3/1/2002
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Crystal Ball Gazing With A Reality Orientation
By Dave Wooldridge
Is business improving during the first quarter of 2002? Depends on whom you talk to. An unscientific survey of several parts and equipment suppliers with whom I have spoken over the past two weeks indicates that business was noticeably better in January than in November or December of 2001. Several also said business has remained good during the first two weeks of February as well – a positive sign.
Engine builders are a different story. Most PERs I’ve spoken with this year are still not seeing any significant improvement in demand for exchange remanufactured engines. Several custom engine rebuilders, on the other hand, have reported that business has been good during the first quarter. And those with installation operations say business has been "average" to good.
Each quarter we send out a fax survey to a sample of our readers to query them on current and projected business. As might be expected, nearly 44% of engine builders responding to our survey said business had decreased in the fourth quarter of 2001 compared to the same period in 2000. The average decrease was about 19%.
But, 52% of engine builders said they expected business in the first quarter of 2002 would be better than the fourth quarter of 2001. Just 16% thought business would decline.
We also asked engine builders what was the most profitable machine and assembly work performed in their shops. Overwhelmingly, 57% cited cylinder head work as the most profitable job category. Even more interesting, we asked for the average age of heads and blocks being rebuilt. As a percentage of total head and block work performed, nearly twice as many heads five years of age or younger are rebuilt compared to blocks.
That last bit of information confirms what many of us have known for a long time – late model heads offer the best profit opportunities for many shops. Unfortunately, many shops still need to equip themselves with the training, equipment, tooling and technical information to take advantage of it.