Equipment Sales, Rentals a Mixed Bag
By K. Robert Wendel

It's a mixed bag for equipment distributors in the Southwest, with Nevada business' growing with an economy that is heating up, while Arizona holds a steady line. In New Mexico, both equipment sales and rentals appear to be slowing.

"We can feel it picking up, but it hasn't yet," said L.K. Russell of Tempe-based CIT Group Equipment Financing. "We thought 2003 would get better sooner, but there is a lot of apprehensive people worried about the stock market and the world situtiaon and they are taking their eyes off the ball."

advertisement

In Arizona, it's a tale of two economies. Driven by strong residential construction, the retail, service and infrastructure sectors are holding steady, but the industrial, manufacturing and office construction markets >> are limping along as those sectors struggle with over capacity.

"Equipment sales are up and down. It fluctuates day to day," said Carol Fellars, president of Phoenix-based Reuters Equipment. "May was horrible, April wasn't too bad and June seemed okay. Right now, we are waiting for the smoke to clear."

That's the scene reported by many dealers across Arizona, as private owners pull back on larger projects, while national retailers like Wal-Mart and Kohl's Department stores aggressively expand into Arizona. Highway construction is also looking stable for the next five years, with ADOT planning $3.6 billion in projects through 2008.

"We are starting to at least see a resurgence of interest, but nobody is getting their checkbook out yet," said Alan Fennig, president of Vermeer Southwest in Phoenix.

In Nevada it's all about keeping up with the Jones'. Casino developer Steve Wynn's $1.8 billion mega casino is spurring a flurry of other large Strip developments, and coupled with strong residential and retail construction, the Las Vegas market is bucking nationwide trends.

Nevada's department of transportation also unveiled a $1.3 billion, two-year plan to upgrade Nevada's roads and highways.

"The past year has been a banner year and Cashman Equipment is breaking new records every month," said Jeff Maxson, Cashman Equipment's director of southern sales in Las Vegas. "When we predicted what 2003 would look like, we thought it would be flat or one or two percent growth. We are finding out consumer confidence is much higher in Nevada."

Just the opposite is true in New Mexico.

After completing high-profile road projects, including the "Big I" and New Mexico Route 550, the state's highway department, faced with declining gas tax revenue and debt service payments, doesn't have much funding left for more than preservation projects.

While residential construction has kept the state's economy stable, a lack of private work is hitting equipment dealers' bottom lines.

"We have taken a big hit, with most of our rolling stock dropping 35 to 40 percent," said Mike Bahrmann of Albuquerque-based Golden Equipment. "We are just not moving a whole lot of units."

Bruce Higgins at Albuquerque's Tom Growney Equipment concurred. "It's tough times. That's all there is to it."