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

The following is the last 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, Jan. 21-28, 2013:



WILL COATES
PRESIDENT
BILLY GOAT INDUSTRIES, INC.
(LEE’S SUMMIT, MO.)


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


Will Coates (WC): Heading into 2013, we would like dealers to know that Billy Goat is committed to providing the most productive products for their customers, highly regarded value-added programming for their stores, and effective merchandising — inclusive of customizable displays, integrated video and promotional financing — to help drive customers into stores and product out the doors. Using 2012 as an example, Billy Goat added four new products to the portfolio: Our largest, most productive debris loader yet, the DL35; our innovative hydro-drive BC26 series brush cutter; our ZForce blower that quickly attaches to most ZTR mowers; and the only litter vacuum on the market with dust reduction technology, our QV series! Since all of these products are less than 12 months old, dealers can expect additional Billy Goat sales over the next few years — that’s exciting.


Dealers can also look forward to on-demand video displays that complement the popular merchandising program we initiated in 2010. Billy Goat’s “Easy as 1-2-3!” retail financing program also continues to grow as dealers and customers look for simple financing options. Finally, Billy Goat introduced the “Pro Goat” dealer initiative last year as a way to reward stocking and servicing dealers with the best value-added programming and discounts. Know that Billy Goat is committed to your success, is appreciative of more than 40 years of your support, and promises more to come!


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


WC: I don’t know of any OPE manufacturers, distributors, dealers and contractors who weren’t affected by the weather in 2012. Beginning with the low snowfall in most of the country and ending with Hurricane Sandy, 2012 was challenging to say the least. Oh, and how could we forget both of these events sandwiched around the worst drought the Midwest has experienced in the last 50 years? It sure would be nice for 2013 to return to “normal” — whatever that is.


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


WC: It’s a good bet that most in the OPE industry were hoping for a different election outcome, but business owners and managers have to make the best decisions for our companies, employees and customers with the hand dealt us — regardless of what party is in charge or who is in the oval office. Inaction because of uncertainty is no longer acceptable; decision makers won’t be able to use that as an excuse. Uncertainty, additional regulations, and higher taxes are the new norm for the foreseeable future.


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


WC: I have two thoughts. First, the scarcity of service technicians in OPE is limiting the ability of dealerships to grow. It’s a bit of a conundrum for dealers who want to grow their businesses but are restrained because their customers’ satisfaction would likely suffer due to declining service levels. And, downtime is everything with commercial contractors, so finding and retaining qualified service techs is a competitive advantage for those dealers who have figured this out.


For the OEMs, finding and retaining qualified factory workers is much more difficult than just a decade ago. For years, manufacturing has been vilified; teachers, schools and the government have encouraged students to pursue careers in anything other than manufacturing. And when government assistance is a more attractive alternative than working, we have a big problem. Fortunately, there are a significant number of people who want to work with their hands. They are good at it, and it’s fulfilling work. Not everyone wants to or should go to college. I applaud Dan Ariens for the efforts Ariens Company is making to partner with local Wisconsin schools on apprenticeship programs for students interested in manufacturing and engineering. Similar efforts on a broader basis could address both the lack of service technicians and manufacturing employees discussed above.


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


WC: I’ve heard GIE+EXPO attendees say for years that there’s no reason for attending — nothing’s new! Obviously, we manufacturers beg to differ, especially when we commit significant portions of our budgets to research and development. Battery-powered alternatives to gasoline power continue to drive OPE consumer product trends. The biggest obstacles are up-front investment and battery replacement costs. Someday, whether it be for operating cost reasons or because industry has finally figured out how to deliver the longevity and performance required for commercial products, we may see lawncare contractors make the shift to battery power.


Hydrostatic pumps and motors have been the domain of commercial mowers for at least 25 years. Now, smaller, more economical, hydrostatic offerings have opened up the conversion of mechanically driven or operated units to hydrostatic operation. In the last few years, Billy Goat has introduced a hydrostatic overseeder, brush cutter and vacuum. This makes sense for contractors only if the increased productivity, ease of use, and fatigue reduction outweigh the old alternatives.


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


WC: We’re certainly excited to see that housing starts increased modestly in 2012, and the pace is expected to increase in 2013. The Baby Boomer generation continues to either downsize or outsource their lawncare and landscape needs if they remain in their houses. There is no doubt that many lawns and landscapes have been damaged by weather events of 2012. All this and modest economic recovery bode well for a marginally better 2013.


7. What advice do you have for OPE dealers?


WC: At the risk of sounding like a broken record, dealers would be well served to focus on OEM product lines that, either direct or through distributor, offer significant value to their dealerships. Good programs offer total solutions from in-store merchandising, to creative co-op advertising designed to pull customers into their stores, to inventory replenishment programs, to prompt warranty processing, and above-average gross margins. If, when you meet with your suppliers, they don’t convince you, it may be time to look at your alternatives.



PETE YUNKER
PRESIDENT

OUTDOOR POWER EQUIPMENT AND ENGINE SERVICE ASSOCIATION (OPEESA) &
PRESIDENT
POWER EQUIPMENT SYSTEMS, INC. (PES)
(SALEM, ORE.)


1. What should OPE dealers know about your company/organization heading into 2013?
Pete Yunker (PY):
One of the main strategic focuses for PES this year will be implementing lean practices throughout the company. We are really focused on increasing efficiencies and being able to quickly adapt to new challenges and opportunities as they present themselves. The other benefit of lean is an energized team and increased morale at PES. As we work together on lean initiatives, using cross-functional teams, we are relying on the employees as the experts, and they are more engaged. We are also focused on aggressive growth with key business partners. We are proactively working on new solutions for OPE manufacturers and dealers who want to increase their market share and profitability in the western United States.


With respect to OPEESA, in 2013 our goal is to deliver even more value to our members. Today, we provide tracking and benchmark opportunities through various monthly, quarterly and annual reporting for all segments of our membership. The OPEESA annual meeting in Florida will provide networking opportunities, and our speakers will provide tangible and implementable take-aways. We will also continue our member round-table discussions, which allow members to glean best practices on a wide range of topics. Another exciting offering at OPEESA is our young professional/emerging leaders group. This group is made up of the leaders of tomorrow for the OPE industry; it is very exciting to see the enthusiasm and insight this group brings to the industry. Overall, OPESSA is a thriving organization, thanks to our dedicated and growing member base and the leadership of our Executive Director Nancy Cueroni.


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


PY: The top story for 2012 seemed to be the weather. Being in the Northwest, we were sheltered from the drought conditions that most of the country felt. But, we had the wettest spring on record. The lack of a good snow season didn’t help either. Looking in the crystal ball for 2013, I think the top story is going to be a better economic environment. If the “experts” are to be believed, we will see positive trends across most all economic indicators.


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


PY: While there is still uncertainty on tax and healthcare issues, we do believe that the new Congress and the President will make decisions. We might not agree with all of them, but at least businesses can make plans if they know what to expect. With many new Cabinet members, it is also anticipated that there will be other regulations that will impact the OPE industry. We will definitely need to remain diligent and pay attention to what goes on in Washington.


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


PY: A shrinking dealer base and a shrinking pool of trained technicians to service equipment remain long-term concerns. Unfortunately, there is not a magic bullet for either of those issues. As an industry, we need to maintain dealer margins while providing more support to help them grow their business. If we want to keep a good level of dealers, we need to work toward keeping it an attractive business proposition. As far as technicians, if we can help dealers make their service departments profitable, it should help them to retain and recruit good technicians. In addition, we need to promote the industry with the next generation. Supporting vocational schools with product and resources is a great start.


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


PY: I think we will see more manufacturers focused on their parts business. We are seeing an increase of new incentives and measurements of service parts with manufacturers. The competition between OEM and aftermarket will get even more competitive in 2013.


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


PY: I feel the industry is poised for growth in 2013. Economic conditions will be better. End users will have more cash on hand and more credit available. This, combined with existing pent-up demand for new equipment, should mean a strong year in 2013. Of course, unfavorable weather conditions trumps everything.


7. What advice do you have for OPE dealers?


PY: There is opportunity for dealers to increase their success by looking at their distributors as business partners and not just suppliers. There is an opportunity for more synergy between dealers and distributors. Dealers should ask for, and utilize, distributor resources to help grow their lawn and garden business.



ERIK SIDES
EXECUTIVE DIRECTOR
EQUIPMENT & ENGINE TRAINING COUNCIL (EETC)
(YORK, S.C.)


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


Erik Sides (ES): The lack of qualified OPE technicians is rapidly increasing as Baby Boomers retire.


The EETC is working to increase the number of vocational-technical schools and colleges with EETC-accredited programs.


Our technician certification program helps ensure new and existing service technicians have the basic knowledge needed to efficiently repair outdoor power equipment.


In 2013, we will launch several improved processes, including online certification testing and streamlined order fulfillment and billing.


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


ES: The economy and effect of the weather on our industry. Economic activity is improving in the USA, but still negative in Europe and other parts of the world.


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


ES: If the new Congress acts in the interest of the country instead of self interest, we will be OK. The biggest concern, I think, could be what the final cost of the new healthcare plan will really be and how it will impact the economy, OPE distributors, dealers and other small businesses.


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


ES:


Concerns — The loss of skilled technicians and dealerships due to retirements/poor economy; emissions, E15 ethanol & other alternative fuels.


How to address issues:


Retirements issueAs the new executive director of the EETC, I will aggressively seek to increase the number of EETC-accredited programs across the USA and Canada, as well as increase the number of certification areas and renewals among the existing group of service technicians.


Emissions/fuels issues — Make sure our voice is heard in Washington through OPEI, NMMA and other concerned organizations.


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


ES: I believe that you will see more technology being used, and experimented with, to help reduce cost, protect the environment, and improve product functionality and reliability.


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


ES: I believe we will see continued improvement in USA/Canada markets, barring severe weather.


7. What advice do you have for OPE dealers?


ES:


A few things:


1) Have a business plan for the next three years, and review and update it every year.


2) When looking to hire a technician, ask about certification. As more sophisticated equipment continues to be developed, you will need a qualified technician to maintain and repair it.


3) Take advantage of manufacturers’ training programs for your technicians. This is vital for them to stay up-to-date on the latest technology and changes in the equipment. It also is needed to keep their certifications current.



PETER ARIENS
PRESIDENT
STENS CORP.
(JASPER, IND.)


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


Peter Ariens (PA): We are here for them. Stens spent the last year upgrading. We installed a new software system, moved some of our distribution center locations, and are currently moving our headquarters to better service our customers. These changes have poised us to really provide that next level of service that will allow our dealers to stand out to their customers in the coming years.


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


PA: I am not thinking of one particular industry story, but certainly a topic of conversation this year was the elections in Washington. From Obamacare to E15 and now evaporative regulations, there are so many ways that politics are entering our business. I think we’ll continue to see stories about EPA regulations in 2013 and how they will affect how dealers run their businesses.


While weather is a staple of conversation in our industry, I would say it was of particular note this year with early and extreme drought conditions throughout most of the country, followed by significant storms like Hurricane Sandy.


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


PA: With the elections behind us, the first real test of the next Congress is how they maneuver through the economic interest of the U.S. Change is in the air for everything from entitlements to taxes. Where the pieces fall will determine just how far reaching those changes will affect small business owners. No business in the U.S., big or small, will be unaffected.


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


PA: My biggest concern is always for the dealers and their profitability. The dealer network is facing so many changes right now with regulation changes, the economy, health care, extremes in weather, and increased technology. If we let it, all these things could eat away at the dealer network’s vitality. It’s important that we continue to come together as an industry through our associations and business groups to help dealers. We all need to be in this together.


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


PA: I think we’ll see a trend towards building even more utilization of technology both from a product and a business standpoint. Technology is expanding and advancing at increasing speeds, making it more affordable for applications in our industry. Equipment manufacturers are working to incorporate technologies seen in larger equipment and the automotive industry. Along with that, you have the increasing need to educate customers on the benefits of all these advances and how to choose the right solution for their needs. Technology has enabled us to deliver that content in so many ways: websites, social sites, videos, mobile devices, etc. There are so many mediums that deliver content on demand these days that I believe this is another trend our industry will start to see, content creation.


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


PA: I am optimistic for 2013. Indications are that the housing market is coming back, although slowly. That is a good sign for our industry. I also believe the stronger consumer sentiment will help all in this industry.


7. What advice do you have for the OPE dealers?


PA: Work smarter, not harder. If you don’t know what lean is, start learning. If you know what lean is, you should be actively practicing it.


Find what you are really good at, what makes customers come to you, and then passionately pursue ways to get even better at it. When you are passionate about your business, customers sense it and respond by choosing to do business with you.


Partner with your suppliers. Most of us understand that helping your business, helps ours. We have staff that are willing and able to advise and help you work through your pain points. If you have a supplier who doesn’t seem to offer that support, find one that does.



BRAD MURPHY
EXECUTIVE VICE PRESIDENT & COO
SUBARU INDUSTRIAL POWER PRODUCTS
(LAKE ZURICH, ILL.)


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


Brad Murphy (BM): Last year, Subaru Industrial Power Products introduced a new 190-cc chain-driven overhead-cam vertical-shaft engine (EA190V) to our line of industrial small gas engine products. When this engine was first launched, we saw its initial usage on pressure washers. Now, we are seeing the EA190V engine on a variety of lawn and garden power equipment.


Additionally, we are currently expanding our vertical-shaft engine line to include a 175-cc chain-driven OHC engine (EA175V). This engine will broaden our products reach into lawn and garden outdoor garden applications. For more information on the EA Series, visit subarupower.com/series.aspx?sid=69.


Featuring a vertical-shaft configuration, Subaru’s new EA175V and EA190V are the first to offer chain-driven overhead-cam (OHC) technology to the small, air-cooled, vertical-shaft engine market. Until recently, OHC technology was only found within the horizontal-engine market.


In 2013, the industry can watch for several lawn and garden OEMs to launch products powered by the EA190 and EA175.


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


BM: One of the biggest headline generators in 2012 was the inclusion of all 100-cc to 999-cc air-cooled gasoline engines into the evaporative emissions standards. Also, we saw a requirement for lower exhaust emissions. Thanks to our modern engine design, Subaru engines easily complied with all the new regulations.


In 2013, you will be seeing a lot of one word: value. Within the two major classes of small engines (lower-cost consumer and heavier-duty professional engines), you are going to see manufacturers putting time and money towards improving overall value of professional engine class. By implementing efficient manufacturing and design processes, manufacturers will still be able to provide top-quality products with less overall overhead costs. This increased value helps independent OPE dealers remain competitive with big-box stores.


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


BM: With the re-election of the current administration, the outdoor power equipment industry and other industries within the United States should expect the continuation of the stricter regulations and the implementation of regulations like E15, regardless of the impact and evidence presented by the Outdoor Power Equipment Institute. Overall, the OPE industry can expect that the regulatory initiatives of the last four years to continue, including the enactment of E15 policies and the damages it will do to the OPE industry.


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


BM: One of the general concerns of the industry is at the retail level. There is a continued trend of big-box stores taking up more and more business from independent OPE dealers. Returning to the concept of value, independent dealers can only survive if they sell quality products that are well supported. If problems do arise, they need to have the power to resolve them with resources such as a good warranty honored by the manufacturer and reliable parts support.


Dealers need to carefully pick suppliers with high-quality products and the best possible service because the well-supported dealers provide the most value to customers.


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


BM: A continued trend for the OPE industry is bringing technology otherwise only seen in the automotive and motorsports industries to small air-cooled engines such as longer service intervals and increased efficiency.


We keep this trend at the forefront by converting our small engines from side-valve or pushrod overhead valves to OHC technology. We are proud to be the first company to bring out a full line of OHC engines to the premium air-cooled engines market.


This trend will continue with the introduction of higher-technology fuel systems into the small-engine market. The benefits of higher-technology fuel systems include meeting new emission standards and increasing the usability and durability of equipment.


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


BM: The state of the general economy over the last few years has forced companies of all sizes to improve their overall efficiency. These optimized companies have systems in place that will allow them to boost production rates when the general economy does improve, without sacrificing quality and service.


7. What advice do you have for OPE dealers?


BM: My advice for OPE dealers is to pick brands and suppliers that stress quality, parts support and warranty support. Remember, your dealership cannot compete on price alone. You have to offer a complete package of quality products and outstanding service to set you apart from the rest. This will also become the reason professionals and consumers will return to your dealership.

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