Genie's Roger Brown on the AWP slowdown
By Murray Pollok26 August 2008
"We are seeing the early stages of the slowdown", said Mr Brown, "It's too early to say if it's going to be short and shallow or long and deep. We don't know yet."
He said the industry was less likely to overproduce machines than in the previous downturn at the start of this decade; "that isn't good for the industry and it isn't good for us either", said Mr Brown, who is Genie's vice president of North American sales. "We've made what we feel is a prudent reduction in production and headcount, and we will adjust as we read the market going forward." Genie's production rate is 25% lower now than this time last year.
Mr Brown said it was significant that there were a fewer big manufacturers now than during previous AWP downturns; "In 2000, we still had seven or eight significant players. Today we have three or maybe four - it's less likely that the market will overproduce."
Genie has also taken the decision to raise prices for a second time this year - a small single digit increase was made at the start of 2008 and a further average 7.5% rise will be put in place on 1 September.
"Since the first of this year, input costs from our vendors - steel, fabrication, components - have gone up significantly. Steel is up 70-80%. It's the most dramatic increase in my 30 years at Genie", said Mr Brown, "We have decided we cannot wait and have to have a fairly significant price increase to recoup some of the margins that have been withering away. It is in our customers interests for our company to be successful. We depend on our customers to be successful, and they depend on us to be successful.
"Our customers have billions and billions of dollars of fleet with Genie...We need to build a floor under our residual values...the risk is not short term profitability, the real risk is in residual values. The interdependence [between a manufacturer and its customers] is real, and so, again, we need to be successful, they have to be successful."
Mr Brown said the slowdown was not impacting on Terex's investment in new AWP facilities in eastern Europe and China, which was continuing.
Likewise, he said the long term prospects for the market remained very good; "We're very optimistic about the market. If you look out to 2010 and 2012 - we're very, very optimistic about the rental industry. We've just got to work our way through this downturn."