Business in 2008 and 2009
Business was great for us in 2008. We exceeded our previous one month record this past September by 10 percent, distribution revenues grew 20 percent and our rentals were up 10 percent. We were strong across the board because we are a strategically geographically-oriented, niche business with widely diversified end markets. For example, in 2008, our strengths in mining and oil and gas exploration in the western and southwestern United States compensated for our downturns in the small bits of business we do in the general construction and development sectors, particularly in the Southeast. I expect to see the same balance internationally, as we push into different markets in Latin America and the Middle East and emphasize Asia and Europe in particular.
There will obviously be economic slowdown in the big picture in 2009. We have continued our momentum through three recessions in my tenure as Chief Executive, and I am confident that we will continue that growth pattern through this one. We have no plans to slow down in 2009. We are inventorying the same. We are opening a new U.S. distribution facility and are expanding our U.S. fabrication facility.
In addition, we plan to open two to four more branches in the continental United States. It has always been our philosophy to work through economic adversity by staying the course and taking advantage of any extra time and resources to improve processes and revamp inventories. In addition, there are contracts to be won that involve bond issues designated for critical infrastructure work. It will be a tough year, but we consider ourselves a high quality, top notch company, and we will continue to win work because we are the best at what we do. Our strong capital position will enable us to invest past the credit crunch. Privately-owned companies will have some advantage here if well-managed.
Critical Issues
Obviously, there are parts of our business (less than 9 percent) that will be affected by the housing market. Another critical issue will be the ongoing developments in international oil prices, because of the resurgence in domestic oil exploration. Any changes in the price of oil and/or developments in alternatives to oil dependence (and how quickly those developments unfold) could affect the business we have garnered from oil exploration, which was favorable for us in 2008. Mining will continue to be strong throughout the next 18 to 24 months or longer, regardless of the state of the economy and particularly in China, India, Eastern Europe, Russia, Australia and Latin America, which are all emerging growth markets for mineral resources.
Business and Technology Trends
Now, more so than ever, we are experiencing a global market. I believe that trend will continue, which undoubtedly has both positive and negative effects.
The rise in technology and the Silicon Valley boom brought us through the last slow down, and then experienced a subsequent collapse. I would anticipate a technology resurgence. We are seeing many different computer-aided or computer-driven components for the pumping solutions we offer. We have discussed GPS technology in this light before. Our machines in the field use GPS technology to communicate with satellites that communicate with computers that relay performance and location information to the end users. What remains to be seen is how entrepreneurial companies like ours take this capability and turn it into a new, profitable way of doing business.
We now offer GlobalTRACS® boxes on our equipment sales so that our customers have the option of having a secured geo-fence around their machines, while also getting important information about machine hours, oil temperature, water pressure, etc. This is critical for some of our mining and oil and gas customers who have remotely-located pumps that cannot be easily accessed. In the rare cases where those machines can be accessed regularly for re-fueling (at a minimum), this type of technology will allow a more seasoned end user to remotely analyze the pump readouts in an effort to monitor system performance and determine the need for preventive maintenance.
Additional Thoughts
In general, the pump industry in 2009 should experience a good year, as pumps play a critical role in U.S. critical infrastructure; in Eastern Europe, China and India's emerging markets; and in Latin America, Russia and even Australia, where there is tremendous potential for mining. In our particular, dewatering centrifugal pump segment of the pump industry, I think that you will see continued growth and opportunity for quality pieces of equipment. I think there will be a move toward customers wanting better equipment as opposed to less expensive, less enduring equipment. That will bode well for us because we manufacture a high quality piece of equipment designed and constructed for the long haul and not the quick sale.
We intend to remain aware and plan for the future. We do not intend to fuel the downturn by changing the way that we do business. We will operate, as we always do, with our eyes focused on maintaining our reliability, responsiveness and reputation.