Issue link: http://read.dmtmag.com/i/221076
Market Pulse "I am optimistic," Ortiz said, and he banks on the overall Texas market remaining "robust" for the foreseeable future. "Houston is going to continue to grow and need homes and with that comes everything else – highway, residential construction, general construction. I think the growth will be stable, and not go through the roof any time soon." The company's optimism is evident in plans to upgrade dealership facilities. This includes a new Doggett facility in Houston, which Ortiz describes as "a flagship for the company," and expansion in south Texas market areas. A 20-year veteran of Houston's construction equipment scene, Jonathan Tarpey, describes the state of business in Houston in 2013 as "very robust, very strong." Tarpey is president of Bobcat of Houston. He ties the current good fortune to the oil and gas work that is attracting people to the epicenter of energy operations, Houston, and boosting the market for homes. "A lot of people are moving to the state of Texas," he said. "Energy companies are hiring in town like crazy and people are coming for opportunity. Existing housing stock is very limited compared to all that, so homebuilders are coming back." Tarpey says that even during the downturn a few years ago, layoffs at energy companies perversely spurred home sales. "They were laying off tenured employees, who would go out and buy a 200-acre ranch. For about two years we were selling either to a municipality or to a well-heeled new landowner who had been an attorney for Exxon or Marathon." Bobcat of Houston was helped in the leaner period by the simple fact that a new skid steer isn't as costly as a new dozer. "I can't say that we are any more resilient than anyone else, but it was probably a lot easier to write a check for $50,000 than for $500,000." Tarpey notes that "any kind of dirt moving" associated with residential building spurs Bobcat sales. The passage of a $3 billion bond issue in Houston last year – two-thirds of it for new schools – is a prime example of residential construction downstream activity. The Bobcat dealer looks across the economic landscape of Houston in 2013 and is pleased by what he sees. "I tell people don't pinch me. I don't want to wake up." Coming Back Ron Hargrave knows Houston well, even though he has just moved to the city. The vice president for sales of Kobelco Construction Machinery USA is back in Houston helping re-establish Kobelco in the U.S. market by opening the company headquarters here. Kobelco and CNH parted ways last December, with Kobelco returning its singular brand of excavators to the equipment marketplace. Looking for a new U.S. headquarters, Houston quickly became the choice. "The port of Houston is here," said Hargrave. "We're in the central time zone, so we can serve dealers throughout the U.S. equally well. The cost of living is low. That's why we were here the first time and we wanted to come back." The new Kobelco organization is still populating its ranks of dealers, with more than 50 now in place in the U.S. and Canada. CLM Equipment, a former Kobelco dealer in Louisiana, is again representing the line and opening a new office in north Houston. "I think it is a good time to come back into the market," said Hargrave. "I lived here during the very worst time and it didn't entirely slow down. It never stopped and then it immediately began coming back. Houston is a pretty vibrant, pretty diversified economy." Kobelco is selling excavators in Houston already – larger models, rather than compacts, in keeping with the larger projects under way in the region – and Hargrave sees no barrier to market growth. He is hopeful, in fact, about the entire domestic market. "Washington (federal government) doesn't help much, but I think the U.S. is ready to go." Port Power The Houston seaport cited by Hargrave as an economic driver unquestionably is that and more. The port is the nation's No. 1 facility in receiving foreign waterborne tonnage and in exporting U.S. tonnage. Sixty-five percent of all major cargo entering the U.S. is docked along the Houston ship channel. A 2012 study attributes more than a million Texas jobs to the presence of the port. That number will increase in the next couple of years as the port authority and its industrial customers spend most of an allotted $35 billion on new construction and maintenance projects. The facility upgrade will accommodate larger container ships and expanded oil refinery activity. An estimated 111,000 construction jobs will be created, along with 150,000 indirect jobs. Houston's employment growth rate has cooled slightly over the last year, partly because it had been an unsustainable 4 percent or so. As of mid-2013, it slipped to 3.4 percent, still the second highest in the region behind Dallas, according to the U.S. Bureau of Labor. That compared to a 2 percent employment growth rate in Atlanta during the same period, 1.3 percent in Los Angeles, and .7 percent in St. Louis. Nothing on the near horizon suggests there will be an interruption in Houston's high employment, busy construction equipment sales, and general business expansion. The shale oil exploration and drilling, for example, are expected to continue for at least another 10 years. Tarpey at Bobcat of Houston sums it up this way: "I think we are going to be in high cotton for the next decade." GILES LAMBERTSON is a retired journalist and freelance writer whose interest in the construction industry goes back to his carpentry days. He can be reached at geepeela@yahoo.com. December 2013 | Construction Equipment Distribution | www.cedmag.com | 39