Elton John's hymn to survival, "I'm Still Standing," greeted attendees arriving at the opening session of the Associated Equipment Distributors' annual meeting Feb. 6 in Anaheim, Calif., sounding the event's keynote theme of survival in tough times.
The meeting and AED's CONDEX equipment show followed a year that has socked distributors with an estimated 30 to 40% drop in business. But the group's outgoing president, John Zoubek, offered reasons for moderate optimism, based on such key signals as improving technology markets and the Federal Reserve's decision against more interest rate cuts. "All in all, I expect 2002 to be a welcome improvement over 2001," said Zoubek, general manager of Parlin, N.J.-based Zoubek Associates, to several hundred participants.
Zoubek's successor echoed his upbeat outlook and his caution. "I think we're beginning to climb out of this thing," said Robert C. McNutt, AED's 2002 president and CEO of Wolverine Tractor & Equipment Co., Southfield, Mich. "The question is, how fast is it going to be?" Distributors are still working through a glut of inventory. "I think we've gone through the worst pain," he said. "Manufacturers are pretty aggressive in their pricing."
Equipment distributors also are responding positively to the industry slowdown, McNutt contended. The recession is "forcing all of us to work harder in improving our own balance sheets," he said. "The rental part of the business tends to increase in downturns, and I think we've learned how to manage the rental side of the business better through all of this." Distributors are taking advantage of new information technology strategies, but they may not be out of the woods yet. Gross profitability and net return on investment have been declining for a decade, and "most of us in industry agree that the wave of manufacturers' consolidation is not over," he said.
The industry also faces continuing pressure from rentals, economic globalization and Internet purchases, said McNutt. But Zoubek predicted that when the dust settles from the recent upheaval, "We will emerge stronger and more prosperous."