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Issue link: http://read.dmtmag.com/i/251878
OUTDOOR POWER EQUIPMENT w w w. o u t d o o r p o w e re q u i p m e n t . c o m 24 until May, but once it started, there was good precipitation through late fall in most regions of the country. This "good weather" seems to have helped most of the companies I spoke with not only recover from 2012, but also break some all-time sales records. I do think the sunshine on our shoulders makes us all happy, but regular rainfall will make anyone in the OPE industry happy, and help fatten the wallet as well. I suppose if I were in charge of the weather, it would rain every three days, between midnight and 3 a.m. This way, the grass keeps growing, and it won't spoil the fun of boaters and motorcyclists. Fuel is the other big story. The EPA continues to cause the OPE industry problems, and the attempts to roll out E15 were no different. The interesting thing is that depending on who you talk to, it may be a bad thing or a good thing. Since NGK sells to both OEMs and to aftermarket distribution, it is clear that both segments have their opinions on this topic. For OEMs, this is clearly a nightmare. It has the potential to cost significant money in terms of warranty expenditures, and even if the company's policy is that fuel-related failures will not be covered, there is the cost of educating and explaining to the customer why it will not be covered. I think the greater cost is the potential damaged reputations to engine and equipment manufacturers with unjust perceptions by the customer with regard to the quality of the engine and equipment. Those who are currently quite happy with the fuel problems brought on by high ethanol content are those who sell fuel component parts. Fuel-related problems definitely make up a large portion of the repairs taking place at the servicing dealers. The other group taking advantage of the fuel situation is the fuel-treatment companies. Some of these products I have tried and was very happy with the results! A brief caveat, not all in this group hold this opinion. For the time being, this is a golden opportunity to increase revenue through increased parts sales and billable labor. 3. What will be the OPE industry's top trends in 2014? Jim Paugh: I expect that we will continue to see an increase in equipment powered by alternative fuels. As much as I hate to say this, battery-powered products seem to be improving in quality and performance. The place where I see the best growth with these types of products will be with homeowners that dislike dealing with fuel and oil, and in places where noise restrictions are enforced. The internal combustion engine will continue its rule, unless there is a major breakthrough with battery technology. This is where we will continue to see growth with alternative fuels. LPG (liquid propane gas) and CNG (compressed natural gas) are proving to be good alternatives to gasoline and diesel. Since the cost of both of these fuels is considerably lower than gasoline and diesel, anyone that is trying to manage fuel costs will be attracted to the new choices when purchasing new equipment. On a recent project that I am involved with, I have been talking with many in the oil and gas industry, and they all have said the supply of natural gas is so plentiful that this the answer to our energy problems for many years to come. 4. Aside from the weather, what challenges will OPE dealers face in 2014, and how should they address them? Jim Paugh: Inventory management is going to be the biggest challenge for OPE dealers. As with all companies, managing this is always a balancing act. There will be the temptation to stock more this year since many had such a good year last year. Stocking more may be appropriate if the trend on a part number or equipment model points toward continued growth, but to overstock on certain numbers or models due to a weather-related spike or a warranty-related spike is a problem. It is critical to have inventory on hand when the customer is ready to buy. Since our industry is seasonal, sending a customer away because the part or product is not in stock does result in lost sales. We are an impatient people, and we want it when we want it. The solution to this is making sure the dealer uses the tools he has available with inventory management software. If the software does not include these types of tools, then it is not worth the money. It is important to set minimums and maxes for parts and supplies, but it is also important to be able to see sales trends on inventory, then evaluate what is seen and adjust purchasing accordingly. 5. What is your overall outlook for the OPE industry in 2014? Jim Paugh: I am expecting a very good year for 2014. I don't think we'll see the same growth as last year, but pending weather problems, we should still have above-average growth. Most of the companies I've spoken with are having strong booking orders being placed, and this is a sure sign of upbeat, positive attitudes at the dealer level. The dealers in the North should be in a better cash position with the respectable snowfall we've had so far, and that always helps. I also think we'll see some more consolidations in distribution through either mergers or attrition. On one hand, this is troubling, since competition is always good to force improvements in customer service. The upside is that it should help the exiting players become more profitable by not having everything come down to price. RICK ZECKMEISTER VP OF ENGINE MARKETING & PLANNING BRIGGS & STRATTON CORPORATION (MILWAUKEE, WIS.) 1. What does your company or organization have planned for 2014? FEATURE STORY