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Nonconstruction: A Move Slowly Upward

Nonconstruction fleets reported an upturn in business-year ratings last year, slightly higher than expectations, and 2011 promises to be a bit better.

January 01, 2011

Nonconstruction fleets reported an upturn in business-year ratings last year, slightly higher than expectations, and 2011 promises to be a bit better. Nonconstruction vocations include logging, utilities and mining fleets.

Last year was rated “off” by nonconstruction fleets, but this was better than the expected “poor” rating offered at the end of 2009. For 2010, managers expect business to move more strongly into the “off” range.

Work volume also picked up for nonconstruction fleets. Measured in total machine hours, the net for 2010 was -7 percent (25 percent reporting more work minus 32 percent reporting less). Still, some 44 percent said work volume remained the same as in 2009. The actual net was far below the expectations for 2010, which was 17 percent.

For 2011, 42 percent of nonconstruction fleets expect volume to stay the same as last year. The net for 2011 is expected to move into positive territory, though, at 21 percent (39 percent increasing minus 18 percent decreasing).

Managers say competition continues intense. Some 62 percent say competition is “intensely” or “very” competitive, mirroring last year’s number. Managers have maintained fleet size over the recession. Last year, nearly four of five managers expected to keep the number of machines stable. When asked this year, 73 percent said they were able to do that. For 2011, though, that group shrinks to 62 percent. The 2010 net is -1 percent (13 percent increasing size minus 14 percent decreasing), but the net increases to 16 percent for 2011 (27 percent increasing minus 11 percent decreasing).

Managers of nonconstruction fleets must watch over fleet age and reliability, so the machine-replacement rate serves as an indication of how they are succeeding in replacing machines. Fleets reported a replacement rate of 6.6 percent against a projected rate of 7.0 percent. This year, nonconstruction fleets anticipate increasing that rate to 8.4 percent.

Fleet condition has remained stable over the past couple of years. About 46 percent of fleets are reported to be in “excellent” and “very good” condition, according to managers. On the other end, 14 percent of nonconstruction fleets are rated as “fair” or “poor.”

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