Troy Clark joins us to discuss what he’s seeing in the machine tool market during the COVID-19 pandemic.
About this segment of Blackbird TV
Recorded: September 28, 2020
Published: November 10, 2020
I’m here with Troy Clark this morning. Troy from Clark Machinery Sales just outside of Baltimore—he just said north of Baltimore in Hunt Valley—can you just share with me what your perspective is right now on the state of the market, and in values relative to your space in the machine tool world? It’s funny, in January we thought things were going to be a little bit soft, and our business was a little bit soft, in January you always feel like there’s a dip because there isn’t that demand for machine tools as opposed to the end of the year 179 ramp up. And then February and we began hearing rumblings that suppliers couldn’t get, maybe aluminum from china or their manufacturers couldn’t, and so some of the people we we’re talking with, they were having difficulty getting parts out of China etc., and so we weren’t able to sell a few machines there and then and then Covid came and everybody got cautious got more cautious so they it’s they’re already… what i’m saying is, they’ve already seen interruptions in supply lines coming overseas and then the United States shut down so in 2020 prices softened early on and then everybody thought the air brakes were going to be thrown on and so they thought they could buy very very cheaply but you probably find the same thing I do, sellers lag behind buyers in the appetite to drop a price right so absolutely buyers are like “ah, you’re screwed this is this price isn’t what it’s worth,” and so then the sale, it takes about five or six months for guys to catch up and go “uncle! You got me, it’s not worth that much,” I thought prices were going to take a very steep dip I don’t think they did, what we saw was a buyer confidence and people had confidence buying cheaper machines rather than more expensive complicated machines that’s what we saw so that 30, 50, 60000 range was easier for people to swallow than the 100 200 machine. That’s what we sort of saw overall, the thing softening for us? no i just think they have a more of a tolerance for the less expensive risk because we’re hearing people talk about election year and covet and riots and so there’s more than just the covenants that held off on buying a machine because he said hey life is doing stable right now i don’t know if i’m going to invest so it’s been tricky but people keep buying and selling yeah that’s great. I’m watching lots and lots of sectors and that’s similar in other sectors and in the case of some tractor trailers, some of the newer trucks, you can’t even keep them on the market, they’re flying off the shelf and prices are really strong. Construction equipment prices have been very very stable, soI’m finding that I have these talks with different people in different industries. Maybe it’s a PPP prop upm we don’t know. There was a lot of money that got thrown around early on and I think people redeployed a lot of that money in different ways to the extent that money is fungible, so there has been stability. What do you—and I know that your crystal ball may be cloudy as mine is, but—what do you see happening going into next year, and when do you see a more full recovery within the machine tool sector again? It’s like what you just said, some sectors are fine. Medical? We could sell CNC Swiss screw machines all throughout the day, but I’m sitting on a million dollars worth of Kitamuras, these large 80-inch X machines that were doing landing gear. Well, okay, those aren’t moving. Airplanes aren’t real hot right now, neither is—well defense is okay—but aerospace and oil and automotive so it depends on the sector, and I think medical is going to keep being hot as governments and drug companies keep experimenting with how to defeat the Covid. To oversimplify that, those would be the smaller envelope machines rather than the bigger pieces. That’s exactly right and you’re talking plastic injection molding machines which we don’t specialize in but we overlap with because it takes you know there’s EDM machines that need to… you need EDM you need CNC Swiss screw machines, you need the plastic injection molding machine so that you can do the small medical devices or you know anything that’s gonna be working with the medical… The guys in my industry, the customers that we have that are six months out doing medical, they’re busy. They’re booked, and I have good friends who are sales people for Zimmer Biomet and Stryker and they got really soft for a month and a half right while all optional / elective surgeries were ruled out during Covid but they’re back bigger than ever he said he’s having one of his best years ever. So, my crystal ball for next year: I think anything is better than an election year for manufacturing. That’s what we’ve seen. We do an annual meeting in January, and we looked every four years and went “huh, isn’t that something? It sort of plateaus on that, and somebody goes, “oh yeah, that’s an election year, okay” well so the year after people get more confident, things more stabilized they know who they’re going to be dealing with in congress and where they’re going with trade deals, things like that, I think there’s just going to be pick-up, that’s me. Great well, we share optimism on this side of the call, Troy. Troy Clark, Clark Machinery Sales, thanks for joining us. Thank you, David.