ForConstructionPros.com

The Associated Equipment Distributors (AED) titled its September 2008 Executive Forum "The Perfect Storm" to represent how equipment manufacturers and dealers are getting hit with multiple negative forces at this time. The housing fiasco, combined with the credit crunch, eliminated a lot of construction work. This in turn reduced dealer equipment sales, increased inventory levels and even reduced the parts and service business. Even contractors who wanted to buy equipment found it difficult to cope with credit providers. Add to that 7% to10% price increases starting this Fall, and you have the "perfect dealer storm."

We all know that one person's problem is another's opportunity. In this case, dealers' problems are your opportunity to upgrade your equipment fleet at their expense. If your business is surviving, and solvent, and you know you will be replacing equipment within the next two years, you should take a very hard look at doing it now, before the end of 2008, because of all the opportunities. Not only do you have the supply and demand cycle on your side, credit for equipment purchases is easing and the IRS is providing tax benefits you may not see again for many years.

Negotiate price and financing
Equipment is available with better than average delivery terms. You want it and, in most cases, you can get it at very competitive pricing.

Of course, pricing should not be your sole determining factor when placing an order, because dealer support is very important, as well. Negotiate hard, but select the best overall deal from the dealer that will help keep the equipment up and running.

On the financing front, your bank or the dealer's financing sources should offer better terms than they were six months ago. You can buy the equipment outright or lease it, though it would probably be in your best interest to lock in an interest rate, since inflation will cause rates to increase. Negotiating the financing should be part of the purchase exercise, and you should expect dealer assistance if it is warranted.