We’re Still Waiting
For The Lights To
Come On
BY CHARLES R. YENGST
Is anybody home yet? The lights till aren’t working and I thought by this time, they’d be on.
Last year, we were dropping over
the edge in terms of sales. Or more
precisely, we had already gone over
the edge and were in free fall — at
least in terms of machinery sales. It
was something that none of us had
seen as far back as 40 and 50 years.
When I estimated that in 2009 sales
might be down roughly 50% from
2008 levels, I unfortunately wasn’t far
off the mark. The lights were literally
off for many out there trying to hang
on in the business.
So, where are we today and what
is happening with business in 2010
as we roll through the third quarter
toward the fourth quarter? Will we end
the year higher or lower in sales? Will
2011 be robust and more recovery
oriented as we come out of the worst
market since the 1930s?
Six months ago, I was thinking that
CHARLES R. YENGST
Charles R. Yengst is president of Yengst
Associates, Wilton, Conn. Phone: (203)
762-8096; Fax: (203) 762-8330; E-mail:
cyengst@yengstassociates.com; Web:
www.yengstassociates.com
everyone in the machinery industry
would definitely have a tough year in
2010, yet I thought business would
be starting to recover modestly by the
second half of the year. But today,
I can’t say I feel any real optimism
about the near-term or the longer-term
situation. I am not buying into the
positive spin being thrown around by
several of the leading companies. Yes,
sales of machines in North America
are showing signs of improvement
during the first half of the year compared to the near-zero conditions of
2009, but we are still hurting from an
economic standpoint.
Unemployment is still 9.5% (where
it was a year ago) and the situation is
not getting better. GDP is struggling
quarter after quarter just to stay positive, instead of steadily getting better. The last report showed GDP up
2.4% annualized, down from previous
reports. And the country faces a $4.4
trillion debt over the next 10 years.
Is there any wonder that housing
construction — usually the first thing
to recover after a recession — has not
moved during the past year or so?
We are down about 75% in housing starts from the peak in the last
cycle, which occurred three years ago.
Housing starts are still below 600,000
units annualized, and there is no sign
of upward movement. Foreclosures
and high inventories of houses for sale
(mostly existing houses), along with
slow lending practices, are keeping the
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