In his “State of the Industry” presentation, NTEA executive director Steve Carey listed these pros:
• The US dollar remains relatively weak.
• There is room for growth as consumers and businesses have available cash.
• The average age of trucks is still high.
• Low inflation.
• Low interest rates.
• The construction industry is growing.
Carey listed these cons:
• Labor market imbalance.
• Consumer confidence is still a bit shaky.
• Slow growth in EuroZone and the BRICS (Brazil, Russia, India, China, and South Africa).
• Political uncertainty domestically and internationally.
Carey said most of the findings from the NTEA Business Conditions Survey exude optimism. For example, since the beginning of 2013, 51% of the member firms have increased employees, 42% have held constant, and only 7% now have fewer employees.
At end of 2013, 58% reported higher sales velocity than in the middle of the year. Last year’s result for 2012 versus 2011 results: 74% reported higher velocity than in 2011, 13% were unchanged from 2011, and 13% were lower.
The majority of members expect improving or stable business climate in 2014, with 73% expecting an improvement (up from 60% a year ago), 5% expecting a decline (down from 8%), and 22% expecting it to remain constant (down from 32%).
In plant utilization, 15% are at full capacity (up from 10%), 56% are at three-quarters to full (up from 53%), 26% are at half to three-quarters (down from 35%), and 3% are at half or less (up from 2%).
Thirty-seven percent had higher backlogs than at the middle of 2013. Last year, NTEA compared the beginning of 2012 versus year-end. During that time, 43% said backlogs were higher, 39% unchanged, and 18% lower.
In lead times, 29% had 60 days or more (down from 32% a year ago), 29% had 30-60 days (down from 31%), and 42% had 30 days or less (up from 37%).
Asked about current business challenges, 68% listed overall economic conditions (down from 84% last year), 50% listed government financial or regulatory policy (up from 45%), 39% listed continuation of a poor housing market (up from 22%), and 22% listed low consumer confidence (down from 28%).
Employees remain a concern
In areas of concern, 57% listed finding and keeping qualified employees (up from 76%) and 32% listed complying with regulations (up from 39%).
The 2014 Fleet Purchasing Outlook Preview tried to measure purchasing intent. Asked if their fleet plans to acquire trucks this year, 91% said yes, an increase of 5%, and 33% said they will acquire more this year than last year, a 7% increase.
On the topic of fleet age, 46% said it will increase, 33% said it will stay the same and 21% said it will decrease—identical to last year.
Asked if truck acquisitions in the coming year will be funded, 11% said funding is questionable (down from 12%) and 33% said funding is likely (up from 31%).
In the Channel Relationship and Market Trend Report, a majority of distributors are maintaining or growing their dependence on manufacturers.
On the topic of change in distributor involvement with manufacturers, 36% increased, 15% decreased, and 49% stayed the same
“It is clear from the data that relations between distributors and manufacturers are important, given that 85% of respondents declare their dependence is increasing or staying the same,” Carey said. “Furthermore, these strengthened relationships may be correlated to their increases in sales volume.
“Company size proves to be a relevant factor in how distributors are positioning themselves and applying competitive tactics. There were clear differences in survey responses for distributors with annual sales less than $5 million, between $5-10 million, and greater than $10 million.”
Over the last five years, manufacturers have made some adjustments to their sales philosophy in order to address changing economic and market conditions.
Over the past year, 26% of manufacturers increased their reliance on distributors, 25% increased reliance on direct selling, and 49% stayed the same. ♦