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2013 Business Outlook overall total dealership revenues will be the same as 2012; 41 percent estimate ���13 revenues will be higher than ���12. ���I���ve been at a loss for a couple of years really trying to figure out where things are going,��� said Walter Berry, chairman of Berry Companies based in Wichita, Kan., ���Our company has done really well, but it doesn���t make me comfortable not knowing why we���re doing so well or how long it will last.��� Berry added that because their market incudes Texas, they���ve benefitted from the oil sector, and they also do well in agriculture markets, though the drawn-out drought that was occurring late in the fourth quarter could drag that down somewhat, he thought. Kansas, on the other hand, was off for the company in 2012, chiefly, said Berry, because it���s not a state that���s being positively influenced by something other than traditional construction. They���re hoping housing continues its climb back. Berry characterizes his own business sentiment as perhaps ���overly��� pessimistic, despite the polar-opposite optimism the company���s own economist is exuding. ���We���re so far apart that averaging doesn���t really help,��� he said. ���There are just so many factors that go in to it. The uncertainty is as high as it���s ever been. ���I wish the country was facing its governmental and financial problems, but we���re not,��� Berry said, ���and I���m not sure what it���s going to take to do that. I think there���s going to be pain involved.��� Expert Expectations CFO.com writer David Rosenbaum affirmed the widespread pessimism in his Dec. 3 article, ���Small-Business Owners Express Epic Pessimism,��� saying that ���[s]mall-business owners are more pessimistic about their businesses��� future than they���ve been since the third quarter of 2010, according to the Wells Fargo/Gallup Got DORF? One dealer we interviewed made an interesting observation: He remarked that during 2012, he thinks Caterpillar dealers around the U.S. have been noticeably increasing their dealer owned rental fleets (DORF) at a level he thinks is substantial ��� but he couldn���t identify why. So CED asked around, and here���s a summary from our conversation with one Cat dealer: Are Cat dealers universally and by some coordinated master plan building DORF? The answer is no. Caterpillar has encouraged its dealers to build fleet but only modest financial incentives are offered to do so, according to our source. There is no official, national U.S. dealer program that is significantly helping Cat dealers ramp up on DORF. ���Fleet loading of all brands is now primarily due to these well known factors: (1.) Rental demand has increased since many customers are reluctant to take on debt. (2.) Fleets in recent years have decreased as customers have preferred to purchase used equipment from the fleets to avoid Tier-4 and to keep cost down. (3.) Some distributors were resistant to add DORF during the recession, due to bank debt covenants I suppose,��� the Cat dealer told CED. ���The portion of all brands delivered to rent-to-rent fleets versus straight sales to customers is high in 2012. I think that goes for most brands. In our area, the portion of units going to fleets was as high in the first half of the year as we have ever seen, then it decreased, since fleet loading is also seasonal.��� Small Business Index released [Nov. 30].��� The article quotes Wells Fargo���s small-business segment manager, Tom Case, who acknowledged that small-business owners are historically optimistic about the future even if they���re pessimistic about the present. ���Unfortunately,��� Case told the reporter, ���these highs (or lows) in the [newly released] index are a clear indication that uncertainty is still paralyzing small-business owners, a situation that will not be cleared up in the short term���Until there���s sustained improvement���you don���t get confidence.��� And, not surprising, nothing resembling confidence is going to take root while the fiscal cliff issues remain unresolved, economists and economic reports agree ��� and the projections for modest 2013 growth are consistently hinged upon outcomes of the fiscal cliff negotiations that were still in gridlock when CED went to press. Bob Murray, vice president of Economic Affairs at McGraw-Hill Construction, says it ���poses a significant downside risk to the near-term prospects for the U.S. economy and the construction industry.��� With hope he added in his October outlook, ���Assuming that efforts to cushion the full extent of the fiscal cliff are successful next year, keeping the U.S. economy from sliding back into a recession, then there are several positive factors to benefit construction, including low interest rates and improving market fundamentals for several project types.��� Associated Builders and Contractors (ABC) Chief Economist Anirban Basu echoed that prediction on Dec. 4, saying that if, indeed, the White House and Congress manage to navigate the nation past the cliff, ���the latter half of 2013 could be surprisingly good for nonresidential activity given the large volume of (continued on next page) January 2013 | Construction Equipment Distribution | www.cedmag.com | 33 32_Biz_Outlook_Feature_KP.indd 33 12/21/12 1:35 PM