be) for the product in question and in a time- frame that is reasonable. If your normal busi- ness is 75 widgets, plus or minus 25 widgets for high and low points on the cycle, you have a long way to go to return to even 50 widgets, the low end of “the normal range.” Everyone will be talking about emis- sions in 2010, at least for those companies dealing with products going to the North
American, European and Japanese mar- kets. There is already so much hype con- cerning the price of machines once the new Tier 4 interim and Stage 3b diesel engines start being used in machines in 2011. Will everything go up 10%, 15% or higher? Whatever the OEMs arrive at for product pricing, you can be sure that demand will be smarting as prices get higher. Will there be pre-buying to escape the higher prices caused by emissions? I seriously doubt it, since demand is weak and no one (the buyers) really cares. There will be a lot of engine suppliers showing off products to be used in 2011 at Bauma and a lot of discussions about machine pricing too. People will also be talking about who is going to be around next year. And, which companies are on the ropes and need to be bailed out with an acquisition or equity financing. These questions always come up at trade shows, but they’ll probably be more frequent and pointed than any time in the past 40 years. We have just gone through the worst recession in several decades and many of the current compa- nies exhibiting at Bauma are surely on the edge. We’ll see questions about other new technologies — have you seen the new, hybrid “whatchamacallit” at the Volvo stand? — and I love these questions, because they often seem to have no time- line. The technology is usually far ahead of reality and the machine is far from reach- ing production status. The Bauma extravaganza in Germany will be fun and there will be a lot of things to see, people to meet, questions to answer and, of course, good German beer to drink. Maybe when it is all over, everyone will return home with a lot of new business, leading to a new cycle that will carry us through this new decade. How I wish! dp