Markets and Monsters

Don’t Get Scared by the Economy — Instead Get Smart and Diversify

Halloween seems especially ominous this year with that creepy economy monster lurking about. High gas prices, lost jobs, a weak dollar, Wall Street fire sales — he’s got his tentacles in everything.

Follow his slime trail and read about the $700 billion bailout program for distressed mortgages being negotiated by the Bush administration and congressional leaders, to fix the housing crisis. It’s an emergency injection of your tax dollars (which might be better spent on infrastructure and road projects) that is making lots of people run for pitchforks and torches. That $700 billion is actually in addition to billions more for bailouts of insurance giant American International Group (AIG), finance companies Fannie Mae and Freddie Mac and the government-arranged marriage of Bear Stearns and JPMorgan Chase. That’s just a part of the path of destruction left by the economy monster at press time.

Even with these tales of terror making headlines, there are still many strong markets that are fortifying the next generation of North American businesses. One of America’s biggest resources is its expansive agricultural community, which is evolving into new niches of biomass, alternative fuels and other organic solutions.

The mad scientists at companies like Vermeer are expanding their product lines to work these new markets, releasing machines like its 605 Super M Cornstalk Special, designed to bail left-over corn stover to feed livestock, make biomass and create biofuel. On page 10 of the News, read about Vermeer’s latest venture with Gyro-Trac, manufacturer of specialized compact utility loaders for the forestry management and mulching industries. Environmental and recycling businesses are also growing green markets.

While the economy monster continues to feed on the landscape and housing industries (two backbone markets for contractors), the rental market is becoming an alternative upswing industry for businesses that still need solid iron. Read about the sharpened teeth of the pedestrian trencher market on page 24 (“Precision Cuts”).

“Dedicated trenchers are very popular products within rental — and in today’s challenging business environment — rental is always a viable option when contractors can’t afford to purchase equipment,” explains Greg Lawrence, marketing product manager at The Toro Co.

Rental may be up, but domestic sales are still down. Luckily, big American manufacturers are still making cash, since construction equipment exports are up 24 percent, compared to the first-half of 2007, according to a survey by the Association of Equipment Manufacturers (AEM) printed in CE’s Industry Watch on page 22.
These are only a few examples of positive emerging markets in this scary economy that successful contractors can still explore as alternative industries. While landscaping, housing and the financial markets will obviously rebound, now is the perfect time to diversify. The next time the economy monster comes to your town, you’ll be prepared to battle it with the weapons of a multifaceted business, banishing for good the bogeymen of the contracting cycle.

Keith Gribbins
Managing Editor
kgribbins@benjaminmedia.com

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