As of this writing, the country is waiting to see if President Barack Obama?s economic stimulus bill will pass the Senate. If it does, the construction and rental industries stand to benefit significantly, a hope we are all clinging to as the news continues to paint a bleak picture for 2009.
According to the 2009 Wells Fargo Construction Industry Forecast, the U.S. residential and non-residential construction activity is expected to remain weak through most of the coming year. In its 33rd edition, the Forecast - published by Wells Fargo Construction, a division of Wells Fargo Equipment Finance Inc. - is based on telephone interviews with over 900 executives of construction contracting and equipment distribution companies from around the country. Surveys were conducted during a six-week period in October and early November 2008.
Many survey respondents expect comparable levels of construction activity in the non-residential and residential sectors. However, 43 percent of contractors and 39 percent of construction equipment distributors foresee less non-residential activity, while 55 percent and 48 percent, respectively, expect residential work to decrease. Only 11 percent of both contractors and distributors believe residential construction activity will increase. A total of 15 percent of contractors and 17 percent of distributors forecast an increase in non-residential construction.
While 2009 is shaping up to be a challenging year, most contractors (73 percent) and equipment distributors (63 percent) who foresee a decrease in construction activity see a turnaround coming 12, 18 or 24 months from the time of the survey in October. The majority predict that improvement will come 12 months from the time of the survey, and that?s encouraging.
Other findings from the survey include:
More contractors plan to buy used equipment in 2009 than 2008; the average age of fleets is up substantially.
Contractors expect to rent equipment slightly more often; rental rates are expected to hold steady; and distributors? share of the rental market has grown slightly.
No matter how you slice it, there are tough times ahead for all of us. It?s important to remember, however, that the construction and rental industries have been through economic downturns in the past and have come back stronger in the long run. In the meantime, there are no easy solutions and the road might be bumpy, but keeping our eyes focused on the future while our hands are busy in the present will help make the journey a little bit smoother - we hope.