WELCOME TO THE PREMIERE EDITION OF INDEPENDENT EQUIPMENT COMPANY'S
MARCH 10, 2009
According to the annual machine tool survey conducted by Gardner Publications, 2009 global output plunged by 59%. The top machine tool producers were: China, Germany, Japan, and the U.S. placed 7th. Meanwhile, the top exporters were: Germany, Japan, and Italy. The U.S. placed 7th. On the import side the top three included: China, the U.S., and Germany. For 2010, the outlook for the industry is expected to improve from its cyclical 2009 bottom as both the U.S. and Global economies climb. January's YOY consumption was up by 26%.
January tonnage jumped by 5.7%, its second consecutive increase and the largest gain since 2005. Diesel fuel prices increased for the second time in six weeks to $2.90, the highest in 16 months. Also, new trailer orders increased by 10% in January, led by a spike in dry vans.
IBM unveiled its latest generation server last week, the eX5. This is the 5th generation of IBM's eX architecture. It is less costly to business since it separates the computer's memory from its central processor. In the HDD sector, sales of disk-based storage systems fell slightly in the 4th quarter vs. the year before. Market leaders by sales include: EMC, IBM, and HP. Also, Cisco just unveiled its next generation router, the CSR-3 at a cost of $90,000. A string of 82 CSR-3s could handle one Library of Congress per second.
Sales continue to improve. Recent introductions include the GE handheld ultrasound called the vScan at a cost of about $8,000. This model will compete with ultra-portables manufactured by Hitachi (laptop), and Siemens (Acuson). In addition, Volcano's vascular 'IVUS' remains very popular at a cost of around $60,000. The revival of 'National Healthcare' legislation may negatively impact the primary market, but is not expected to hurt the secondary market. The status of this legislation may be known before many hospitals set their annual budgets in July.
IC Insights forecasts that, after falling by 11.6% in 2009, semiconductor sales for 2010 will increase by 27%, led by a 74% surge in the DRAM market. Furthermore, the company forecasts a 15% increase in 2011. In addition, Gartner has predicted that semiconductor capex will increase by 76% this year. Already price increases can be seen in the secondary market with some tool prices increasing by over 50% in just three months. Industry capex is forecast to grow by 76% in 2010.
A rash of new orders is causing many experts to claim, "The Baltic Dry Index will be less responsive to shifts in demand.." This Index has long been used to measure the health of the shipping industry. Also, the industry has found a way to slash operating costs referred to as "slow steaming." In utilizing this method of operation, deep-sea route speeds are reduced from 22-24 knots to 18 or 14 knots, generating substantial bunker savings.
The number of items included in the annual consignment sale held in Kissimmee, Florida fell by 10% this year; however the average sales price exploded by 40% to 50% over July's cyclical lows. A large number of South American buyers attended the sale. In other news, the AEM forecast that sales of new construction equipment in 2010 will increase by 5%.
According to data just released data by Flight International, Embraer delivered (122) regional jets vs. Bombardier with (60), and likewise had a backlog of (265) vs. (158) for Bombardier. In the turboprop sector, Bombardier delivered (115) in 2009 vs. (54) by ATR, and likewise led in backlogs with (211) vs. (136). Final 2009 totals in the helicopter segment found the top seller to be the Eurocopter EC135 (92), followed by the Agusta A109 (83) and the Bell 407 (73).
Last week the AAR reported freight volume hit its highest level in more than a year. As a result, Class 1s are beginning to remove locomotives and railcars from storage. It is estimated the number of stored railcars has dropped from 500,000 to 425,000. Should this trend continue, railcar values and lease rates would benefit. Sales of most types of used tank cars continue to hold up well.
OIL AND GAS EXPLORATION:
Baker Hughes announced that the N.A. rig count for February continued to climb to 1,914, an increase of 188 from January. Already used rig prices are beginning to stabilize and are forecast to increase by around 10% in 2010.
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INDEPENDENT EQUIPMENT COMPANY
Carl Chrappa, A.S.A., M.R.I.C.S., I.F.A.