Construction-equipment industry says things are looking up
Published in: Chicago Tribune
Date: 3/18/2005
By: James P. Miller
LAS VEGAS _ Even in a town devoted to excess, the construction-equipment industry’s once-every-three years trade show here is a big deal.
More than 120,000 people showed up to kick the tires (or the steel treads) of the dinosaur-sized equipment contractors use for smashing rocks, boring into the earth and lifting heavy objects into the sky at the latest CONEXPO-CON/AGG gathering, which ended Friday.
In contrast to the 2002 gathering, which took place at a time when industry conditions were weakening, the mood at this year’s meeting was solidly upbeat.
Higher prices for commodities such as iron and copper, combined with strengthening economies around the world, have fueled a powerful increase in demand for the equipment to make highways, factories, power plants and mines.
The market’s unexpectedly strong cyclical rebound has had equipment makers such as Caterpillar Inc. and Deere & Co. struggling to keep up with demand for more than a year, and most experts anticipate the strong conditions will remain in place in 2005.
Last year was “without a doubt” one of Caterpillar’s best years ever, Chief Executive Jim Owens told a Las Vegas audience Tuesday, and the current year will be even stronger. “This global economy growth has legs,” he said.
That optimistic perspective was evident throughout the approximately 45-acre exposition site. Visitors tended to be large, middle-aged men who manage contracting companies, operate equipment-rental outlets or work in related construction fields. And while their interest was professional, it was also obvious that for many attendees the chance to clamber around new models of the outsized equipment was like catnip.
There was plenty to see. The show’s nearly two million square feet of exhibits spilled out of the convention center and into the surrounding parking lot. There, steel cranes stretched high into the sky like sailboat masts in a harbor. Pile-driving equipment towered three or four stories in the air, as if ready to punch right through the pavement.
Visitors peered at subsurface radar equipment designed to help backhoe operators avoid hitting unexpected underground gas pipes or electric cables. They surrounded the giant sandboxes where vendors demonstrated their ground-pounding earth compactors. They stared as newfangled concrete saws buzzed, high-tech cutting torches sliced through steel bars and watched with appreciation the endless shimmying of a gravel-sorting machine the size of a hay wagon.
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“People don’t want to just look at something sit there, they want to see it work,” observed an employee with the U.S. unit of Germany’s Wacker Corp. The Menomonee Falls, Wis., company drew a crowd by demonstrating a gas-powered cement-finishing system that resembled a cross between a riding lawn mower and a Zamboni ice-smoothing machine.
Monday was “the strongest first day I’ve ever seen _ wall-to-wall people,” said Doug Laudick, a product manager with Deere & Co.’s diesel-engine group, John Deere Power Systems.” Laudick, who has been coming to the show since the early 1990s, was demonstrating a new generation of diesel that will meet clean-air requirements that take effect in 2006 for off-road vehicles like bulldozers and backhoes.
“We’ve seen a lot of increase in OEM interest,” echoed Chris Magiera, who works in the Vernon Hills, Ill. office of Germany’s ZF Group. ZF produces heavy-duty components like transmissions and axles for construction-equipment makers, known as “original equipment manufacturers” or OEMs. The expo, Magiera noted, is “more of a showcase” for products than a venue for making sales.
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That’s not to say that commerce isn’t the driving force for the 2,300 exhibitors who displayed their wares at the Las Vegas show. A Florida construction-chemicals company took one route, blasting rock music from big speakers in its outdoor booth while attractive young women in skimpy outfits poured free beer to a long line of attendees. There’s a downside to that tactic, however: “I still don’t even know what they sell,” confided one attendee, “and I was there yesterday, too.”
Caterpillar, the nation’s biggest heavy-equipment maker, took a more restrained tack; the Peoria, Ill., company staked out a total of 60,000 square feet of space indoors and out, and put scores of uniformed salespeople on site. A stream of visitors climbed up a long flight of stairs to look into the cab of a mammoth Caterpillar mining truck, and to stare into a wheel loader’s scoop capable of holding a compact car inside.
Like a number of exhibitors, Caterpillar was anxious to tout the high-tech features that require fewer human workers, and make it easier to operate its equipment. An older generation of skilled operators is already starting to retire from the construction life, Owens said, and younger ones lack adequate experience.
“Customers today need machines that practically run themselves, or at least are friendly to the inexperienced operator,” he said.
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“We’re interested in stretching our dollar,” as well, said William McGowan, an official with the Kent County, Mich. road commission. With the boom in orders, equipment makers have been able to boost their prices, but tax receipts have softened; McGowan said his group’s about $2 million annual equipment budget is facing the kind of financial squeeze afflicting many municipal and state government agencies.
As he spoke, a helicopter droned through the sky, pulling a giant banner advertising a vendor of global positioning satellite-related construction gear, and promising “Help From Above.” Inside the convention center, a European company sold a tire-chain product that resembles chain-mail, designed to protect the giant tires of construction vehicles. In smaller booths, makers of filters, valves and other arcane components sat waiting for customers.
Sitting alone in a corner of the mammoth building, behind a glass case full of alarm-clock-sized devices said to be “high-torque gearboxes,” was Linda Pullman. Pullman’s husband Steve is the owner of a Freeport, N.Y., company that makes the product.
“We decided at the last minute to attend,” she said, “that’s why were here in the corner.” The visit has yielded some potentially valuable leads, said Pullman. “But I’d rather be outside. I do this out of love.”
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(c) 2005, Chicago Tribune.