As spring 2013 is upon us, Kohler Engines president Tom Cromwell offers his outlook for the coming year. He shared his take on indicators—weather, economy and housing starts, and age of equipment—that drive the outdoor power equipment business and their status going into the spring selling season.
Economy and housing starts
The state of the economy and consumer confidence is a major indicator when considering outdoor power equipment sales expectations. While there are positive signs like housing starts at good levels, Cromwell thinks there will still be some hesitation among consumers.
"There are a lot of positive signs there," says Cromwell. "Underlying, I think it is a bit fragile yet. I am confident and I feel good overall about where the economic indicators are going, but I think if the government continues to sit in a stalemate, there is concern that it can dampen overall consumer confidence."
The dry weather in 2012 hurt a lot of equipment dealers. Going into 2013, the wet winter could mean a promising year for dealers if it is followed by a wet, warm spring and a wet, cool summer.
"It's been a wetter winter through most of the U.S., which is getting some moisture back into the ground," says Cromwell. "If we get some warmer temperatures, I think it is set up to be a good solid spring which should drive improvements in overall sales."
Cromwell shared that while the economy wasn’t doing so well in 2010, the weather drove sales and shipments saw an uptick. This shows the power good weather has over the industry.
"The year 2010 was a relatively good year from the weather perspective with most of the country being fairly damp," says Cromwell. "We saw growth in the industry even though the economic situation wasn’t really great."
The age of equipment
While the industry may not have the best handle on data covering the age of equipment in the field, older machines needing replacement could lead to greater sales numbers in 2013 over 2012. Customers who have been holding off on replacing aged equipment are getting close to a situation where they may be forced to do so. Contractors in the north who had a strong winter might be ready to use the capital gained to replace equipment this spring.
"There aren’t as good of indicators for us as there are in automotive, where they can track the average age of vehicles in the field," explains Cromwell. "Very similar to the automotive industry, where the average age of cars is jumping up, we see the exact same thing in lawn and garden equipment."
Trends in customer segments
In the consumer market, Cromwell says the homeowners are getting out from behind a push mower and onto a zero-turn mower. With time savings a focus, more homeowners are turning to the efficient equipment.
"With the average consumer we are seeing a shift to more ZTRs, and a few less of the front-engine riders," says Cromwell. "The ZTR is a little more efficient piece of equipment and can cut a little quicker."
Commercial cutters are seeking similar features, looking for products and dealers that keep their operations productive and efficient. They are seeking wider decks and high-performance engine options.
"What a dealer can really do to help drive business and help their customers is make the landscaper more profitable," advises Cromwell. "Help them lower their cost of operations and increase their equipment uptime."
As the larger decks require more power, Cromwell says contractors are looking for more-efficient engines to save on fuel costs. Kohler offers EFI options that do just that.
"We sell a closed-loop electronic fuel injected (EFI) system that reacts to the specific gas that’s in the tank," says Cromwell. "It adjusts to temperatures and altitude, and will give you typically 20% or greater fuel savings vs. a carbureted engine."
According to Cromwell, the EFI engines are also easier to diagnose and have fewer fuel-related issues, increasing the mowers uptime. (Click here to read: How Kohler’s EFI System Works)
Outlook for 2014
Once 2013 comes to a close, Cromwell says it will be pretty clear what to expect of 2014. Currently, manufacturers are building a lot of equipment for the commercial and consumer markets. If dealers are left with little inventory at the end of this year, the next year will be equally as promising.
"How that equipment sells through 2013 becomes very important to how much inventory sits in the field over winter," says Cromwell. "If 2013 is a really strong year with good sales and service, we will go into 2014 in very good shape as an industry."