Issue link: https://read.dmtmag.com/i/255289
42 | www.cedmag.com | Construction Equipment Distribution | February 2014 Regions recovery. Most believe a full recovery is still two years away. According to AGC of St. Louis, construction employment for the state of Missouri is on the rise. The month of July totaled 111,000, an increase of almost 8 percent since July 2012 when employment was 103,100. Although most contractors would like to see more projects to bid on, there have been several new large construction projects throughout our trade area. Some examples of these projects have been four new medical facilities, a new bridge going over the Mississippi, two new retail outlet malls in Chesterfield, a large highway project in Indiana, and several other small projects throughout our market. Projects like these have provided a bright spot for the contractors and in turn will have a tremendous impact on the economy, as well as creating several new jobs. Construction Market Contractors are starting to return from work that was out of state. They are now diversifying into different market segments that are closer to home, where there are more opportunities for growth and better margins. Most contractors believe the construction market won't come close to matching what was seen prior to the recession but will show to be more promising than 2013. Until consumer confidence improves, the outlook for new equip- ment sales will come from lease and rental purchase options. In general, we saw a nice increase in new and used equipment sales this past year. However, we are still strug- gling with higher-than-normal inven- tory levels. Used equipment values are starting to soften, which is going to affect our ability to make trades and sell new equipment. Rental is one area where we did not see any upward trend in rental revenue. Utilization has climbed, but rental margins have not. Trying to raise rental rates is very competitive in today's market. With the current prices increases from Tier-4 machines, rental rates will have to increase the first of the year. Housing According to the National Association of Realtors, home sales have continued to increase throughout most of our trade area on a year-over-year basis. Compared with the same period in 2012, August 2013 year-to-date home sales were up 8 percent. August 2013 year-to-date single-family housing permits increased in metro areas compared with the same period in 2012. Permits increased 17 percent in St. Louis. We are predicting an increase of 17 percent in housing for 2014, which will create many new opportuni- ties for growth throughout our region. Commercial As the commercial and industrial real estate markets continue to improve we are starting to see a decrease in the amount of available retail outlets, and they are starting to raise rental rates. There has also been a slight rebound in the industrial real estate market. Commercial and industrial construc- tion activity also continued to improve throughout most of the trade area. We are hearing rumors that there are plans for expansion of a manufactur- ing factory in southwest Missouri and industrial development in north St. Louis. We are predicting an increase of 12 percent in nonresidential for 2014 throughout our trade area. Infrastructure (Road and Bridge) While some highway projects are being bid, the main issue is with the uncer- tainty in Washington. Most all of our larger contractors are concerned with the lack of funding and the outlook for future projects. This segment of our business does not look good and is hurting everyone. If Congress can't reach an agreement on the federal budget by Jan. 15, or resolve issues involving the debt ceiling by Feb.7, financing for construction projects will continue to be a problem. Our One-Year Projection: Looking ahead at the next 12-month horizon, as the customers' confi- dence continues to improve, we are predicting an increase in our industry opportunities of approximately 5 to 8 percent. ("Three's a Charm: Infrastructure, Energy, Housing Put the Rev in Revenue" continued from page 41) Alabama/Southeast U.S. 2013 Housing Leaped to Five-Year High, More to Come in '14 MIKE ROONEY AED At-Large Director Executive Vice President and General Manager Thompson Tractor, Birmingham, Ala. Consumer confidence grew to a five-month high in December. This is attributed to a pickup in employment, higher property values and stock market gains. In most of the Southeastern states, these factors helped drive housing starts to a five-year high in November, exceeding forecasts. A hous- ing shortage in many areas now is over- shadowing the slight increase in mort- gage rates. Projections for the Southeast include annual 10-percent-plus increases in housing starts to continue into 2014 and 2015. While far below the peak, this activity will continue to help many of our local contractors. Many heavy equipment distributors