ForConstructionPros.com

The construction outlook for 2004 was better than 2003, and it seems to be holding true to forecasts so far. This is good news because it means business is firming up. But you also have what goes with it -- increased costs. Based on what you hear from equipment manufacturers, dealers are buying again, the used equipment market is tightening up and rental rates for equipment are increasing. Add to that the additional cost for fuel.

So where does this leave you as a business owner?

Running at full speed, 24/7, if I had to guess. Many of you are getting a late start on the season, and all of you have to manage the changes taking place in your cost structure. If you’re not careful to take time to manage the bid and actual work process, you could produce a lower gross profit than you had in prior years.

Evaluate Your Equipment Options

Equipment costs are increasing, and dealers will make them stick. Many manufacturers are six to eight months out, and it will probably get worse before it gets better. It seems that even though manufacturers were ready to go, component suppliers have been falling behind. If you ordered a new unit and need it for an upcoming job, you better keep checking on it or it may not be there when you think you are going to get it.

Rental companies are sucking up a major portion of new production. Now that rental rates have firmed up, rental companies should start unloading used equipment out of their fleets. If you can’t get a new unit, maybe you should consider a used one. However, prices are not going to be what they were 12 to 18 months ago. They have firmed up and should stay that way.

If used values have indeed improved, now may be the time to trade or sell units you were thinking of replacing but held back because of the soft market. Before you let anything go, make sure you can replace it, and take a careful look at your potential business opportunities for the year to make sure you won’t need it. It’s better to be safe than sorry.