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How will we fare in 2016

Leigh W Sparrow, Publisher
Leigh W Sparrow, Publisher

January 3, 2016 - First of all I would like to wish you all a very happy and prosperous year in 2016, but what sort of year will it be for our industry overall?

The past two or three years have generally been positive ones as we climbed from the depths of the economic crash of 2007/2008, to the point where Southern Europe began to bounce back in 2015 and economic bail outs began to be repaid.

Against that we saw the Chinese powerhouse economy falter, with the fall out having an even greater impact on much of the developing world, and on economies that are dependent on the export of raw materials such as Russia and Australia.

Having said that China is still a larger, more prosperous place than it was in 2007, it is just not growing quite as fast – and that is no bad thing, as it goes through a reality check and gathers its breath. Those who are suffering the most are economies like Brazil which saw growth at a pace that was clearly unsustainable over the longer term. As we all should well know by now, the further the pace of growth overshoots reality, the more painful the correction.

So back to the west where things had been pretty good until later in second half when we began to see a few setbacks here and there. Some caused by the surprise fall in oil prices, and some by a nervousness gripping some larger rental companies, at the same time as long manufacturer lead times required longer term commitments.

The result?  Cut backs in new orders as a ‘wait and see’ mentality began to affect some of these larger, publicly quoted buyers. Underlying demand does not appear to have changed, rental rates appear to have held up, and the prospects still look pretty good, however all it takes for a manufacturer to suffer is a nervous customer base.

Hopefully everyone will hold their cool, maintain rental rates, hold off on silly deals for new equipment, and confidence should return. And we all benefit, also don’t forget that it is at times like this that opportunities are at their highest.

I am quietly confident for the next few years, yes the ride will be bumpy but the underlying market is still growing – for most products – there is still a lot of aging equipment out there, and most economies are still growing. That all sounds like a great environment for well run businesses.

So how do you think 2016 will pan out? Vote in our online poll below.

 

Happy New Year

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