RERMAG

Uptick in Some Industries

Woody Weld's Acme Lift Co. is a unique business, specializing in re-rental of very large aerial work platforms that most rental companies do not stock in their inventory. Based in Mesa, Ariz., Acme has equipment on jobsites through the U.S. Weld shares his thoughts about prospects for re-rental and markets he expects to be humming in 2010.

RER: What do you expect business to be like in 2010?

Weld: We anticipate an increase in business during 2010 due to the slight rebound of the economy (a stop in downward movement being perceived as up), increases of spending in oil and gas production and refining, slight return of commodity and mineral business spending, healthcare facility, bridgework, governmental (military), and some other industrial and infrastructure increases (slight).

Do you have any reason to expect business to ‘turn around’ before 2011?

Some additional business drivers that may accelerate our time and dollar utilization: Almost everything we do is governed by scarcity of equipment plus customer demand. The type of equipment in which we specialize is not available from anyone in large amounts and some has only been manufactured in the last few years in any quantity. This has in the past created demand for 80- to 150-foot lifts and 30- to 50-ton boom trucks in advance of the demand for more commoditized rental items.

If the uptick in the industries listed above is sufficient, we will reach a point of equipment scarcity before most other rental companies. Our customers (large and small) will not necessarily wish to purchase capital-intensive and difficult-to-utilize assets at the beginning of an upturn or may find constraints upon the manufacturer's ability to deliver. Access to capital may constrain some purchases and drive some customers to re-rental as well.

What do you expect from the economy in 2010 — in your market areas and overall in the U.S. and how it pertains to our industry?

Oil is active both at the wellhead and at the refinery level. Gold, copper, coal and other mined commodities have risen in price. Natural gas pricing is improving. We are participating in the current build of a number of health care projects and more are planned. Electrical power generation (including clean air updates), transmission and distribution are not where they should be but are recovering (much grid work must be completed in order to allow for new power generation to enter the grid), base closures have meant expansion on existing military bases, and infrastructure projects (specifically transportation, waste and water treatment, bridge projects and ports) are just now receiving a small amount of governmental aid. These are the industries in which we expect business increases.

What are your customers telling you about their expectations for 2010?

Rental companies tell us that they are quoting more than ever, that they have huge projects ready to kick off in the near future, and then when that future date arrives they tell us that the project in question didn't get funded. We expect to hear that story quite a bit in 2010, but with some improvement. Our customers say they think it will get better in 2010, that they are not going to buy much and that they have cut back as far as they could up to now.

Any strategies you can share about how you will survive and prosper in 2010?

Be flexible, look for new opportunities, keep acquiring new customers and take great care of all of your new and older customers alike; move quickly to take advantage of opportunity; keep your great employees and don't cut them back financially if possible (they don't experience the highs that owners do so try to keep them from experiencing the lows as well); build cash as much as possible; begin to think about your next borrowing source because opportunity may present itself sooner than you think; focus on training and internal systems while business is slow and allows for introspection; help your friends in business during hard times because all of us need help and difficulties teach each of us new and important things.

Try not to expend too much energy fighting with customers and employees because it is energy wasted. Try to remember what is really important in life and focus upon it relentlessly.

TAGS: Ar Mag
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