OPE Industry Forecasts: Leading minds delve into 2012 (Part II)

The StaffFebruary 15, 2012

The following is the last of a two-part series:

Outdoor Power Equipment recently took the pulse of the OPE industry by asking several of its leaders to share their thoughts.

Specifically, we asked the following thought-provoking questions:

1. What is exciting or new about your company or organization for 2012?

2. What will be the OPE industry’s top trends in 2012?

3. What will be the OPE industry’s biggest story in 2012?

4. Who will emerge as the Republican Party representative for the 2012 U.S. presidential election? Who will be elected president? How will the outcome of the presidential election impact the OPE industry?

5. What is your overall outlook for the OPE industry in 2012?

OPE received the following written responses, in order, Jan. 6-26, 2012:

WILL COATES
PRESIDENT
BILLY GOAT INDUSTRIES, INC.
(LEE’S SUMMIT, MO.)

1. What is exciting or new about your company or organization for 2012?

WC: Our commitment to launching new, productivity-enhancing products and programs throughout the recession were well received by the industry and a lesson we will remember going forward. In our new self-propelled overseeder, we confirmed that dealers and end users alike value innovation when it creates a better user experience and time (labor) savings. Features such as intuitive hydrostatic controls, “Auto Drop,” and a floating cutting head provide that value. The same is true of products we’ve designed to reduce noise, weight and effort required to complete work. These are tangible benefits that give Billy Goat dealers the preferred equipment to sell. In 2012, we have no less than three new or improved products. Dealers who have made the decision to consolidate their offering under the Billy Goat umbrella will continue to be rewarded.

2. What will be the OPE industry’s top trends in 2012?

WC: A trend we see continuing is the larger dealer getting larger. Dealers who embrace the meaning of full service and after-sales support, commit to professionalism and top-shelf merchandising, are mindful of customer convenience, and reinvest in their business will continue to earn new customers at the expense of lower-tier dealers. Online retailing may continue to grow for those end users who choose products strictly on the basis of price, but we believe commercial customers deserve and expect timely and professional service and support.

3. What will be the OPE industry’s biggest story in 2012?

WC: If it doesn’t snow soon, especially among the larger northern SMSAs [standard metropolitan statistical area], I’m afraid that one of the biggest stories — reported or unreported — may well be the ramifications of excess snow-product inventory at the retail and wholesale level. Unfortunately, snowfall is less predictable than grass growth or leaf fall, so manufacturers, distributors and retailers often forget the risk of overproduction and low demand. News reports of peak production of snow product by all the major suppliers dominated the news late last summer and through the fall. Unfortunately, if this inventory doesn’t quickly move through the channel, all players could be adversely affected. This was a lesson I remember well from the early-mid ‘80s and again in the early ‘90s.

WC: The “safe” answer to the first question is Mitt Romney, but it’s questionable whether the successful Republican candidate will have a strong enough vision or the courage to tackle the really difficult issues this country faces. Unfortunately, beltway politicians seem largely indistinguishable — they act and behave the same despite their party affiliation. The largest impact that a new president could have on business in general, not just the OPE industry, is to enact laws and policies that ensure confidence and continuity and to relax or remove the regulatory burdens and pro-union threats on business. But, this all assumes a complicit house and senate.

5. What is your overall outlook for the OPE industry in 2012?

WC: Following the dismal results of 2009, most OPE manufacturers who cater to the commercial market have enjoyed robust “growth” to pre-recession levels. A return to normal revenue in 2012 is more likely, but profits will likely fall as expenses have lagged revenues over the last two years and inflation rears its ugly head. Our company enjoys a fairly robust international business, so the state of the Euro and health of the European Union are concerns.

STAN GUYER
PRESIDENT
THE GRASSHOPPER COMPANY
(MOUNDRIDGE, KAN.)

1. What is exciting or new about your company or organization for 2012?

SG: We’re excited that we continue to improve our production capabilities in the plant. We’ve just completed a third-generation upgrade of our powder paint system to utilize the latest technology for state-of-the-art finishing. Grasshopper first installed a powder paint system in 1986 to avoid waste and improve durability. Now, our new “quick color change” system is even cleaner and greener than its predecessors. This state-of-the-art system allows us to control powder application more precisely for optimum coverage of each particular part. The application guns are programmed to recognize different parts and adjust their action to greatly improve material coverage with much less overspray.

2. What will be the OPE industry’s top trends in 2012?

SG: Fuel efficiency will be the top trend in 2012, and we expect to continue helping commercial contractors and fleets achieve significant savings with ergonomically designed Grasshopper diesel mowers. While all the engines used in Grasshopper mowers are fuel efficient, the greatest savings are realized when machines used in high-hour operations switch to MaxTorque diesel-powered Grasshopper mowers. Harnessing diesel power and channeling it to the implement drive without loss of power and with minimal vibration to the ergonomically designed Grasshopper chassis is what we like to call “Diesel Done Right.” Savings occur when jobs are completed faster, using less fuel, with less wear and tear on both machine and operator, due to various vibration-cancelling innovations designed into every Grasshopper mower. And a bonus of using Grasshopper diesel-powered mowers is improved air quality from lower emissions, resulting from burning clean diesel fuel and getting more done in less time. Readers can find the details at www.grasshoppermower.com/diesel.

3. What will be the OPE industry’s biggest story in 2012?

SG: So far, it’s the weather, just like most years. We are in a cycle of extreme conditions, where some areas are suffering drought and others are being inundated with moisture. It would be a big story if the drought areas receive enough moisture to level out and let the grass grow.

In reality, weather is the major driving force behind economic trends in this industry and certainly has a profound effect on regions and individual dealerships. Look at the impact of the floods, droughts and tornadoes of 2011. Dealers in our industry stand to gain by being prepared to help meet and manage extreme conditions, but protracted drought is the one that can have the most negative long-term effects.

SG: Whether the Republicans choose Newt Gingrich or Mitt Romney, the Republican candidate will be elected president. This will give OPE dealers and everyone in the industry confidence that our country can return to its roots, rewarding those that are industrious, creative and hard working. The outcome of this election will lead to reduction in regulations that small business often struggles to handle and will have a positive impact overall.

5. What is your overall outlook for the OPE industry in 2012?

SG: If we had complete control of the weather, and fully understood the economic and political scenes and their repercussions, we would say full throttle ahead. But I’ll stand by Yogi Berra, who said, “It’s tough to make predictions, especially about the future.”

PETER ARIENS
PRESIDENT
STENS CORP.
(JASPER, IND.)

1. What is exciting or new about your company or organization for 2012?

PA: Stens and our global aftermarket businesses continue to bring our customers the right products and services that help them profit. In today’s economy, every dealer is looking for an edge to keep their dealership on top of its game. Stens provides the products to do that. Stens added more than 450 new products in our 2012 catalog, and we are excited to announce 200 new items that fit E-Z-GO and Club Car golf carts. This allows for even more diversification for dealers in 2012 and beyond. Stens is also enhancing our ethanol product line by adding additional Star Tron products. We continue to strengthen our cross-reference applications with more than 320,000 references in the Stens product offering. There is something in the Stens catalog for every dealer in the country.

2. What will be the OPE industry’s top trends in 2012?

PA: I think the top trends continue to be dealer profitability and continued evolution of the products that dealers supply. Dealer profitability is taking center stage in the market because without a strong dealer base, the industry will suffer. Every OEM and aftermarket participant wants dealers to thrive. There will also be major moves in the equipment world over the next 5-10 years as manufacturers look toward the technologies of the future. I think some of the tech enhancements found in larger equipment like construction or agricultural equipment will make it to our markets.

3. What will be the OPE industry’s biggest story in 2012?

PA: In my opinion, the biggest stories will be the U.S. economy’s recovery, as well as what happens in Europe. More importantly, how do the dynamics of a recovering economy bolster the industry in 2012 and beyond? Housing starts are a leading indicator, and signs just a month or two ago were looking up. Unemployment, which lags, is also showing signs of strength. Both will allow for discretionary income to be spent on our products. We can hope for those trends to continue.

PA: Oh! Good questions. I am afraid my candidate may not make it past the Florida primary. By the time people read this, it may be decided. I believe there are several candidates that could represent the Republican Party. I would not be surprised if Mitt Romney is the nominee, but I could also see Newt Gingrich as the dark horse that may just pull it out. Do not count Obama out as he is a great campaigner and may win or lose his re-election in the debates, if there are any of consequence.

Regardless of the outcome, I do not see the election of a new president or re-election of our current president changing the course of our industry quickly. The biggest issue in our industry relative to Washington is Cap and Trade and Ethanol. Both are big, arduous, heavily debated and lobbied items, which will likely involve the new Congress as well. I don’t see major changes quickly. If they get momentum, however, then we could end up on the short end of that debate.

5. What is your overall outlook for the OPE industry in 2012?

PA: I believe the industry is slated for an upswing in 2012, but only slightly. We again are quite dependent on the appropriate amount of rain and sunshine to brighten the optimism of everyone in the industry. I think with a recovering economy and rain in the drought-stricken West and South, optimism may win out.

The StaffFebruary 15, 2012