POWER GENERATION REPORT III
Y/2K
"Very Concerned"
portion of
population settling
out in 2009
Katrina
9 /11
East Coast
Outage
starting to turn will be the rental mar- kets, and we would expect to see some improved rental activity before the end of 2010. Additional pro- spects seem to remain in standby gen-sets for small business and office building installations, where they provide needed standby for expanding business opportunities or meet industry requirements for in- stalled backup power. Every natural disaster and ongoing issue related to the aging electricity infrastructure tends to set motivation for gen-set requirements in motion. We don’t know when these events will happen, but we know with cer- tainty that they will. Each quarter we contact over 200 gen-set dealers and 1200 gen-set customers in our continuing Power Tracker syndicated survey. One of the key questions we ask customers is “How concerned are you about the reliability of elec- tricity supply?” The “very concerned” portion of our respondents settled in 2009 to the lowest levels seen since August 2003 leading up to the East Coast outage. However, grid-related problems are like an aching tooth right now — prob- lems will happen, and with tight spending plans on the horizon the ability to solve these problems in the near term is just not there. It is a high probability bet that somewhere in North America in 2010 a widespread system failure will occur. Disaster Markets Many domestic suppliers have been shipping large numbers of gen-sets to provide urgent relief in response to the earthquakes in Haiti and Chile. These shipments have drawn down the large contingency inventory that was on the shelves. These recent events have proven that natural disasters any- where in this hemisphere can have an effect on inventory and even in a rather uneventful domestic market, the regional response to emergencies ripples through the entire gen-set industry. Refilling this pipeline will mit- igate some of the softness in the nor- mal small gen-set markets. Contingencies for natural disasters have been depleted so we would expect that actual gen-set production in the United States won’t be down at the end of 2010 as drastically as the domestic end market conditions might imply. “Nice To Have” Product End market conditions in the United States are currently as bad as they are likely to be for a long time. We’ve weathered the downward spiral of 2009 and 2010 looks to offer only a meager rebound. One important les- son from this downward market trend
