Body Slam on Distribution

It's not exaggerating much to say that distributors aren't glad to leave 2002 behind. While 2001 saw six out of nine regions "poor" years, in 2002 it was unanimous.

Four regions foresee no improvement this year, retaining "poor" as a forecast. but four regions do predict an improvement to "off", while New England distributors have a return to "good" as they look ahead.

Distributors overall saw no part of their business grow significantly this year, but many areas fell off. New equipment sales were significantly off with a net 39 percent decrease. On the positive side, however, net declines in the single digits were evident for the product support and short-term rental businesses.

the recession continues to concern most distributors, dropping only slightly from the 82 percent reported in 2001. increasing competition and margins follow right behind, though, giving distributors a full plate for 2003.

Distributor rating fell as low as it could go this year. Pessimism subsides for this year, although the forecast is a far cry from their outlook in the late '90s.

No relief seems to be imminent on new equipment margins. Some 56 percent of distributors saw margins lower in 2002 than they had been in 2001. And only 8 percent reported an increase, compared with 35 percent in 1999.

Distributors' business reports can't go much lower than the nationwide "poor" recorded for 2002. Machinery moved slowly through the channel as the recession rode distributors hard. Although the forecast for 2002 was "off," this was unexpected.

Sales volume decreased for nearly half of distributors, leaving a net decrease (those reporting an increase minus those reporting a decrease) of 39 percent. Although two-thirds expect 2003 to be flat, 25 percent of distributors do expect volume increases this year.

Volume pain was spread evenly among specialties, although aerial-work platforms and cranes continued to lead the declines. Heavy equipment specialists also recorded a net decrease, though, of 12 percent. Light equipment and paving specialties broke even with equal percentages of distributors reporting increases as decreases.

For this year, material handling, light equipment and trucks and trailers forecast a net, double-digit upturn in volume.

Every sales category was off last year, as measured by the net percentage resulting when decreases are subtracted from increases. New equipment sales suffered the most, as 47 percent reported sales decreases against only 8 percent reporting an increase. Parts sales, short-term rental, and service were nearly a wash with equal percentages reporting increases and decreases.

Margin pressure intensified. Ninety-six percent say competition in the new-equipment market is "intense" or "very intense" in their area. Some 56 percent said margins were lower in 2002 than in 2001, up from 49 percent the year before.