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.
