PACIFIC NORTHWEST HARDWARE & IMPLEMENT ASSOCIATION Serving Dealers Since 1899 INSIDE: Washington State Legislative Watch List Grows Washington State Workers' Compensation Bills Washington $12 An Hour Minimum Wage Bill Oregon Legislative Watch List Debit Card Fee Ruling Goes Against Retailers, Consumers Federal Mediator Intervenes In West Coast Port Labor Dispute AGCO and Russian Machines Complete Joint Venture ICP Files Suit Against Caterpillar, Komatsu and Volvo Heavy Construction Equipment Ironplanet And Cat Auction Services To Hold First Joint Auction New Study on Clean Diesel Technology Affirms Near-Zero Emissions John Deere Announced The New John Deere App Center Which Is A Convenient Mobile App, Designed Specifically For John Deere Equipment Users 2015 Equipment Rental Industry Forecast To Grow 8.1 Percent New Home Sales Rise 11.6 Percent In December Stanley Black & Decker Reports Net Sales Up 3.5% In Q4 United Rentals Post Fourth Quarter Revenue Connecting the Dots AEM Flash Report February 2015
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PACIFIC NORTHWEST HARDWARE & IMPLEMENT
ASSOCIATION Serving Dealers Since 1899
INSIDE: Washington State Legislative Watch List Grows
Washington State Workers' Compensation Bills
Washington $12 An Hour Minimum Wage Bill
Oregon Legislative Watch List
Debit Card Fee Ruling Goes Against Retailers, Consumers
Federal Mediator Intervenes In West Coast Port Labor Dispute
AGCO and Russian Machines Complete Joint Venture
ICP Files Suit Against Caterpillar, Komatsu and Volvo Heavy Construction Equipment
Ironplanet And Cat Auction Services To Hold First Joint Auction
New Study on Clean Diesel Technology Affirms Near-Zero Emissions
John Deere Announced The New John Deere App Center Which Is A Convenient MobileApp, Designed Specifically For John Deere Equipment Users
2015 Equipment Rental Industry Forecast To Grow 8.1 Percent
New Home Sales Rise 11.6 Percent In December
Stanley Black & Decker Reports Net Sales Up 3.5% In Q4
United Rentals Post Fourth Quarter Revenue
Connecting the Dots
AEM Flash Report
February 2015
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Washington State Legislative Watch List Grows Here is a summary of some key bills on the watch list:
SB5037, preventing flash mob robberies. A broad coalition of retail, business and law enforcement including support this bill, to specifically identify flash mob robberies for prosecution. Small retailers, in particular, are defenseless as groups of thieves, often pre-arranged on social media, arrive at a store at the same time to steal merchandise. The national trend spread to Federal Way convenience stores late last year.
HB1273, HB 1163, concerning paid vacations and sick leave. These bills will require minimum paid vacation and sick leave statewide. Such policies threaten the livelihoods of some businesses and the jobs of employees. PNA prefers that businesses resolve schedule demands without regulations and costly mandates.
HB 1356, statewide sick leave policy. This statewide bill that mirrors a Seattle ordinance. PNA prefers that economic incentives encourage participation on a voluntary basis. Seattle's experience of mountains of documentation has proven burdensome and impractical for employers.
The Legislature has established a website that allows visitors to review and comment on bills sorted either by their number or general topic. The site also allows visitors to review the bills sponsored by each legislator.
Washington State Workers' Compensation Bills The House Labor Committee heard a bill HB1253 that requires employees to report workplace injuries to their employer for purposes of workers' compensation. Workers stop showing up for work without notifying the employer they suffered an on the job injury. Employers eventually receive a report of accident, sometimes months after the alleged injury, which makes it difficult for the employer to investigate to determine when and how the accident happened.
This is bill will reinforce the current requirement in workers' compensation that is not enforced by Labor and Industries. It would allow employers to respond quickly and resolve any hazards in the workplace in a timely fashion.
This bill gives Labor and Industries the tools it needs to enforce the communication of any injury to the employer.
The Senate committee also heard several very good workers' compensation bills, including SB5510. This bill will bring clarity to a confusing and unbalanced formula for calculating a worker's wages when they are injured on the job.
Washington $12 An Hour Minimum Wage Bill House Bill 1355 raises the state minimum wage for employees 18 years or older to $10 an hour in 2016, then raises it 50 cents per hour each year until the rate is $12 an hour in 2019. The bill's prime sponsored by Rep. Jessyn Farrell and 40 co-sponsors.
The bill has support to pass. It is scheduled for public hearing in the House Committee on Appropriations at 3:30 PM, February 16th (Subject to change). Depending on the outcome of the public hearing the bill is scheduled for Executive Session in the House Committee on Appropriations at 3:30 PM. (Subject to change).
Oregon Legislative Watch List As I write this newsletter the Association is working a bill in Oregon to clarify the definition of a supplier’s actions that result in a “substantial change to the dealers competitive circumstances” and the consequences of such an action.
The Association, through our lobbyist Roger Beyer, has been monitoring several employment related bills and submitted position papers on two bills HB2007 and HB2006.
HB 2007. This bill would make it an unlawful employment practice for an employer to discharge, demote or suspend, or discriminate or retaliate against an employee because that employee has:
• Inquired about, discussed, or disclosed in any manner the wages of the employee or anotheremployee.
• Made a charge, filed a complaint or instituted or caused to be instituted, an investigation orother proceeding based on the disclosure of wage information by the employee.
We opposed HB 2007. The terms “inquired about, discussed, or disclosed in any manner” is a very low bar for an employee to prove when filing an action for employment discrimination against an employer. Any comment made in the course of an ordinary day that mentions compensation could suddenly become grounds for retaliation complaints. To read the entire letter go to our website www.pnwassoc.com Legislature, State Legislative Affairs, Oregon Legislation.
We oppose HB 2006 because pay discrimination based on gender, or any protected class, is already illegal and it shifts the burden of proof from the employee to the employer. You can read the testimony letter at www.pnwassoc.com Legislature, State Legislative Affairs, Oregon Legislation.
Pacific Northwest Implement and Hardware Association believes the current ORS 659A remedies and burdens of proof are appropriate since there are many legal reasons for disparities in pay such as education, seniority and skill level.
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Debit Card Fee Ruling Goes Against Retailers, Consumers The National Retail Federation today vowed to press the issue in seeking relief for consumers following the Supreme Court's refusal to review a complaint that banks charge excessive fees for use of debit cards.
"The (Supreme) court's decision is disappointing because it leave merchants and their customers paying far more than intended by Congress," said Mallory Duncan's NRF's Vice President and General Council. "Federal agencies have flexibility in implementing our nation's laws, but do not have the discretion to blatantly ignore the wishes of elected officials and the clear language of the statute."
In a lawsuit filed four years ago, NRF argued the Federal Reserve set excessive fees banks are allowed to charge for use of debit cards. It argued a rate of 21 cents per transaction was beyond that intended in the Wall Street Reform Act of 2011. The law requires the Fed to set so-called swipe fees that are "reasonable and proportional" to the cost of processing a sale.
"Banks will benefit from this ruling but the battle over swipe fees isn't over," Duncan said. "We will continue to press the issue."
Litigation is pending on fees banks charge for credit cards, Duncan noted.
WRA is in support of challenging swipe fee levels that have been rising rapidly in recent years while hurting retailers by discouraging sales. Here is the text of NRF's petition in the case. Source: NRF
Federal Mediator Intervenes In West Coast Port Labor Dispute A federal mediator is now involved in the West Coast port labor dispute that has slowed down shipments of agricultural products, according to agweb.com.
The Pacific Maritime Association (PMA), which represents shipping companies, said West Coast ports are facing “complete gridlock,” with few ships going in and out. Members of the International Longshore and Warehouse Union have been working without a contract since July 1, 2014. The PMA accuses union members of intentionally slowing down trucks at the ports, while the union says shippers have cut workers’ shifts.
The White House sent a mediator to help negotiate a solution, but, according to the Agriculture Transportation Coalition, a mediator cannot impose a resolution. Since the mediator joined the talks last week, no further agreements have been reached over the long-expired contract.
The National Pork Producers Council (NPPC) this week sent a letter to PMA and union leaders, urging quick reconciliation to get meat exports back on track. NPPC says slowdowns resulting from the disagreement affect meat exporters significantly, noting that they are running out of room to store pork, beef and poultry destined for export markets. The group said meat companies may be forced to shut or slow processing lines, which could have “catastrophic consequences for livestock producers, with animals ready for market taking space on farms.”
AGCO And Russian Machines Complete Joint Venture AGCO and Russian Machines Corporation announced they have completed a deal to begin operations of “AGCO-RM” for production of agricultural equipment.
The joint venture began in March 2013, when the two companies signed an agreement to establish mutually owned Russian manufacturing and distribution businesses. While competition approvals were being sought, the partners worked together on a contract basis for assembly operations at a 12.5-hectare manufacturing facility in Golitsyno, outside of Moscow. Assembly of Challenger and Massey Ferguson branded tractors and harvesters is underway, to be followed by distribution of assembled Fendt and Valtra branded products.
The new joint venture will begin assembling Massey Ferguson 7347 and 7370 combine harvesters and 7000 and 8000 series tractors with Russian-produced components.
ICP Files Suit against Caterpillar, Komatsu and Volvo Heavy Construction Equipment Boies, Schiller & Flexner (BCF) filed a suit on behalf of International Construction Products (“ICP”) against Caterpillar Inc., Komatsu America Corp., and Volvo Heavy Construction Equipment North America, LLC in the U.S. District Court in Wilmington, Del. The suit alleges the defendants in the case acted illegally to exclude ICP from the U.S. market by depriving it of access to efficient distribution.
According to the law firm, ICP, a seller of Chinese construction equipment, planned to sell equipment through IronPlanet, an online website. The suit alleges the defendants threatened to boycott IronPlanet if the site were to sell ICP products. IronPlanet has since announced a merger with CAT Auction Services.
ICP seeks monetary damages (compensatory and punitive) and injunctive relief to unwind the acquisition of IronPlanet and eliminate the Defendants’ exclusivity arrangements with their dealers.
The defendants in the case have not responded publically regarding the suit. Source: Boies, Schiller &Flexner
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IronPlanet And Cat Auction Services To Hold First Joint Auction Online auctioneer IronPlanet and Associated Auction Services LLC, an alliance of Caterpillar and several of its independent Caterpillar dealers operating under the name of Cat Auction Services will hold a live unreserved public auction in Kissimmee, Fla., with more than 1,000 items up for bid. All of the equipment will be backed by IronPlanet’s IronClad Assurance buyer protection program.
Equipment will include articulated dump trucks, backhoe loaders, cargo trucks, compact track loaders and more.
“We’ll have a large and diverse selection of late model equipment from OEMs, Caterpillar dealers, rental companies and large contractors,” said Gregory Owens, chairman and CEO of IronPlanet.
“IronPlanet and Cat Auction Services together in one auction will be the largest selection of quality used Cat equipment in Florida,” added Frank Fowler, senior vice president of used sales at Ring Power Corp.
Buyers around the world will be able to view and bid on the full list of items at IronPlanet’s online marketplace at www.ironplanet.com and at www.catauctions.com.
IronPlanet and Cat Auction Services announced last month that they had signed an agreement to merge. The transaction is subject to regulatory approval and other standard closing conditions and is expected to be completed during the first quarter.
New Study On Clean Diesel Technology Affirms Near-Zero Emissions The Diesel Technology Forum issued the following statement on Jan. 27, regarding the final report of the multiyear Advanced Collaborative Emissions Study (ACES) conducted by the Boston-based Health Effects Institute (HEI).
HEI conducted the independent study of new technology diesel engines to determine whether the engines achieved the expected emissions reductions, thereby improving air quality for public health, as well as whether the new technologies resulted in any unintended increases in emission components. The study concluded that exposure to new technology diesel exhaust does not cause any increase in the risk of lung cancer or other significant adverse health effects in study animals.
“The significance of this study and its conclusions cannot be overstated,” said Allen Schaeffer, the executive director of the Diesel Technology Forum. “The results of this new study verify the environmental benefits of the new clean diesel technology, which have near-zero emissions for nitrogen oxides (NOx), hydrocarbons (HC) and particulate matter (PM). And while this study focused on heavy duty truck emissions, the new clean diesel technology has the potential for impacting all sectors, including passenger cars, agriculture, construction, maritime and transportation.
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“The comprehensive nature of this study by such an authoritative body as the Health Effects Institute is extremely significant. It’s also important to highlight that the U.S. Environmental Protection Agency (EPA), the California Air Resources Board, the U.S. Department of Energy (DOE) and the U.S. Federal Highway Administration are sponsors of this study in conjunction with the manufacturers of emissions control equipment.”
To read the HEI press release on the ACES study go to:
John Deere Announced The New John Deere App Center Which Is A Convenient Mobile App, Designed Specifically For John Deere Equipment Users The new John Deere App Center will assist equipment users with convenient apps to help increase performance and productivity.
“This new tool offers applications that will help users increase the performance and productivity of their equipment,” said Pat Pinkston, vice president, technology and information solutions, John Deere Intelligent Solutions Group. “Other apps will be available to help manage many jobs within their operation while helping to improve overall efficiency for their work or farm site.”
The John Deere App Center provides users the ability to search and find apps most useful to their business or operations. They will also be able to share the apps on social media and provide feedback to improve the applications and develop additional apps for the future.
“This is just the tip of the iceberg,” said Pinkston. “In this age of wireless data transfer, data-enabled agriculture, and new data technologies in machinery, we will be offering many more apps in the future with additional features to help our customers.”
For more information, you can download the John Deere App Center on your iPhone or contact your local John Deere dealer.
2015 Equipment Rental Industry Forecast To Grow 8.1 Percent A strengthened economy, growth in employment and lower gas prices at the pump, generating increased disposable income, all spell favorable news for consumers as well as the equipment rental industry in the United States.
Overall, the American Rental Association (ARA), through its ARA Rental Market Monitor subscription service, forecasts equipment rental industry total revenue growth of 8.1 percent in 2015 to reach $38.5 billion in the U.S., including all three segments — construction/industrial, general tool, and party and event.
Construction/industrial rental revenue is now forecast to increase 8.5 percent in 2015 to $26 billion, with general tool projected to grow 8.3 percent to $9.9 billion this year and party event to show a 4.5 percent increase to $2.7 billion.
“The equipment rental industry continues to grow at a fast pace with strong equipment rental demand within all markets,” said Christine Wehrman, ARA’s executive vice president and CEO. “While the news focuses on the energy sector of the economy, our industry is fortunate to have a balanced marketplace in which rental is in demand and energy represents only one of those markets. Rental companies have always been flexible in meeting customer demand by adapting quickly to changing markets. The industry growth forecast remains more than double that of the overall economy.”
“The number of positive offsets in commercial construction, multifamily housing, healthcare and manufacturing help to counteract the drop in oil prices and contribute to the strong 2015 growth projections for the equipment rental industry,” said Scott Hazelton, managing partner, IHS Inc. (NYSE: IHS), a leading global source of critical information and insight and the company that compiles data for the ARA Rental Market Monitor.
Also, a decrease in oil prices does not mean the energy sector growth stops. “Natural gas and oil extraction growth will likely be slower in 2015 and 2016, but it is important to note that extraction actually increases, just at a slower rate, even with lower oil prices,” said Hazelton.
Projected revenue increases for equipment rental due to more direct and indirect demand from the energy sector may be lower now than previously expected, but Hazelton says the other rising segments for the equipment rental industry will remain a positive factor for 2016 as well.
“IHS already had projected softness in the energy markets in 2016, so the quick drop in oil prices now presents less of a change in the overall forecast for the equipment rental industry,” said Hazelton.
The forecast for Canada calls for 3.7 percent growth in 2015 to $4.1 billion, with growth of 6.3 percent expected in 2016 to nearly $4.4 billion.
“We continue to monitor our industry on a quarterly basis to ensure that our members have the best information available in a changing economic environment,” said Wehrman. Source ARA
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New Home Sales Rise 11.6 Percent In December Sales of newly built, single-family homes rose 11.6 percent in December to a seasonally adjusted annual rate of 481,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“This uptick is in line with what our builders are telling us in surveys and on the ground — that they are seeing increased traffic and more serious buyers in the market for single-family homes,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo.
“After a slow start to 2014 precipitated by bad weather conditions, new home sales have ramped up in the second half of the year,” said NAHB Chief Economist David Crowe. “We can expect this momentum to continue into 2015 with the release of pent-up demand, particularly as existing home owners are trading up.”
The inventory of new homes for sale rose to 219,000 in December, which is a 5.5-month supply at the current sales pace. Regionally, new home sales rose 53.6 percent in the Northeast, 17.7 percent in the South and 3.1 percent in the West. Sales dropped 11.5 percent in the Midwest. Source: National Association of HomeBuilders
Stanley Black & Decker Reports Net Sales Up 3.5% In Q4 Stanley Black & Decker reported modest but steady growth in the fourth quarter, results that its chief executive said would fortify its position when facing challenges in the year ahead. “We were very pleased with our performance in the fourth quarter and for the full year," said chairman and CEO John Lundgren. "Our commitment to well balanced capital allocation priorities combined with our focus on key operational levers produced favorable organic growth, operating leverage and free cash flow results despite adverse currency and volatile macro environments." Net sales for the quarter came in at $2.98 billion, up from $2.88 billion in the fourth quarter of 2013. This was mainly due to increases in volume and price, but partially offset by currency. In terms of net income, the company pulled in $145.8 million, up considerably from last year's $56.1 million. For the full year, Stanley Black & Decker pulled in net sales of $11.34 billion, compared to $10.89 billion in 2013. Net income was $760.9 million, several steps ahead of 2013's $490.3 million. “As we look to 2015, we continue to enjoy strong operating momentum amidst similar operating conditions and, as a consequence, are well positioned to manage through another challenging environment," added Lundgren. "Our long-term strategy and financial objectives remain intact, and we are confident in our ability to continue to generate strong underlying organic revenue, earnings and cash flow growth while producing meaningful returns for shareholders.”
United Rentals Post Fourth Quarter Revenue United Rentals posted total fourth quarter revenue of $1.564 billion, compared with $1.338 billion for the fourth quarter of 2013, a 16.9-percent jump, while rental revenue leapt 16.5 percent from $1.133 billion in Q413 to $1.320 million in the recently concluded quarter. Net income for the quarter was $194 million on a GAAP basis, or $1.88 per diluted share, compared with $140 million, or $1.31 per diluted share in the year-ago period.
For the full year 2014, total revenue was $5.685 billion, a 14.7 percent year-over-year hike and rental revenue was $4.819 billion, a 14.8-percent year-over-year increase.
Time utilization increased 130 basis points year over year to 70.6 percent for the fourth quarter, while full year time utilization jumped 60 basis points to 68.8 percent.
For the fourth quarter of 2014, United Rentals generated $156 million of proceeds from used equipment sales at a gross margin of 48.7 percent, compared with $134 million of proceeds at a gross margin of 46.3 percent the prior year. For the full year, United generated $544 million of proceeds at a 48.5-percent margin.
“We met or exceeded every target in our outlook for 2014, ending the year with a better-than-expected quarter and our highest return yet on invested capital,” said CEO Michael Kneeland. “Our full year increases in rates and utilization helped drive up rental revenue at almost twice the pace of industry expansion, and we’re in a strong position to grow the most profitable areas of our business, including our high-margin specialty rental lines.
“For 2015, we are guiding to record highs of over $6 billion in revenue and approximately $3 billion in adjusted EBITDA. Our industry is forecast to have multiple years of growth ahead, and our customers are upbeat. While we expect to see a drag in some trade areas from the slowdown in upstream oil, our exposure is greatly limited by our size, agility and diversification. Furthermore, we believe that low oil prices will be a boon to many sectors we serve, spurring demand in manufacturing and other markets hungry for our fleet.”
The size of the rental fleet was $8.44 billion of original equipment cost on Dec. 31, 2014, compared with $7.73 billion at the end of 2013. The age of the rental fleet was 43 months, compared with 45.2 months at the end of 2013.
These data are, in part, estimates that are subject to revisions when final detailed data become available. Because of the seasonal nature of the industry, comparisons of monthly data from one period to another should be done with extreme caution. These data represent the machines in each product category being sold at retail in the fifty states and District of Columbia by most, but not all, of the manufacturers.
January 2015 Flash Report United States Unit Retail Sales
Report Released 2/10/2015
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