Is 2020 expected to be better than 2019? That is the question we are all asking ourselves as we start the New Year. We must first start by assessing how 2019 turned out.
2019 – Overview, A Good Year
When it comes to the construction industry and used equipment, 2019 was a good year. The market was up, used equipment volumes increased, then, as new machine availability got better, used values dipped a bit, making it a great time to buy used equipment.
Overall, the economy avoided a predicted recession that everyone was talking about in the fall. Most economists agreed the odds of a recession heading into 2020 dropped dramatically, a prediction expected to remain in 2020, even amidst an election year.
In the construction industry and, particularly, looking at the used equipment market and values, there are a few predictions one can draw based on 2019 events, areas of strength in 2020, and two key areas that have potential to grow or hinder the industry.
Here’s how two key events and two key areas of positivity to come in 2020 present a year that could be best summed up as one with a mix of optimism and uncertainty.
2020 Key #1 – The Election
The election. It’s perhaps the biggest factor that will drive the health of the construction industry and used equipment market in 2020. No matter which side of the political spectrum you’re on, election years always bring uncertainty and are tough for the industry.
Everyone gets nervous in an election year, especially a presidential election year. Tax laws, environmental policy, government spending all is in question as the leaders in Washington change. It’s an area that companies and fleet managers will no doubt be watching and keeping in mind every step of the way.
2020 Key #2 – The Labor Force
Another area to watch closely and that will affect the used equipment market is the labor force.
As I write this, unemployment is currently at 3.7%, only slightly up from 3.5% in the fall of 2019, the lowest rate in 50 years. In the AGC of America’s 2020 Construction Outlook Survey, it reports that 52% of the almost 1,000 surveyed said they plan on increasing head count in 2020. 81% of those surveyed also responded that they are having a hard time filling salaried and hourly craft positions.
Along with the number, one concern they have for 2020 is worker quality, which is a key consideration when looking at things like machine technology and productivity enhancements. It seems that this will be a key factor to watch in 2020 and certainly will affect fleet management decisions.
2020 Positivity – More Technology
Probably not surprising to anyone, technology will continue to evolve and drive positive change in the construction industry and used equipment business. The AGCs survey reported, of the almost 1,000 contractors surveyed, 30% plan on increasing project management software, 23% fleet tracking, and 22% estimating software.
The used equipment market especially has seen a boost from technology growth, with more machines already outfitted with options like GPS machine control hitting the used market last year. This is a trend that’ll continue and grow in 2020. For the machines that don’t yet have technology upgrades, more pre-owned technology is creating opportunities to easily add it – and at an attractive price point.
The concept of “used” technology may be a hard one to wrap the mind around, with the speed that technology evolves. However, just because it’s not brand-new doesn’t mean it’s obsolete.
For example, at RDO Equipment Co., we rent various technology systems, either on their own or on rental machines. As these tech rentals accumulate hours, it puts them at a better price point for those buyers, yet they’re still current systems. Companies looking to purchase used machines in 2020 can be confident that, whether in-place or add-on, the technology will bring the same accuracy and efficiency benefits as new.
Furthermore, the integration of technology into machines will continue to grow, both new and used. While I have yet to see a used SmartGrade motor grader on the market (not surprising since it was just introduced last year), integrated dozers started to become available on the used market.
The added advantage of the continued focus on technology is a small bright spot in the labor shortage. As mentioned earlier, attracting and retaining talent will continue to be a challenge in 2020 and beyond. Technology offers opportunities for companies to do more work with fewer people, while some systems make equipment so user-friendly, an unskilled operator can do high-quality work.
2020 Positivity – CONEXPO/CON-AGG
Continuing the technology conversation, it would be impossible to address it, and 2020 in general, without talking about CONEXPO/CON-AGG. It’s the biggest U.S. show for our industry and, between exhibits, education sessions, and networking, there’s something for everyone.
Anyone heading to Las Vegas in March for CONEXPO will get to see the industry’s technology focus first-hand, as tech experience is a key theme of the 2020 show and I expect to see that resonated throughout the exhibitor booths, not just the large manufacturers, but all manufacturers.
I’m optimistic that CONEXPO will be the show’s biggest yet and draw a record number of attendees, as companies look to invest in their people, consider diversifying to meet new demand, and stay up-to-date on the latest offerings to make their businesses more efficient and effective.
2020 – A Final Thought
A strong turnout at CONEXPO will no doubt set the tone of the industry for a great 2020. All preliminary indicators how this could be a record year for the event.
All in all, it’s safe to say that should be a good year. However, with this being an election year, at this time, I will only predict the first half – which should be as strong or potentially stronger than 2019 for the construction industry and used equipment market.
One thing remains true – investing in the growing population with housing starts, infrastructure improvements, and other construction work isn’t going away. Companies that invest in their people, technology, and the equipment needed to get the job done will be poised for another successful year.
About the Author
Dennis Howard has spent more than a decade with RDO Equipment Co.’s construction equipment division, working with teams in the company’s Texas and the Desert Southwest regions. As a Vice President, he focuses on fleet management, with used construction equipment values and heavy equipment sales two of his key areas of expertise. He’s a member of the Association of Equipment Management Professionals ( AEMP), a regular contributor to ForConstructionPros.com, and host of The Track – Used Equipment from RDO. Subscribe to The Track on YouTube, or connect with Dennis on Twitter @RDODennisH.
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