Aerial Outlook 2013: Current State of the North American Work-Platform Market

Aerial lifts make up enough of the North American rental market that what happens in the segment has a large impact on the entire rental industry. Rental asked the leaders of Skyjack, Terex AWP, JLG, and Snorkel where the aerial market's at and where it's headed.

Q: How would you characterize the current state of the North American aerial market in general, and for your company specifically?

Brad Boehler, president of Skyjack: In a word, it's strong, and that translates to positive trends for Skyjack specifically. Rental companies are our focus and we regularly see reports on utilization and rental rates which have been trending into positive territory for the past 18 months. 2012 was a strong year in terms of business.

The American Rental Association has been working on its "equipment rental penetration index" which measures the amount of equipment that is rented as a percentage of total construction equipment. Since 2008 this measure has increased 600 basis points and now stands at the highest level since 2003 - another positive trend.

Following the financial crisis, we saw rental companies hold back on fleet purchases and today that means fleet age is increasing. As a trend and in terms of average fleet age, Rouse reports show that although there has been some downward movement as a result of heavier purchases recently, the number is still at a level where rental company efficiency can be compromised. Although we do not expect fleet age to return to pre-recessionary levels, there is much room for improvement. Our feeling is that this bodes well for Skyjack, to such an extent that 2013 will see the sale of our 250,000th machine, something we are very proud of.

Matt Fearon, president of Terex AWP: The North American market is very strong and continues to improve. It has been primarily driven by fleet age and replenishment, but we are beginning to see some fleet expansion as well. Customers are reporting very good utilization and it’s become more widespread. For the Genie brand in particular, we feel we are set up to win in 2013 by introducing new products, a new business alliance with Disney and by developing our leaders for the future.

We are in a really good place right now because we chose to invest through the downturn in internal systems, our factories and our parts distribution and logistics centers. We are primed for growth and ready for added capacity.

Frank Nerenhausen, president of JLG: Our business is recovering nicely along with the general market. We're still in a robust replacement mode and the replacement mode still has some runway on it.

Growth could eventually creep into our market as housing continues to exhibit some solid strength. We're nowhere near a healthy housing market yet. It's getting stronger, but until its gets to 1.5 or 1.6 million starts, it's not what I would consider a strong housing market. When you get over 2 million starts, that's more of a boom cycle. We're recovering, and that's encouraging, but more housing and sustained housing growth will help that growth cycle come into play.

Number of Improving Housing Markets Steady in April 2013

Overall, we're pretty bullish in the near term. In the mid-term planning horizon, what happens in Washington could have some effect on those predictions. Meanwhile, we're pretty pleased with where we are as a business.

Dave Smith, president of Snorkel: We're still in a replacement cycle. People are not necessarily growing fleet, as they were in 2008, but there is a pretty good level of activity in replacement, which has increased more along with growing consumer confidence. There's a lot more activity in construction and utilization rates are up; there's pent-up demand. We have no fear about availability -- we believe supply will be enough for the demand. The general feel is fairly positive and it's going in the right direction.

FMI Forecasts 2013 Construction Market to Grow 8%

At Snorkel, we've limited our build to make sure we can service. We've limited the customers we're focused on, and we've limited the models of equipment that we're focused on. From that standpoint, yes, we're showing that same trajectory, but we're probably longer on availability quotes because we have the limited build.

 

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