2011 - A Year of Transition for the Aerial Market

The buzz of optimism can be heard throughout the U.S. rental industry these days, a sound perhaps most welcome in the aerial sector, hard hit by the recession of the past few years. At both The Rental Show and CONEXPO this year, leading manufacturers reported significantly increased sales of aerial equipment, a sign of burgeoning economic recovery.

"The industry is back," stated Tim Ford, president of Terex AWP, at The Rental Show in February, noting that Terex saw a 50-percent increase in units shipped within North America during 2010 versus 2009.

"The industry for aerials is very strong," adds Matt Fearon, vice president and general manager, AWP Americas at Terex. "The primary driver for demand has been from rental companies wanting to refresh their fleets," he says. "We are also getting a lift on new equipment sales because there is less late-model, used equipment available."

Globally, increased demand from developing markets in Brazil, China and India has bolstered the recovery of the aerial industry, but the trend is homegrown as well. "There is quite a bit of activity going on right now in North America, particularly in the oil-related industry in Texas, Quebec and the Gulf Coast," Fearon says. "Although there isn't a lot of 'new build' going on, there is quite a bit of refacing work on existing buildings, so scissors are in big demand too."

While AWP sales are increasing, it will take time to reach levels seen before the recession hit. "At Haulotte, there has been an increase in the sales of aerials over the last year from the previous two, as the market slowly recovers, but it will be a few more years to ramp up to the units delivered in 2008," says Tami Becher, North America marketing manager. Haulotte Group's sales were $104.3 million in the first quarter of 2011 compared to 2010, an increase of 50.7%. According to company reports, increased sales in Asia, Brazil and Europe are contributing factors, as well as demand in North America from rental companies refreshing their fleets.

Haulotte's equipment sales were up 75.5%, representing 67% of the company's total revenue. Specifically, North American sales grew by 16%. Meanwhile, service activities and rental business rose by 17.6% and 14.8% compared to 2010's first quarter.

For its part, JLG Industries is seeing market recovery ramping up faster and stronger than expected, according to industry reports, primarily due to rental companies replacing their aging fleets. To that end, the top 20 rental companies in North America are increasing investment, with CapEx from those companies up 30 to 50 percent over last year.

Rental companies buying

Aerial manufacturers are selling more units to rental companies replacing their aging fleets, but does this trend reflect a true recovery?

"We are seeing optimism throughout the industry," says Fearon. "Overall, we feel that business is gradually increasing. We are seeing a concerted effort from rental companies to raise rental rates."

David Smith, president at Snorkel North America, says there is more than just fleet replacement going on. "We expect to see a modest increase in CapEx from the major rental companies in 2011. This is largely fleet replacement, although they will invest in new products for specific contracts," he says. "We also think 2011 will be the year that they start to seriously invest in Pop-Up and other low-level access products."

It is precisely those niche products that will help sustain the recovery for the aerial market, says Becher at Haulotte.

A far cry from commodity status, differentiating between brands of aerial equipment is tougher than ever, says Alan Dotts, AWP National Sales Manager at Toyota Material Handling, U.S.A., Inc. "Rental companies and end users are closely evaluating cost of ownership, product value in terms in quality, value and productivity, along with financing options for fleet replacements/upgrades," he says.