By John Blodgett, MacKay & Company
Signs of Spring have finally arrived in Chicagoland. It’s about time. It’s 55°F out today (I say out because I’m in here at this desk) but we will be back in the 30’s and 40’s this weekend, so just signs of spring, no full appearance yet, maybe by June.
The busy first quarter of tradeshows is over and I have had the opportunity to speak with a lot of industry people at these shows. Some have told me they think we will have a good first half of the year but not a good second half, but none of them seem to have a solid reason for these thoughts.
It was 70 degrees cooler outside when I provided my last status update on the aftermarket back before Heavy Duty Aftermarket Dialogue. Our outlook back then was positive and, while the mercury has since risen, our aftermarket outlook as we approach the year’s quarter pole remains steady and strong. No guarantees, but things still seem to be on track for a positive year (entire year).
Our economist Bob Dieli’s outlook tool, Enhanced Aggregate Spread (EAS), designed to forecast the short-term performance of the economy is still positive, and now projects through November of this year.
This is not to say there are no concerns. We still have trade/tariff issues, an inverted yield curve (some type of yoga position, I believe), low employment numbers in February and other signs that we need to stay attuned to what is happening with our economy.
MacKay & Company tracks a number of indices related to the aftermarket. Every month we survey truck dealers and independent heavy-duty distributors about their year-to-date parts sales.
Through February for this year, dealers are up 5.3 percent and distributors 1.3 percent. Though two months might not seem like much of a sample, this index actually has been up for 26 consecutive months for both channels. Touching briefly back to weather, I’m guessing the -40°F wind chill days in the upper Midwest a while back might have helped some of that recent performance.
Our Aftermarket Index of aftermarket component manufacturers sales in the U.S. also continues to be strong, up 6.1 percent through two months.
I think the theme for this year is to keep your eye on the ball. There may be more economy-related distractions as we move through the year compared with the last couple of years — or last 10 years as you look at the length of this current economic expansion. Some distractions will be good news, some not. While it will be important to be mindful of what is going on, don’t get caught up by every distraction and don’t let your team use these distractions as a reason or excuse to back off their jobs, especially in sales.
I have had a few discussions with senior level managers at companies that are concerned they have a good portion of folks in their companies who have never been through a recession. Again, we have no signs of a recession in our short-term outlook (I said no signs), but some day we will.
It will be important to remind people, especially younger people, that when these distracting economic stories pop up there is very little they can do about it. What they can control (positively or negatively) is their performance.
Stay tuned but don’t take your eye off the ball.
John Blodgett has worked for MacKay & Company for more than 20 years and is currently vice president of sales and marketing, responsible for client contact for single- and multi-client projects. He can be reached at john.blodgett@mackayco.com.
