Issue link: http://read.dmtmag.com/i/146868
Regional Snapshots ("How Do Contractors Spell Relief?" continued from page 39) funding to support major economic projects. The Western Canadian region has a resource-based economy, and as long as commodity prices remain relatively strong and global demand continues then market growth should remain stable. Dealers continue to be actively recruiting for service technicians to support increased product support activity, and experienced technicians are in great demand throughout the region – this trend will continue into the foreseeable future. All levels of government are promoting and growing skilled trade apprenticeship programs to attract youth, women, aboriginals and foreign immigrants to the work force. Overall equipment sales activity within the forestry market segment continues to improve and the short term looks strong especially if the U.S. housing recovery continues to gain strength, while Asian markets remain stable. This is making up for the recent softening in housing demand in Canada. Strong lumber prices and the increase in value-added forestry products has also fuelled this growth, while the demand for newsprint has declined. Overall equipment demand in the mining sector has softened as oil sands, and commodity sector development plans and capital expenditures are being scaled back, having a negative impact on large equipment purchases. A number of Western Canada pipeline projects continue to be hot topics of discussion as these pipelines are needed to export to the U.S./Asian markets, but these major projects are struggling to get off the ground in the face of environmental opposition, regulatory roadblocks and other obstacles. Even after all of this is sorted out Canadian producers must control costs to remain competitive. While year to date the region continues to experience modest sales growth over last year, there is definitely a mood of cautious optimism for the balance of 2013 given the level of economic uncertainty and the potential impact on the end use markets. n Eastern Canada Mixed Experience Among Customers – 'Very Good' to 'Lousy' Rick Van Exan AED Vice President and Director, Eastern Canada Region Toromont Industries Ltd., Concord, Ont. The economy in Canada has been bumping along for the last year with GDP growth of just 1.6 percent. The housing sector is cooling but it is not crashing – the good news is that low interest rates and decent employment growth should sustain this sector. Exports on the other hand are soft, and growth in the U.S. economy is needed to see this sector improve. Exports account for about one-third of Canada's GDP and roughly three quarters of exports are bound for the U.S. We are currently in the middle of government budget season, and the slowdown in economic growth has hit government revenues. As the federal government and most provinces struggle to get back in the black, expenditure restraint continues to be the theme. While public sector investment intentions looked strong, they are only intentions, and as budgets are drawn up, plans may not come to fruition. Added to all of that, the resource sector is weak. Existing mines continue to produce, but new development has been shelved for the moment. Our customers are experiencing an extremely mixed year. When you ask them how their business is you get answers that very from "very good" to "lousy." It all depends where they are located, what sector they concentrate on and how sharp their pencil is. The competitiveness of bid prices is a recurring theme with customers reporting prices well below last year's levels for both public and private work. All of this sets the stage for a rather unsettled and difficult business environment for construction equipment dealers. We are all pretty good at ramping up when business is strong. We know the tough decisions that need to be made when things go in the tank. But what do you do when things are just bumping along and there is no real clarity if it is going to get better or worse. Decisions on capital investments, people investments and inventory all become more difficult because of the risks in an unclear business climate. Creatively providing solutions for our customers, to deal with their challenges to be more competitive, will intensify the complexity of our own business. But providing solutions to customers is what construction equipment dealers do, and creativity is what customers are relying on us for today more than ever before. Product sophistication, new technology for machine guidance and monitoring, ever-increasing safety and environmental standards, and a growing skilled workforce shortage are all realities that ignore the business cycle. However, as equipment dealers we have much to look forward to. Old infrastructure has outlived its first life and is heavy into the replacement cycle. New infrastructure is required to support a growing population. Rapid transit is a hot button for all of our cities and several are moving forward in this area. Toronto has now passed Chicago as the fourth largest city in North America behind Mexico City, New York and LA. Energy demand must be met – wind, solar, and especially hydro will see continued strong development. Commodities are taking a pause at the moment but it is only a pause; they will come roaring back soon enough. n 40 | www.cedmag.com | Construction Equipment Distribution | August 2013 32_Directors_Feature_KP1.indd 40 7/25/13 12:46 PM