Positive signs abound, but Wirtgen’s VP of Dealer Development is still expecting a relatively flat 2021

Feb. 3, 2021

This column published as "A Mixed Outlook for 2021" in February 2021 issue

Given the chaos that 2020 is leaving in its wake, you’d have to forgive any industry expert who declined to try and make sense of all the disorder around the economy in general—and infrastructure issues in particular—right now.

Nonetheless, Brodie Hutchins, vice president of dealer development for Wirtgen America was game enough to try and peer into the tea leaves and give contractors some thoughts on what to expect as 2021 comes into focus.

Talking to customers is, naturally, a key element of Hutchins’ job. And, he said, the majority of them tell him how thankful they are to have had steady work in a year as full of unforeseen upheaval as 2020 has been. “That was one tremendous asset for our industry is that we, collectively, were deemed ‘essential’ and—in many cases—were able to keep right on going, because the work was there,” he added. “It’s pretty easy to ‘social distance’ on a jobsite. And, to be honest, the much lower traffic volumes we encountered as various parts of the country shut down at times, made jobsites much safer for our workers out there.”

On the other hand, Hutchins noted, fewer cars on the road also translated into fewer gallons of gas being purchased, and fewer tolls being paid. All of which has badly undermined infrastructure funding, notably at the state level, heading into the new year. So, he cautions contractors to keep that in mind as 2021 begins to take shape.

Some parts of the country have been hit harder by COVID-19 than others, and Hutchins feels that introduces a new variable into the mix that contractors must consider as they prepare for the coming year. “There are states laying teachers and other employees off—California is essentially shut down now, for example,” he said. “New York, Pennsylvania, and New Jersey all reacted to the pandemic aggressively. So every state is different. Rarely do we have to try and do economic forecasting with so many unknown variables coming into play. It’s like trying to play poker with eight wild cards in the deck! It’s almost impossible to consider and plan for everything that’s going on.

“Looking ahead to 2021, I think it’s pretty clear we’re going to see more uncertainty and ‘new normals’ as we head into the new year,” Hutchins said. “At the same time, we’re still going to see markets out there that need to be served. So things are really mixed.”

Hutchins points out that construction equipment sales—particularly road building—are cyclical in nature. And even though 2020 just sort of fell apart early on, he still feels it would be a mistake to ignore those inherent cycles as 2021 begins.

“We just came off some pretty high-water marks as far as new machinery going into the market,” Hutchins noted. “And there is still pent-up demand for infrastructure project spending. Regardless of who was going to win the last election, infrastructure spending has been front and center in the national debate for some time now. So, whatever happens going forward, I think we already are seeing a bigger focus and—perhaps—more of a priority on infrastructure. I think that for all the posturing and polarization, both Democrats and Republicans alike recognize both the significance and importance of getting a good infrastructure bill together. The probability of multiyear infrastructure program is now greater than it’s been in the past 20 years, regardless of which party is in power. And that is definitely encouraging.”

At the same time, Hutchins cautions, with COVID-19 still ravaging the country and state budgets thrown into disarray as they attempt to deal with the pandemic, there are numerous negative factors heading into 2021 that contractors should not ignore.

“With everything going on right now, it’s really tricky to try and figure out where all the money will go once it becomes available,” he said. “But, if we look at historical trends, it suggests that we may be headed for a slightly downward trend as far as getting new machines out into the market. But overall, I think 2021 is going to be pretty similar to how 2020 would have gone, minus the COVID pandemic.” 

About The Author: Roberts covers the equipment side of our industry for Roads & Bridges.

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