1996-97 Equipment Ownership Trends Survey

By: Larry Flynn

Responses from readers of the magazine who are responsible for mobile equipment and trucks reflect a constant rate of investment in equipment, similar to that of last year's survey (see Increasing Budgets Through 1996 Will Add to Contractor, Agency Fleets, December 1994, p 22).

Contractors and road agencies put greater emphasis on factors affecting equipment serviceability; this coming at the expense of considerations such as brand preference and price. Light and medium trucks, trailers and equipment attachments are planned to be the most purchased pieces of equipment among readers.

These are a few of the highlights of an extensive survey of equipment ownership trends among contractor and road agency readers, conducted this fall by ROADS & BRIDGES.

Four thousand surveys representative of the magazine's circulation list were mailed to municipal, county and state agencies, and state prequalified-to-bid road and bridge contractors. Recipients of the survey were selected on an "Nth name" basis, all of whom indicated they buy or specify mobile equipment, trailers and trucks. The number of responses returned equaled 781, a response rate of 20%, a 4% increase over the previous year.

The classification of respondents (see Chart No. 1) is as follows: contractors (35%); municipalities (35%); counties (16%); and states (13%). State respondents include both DOT headquarters and district DOT returns.

When our readers were asked if they were optimistic or pessimistic about their ability to make future purchase decisions (see Chart No. 2) they responded overwhelmingly in favor of optimism. Overall, 59% of respondents said they are optimistic (11% strongly optimistic and 48% somewhat optimistic), while only 17% are pessimistic (2% strongly pessimistic and 15% somewhat pessimistic). The remaining 24% of respondents are neutral.

"We're very confident that 1996 will be as good as 1995," said Thomas Dapp, president and CEO, Gradex Inc., a contractor in Indianapolis, Ind. "We're very optimistic."

"Here, in Nashville, it will be somewhat weaker but we're still hoping for a good year," said Ray Woodson, equipment manager, W.L. Hailey and Co., Nashville, Tenn. "We came off a good year and we think it will continue up up up."

The size of reader equipment fleets in the survey, both for equipment fleets, excluding trucks, and for trucks and trailers specifically, are categorized by dollar value. Truck fleet size is categorized by class of trucks.

The bulk of the replacement value of equipment (road construction and maintenance equipment fleets, excluding trucks) is split between the lower and higher dollar value ranges (see Chart No. 3). The majority of readers' fleets lie within three dollar ranges: 0­p;$500,000 (28%); $501,000­p;$1 million; and Greater than $3 million (20%). The $501,000­p;$1 million fleet value range increased 9% over last years' figure, while fleet values dipped slightly in the $2.1 million­p;$3 million; $1.51 million­p;$2 million; and $1.1 million­p;$1.5 million ranges.

Readers' replacement value of equipment (trucks and trailers) (see Chart No. 4) is consistent with the last two surveys (December 1994, p 23, and December 1993, p 26). The lower dollar values comprise three quarters of respondents' fleets. The most predominant values are as follows: 0­p;$500,000 (47%); $501,000­p;$1 million (23%); and Greater than $3 million (11%).

For the second year, our survey profiles truck fleet sizes (on average) for state DOTs and contractors (see Chart No. 5). State DOT and contractor fleets are compared, with state fleets far exceeding those of contractors; the number is an average number of trucks in the state or contractor fleet, sized from Class I to VIII. The classes are defined as: Class I less than 6,001 lb GWV); Class II (6,001 to 10M GWV); Class III (10,001 to 14M GWV); Class IV (14,001 to 16M GWV); Class V (16,001 to 19.5M GWV); Class VI (19,501 to 26M GWV); Class VII (26,001 to 33M GWV); and Class VIII (greater than 33,000 lb GVW).

We asked respondents the amounts of money they plan to invest in 1996 in mobile equipment (excluding trucks), and then to tell us whether that amount constituted an increase, decrease or the same as the previous year. We also asked our readers if they expected an increase, decrease or the same for 1997.

Overall, in this year's survey, reader investment in equipment is gravitating more toward the middle ground, with a slightly increased percentage of readers' budgets staying the same as in 1995. Percentages of "increased budgets" and "decreased budgets" for investment in equipment (excluding trucks) (see Chart Nos. 6 and 7) and investment in trucks (see Chart Nos. 8 and 9) offset each another, with the percentages of both categories slightly reduced from last year.

Even though the trend is toward budgets staying the same, nearly a third of respondents continue to expect their budgets to increase in both 1996 and 1997. However, for both investment in equipment (excluding trucks) and investment in trucks, those expecting increased budgets in 1997 (25% and 23%, respectively) is down slightly from last years' projection for 1996 (30% and 25%).

"We'll increase purchasing at a slower rate than '94 and '95 because we made large expansions during those years," said Dapp.

"Our purchases for 1996 will stay the same but it is all contingent on the budget," said Sandra Radosavljevic, senior purchaser, Texas DOT.

"Our buying for 1996 will be about the same but should be followed with an increase in 1997," said Thomas Templeman, supervisor, Colorado DOT.

As for investment in equipment (excluding trucks), in 1996, 80% of respondents said they planned on investing in new equipment this year. The percentage breakdown for 1996 is as follows: 54% of respondents expect their budgets to stay the same; 26% expect budgets to increase; and 20% expect budgets to decrease. As for 1997 projections, 60% of respondents expect budgets to stay the same; 25% expect budgets to increase; and 15% expect budgets to decrease.

Seventy-nine percent of respondents plan on investing in new trucks and trailers in 1996.

Investment in new trucks for 1996 is as follows: 49% expect budgets to stay the same; 30% expect budgets to increase; and 21% expect budgets to decrease. For 1997 respondents 60% of respondents expect budgets to stay the same; 23% expect budgets to increase; and 17% expect budgets to decrease.

Purchase decision factors contractors and state DOTs consider in the course of making equipment purchases made some interesting shifts versus last year's survey, with the previous No. 1 choices on the part of both factions dropping in position (see Chart No. 10). The purchase decision factors chart shows the factors most considered by respondents' in the decision making process. Readers were asked to rate each item on a scale of 10 to 1, in which 10 is most important, and 1 being least.

After a one-year resurgence last year that saw "brand preference" take a giant step forward over previous years, at least from a contractor perspective, the category regressed once again. In last year's survey, brand preference was the No. 1 purchase decision factor among contractors.
However, this year, brand preference did not rank among the top five contractor choices. Categories dealing with equipment service received the most votes from contractors, with "parts availability" ranking at the top of the list, followed by "dealer service," "meets spec," "manufacturer support," "lowest price" and "multi use equipment."

"We look at a whole gamut of things; the feel of the equipment, the price dealer service; we keep our eyes and ears open, we demo some; and we'll pay a higher price if we like a machine," said W L Hailey and Co.'s Woodson.

However, some contractors, such as Gradex Inc.'s Dapp, still say brand preference means more than dealer service.

Contractors like Michael Miller, project/plant manager, M-B Contracting Co., Anchorage, Alaska, look at durability when considering equipment purchases.

"We want equipment that will last a long time," Miller said. Because M-B has a large scraper and truck fleet, durability is the company's major consideration.

As for state DOTs, while lowest price was the No. 1 choice among respondents in last year's survey, this year, lowest price drops to No. 4. Meets spec ranks No. 1, followed by dealer service, parts availability, lowest price and brand preference.

"It is state law that we go for the low bid and have at least three bidders," said Colorado DOT's Templeman. "A spec Com. develops the specs and we will take the minimum or better for the specs."

"We try to write specs to meet bonafide performance and design needs," said Texas DOT's Radosavljevic. "Buying good quality products, to meet our needs, via solid specs, for the low bid price all ties into one package. You can't really separate or rank the importance of specs and bids, as each affects the other."

Once again, trucks and trailers are by far the most popular pieces of equipment in road agency and contractor purchase plans for the next 18 months (see "Purchase Plans," below).

Contractors plan to purchase even more light and medium trucks and trailers than last year. Tracked excavators, backhoe loaders, dozers, asphalt pavers and sweepers also are prominent in contractor plans.

"We're looking to increase in all areas of equipment but especially with scrapers and excavators," said Gradex Inc.'s Dapp.

As for state DOTs, light trucks purchase plans are more than doubled this year over last. Significant increases in purchases also are planned for equipment attachments, wheel excavators, skid-steer loaders, wheel loaders, dozers, soil compactors, asphalt compactors, motor graders, mowers and sweepers.

"In 1996 we will be buying a tandem and some mid-range trucks," said Colorado DOT's Templeman.

County agencies plan to invest in attachments, backhoe loaders, wheel loaders, asphalt pavers, motor graders and mowers. Wheel excavator and soil compactor purchases are on the agenda for municipalities.

The material contained herein represents only a brief sample of the data contained in the survey. For a copy of the complete 1996-1997 Survey of Equipment Ownership Trends, contact Carolyn Sturch, sales/marketing associate, ROADS & BRIDGES, 380 E. Northwest Highway, Des Plaines, Ill., 60016-2282, or call (847) 391-1020, fax (847) 390-0408, e-mail us at [email protected]

Survey compiled by Tamara Perlick. David Banasiak, Jeanne Spacek and Lee Geistlinger contributed to this story.