Profiting or Profiteering?

Guy Ramsey

October 5, 2005 • In the aftermath of Hurricanes Katrina and Rita, the impact on the lifting equipment industry is huge. The number of telehandlers and cranes required to first clean up the Gulf Coast and then put things back together again is unfathomable. In terms of supply and demand in the construction equipment business, these natural disasters could not have happened at a worse time.

 

The story is the same in any part of the country • not just states serving the Gulf Coast. Already stretched thinner that many can ever remember, the lifting equipment industry is now scrambling to respond to current market conditions. Before the hurricanes, fleet operators were struggling to meet equipment needs, expecting additional equipment shortages fueled by the projected demand of the recently passed $286.5 billion transportation bill.

 

The owner of one major Midwestern crane and aerial lift rental company shared with me that even before the hurricanes, his organization was fielding dozens of calls every day for equipment he didn't have. In addition, the equipment he already has on order through July 2006 was for needs exclusive of any related to the storms. Compounding the problem is a shortage of trailers and transportation vehicles required to deliver the equipment that is available.

 

It seems the industry was poised to enjoy several years of excellent returns without the demand spawned by Katrina and Rita. So what is one to do when faced with record demand and no apparent end in sight? No one will argue that now is the time to make a profit. You have the equipment, made an investment, took the risk, and are entitled to a return. Based on the unfortunate circumstances, that return may be a little healthier return than you had planned. That seems fair. But what isn't fair is profiteering • seeking or obtaining excessive profits at the determent of others. Let's hope we don't see this kind of response to the hurricanes raise its ugly head.

 

But what is considered excessive profit? As we watched the floodwaters rise in New Orleans, I believe petroleum producers and wholesales demonstrated profiteering. Within hours, they had calculated how high they could push the price of gas on nearly every street corner in the country. Overnight gas prices spiking more than 30 percent for fuel that was already in storage and would be replaced by product that came from places thousands of miles away from the Gulf of Mexico.

 

Certainly the extra cost we are incurring for gas pales in comparison to the suffering of those directly affected by the storms. Yet there is a ripple effect by which we all will be impacted • higher property insurance rates, a spike in building costs in the near term as delivery of building supplies are delayed, and in the long term as reconstruction creates a vacuum for what remains of an already stressed supply (think concrete, tires, steel). We can also look forward to a larger budget deficit, the cost of which will hit our pocketbooks in years to come.

 

Some experts warn that the crisis atmosphere and the open federal purse are a bonanza for lobbyists. It's likely that private companies will abuse contracts with dishonesty and waste. A lot of organizations will profiteer from this reality. But the lifting equipment industry must resist the temptation.

 

Profiteering is simply taking advantage of someone else's misfortune. Certainly a smart business person will take into consideration that direct and indirect costs of doing business will be on the rise for months to come, and expected profit margins will be set accordingly. But how much is too much profit? Only you know that answer.

 

On another note, you may have read last week about our partnership with Crane Hot Line magazine. Look closely at any successful partnership, be it personal or business, and you will likely find that the parties involved complement each other. That is to say each has its own set of skills or assets that when joined together produce a much stronger entity or union. We have achieved just such a partnership with the creation of a new publishing company, Maximum Capacity Media, L.L.C., Ft. Dodge, Iowa, serving as the umbrella for Lift and Access and Crane Hot Line magazines.

 

The two most important aspects of a successful publication are content and readership. Content is a combination of expertise, creativity and hard work, which with the right people and direction, can be developed rather quickly. Readership, on the other hand, is a different story. Building and properly managing a database is an ongoing and arduous process.

 

Both Lift and Access and Crane Hot Line will maintain separate identities, but through this partnership will be able to draw from the other's strengths. The editorial staff of Lift and Access has more than 50 years combined experience covering and working in the lifting equipment industry. Our editorial staff lends an expertise to Crane Hot Line, which the magazine previously lacked. Meanwhile, Crane Hot Line is widely known for its unparalleled leadership in database management and the marketing of new and used cranes, lifting equipment, support equipment and services to buyers in heavy construction, highway and bridge construction, general construction, and specialty trades. It boasts an exceptional and sophisticated circulation management department. Working together, both magazines will benefit from the strengths of the other.

 

I will be serving as President and Publisher of Maximum Capacity Media, so named as a reference to the products both magazines cover as well as to the effort the editorial, sales, and production teams will put forth for the respective publications.

 

Lift and Access will continue to expand its presence under the leadership of Katie Parrish. In the months ahead Crane Hot Line readers will begin to see expanded editorial coverage of cranes and rigging products, job applications, and safety and regulation issues. Leading this effort is Tracy Bennett, who has been named Editorial Director of Crane Hot Line.

 

Meanwhile, Lift and Access 360 readers will enjoy the benefit of increased circulation. With the joining of Crane Hot Line and Lift and Access, more than 17,000 crane and lift equipment owners will be added to the electronic database for 360, more than doubling its current distribution. Ellen Parson will oversee both websites and remains the editor of 360, which will now include additional crane and rigging articles.

 

This new venture gives us the ability to leverage our combined strengths. We look forward to being a top-notch resource for the industry we have all served for so many years.