As expected the atmosphere was positive and optimistic at The Rental Show last month. Most exhibitors were happy with the leads they were getting and the equipment they were selling on the show floor. Most of the rental people I talked with were bullish about the year ahead. Their customers are busy with projects and work and it was inspiring to see continuing advances and improved technology on equipment.
As this issue of RER prepares to go to press, however, Donald Trump has announced plans to impose 25 percent tariffs on imported steel and 10 percent on aluminum, sending stock prices tumbling and eliciting significant concerns from politicians (including many in the president’s own party), economists and equipment manufacturers, particularly those who make cranes and mobile elevating work platforms, not to mention automobiles and trucks. Retaliation by U.S. trading partners is essentially certain and an all-out trade war appears to loom on the horizon, benefiting almost nobody. Steel prices were already rising and clearly such tariffs will make it very difficult for manufacturers to do business.
J.P. Morgan analysts said crane manufacturer Manitowoc could suffer a 25-percent decline in earnings per share if such tariffs are implemented, and that Oshkosh and Terex, parent companies to JLG and Genie, could take a steep hit as well. The analysts said Caterpillar and Deere would be less hard hit because of their size, enabling them to cushion losses more easily, but clearly many an equipment manufacturer will be hurt.
Ken Simonson, chief economist for the Association of General Contractors expresses concerns about these actions in no uncertain terms. “Many projects are vulnerable to steep increases in materials costs,” he says. “Already prices have jumped for lumber, steel and aluminum. Potential double-digit tariffs or import restrictions on steel and aluminum could wreck the budgets for numerous infrastructure projects and private nonresidential investments.”
Simonson adds that countermeasures taken by U.S. trading partners that are affected by these measures would likely harm U.S. exporters, transportation and logistics businesses and parts, thus reducing demand for construction equipment. AGC officials said that tariffs on steel and aluminum would undermine the administration’s goals of boosting infrastructure investment and achieving sustained economic growth.
Trump stated that trade wars are a good thing and easily won, ignoring the casualties of such a conflict. I was not an economics major but I don’t recall anything I’ve ever read that showed economic benefits from a trade war, especially when relationships with U.S. trading partners have already been severely strained in the past year or so. In fact, I remember a history professor of mine challenging a class to come up with examples in history where a trade war was beneficial. We weren’t experts on the topic, but I don’t believe anybody ever convinced him he was wrong.
I look forward to hearing from any of you on this issue.
@ @ @
One of the more interesting experiences for me and some other attendees at The Rental Show was going up in a virtual reality simulator at the Skyjack booth brought to the show by Serious Labs, an outfit from Edmonton, Alberta, Canada. You notice I said I went “up” in this simulator! In reality, I was not off the ground at all, but it sure felt like I was up in the air. Serious Labs has worked in the virtual reality space for some time and the benefits of training in the simulator have been well documented by United Rentals Training Academy, which has been using the simulator as a teaching tool for training for a few years now.
Virtual reality training, which is also being used by JLG and some others, does not take the place of actual hands-on training, but it does a tremendous job in bridging the gap between classroom instruction and actual up-in-the-air training on a real boom lift. When a trainee does go up in the air after being in the VR machine, he really feels like he’s been there before.
I hope you read this month’s cover story about what many of the manufacturers are doing to improve training and make their equipment safer. We didn’t get to cover all the manufacturers, so apologies to those not included. We’ll come back to you and report on what you are doing in this vital area.