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"Artics" finally come alive again.

While we have talked a lot about 2004 machinery sales, there is one product we have overlooked that had a really good year after several bad years. Articulated haulers, or better known in the trade as "artics," jumped in demand by over 45% last year, which is unprecedented. Sales of these products stagnated for three years, with demand ranging from 1650 to 1775 units annually starting in 2001.

There was always an excuse as a reason for the dropoff--the slowing economy, 9/11 and the troubles surrounding TEA-21 (the Transportation Equity Act for the 21st Century--which is still pending) were all cited.

Then along came 2004 and wham, sales of many products started to skyrocket. And as part of that, sales of artics jumped to nearly 2600 units for the year.

Pent-up demand for artics exploded and suddenly everyone needing a new hauler or needing to replace an old one decided to head for their local dealer and order one or two. Needless to say, no one quite saw this coming--not even the big players like Caterpillar, Volvo or Terex. Cat's sales popped about 50% for the year and several other companies had sales spikes of 25 to 35%.

At the recent ConExpo in Las Vegas, it was obvious that anyone offering articulated haulers in the marketplace had a machine to show off. I saw a number of haulers, and I was always told that they were "already sold."

For those of you keeping score, Caterpillar is the big gun in this market, followed by Volvo. Volvo was in the lead position for decades here in North America and was the only company making the machines domestically until a few years ago. For one reason or another, Volvo consolidated production back to Europe about 18 months ago. Not really good timing, because after they, shut down the lines in Asheville, N.C., everything hit the fan and they couldn't get enough haulers fast enough from the plant in Sweden.

Terex is a distant third in articulated haulers, while fourth-place Deere had a fabulous year, with sales rocketing up 150% over 2003 levels. The Bell Equipment folks who produce the machines for Deere in South Africa were delighted as their production levels were increased, which helped them have a more bountiful year.

Komatsu is another of the suppliers that had a great year for artic sales compared to the past few years. The Japanese giant came in fitch and had a 200% improvement iii sales for the year. These are big numbers and they need to be respected. In tact, Komatsu had such a good year with its attics that it decided to move production to the United States for 2005 to become the only supplier to be producing here in the domestic market. Wonder how long it will take others to get that idea again?

It should be mentioned that Volvo may have just removed its production of haulers from North Carolina, but they could come back if the demand remains higher than it was from 2001 through 2003. Furthermore, Caterpillar had planned a new factory for artics in Texas a few years ago, which it scrapped. That could be resurrected, particularly since more than 60% of Cat's production in the U.K. is coming to North America.

Moxy, Case, JCB and LBX are the others wing for position in the artic market.

Looking at the enthusiasm at ConExpo, I would have to say that artic sales will grow another 15 to 20% this year, but my better judgment tells me that is over-speculation. Right now, I'm of the opinion that sales will fall near last year's total, plus or minus a few percent. I just can't see the "big bubble" happening here with two magnificent sales years back-to-back. I see sales strong for the first half of 2005 and slowing modestly during the second half. Comparisons with last year's results will be tough even though we are starting off where we left off last year.

We are at peak historic demand levels right now so that any slowing in sales will still make for record sales levels for the industry this year and possibly next. The next downturn to worry about in demand will occur sometime in the next 18 to 24 months. Not to worry though--right now, sales are booming and everyone is smiling!

CHARLES R. YENGST IS PRESIDENT OF YENGST ASSOCIATES, WILTON, CONN.
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Title Annotation:trendlines
Author:Yengst, Charles R.
Publication:Diesel Progress North American Edition
Geographic Code:4EUSW
Date:Apr 1, 2005
Words:736
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