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From the Chairman President & CEO TOBY MACK Associated Equipment Distributors Oak Brook, Ill. Executive Vice President & COO ROBERT HENDERSON Associated Equipment Distributors Oak Brook, Ill. OFFICERS Chairman LAWRENCE F. GLYNN CMW Equipment, St. Louis, Mo. Vice Chairman MIKE QUIRK Wagner Equipment Co., Aurora, Colo. Sr. Vice President TIMOTHY J. WATTERS Hoffman Equipment Co., Piscataway, N.J. Vice President GARRY FRELICK Douglas Lake Equipment, Langley, BC Vice President DON SHILLING General Equipment & Supplies, Inc. Fargo, N.D. Vice President of Finance MICHAEL D. BRENNAN Brandeis Machinery & Supply Co., Louisville, Ky. Past Chairman DENNIS E. KRUEPKE McCann Industries, Inc., Addison, Ill. AT-LARGE DIRECTORS PAULA BENARD C.N. Wood Co., Inc. Woburn, Mass. RICK DAHL Metrolift, Inc. Sugar Grove, Ill. GREGG R. ERB Erb Equipment Company, Inc. Fenton, Mo. DENNIS J. HELLER Stephenson Equipment Inc. Harrisburg, Pa. MIKE ROONEY Thompson Tractor Co., Inc. Tarrant, Ala. MICHAEL J. SAVASTIO Groff Tractor & Equipment, Inc. Mechanicsburg, Pa. REGIONAL DIRECTORS BRUCE A. BOWMAN, Upper Midwest Reg. Star Equipment, Ltd Des Moines, Iowa RICK VAN EXAN, Eastern Canada Reg. Toromont Industries Ltd. Concord, ON PATRICK MCCONNELL, West Reg. Clyde/West, Inc. Portland, Ore. MARK ROMER, Southeast Reg. James River Equipment, Inc. Ashland, Va. JEFFREY SCOTT, Rocky Mountain Reg. Intermountain Bobcat Salt Lake City, Utah GERALD W. TRACEY, Northeast Reg. Tracey Road Equipment Inc. East Syracuse, N.J. GARY D. VAUGHN, South Central Reg. OCT Equipment, Inc. Oklahoma City, Okla. BY LARRY GLYNN Every year we go through this ritual to figure out what the next year is going to bring. Each manufacturer has to plan their production schedule and, with just- in-time assembly plants, the lead times for so many components seem to get longer and longer. Therefore, it falls upon us to figure out the future in our local world. Many times you wonder if a dartboard with different color darts for each manufacturer would work better. We have to start somewhere. We listen to the economists, but which one? There are the government reports and forecasts. Every magazine and finance company has a multitude of words with their predictions. After absorbing everything macro, you have to translate it into something more local and personal. We begin by interviewing key persons in each market segment we service – we talk to a principal at a large general contractor to find out what they see coming for them to bid; we talk to a real estate developer to see if there are any pending opportunities; we talk to someone who knows the residen- tial market to see where it is going; we talk to state Department of Transportation offi- cials to see what their budget will bring; the same with counties and cities; we look at federal government spends with the Corps of Engineers and at military bases with planned budgets. We basically talk to anyone who might have knowledge of where things are going. More and more of our local customers are being bought up by conglomerates. The purchasing policies of these larger corpora- tions are much more structured than privately held concerns. Equipment managers will submit paperwork for equipment to purchase for the coming year, but for a myriad of different reasons their requests will not be honored – and many times they won't find out they have been rejected until much later in the process. As a dealer, it is very hard to plan on the opportunity and buy inventory. By this time in the process we should have some idea of what the coming year might bring. During our interviews, the question of what the customers would buy has surely come up, and we plan accordingly. Yet even with this knowledge, buying stock on a floor plan is still a crapshoot. You buy it, you own it. Planning for a whole year in this business is very risky. Every once in a while a manufac- turer will introduce a new piece of equipment that wows the customers and surprises us. Sometimes the specifying agency involved in the work will change the rules and suddenly last year's equipment is no longer applicable. And sometimes, unexpected manufac- turer changes occur. For example, in 2002, Wirtgen came to us and told us we had to drop Blaw Knox asphalt pavers (which the company had represented since 1956) and take on their asphalt pavers and rollers or lose our most profitable line, even though we had consistently gained 75-80 percent market share. Sometimes the manufacturers will make modifications to equipment that cause customers to rethink their loyalties. Basically, there are a lot of things that change the fore- casting process today and make it more chal- lenging than in the past. We used to be pretty good at figuring out the coming year but not so much so in the last few years. We still have inventory from last year's stock orders to prove it. Someone just keeps moving the cheese. Since dollars of profit are what pay the bills at CMW, we ask the salesmen to annually forecast profit dollars only for their respective territories. That is what they are held respon- sible for on a monthly basis throughout the year at our company. We learned that tip from a good contractor friend and customer. Forecasting – How About a Game of Darts Instead? Despite our best efforts to approach it logically, predicting next year's purchasing is tricky business. LARRY GLYNN (larryg@cmw-equip.com) is President of CMW Equipment in St. Louis, Mo. November 2012 | Construction Equipment Distribution | www.cedmag.com | 5