Breaking out of the box

ConExpo-Con/Agg 2002 could give industry some power to escape hard times

Article February 18, 2002
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Empty cardboard boxes never look appealing, even when
you’ve fallen on hard times.

Every business wants inventory constantly packed and moved
out the door, but every now and then the assembly line loses its rhythm.
Equipment manufacturers in the highway and bridge industry are ready to gain a
beat or two, and ConExpo-Con/Agg 2002 could serve as the conductor quickening
the tempo.

ROADS & BRIDGES sat down with Al Cervero, senior vice
president for the Association of Equipment Manufacturers (AEM), and talked
about how the market could react in the upcoming months.

This year’s ConExpo-Con/Agg comes during turbulent
economic times. How do you think this year’s show will affect the market
for the remainder of this year and beyond? How did it affect the market in
1999?

I have believed after attending my first show in 1981 and
then in 1987 that the show is a great industry catalyst and motivator. If the
industry has solid footing, and I think it does, it should provide a stepping
stone for people to get moving again. All people really need is a comfort
factor to start to make plans for the future and ConExpo-Con/Agg provides the
forum to discuss issues and the outlook.

Do you anticipate a decline in product introductions at
ConExpo-Con/Agg 2002?

No. The show is a three-year show and was a six-year show
for that purpose, to provide a platform for equipment introductions, and the
2002 show will be no different. However, the development process is shrinking
with the advent of new technology so it may seem like every year new products
are introduced. What you will find is the introductions of more new technology
with and for equipment and support of it, as well as plans to add value to the
customer through better management tools and programs.

The rental industry is a major player in all this. Are the
rental companies ready to build up their equipment arsenal again? How will
continued consolidation among the rentals affect product purchasing in the next
five to 10 years?

Rental will continue to grow in certain sectors. The rental
industry will continue to develop into a better managed industry with better
product availability for the end-user. The rental industry and the equipment manufacturers are already partnering for better service to the ultimate customer. The rental companies will continually be rationalizing and replenishing their
fleets—they have to. They need fleets that are relatively new or their
available utilization will fall short of their need and their servicing costs
will increase beyond the effective ratio.

Will we get it get back to ’99 levels? Probably not.
Is that OK? Yes. Our industry is rationalizing everything, but so is global
production of everything. Exhibitors at ConExpo-Con/Agg are ready for today and
tomorrow’s market and forming partnerships with many of the
consolidators.

More and more people are turning to the Internet for
product information, etc. AEM recently conducted a study about Internet usage.
What result(s) from this study stand(s) out most in your mind?

The study is half done and in final review so to comment on
the study is probably premature. I believe the industry will continue to
embrace the Internet in all forms especially on the information side. The
biggest surprise, believe it or not, is that with the advent and the boom of
the Internet over the course of the last three years the No. 1 most utilized
method to obtain information over the past three years is attending trade
shows.

Congress tried to pass an economic stimulus bill late last
year. Do you think some type of stimulus bill which includes a package for
highway/bridge construction will help manufacturers?

Yes. I think anything that can happen in the way of a
stimulus would be good if only to improve the outlook or opinion of the
contractors.

New engine emission standards are about to kick in. What
steps have manufacturers taken to prepare for it? Will this standard raise the
cost of machinery?

The equipment manufacturers and engine manufacturers have
been aware of these and are prepared. As to the cost of equipment, I cannot
comment as each manufacturer of equipment and engines takes various approaches
to its design and cost of manufacturing, so to the extent that it passes on its
R&D expense we are not aware. I do know that extensive time and effort has
gone into new designs and changes to designs, and that it has cost all
manufacturers a significant amount of money.

How has the strength of the American dollar hurt the U.S.
equipment manufacturer?

It has hurt and will continue to hurt those with an
export-only strategy and knock-down and assembly-only operations. Many
manufacturers have again various strategies on marketing outside the U.S. and no
one rule applies. The U.S. should take a serious look at its policy as to the
ongoing strength of the dollar. AEM will be addressing this issue with various
members this year and discussing its approach with government committees.

Okay, enough with the negatives. What are some of the
positives that have happened in the construction equipment industry over the
last year?

The industry bottomed out so it can only look up. The
formation of AEM created by the agreement to consolidate the Construction
Industry Manufacturers Association (CIMA) and the Equipment Manufacturers
Institute (EMI) is bringing the power of one industry association to work for
them on all these issues. This consolidation will allow members to be more
efficient and the association to provide more valuable assistance for them to
compete effectively in the global marketplace. 

ConExpo-Con/Agg has showed its resilience against an
economic downturn with a record amount of exhibit space. And, the tragedy of
Sept. 11 has provided a resurgence of pride to not only U.S. contractors but a
feeling of U.S. strength in the export marketplace.

You mentioned CIMA and EMI joining forces. How has the
transition gone? What are some of AEM’s plans this year?

The transition is moving along. We had our first board
meeting on Jan. 22 and all is well. We have defined operational guidelines to
assist. We will continue to offer members the full services previously offered
by CIMA and EMI. Efficiencies are developing and surfacing every day, as is
planning to offer expanded services. And we are committed to maintaining and
expanding our liaison with customer groups. We will continue to actively
address issues and concerns in technical/safety, government affairs and
international market support, among other areas.

What equipment traditionally sells better than any other?
What equipment do you expect will show “brisker” sales by the end
of 2002?

It depends. Our industry has many segments. Road building,
rental, utility, industrial, aggregates, lifting are all separate industries
within an industry. There are various niches in each of those categories.
However, you will find the biggest sales in new products and those with more
versatile capabilities and efficient usages.

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