Construction Equipment
The construction equipment industry is the backbone of the construction industry as a whole—its health may be one of the best indicators of the construction climate. Construction Business Owner caught up with these executives to hear their thoughts on 2012 and 2013.
Mike Mack
President
Worldwide Construction & Forestry Division
Deere & Company
CBO: What is the most pressing challenge in the construction equipment industry right now?
"While we are seeing some bright spots, such as in the housing market, general economic conditions are still impacting the sales of all equipment. Additionally, sensitivity to rising fuel costs is also a pressing topic for our customers and the industry as a whole. It’s important for manufacturers like John Deere to make engine technology upgrades seamless for our customers. Dealer education and readiness is vital to ensure our customers are comfortable and prepared for the latest emissions standards. John Deere worked hard in the development and validation of its IT4 and FT4 engines to make these upgrades a non-issue."
Alex Shingledecker
International Sales Manager
AlturnaMATS
CBO: What are you predicting the construction equipment industry landscape as a whole to look like in 2013?
"Most recently, the economy is on the rise. We have been extremely busy for the past 18-plus months. We are anticipating a strong 2013 as well. The ability of some contractors to survive during times of market challenges is the ability to be prepared and know what drives business."
Kirk Gillette
Vice President
Hyundai Construction Equipment
CBO: What are you predicting the construction equipment industry landscape as a whole to look like in 2013?
"From a customer perspective, I think there will be more interest in rental rather than ownership. I think there will be additional incentives—tax incentives, lower costs—offered that will make hybrid and electric vehicles a more viable alternative for many customers."
"I also think that we will see more consolidation taking place. This will be in the form of internal (reduction of multiple brands) consolidation as well as renewed interest in acquisition. Construction equipment, material handling/forklift as well as rental companies are all candidates for acquisition."
Sam Humphrey
President
Mi-T-M
CBO: How do you see construction equipment continuing to evolve in 2013?
"I feel the construction industry will make several advances in energy conservation. The continued awareness of the necessity of our industry to develop equipment to pressure our resources will continue to gain R-and-O support with manufacturers. Equipment manufacturers will make strides in introducing product with better fuel economy while meeting and exceeding emissions standards."
Michael Kneeland
President and CEO
United Rentals
CBO: What kinds of changes have been most important to the construction equipment industry in 2012?
"In terms of inherent changes in industry behavior, I believe that the secular shift toward equipment rental is one of the leading trends. It has long-term implications for almost every area of the construction business. ...
For many contractors in the U.S., the past several years have been a perfect storm of challenges. In addition to tighter access to capital, commercial construction went through a substantial decline. The economic benefits of renting, and the flexibility it offers in terms of bidding on different types of work, have helped drive rental penetration. It has also opened contractors’ eyes to the rental option as a sound business strategy, which is why growth in the equipment rental industry has been outpacing the recovery in construction."
Fred Diaz
President and CEO
Ram Truck Brand, Chrysler Group
CBO: How do you see construction equipment continuing to evolve in 2013?
"From Ram Truck’s perspective, what we’re seeing with the building industry gives us a great deal of confidence and optimism for 2013. Ram Trucks have achieved nearly three years of consecutive year-over-year sales gains. We’re seeing everything from premium luxury trucks to value-priced models doing very well.
I expect Ram Truck brand’s momentum to continue in 2013 for a number of reasons. The first is demand. The average age of a truck—from half-ton pickups through Class 5 medium-duty trucks—is 12 years. Buyers are heading back to their dealers. Their trucks are worn out, and now with more and more positive economic indicators, it’s time to replace equipment.
I’m also optimistic because I feel Ram Truck is making the right moves, at the right time, to attract buyers, whether it’s a truck for personal use, a small construction business or a substantial fleet purchase."
Software & Technology
The software and technology industry remains one of the most rapidly evolving businesses, and this is true regardless of the overall health of the economy. Especially in the business-to-business world, the argument is often made that improved software solutions become even more important during rough times, as such solutions are almost always geared toward improving efficiency. Construction Business Owner talked to nine construction software industry executives to get their views on what 2012 was like and what they are anticipating for 2013.
Leigh Jasper
CEO
Aconex
CBO: Right now, the fiscal cliff is a major concern for many businesses. How is your company dealing with this threat from the perspective of the construction software industry?
"Our business is global, so we’re used to dealing with varying economic conditions. … For the most part, we’ve found that different regions of the world tend to balance each other over time. We’re as concerned about the fiscal cliff as any business. We also view it as an opportunity because our collaboration technology saves time and money for owners, developers, contractors and project managers. Demand for tighter schedules and budgets—plus risk reduction and avoidance of disputes—increases the need for online, project-wide collaboration."
Jay Haladay
CEO
Viewpoint Construction Software
CBO: What is the most pressing challenge in the construction software industry right now?
"I think it’s trying to make technology easier for contractors to use. And that’s not just individual products, but contractors have to use 10, 15, 20 different software products and technology products to run a project or run their business. And trying to give them an easier way to make those products work together is what they’re looking for, and they’re looking to our industry to figure that out. …
Now, one of the things that make that challenging is it takes a lot of money to make that work, to make that a reality. So, I think a corollary to that is that construction technology providers have to be well capitalized. They have to have the funds to be able to invest in the staff and the product development required to make products both easier to use and more connected."
John Chaney
President and Co-founder
Dexter + Chaney
CBO: What kinds of changes have been most important to the construction software industry in 2012?
"I look back at 2012 as a pivotal year for construction software. A confluence of new technologies brought significant change to the way we work and, therefore, the way we deliver software.
Consider mobile computing. This past year saw the market share of the PC dip below that of mobile computing devices (smart phones, tablets, etc.) for the first time. More than half of the devices used to run software are no longer using the traditional ‘WinTel’ architecture. Software applications that are not adapting to this change will soon find themselves on the wrong side of technology history.
Cloud computing continues to dominate discussions about the future of software, but 2012 also saw this technology become more real for many more companies. Eighty percent of businesses are using some type of cloud computing. But, what is more interesting is why they are moving to the cloud. More than a third are doing so in order to be able to connect to their software and data from any place and any device."
Fred Ode
CEO and Chairman
Foundation Software
CBO: What changes regarding the construction software industry as a whole do you predict for 2013?
"Truthfully, I don’t see very many changes, nothing major on the surface, anyway. I do think we’ll see a continuation of the evolution of construction technology, though—people stepping up and leveraging smart devices, the cloud, etc. We’ll also see a willingness on behalf of construction companies to use this technology to increase their efficiency, their bottom line and, most importantly, their long-term success."
Steve McGough
Chief Operation Officer
HCSS
CBO: What is the most pressing challenge in the construction software industry right now?
"The most pressing challenge in the construction software industry right now is how to innovate in a slow economy. The push toward tablet and mobile computing is driving software companies to innovate. How does a software company pay for this innovation when the profit perspective for this innovation is far from certain or, at a minimum, very difficult to predict. The challenge is to deliver a product that is affordable and adds value to your customer."
Jim Flynn
President and CEO
Maxwell Systems
CBO: How do you see construction software evolving in 2013?
"In 2013, we are going to see the continued generational adoption of social collaboration, specifically in the coordination of construction activities (i.e. transfers, documents, payments and plans). This is going to continue to explode through web-based collaboration sites designed to connect the entire construction process from bid to cash.
I believe that the merit of the online collaboration capability is going to become the norm, much like digital plans are now the norm for the industry. There will be a higher degree of coordination and a significant decrease in cost overruns and misunderstandings that in essence harm all the participants in the construction process. This expanded use of social collaboration in the construction industry will continue to transform the cash flow of construction businesses, their degree of efficiency and the degree of coordination among all members of the construction process."
Jim Wenninger
CEO
Wennsoft
CBO: What is the most pressing challenge in the construction software industry right now?
"Flexibility is a key challenge. For instance, a mobile solution should offer both online and offline functionality with store-and-forward capture of information. The store-and-forward capability provides maximum flexibility by allowing contractors to access and update information even when they lose connectivity. … Software should never be limited by the availability of an Internet connection. Customers also want the flexibility to choose between hosted or on-premise deployment, perpetual or subscription licensing, or deployment in pieces or all at once."
Tony Pappas
CEO
ExakTime
CBO: What kinds of changes have been most important to the construction software industry in 2012?
"I think the biggest change in construction software is driven by changes in the consumer market.
Think back for a second on the ‘old’ days. Technology and people were separated by a wide gulf. Only the computer ‘geeks’ could install software, configure it, understand how it worked, add and remove files. Now? Much of that knowledge, at least for end users, just isn’t that important.
It’s easy to pigeonhole your customers, get into the mindset that they’ll remain constant. But, the mobile and web revolution is really taking hold at all levels. Kids, the elderly and everyone in between are not only losing their fear of technology, but they’re seeking out technology.
We’ve seen the evolution of our customers on computers: moving from fear to function. It’s a shift that construction software vendors should love because they can spend more time on creating excellent products and services, and less time worrying that users will be afraid to use them."
Bryn Fosburgh
Sector Vice President
Trimble
CBO: How do you see construction software evolving in 2013?
"First, we see further adoption of best-of-breed enterprise back-office software to enable operational process efficiencies. Next, BIM and integrated project delivery (IPD) are expected to evolve at a much faster rate due to hardware and software technology advancements and ease of use. Open technology and developments in OpenBIM will play an important role here. This will enable the unique project teams to enable processes and technology best suited for the project needs. In order to achieve this, back office systems, field software and field hardware will need to be interoperable with open technology."
Jim Hasler
Vice President
Case Construction Equipment
CBO: What are you predicting the construction equipment industry landscape as a whole to look like in 2013?
"We expect the overall construction market to be relatively stable in 2013, with possible improvement later in the year. Continued modest recovery in the housing market will help, as well as modest growth in industrial construction spending, driven in part by ongoing shale energy development."
