OPE Industry Forecasts: What can expect to be seen in 2013? (Part I)

The following is the first of a two-part series:


Outdoor Power Equipment recently took the pulse of the OPE industry by asking several of its leaders to share their thoughts.


Specifically, we asked the following thought-provoking questions:

What should OPE dealers know about your company/organization heading into 2013?
What was the OPE industry’s top story in 2012, and what will it be in 2013?
How will the outcome of the recent federal elections impact OPE dealers and the rest of the industry?
What are your biggest concerns about the OPE industry, and how should they be addressed?
What will be the top trends in the OPE industry in 2013?
What is your overall outlook for the OPE industry in 2013?
What advice do you have for OPE dealers?

OPE received the following written responses, in order, Nov. 27-Dec. 20, 2012:


 


BOB WALKER
PRESIDENT
WALKER MFG. CO.
(FORT COLLINS, COLO.)


1. What should OPE dealers know about your company/organization heading into 2013?


Bob Walker (BW): The company is alive and well. The election is over, and it is time to roll up our sleeves and get back to work. We will just keep doing our best to work with the opportunities that we have in the industry, hopefully without too much “help” from the government. We are continuing to emphasize new product development and are working on some “next generation” designs. Power equipment distributors and servicing dealers continue to be our only marketing channel to end-customers. We are planning to keep the company family owned and family operated, with the third-generation Walker family members now at work in the company.

2. What was the OPE industry’s top story in 2012, and what will it be in 2013?


BW: From the business perspective of the OPE industry, the elections, economy and jobs overshadowed any other industry-specific stories. I have no prediction on the top 2013 story.

3. How will the outcome of the recent federal elections impact OPE dealers and the rest of the industry?


BW: I think the elections have put us on a path that will present more challenges and less freedom to be in private business. It is fairly easy to see more regulations, more taxes (fees), and more government-imposed costs will make it more difficult to compete in the worldwide market. If you care about your employees and desire to continue to take good care of employees with health insurance, this issue looms big as “Obamacare” is implemented. Nevertheless, I am an optimist, and we will do our best to keep moving ahead.

4. What are your biggest concerns about the OPE industry, and how should they be addressed?


BW: For the OPE manufacturing business, meeting the demands of increasing regulation and complexity in business operation is the biggest concern. From the dealer perspective, we are concerned that power equipment dealers are healthy and prosperous and that the dealer opportunity attracts next-generation owners. Dealer services are needed to bring our line of products to market and to deliver full value to our end-customers.


5. What will be the top trends in the OPE industry in 2013?


BW: More commercial riding mowers will be equipped with fuel-injection engines. The costs for fuel injection are going down, and the benefits are going up.


6. What is your overall outlook for the OPE industry in 2013?


BW: We believe there will be some modest growth in sales in 2013.We noticed an uptick in interest and sales right after the election, and we think that will continue into 2013.


7. What advice do you have for OPE dealers?


BW: In order for dealers to prosper, they need a “numbers” person — someone who is passionate about the numbers of the business. In my travels to visit dealers, I have often met dealers who are great practitioners, great mechanics, great salespeople, great marketers, but there was no one watching the numbers. All of that good work is for nothing if the numbers of the business are not right. So my advice: Don’t try to be in business without a “numbers” person on your team.



STAN GUYER
PRESIDENT
THE GRASSHOPPER CO.
(MOUNDRIDGE, KAN.)


1. What should OPE dealers know about your company/organization heading into 2013?


Stan Guyer (SG): Dealers should realize they provide a premium customer experience when selling Grasshopper product through sales, service, parts and marketing standards. We continue to innovate and enhance our line of zero-turn mowers and year-round grounds maintenance systems to meet the needs of our dealers and customers in the field. A dealer can count on timely and efficient parts availability, knowledgeable customer service and common-sense stocking programs designed to help them earn a high ROI on reasonable inventory turnover. Our QuikParts ordering software and our new QuikQuote price builder are just two examples of the proprietary resources provided to dealers to make selling and servicing Grasshopper equipment faster, easier, and more profitable. Introducing new products to address market demands is also a priority for Grasshopper, which includes a new hardtop collector — the 8HT PowerVac — now available for all Grasshopper models, as well as a redesigned and enhanced 100 Series line of small-acreage mowers that will be available in early 2013.


2. What was the OPE industry’s top story in 2012, and what will it be in 2013?


SG: The top story in 2012 was extreme weather and the effects on the industry in general. Lack of snowfall during the winter, coupled with severe drought in the summer, has squeezed dealers and landscape contractors alike. While we are still dealing with drought in some regions, other areas are getting back to normal. The top story in 2013 could well be the impact of new and proposed regulations and programs imposed at the federal level.


3. How will the outcome of the recent federal elections impact OPE dealers and the rest of the industry?


SG: The results of the election did not necessarily provide a clear answer for the industry. There will still be environmental, health care and financial reforms that will have an impact on business in general, but questions still remain of how the federal government will address the “fiscal cliff” and what affect that will have on the industry. However, one of the biggest challenges will be the implementation of health care reform and how that will affect job and wage growth for landscapers and dealers.


4. What are your biggest concerns about the OPE industry, and how should they be addressed?


SG: Regulations and compliance. Beginning in 2013, diesel engines greater than 25 horsepower will be required to comply with much stricter EPA Tier 4 Final standards, such as a 90-percent reduction of already minute levels of particulate emissions. Fortunately, Grasshopper dealers will have several clean diesel models to offer throughout the transition period. Integrating compliant diesel engines above 25 horsepower into the product line will require significant redesign of existing models. Requirements for turbochargers, diesel particulate filters, filter regeneration components and/or diesel oxidation catalysts, as well as additional design and manufacturing costs to deliver Tier 4 Final-compliant diesel products, will have a major impact on the final cost of upper-end diesel equipment, and that is only if offering those new models is economically feasible. Also of concern is EPA approval of E15 gasoline, which can cause significant damage to small engines like those found in outdoor power equipment if misfueling occurs. Several industry groups have warned about the potential for misfueling and the resulting repair or replacement of those engines, which will likely be costly. Our industry understands the importance of conserving resources and reducing waste — doing so can be profitable and makes good business sense. While these regulations are intended to advance those ideals, at this time it’s hard to see how they accomplish much more than adding to the cost of equipment and doing business.


5. What will be the top trends in the OPE industry in 2013?


SG: Finding more efficient, sustainable and profitable ways to do business will continue to be a top trend. Grasshopper leads the industry in Clean Diesel technology, which not only reduces fuel consumption by more than half compared to other fuels, it also reduces the cost of fuel and the amount of emissions per hour of operation. Clean Diesel continues to be the most economically and environmentally responsible fuel choice for landscape contractors and can contribute to a healthy sales margin for the dealer. To help dealers and customers realize the impact switching to Clean Diesel can have, Grasshopper launched the Fuel & Emissions Calculator for Commercial Mowing Equipment, which can be found at grasshopperfuelsavings.com. In addition, Grasshopper’s unique FrontMount out-front deck design allows the same tractor to perform mowing, snow removal, turf renovation and other grounds management tasks. The PTO-driven decks and attachments require no additional engines (which reduce fuel use and emissions) and reduce labor and costs of operation, all of which can contribute to a healthy bottom line for the contractor or facility using the equipment, and provides year-round selling opportunities for the dealer stocking Grasshopper equipment. Implements also provide larger package sales and create longer-term customers.


6. What is your overall outlook for the OPE industry in 2013?


SG: My overall outlook is optimistic, because landscapers and dealers are optimistic. The worst of the recession is behind us, and the economy is beginning to show signs of growth. Our customers and dealers are beginning to see an uptick in business, which is a good indicator that consumers are feeling more confident. It’s a truly American attitude to believe that no matter how hard times have been, the future will be better because we have ingenuity and determination to make it so.


7. What advice do you have for OPE dealers?


SG: It’s more cost effective to support and maintain existing customers than to focus all your resources on finding new ones, so the greatest dealer success stories come from offering the right equipment solutions at the outset of the customer relationship and providing top-notch support after the sale. Your product expertise and excellent customer service set you apart from the big-box store. Partner with family-owned manufacturers who share your core values toward building long-term customer value rather than short-term gain.


 


KRIS KISER
PRESIDENT AND CEO
OUTDOOR POWER EQUIPMENT INSTITUTE (OPEI)
(ALEXANDRIA, VA.)


1. What should OPE dealers know about your company/organization heading into 2013?


Kris Kiser (KK): The Outdoor Power Equipment Institute (OPEI) continues to enhance and expand its processes, programs and staff to serve our membership – small-engine, utility vehicle and OPE manufacturers and suppliers.


Within our membership, we have true subject matter experts and a talented resource pool for us to draw on so, as an industry, we can meet challenges head-on. Some challenges are foreseeable, but other challenges arise unexpectedly, and OPEI is now built to respond quickly and effectively to advocate for and help its members.


Case in point: In 2012, the British Columbia Ministry of Environment mandated outdoor power equipment manufacturer responsibility for product recovery and recycling. OPEI stepped in and not only developed a Stewardship Plan to comply with the requirements, but we also created a Canadian arm, called OPEI of Canada (OPEIC). Instead of each company having to build their own waste infrastructure, companies doing business in British Columbia can now rely on OPEIC.


We are also prepared to help our OPE manufacturers and suppliers tackle recovery and recycling mandates that we expect to expand across other provinces. We also intend to work on harmonizing emission standards between the U.S. and Canada. You can stay informed on these developments by going to www.opei.org.


Canada is just one example of OPEI stepping up to the global ‘plate.’ OPEI is currently working cooperatively with EGMF (European Garden Machinery Industry Federation) to more fully address a new European restriction on heavy metals (RoHS2), which impacts outdoor power equipment — marking up language in the regulation and offering comment and proposed changes.


2. What was the OPE industry’s top story in 2012, and what will it be in 2013?


KK: In 2012, I would venture to say that the coordinated attack on the managed landscape was a top story. We saw groups that couldn’t push through turf restrictions via traditional, regulatory avenues, go ‘underground’ and try to restrict turfgrass/lawn through building codes and standards. Originally, EPA released a new-home specification containing restrictions on the amount of turfgrass that could be used nationwide on new-home sites (40-percent grass use on a site’s landscapeable area).


Despite this maneuvering, OPEI and its partners not only saw the turf limitation withdrawn from the WaterSense specification, but we also successfully fought off an attempt to expand the turf limitation to the International Green Construction Code. And, we have submitted a proposal to remove a 40-percent turf limitation from the ASHRAE 189.1 Standard for the Design of High-performance Green Buildings.


To ensure water restrictions related to turf are developed based on sound science and via public forms, OPEI is working in concert with ASABE to develop a standardized procedure for determining available water for landscapes and estimating landscape water use.


In 2013, the top issue will be Ethanol 15 (E15).


The reality is setting in for dealers and retailers — those on the front lines who must now counsel customers on a new fuel coming on the market that could ruin equipment and void warranties.


E15 has entered the marketplace for a subset of the auto fleet, yet OPE isn’t designed — and in fact is prohibited by law — to run on anything higher than 10-percent ethanol (E10). As you can see, the industry faces a challenging task of advising consumers to be wary at the gas pump.


3. How will the outcome of the recent federal elections impact OPE dealers and the rest of the industry?


KK: From a policy perspective, we don’t anticipate a change in direction when it comes to biofuels, in particular ethanol. The administration has championed this issue.


However, we hope both parties will revisit the underlying premise of the push for corn ethanol — the renewable fuel standard (RFS). In 2007, after being signed into law, RFS program regulations were developed in collaboration with refiners, renewable fuel producers, and many other stakeholders. Created under the Energy Policy Act (EPAct), EPA was tasked with reaching the RFS requirement of 7.5-billion gallons of renewable-fuel to be blended into gasoline by 2012 and growing to 15-billion gallons of ethanol.


The underlying assumptions — gasoline demand would increase, advanced and cellulosic fuels would be available (other than corn ethanol), and flex-fuel vehicles would expand dramatically — have not held true.


4. What are your biggest concerns about the OPE industry, and how should they be addressed?


KK: Our industry needs to do a better job of encouraging stewardship and best management practices when it comes to lawn and landscape care. That’s why OPEI has joined with Discovery Education, a highly respected, national curriculum development organization, and division of Discovery Communication, to develop a science-aligned program — TurfMutt — which educates, inspires, and galvanizes today’s youth and their families with a robust online destination (www.TurfMutt.com).


TurfMutt.com offers tools and resources to inspire environmental stewardship among elementary-school students and families to reinforce the importance and value of our lawns, parks, landscapes and other green spaces.


The TurfMutt program will be featured on a nationally televised Public Service Announcement (PSA), developed in concert with Discovery Education, talking about the importance and care of green spaces. The PSA will run across the country on cable networks and help make TurfMutt not only a desired and valued educational program, but a household name and ‘go-to’ resource for families from all over.


We invite you to visit the TurfMutt.com website and share its resources with your family, friends and school system. TurfMutt is currently promoting a ‘Spruce Up Your School’ sweepstakes where your local school could win a $5,000 grant to build more green space around school grounds and play areas. Encourage your local school, PTO/PTA and teachers to enter daily at www.turfmutt.com/sweepstakes.cfm.


We also encourage you to visit TurfMutt.com and “Like” the TurfMutt Facebook page, and sign up for the TurfMutt blog to receive regular program updates. And, stay tuned for information on upcoming promotions and sweepstakes information, which will come from your OEMs and manufacturers who are OPEI members.


5. What will be the top trends in the OPE industry in 2013?


KK: We expect the Dealer Day at this year’s GIE+EXPO will build on our recent success. In 2012, GIE+EXPO had its first-ever Dealer Day and set of dealer-focused events. Dealers are very important to us, and we’ve designed this Dealer Day to allow them to meet privately with manufacturers to forge important business relationships. You can read more about this at www.gie-expo.com.


6. What is your overall outlook for the OPE industry in 2013?


KK: Members are largely optimistic since we are seeing some good signs: foreclosures seem to have stabilized, rates are staying low, home values are largely appreciating, and market sales are improving. There were some substantial weather events in spring 2012 — storms and power outages — which also triggered some product sales. So, while members wish the economic recovery would be more robust, they remain positive.


7. What advice do you have for OPE dealers?


KK: Dealers need to really get a handle on E15 as it begins to rollout. They are the critical point of contact for purchasers and must be armed with the right messaging and know-how to handle problem product and address warranty issues.


OPEI and its membership are about to launch a consumer awareness program on Ethanol 15, and we’ll look to our dealers to help us educate and inform consumers. Go to www.opei.org to stay on top of E15.


 


JOHN D. HEDGES
DIRECTOR OF SALES & MARKETING
CENTRAL POWER DISTRIBUTORS, INC. (CPD)
(ANOKA, MINN.)


1. What should OPE dealers know about your company/organization heading into 2013?


John D. Hedges (JDH): Central Power Distributors, Inc. (CPD) is now in our 28th year of business and markets to a wide variety of customers. We take pride in answering the phone with a live person, no automation. Our staff is trained at dealing with all types of customers, so no matter who you are, there is help available.


Beginning in January 2013, our newly created salesmen model will begin adding direct benefit to our customers. Our technical service updates will once again be done through Webinars, which allows our customers to have more of their people in attendance and no need to travel, which saves everyone money. If a dealer wants to attend a live event, there are five to choose from. Our company newsletter will continue to poll our customers for answers to the industry’s top concerns. The answers and additional comments are shared in the next month’s newsletter.


Our IT department is developing new programs for our warehouse and customer service that allows easier interaction with customers. Our E-Zone continues to be more valuable every year because of all its features for our customers. A customer of CPD automatically gets a personalized E-Zone account, so they can see programs they are eligible for, order parts online, check stock and prices, look up parts with the E-Zone Gold package, and download price files. We continue to manage our inventory for those that order a lot and frequently, as well as the customer that waits until they need it.


2. What was the OPE industry’s top story in 2012, and what will it be in 2013?


JDH: If this answer is different than the other leaders, I will be shocked. The biggest news in 2012 for the industry is two things: weather and the election. Everyone I have talked to says the same thing. Had a nice start to 2012 with snow in October 2011, then nothing until March 2012. That was one of the few times that April was the biggest month for many. However, the news of this story is what happened after April. The month of May, which is traditionally the biggest summer month, was mediocre and the rest of the year was dry and warm. Two out of three customers in a recent CPD poll said they cannot experience another year like 2012.


The second big news story was the re-election of President Obama. Many said the people opposed healthcare, but the President was re-elected anyway. Many said the poor economy and lack of jobs would hurt the President; instead, he was re-elected. The tragedy in Benghazi was another sure thing that the President couldn’t overcome, but he did and was re-elected. With all these negatives looming over him and he was able to prevail, who knows what will happen in 2013 and the effect it will have on our industry. I think we can predict the weather better than politics anymore. So with that said, I think 2013 will start with snow for the northern states that need it; the spring will come in April; and rain will result in a rebound year and help us forget 2012.


3. How will the outcome of the recent federal elections impact OPE dealers and the rest of the industry?


JDH: EPA and CARB won’t be going away. By the time this is printed, we will know what effect the fiscal cliff discussions were about. In 2014, we will see what effect the healthcare laws will bring. For years, we have worried about what changes in government will bring after an election, and we are still here. I think we as an industry of amazing people will adjust, survive, and move forward.


4. What are your biggest concerns about the OPE industry, and how should they be addressed?


JDH: The Internet is a big concern and how manufacturers will address it moving forward. To some degree, they have ignored making policies. If you are a dealer, you can sell anywhere you want. But that “simple” sentence creates mass confusion and allows non-stocking dealers to sell against stocking dealers.


Another concern is not having enough schools to teach the OPE service technician trade. We have to figure how we can attract promising and talented young men and women into our industry. We have always had a hiring and training disadvantage to airline mechanics, automobile mechanics, and heavy-equipment mechanics. Our dealers have to create new ideas for fair compensation based on performance. Service techs that own their own companies should take business classes. Manufacturers need to offer educational opportunities through their distributor networks or do it themselves. With the sophisticated machinery we are selling, trial-and-error repair tactics will no longer work.


And last, if you are a servicing dealer, it might be harder to keep your servicing independence with service chains working on mass merchant products. My suggestion to any independent dealer that has lost opportunities to the large servicing groups, hang in there. We have seen mass merchants change their programs, and I’ll bet it happens again. Keep an open mind when you are asked to work on mass merchant products.


5. What will be the top trends in the OPE industry in 2013?


JDH: “Made in America” will gain strength in 2013. OPE manufacturers may not be able to bring some manufacturing back, but they will concentrate on products that are built here.


Social media and how companies utilize it will trend the industry. Many of us use social media in our personal lives but have no clue what to do with it in a small-business setting. Manufacturers have a training opportunity for their customers, teaching the ins and outs of social media if they choose to accept the challenge.


We don’t know what the President really has in mind about clean air, but if he promotes the things he promoted in the election, we can be assured that our solar- and battery-powered products might gain speed.


Selling on the Internet and, more importantly, competing with Internet sales will not slow down; it will speed up.


6. What is your overall outlook for the OPE industry in 2013?


JDH: We should witness a rebound year, as I mentioned earlier. Getting off to a great start in December will help the dealers make up for lost sales last year. With the 16 inches of heavy snow yesterday (Dec. 9), we are off to a great start.


7. What advice do you have for OPE dealers?


JDH: Don’t get caught up in the worry game with insurance changes and other election scares. Pamper your customers with unbelievable customer service. If you don’t, the Internet will. With sales on the Internet trending, your customers (or others) don’t have to talk to unhappy lawn and garden employees. Portray that you are having a great day every time a customer walks through the door. Respect your employees, and teach them incredible customer service by your positive example.


Bad fuel is both bad and good for our industry. I was with a good industry friend on a bus when the conversation turned to fuel additives. Talk about a double-edge sword! We want to sell parts, but we want the customer to buy their fuel additives from us. Be careful not to put your parts business out of business with fuel additives. However, don’t ignore that the buzz on the street is bad fuel forces small-engine repairs.


And finally, have a selling website. Yahoo and others offer a selling website complete with PayPal options for $39 per month. You may not think you need one, but your customers do.



MICHAEL JONES
PRESIDENT OF THE AMERICAS
HUSQVARNA PROFESSIONAL PRODUCTS, INC.
(CHARLOTTE, N.C.) &
BOARD MEMBER, OPEI


1. What should OPE dealers know about your company/organization heading into 2013?


Michael Jones (MJ): From an organizational standpoint, we invested heavily in our North American production and manufacturing processes in order to drive excellent supply performance in 2012. We feel that those efforts have helped to position the organization for success going into 2013. And the Husqvarna Group leadership team continues to examine cost structure improvements throughout the organization to optimize the business.


From a product standpoint, Husqvarna is very excited to launch the All-Wheel-Drive push mower. The ease of use for consumers to get this mower across tricky terrain will be a game changer for Husqvarna here in the U.S. As is always the case with Husqvarna products, the commitment to innovation and manufacturing products that improve the consumer experience is paramount, and this will be reflected in the AWD Mower.


2. What was the OPE industry’s top story in 2012, and what will it be in 2013?


MJ: The top story for 2012 was the weather throughout the country, and how a long drought affected the industry negatively. We feel that a lot of purchasing decisions were put on hold temporarily due to the weather and that demand for purchasing new equipment will rise in 2013.


3. How will the outcome of the recent federal elections impact OPE dealers and the

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