Issue link: http://read.dmtmag.com/i/146868
Regional Snapshots a decline of 37,800 in government. Sales of existing, singlefamily detached homes totaled 544,380 units at a seasonally adjusted annualized rate, which was up over 10 percent from late 2011. Home prices were up substantially from a year earlier. The median price of existing, single-family homes sold in October was $341,370, up 23 percent from 12 months earlier. The California Association of Realtors' unsold inventory index fell to 3.1 months in October, which was the lowest inventory reading since August 2005. Most machinery dealers are seeing growth in the high single-digit to low-teens percentage range. Nevada: Nevada is on pace, by the end of the year, to have added 25,000 new jobs since the start of 2011. About 12,000 more jobs are forecasted to come on line, with the unemployment rate dropping to about 10.6 percent in 2013 according to the magazine Nevada Business. Even real estate has begun to show signs of a turnaround with median home prices up over 10 percent from the bottom. However, customers continue to show a reluctance to commit to purchasing machines, preferring to rent since most bids awarded are relatively small. And, following the example set by the Las Vegas callgirls, some Nevada machinery dealers are opening oil patch locations in North Dakota. Cascadia: While the 787 Dreamliner is still grounded Boeing continues to prosper along with the other drivers of the Northwest economy: Agriculture is strong, corporate giants Microsoft and Amazon continue to hire bright, motivated tech people (and pay them very well) forestry and wood products companies are again profitable, and all types of building permits are up significantly year over year. Washington's unemployment rate continues to drop, moving down from about 8.5 percent in Q1 2012 to just less than 7.5 percent today. Oregon's unemployment rate has seen a similar YOY drop going from 9.6 percent to 8.5 percent. Tax receipts are up in both states, but state level budget shortfalls remain an issue with no lack of unfunded good deeds yet to be done. n California Regulations, Costs Make Contractors Call It Quits Ron Barlet AED At-Large Director Bejac Corp., Placentia, Calif. In California, rentals continue to dominate the market as tight credit, operating cost pressures and the uncertainty of new projects has many contractors holding off on purchases. Deliveries of construction equipment have increased year over year, but in some categories such as excavators and wheel loaders, as much as 75 percent of these are being delivered to dealer-owned and independent rental fleets. Consequently, the retail opportunity for dealers remains very depressed. Tier-4 issues seem to be further slowing the demand for new equipment purchases as some contractors are still reeling from the reality that the equipment they own can no longer be used. The word "interim" seems to be playing havoc for some who believe waiting for "final" would be a better decision. Rental as the alternative satisfies the job requirements of latest technology, if required, and appears to be a bridge that many will use until future work outlook justifies the purchase of equipment. Of course, this again further impacts the present day sale of new equipment. Both contractors and equipment dealers are frustrated by overlap of government regulation with regard to air quality. Along with federal EPA rules, California Air Resources Board (CARB) regulations, and regional Air Quality Districts, the burden of record keeping for portable equipment (air compressors, generators, screens, crushers, grinders, etc.) as it moves throughout these districts has forced complex administrative compliance. Further, trying to follow and understand conflicting regulations not only results in frustration, but additional personnel cost to navigate these issues for both users and dealers. Many contractors continue to express concern with the increasing tax burdens, the complexity of the health care rules, oil prices, raw material costs, and the inability to be able to move their bid prices higher. As a result, several have retired from the business and many others are considering it. Optimistic contractors willing to persist view this as a possibility to grow their business by capturing the voids that may be available. In addition, very few new contractors are entering the market, which supports this optimism. Some bright spots do appear in the construction market, predominantly in the home building sector, where new housing starts have increased, especially in desirable areas where demand is already exceeding supply. Larger contractors are having better success in heavy highway projects, but are subcontracting less to smaller operators who would have normally received work from these jobs. n (continued on next page) August 2013 | Construction Equipment Distribution | www.cedmag.com | 33 32_Directors_Feature_KP1.indd 33 7/25/13 12:46 PM