Economy Tests Tanks
Tank and containment suppliers have felt the pinch as dealers dial back spending.
October 6, 2010
Though fertilizer and commodity prices seem to have settled, there is still an air of uncertainty in the overall economy that's affecting allied ag equipment sales, says Ron Lager, sales manager with Precision Tank & Equipment (PT&E). He believes customers have pulled through the tougher times and are showing renewed interest in purchasing. However, it's still a cautious interest and most of the purchasing is replacement and strictly what's needed, he says.
Ken Hunter, president of Hunter Agri-Sales, reports fewer leads for large-volume containment projects, but larger-scale construction is not on a total hold. In fact, Lager has seen a few big companies building mega-plants this year: "As smaller plants strive for purchasing power, these new plants offer significant savings for the end users as well as a more efficient means of doing business," he says.
Fiberglass Meets Metal
Precision Tank — famous for its steel tanks — has found big gains lately with fiberglass tanks, constructing a new facility devoted to the products. Lager believes fiberglass "is the hot topic right now. With improvements in manufacturing techniques and components, fiberglass pricing will continue to be competitive, while providing great longevity and maintenance advantages," he says.
Dennis Neal, president of Enviropac, Inc., would second that. "We are having one of our biggest years ever in the fiberglass tank business in both agricultural and industrial," says Neal.
He adds that Enviropac's supplier has been in business for over 40 years and really understands customers' needs and how to build the product needed for the marketplace. One major issue with oversized tank loads is always freight. "With its fleet of trucks with cranes on-board, our source can deliver all tanks that a customer orders on the same day, which greatly minimizes crane costs for the customer," he says.
Gery Conlin, president of Mid-State Tank, says sales of his company's stainless products for the ag market — which include tanks for most of the major sprayer manufacturers' self-propelled units — have started to pick up again after a dip. "That market appears to be very strong heading into the fall, as does the market for nurse tanks," he says.
Conlin attests that stainless steel and aluminum supplies have not been a problem — it's their prices, up from a year ago, that are a concern. Prices have been volatile because the cost of nickel has been high. "It's a precious metal, a whole different animal ... its price does not necessarily fluctuate with supply and demand," he says. Mid-State has had to pass material costs on to customers, just like all stainless steel equipment manufacturers.
Last year at this time, Mid-State was celebrating the completion of its new 33,000-square-foot facility, geared in particular for construction of 20,000- and 30,000-gallon storage tanks. The building was also designed for the company's non-ag markets, to handle airport de-icer tanks, industrial chemical tanks, fire tankers, and pressure vacuum truck-mounted tanks. Unfortunately, sales in 2010 in those arenas dropped "off the chart, declining very, very substantially," notes Conlin — another sign of a sagging economy. "We were struggling to keep that building busy, up until the last two months," he says.
Hunter reports the same for his containment business. Sales were down considerably over the past year, which he attributes to a poor economy, higher taxes and bigger government — all creating a slowdown in the private sector, he says. But orders started picking up in August, and the company's portable Plia-Pads moved much of the year because regulations in more states are requiring airplanes to fill product on load pads.
Other tank suppliers had a few words of advice with 2011 approaching. "It's not the year to procrastinate if you need equipment," PT&E's Lager warns. As dealers realize they need equipment replaced in coming months, he cautions that lead times will be increasing at a quick pace.
Both Hunter and Conlin would both recommend making buying decisions based on quality, not price.