StageSeed | Alive
Last Raised$120K | 2 yrs ago
Watton develops software to help tutoring businesses manage their operations. It provides a full-service application that helps businesses schedule sessions, invoice clients, create shared whiteboards, and much more.
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Latest Watton News
Mar 1, 2022
Mar 1, 2022 Construction equipment demand in 2022 is expected to grow 6% to 10% over the next 12 months on top of last year’s 6% to 10% growth. RDO Equipment Forgive your equipment suppliers if they’ve been a bit winded these days. “The standard conversation in the industry is that they’d never seen anything like 2021,” says Dennis Howard, vice president for Deere and Vermeer dealer RDO Equipment. “It was all demand and no supply.” Surfing pandemic uncertainties, supply chain constraints, labor shortages and surging demand, the construction equipment industry is “a machine that’s low on oil and almost out of it,” says Benjamin Duyck, director of market intelligence for the Association of Equipment Manufacturers in reporting on the industry’s supply-and-demand issues in February. “Demand for new equipment was across the board, from quarry to mid-range to compact,” says Jason Hurdis, global market professional, Caterpillar. “We’re hearing from OEMs and dealers that they could have sold 10%, 15%, 20% more if they only had the machines,” says Chris Sleight, managing director, Off-Highway Research, speaking during the Feb. 4th Ritchie Bros. Auctioneers Inside Edge webinar. With used equipment, “anything that was newer, well maintained from good homes continued to set new pricing records,” says Doug Olive, senior vice president, pricing and appraisals, Ritchie. More of the same? And the not-so-good news, at least for those waiting for the market to normalize: none of this is likely to change this year. “We’ve got a lot of tailwinds going into 2022,” says Josh Nickell, vice president, equipment segment, American Rental Association. “Most contractors are pretty much booked for 2022 at this point,” says Heath Watton, vice president of business development for Case dealer Southeastern Equipment. “Any way contractors can get their hands on new equipment, they are,” Watton says. “Contractors are buying on need, period. If they need it, they’re going to find it, whether it’s new or used.” Starts with new When new supply is constrained, users go to used and rental machines, says Carey Nicholson, rental and used equipment market professional, Caterpillar. “You now have a high demand for used equipment, basically any piece of iron that can fill the gap between now and when the new one comes in,” Nicholson says. Much-discussed supply chain woes – microchip shortages, ships waiting to be unloaded, labor constraints – have impacted how much OEMs are shipping. In AEM’s most recent quarterly survey, 95% of its construction and ag equipment manufacturers said they were experiencing supply chain issues. “When all three legs of a dealer’s machine business – new, used and rental – are impacted, it’s a perfect storm,” says Nicholson, who points to car dealerships. “There used to be hundreds of cars on the lot, and now you see 10 new ones. That’s the same thing equipment dealers are experiencing.” Looking at the long-term trend line going back to 2016, auction values were running about 13% higher in 2021 than the six-year trend (dotted line on chart) would indicate.Rouse, Ritchie Bros.Know when to hold ‘em With new machine availability so constrained, not only are contractors finding machines any way they can get them, they are also keeping what they’ve got. Rental companies are doing the same, aging their fleets beyond a typical 3.5- to 4-year cycle. When such large fleets keep machines out of the used market, supply takes another hit. “Rental companies have held their fleet longer; it’s got the most hours it’s ever had on it,” Ritchie’s Olive says. “They just can’t turn those assets right now because they’re at a high utilization rate.” “Rental companies are managing their fleets differently,” ARA’s Nickell says. “It doesn’t matter how much it’s worth because they need to rent it.” What to do now? Enough with the hand wringing. What’s the best strategy moving forward? Here’s what our experts advise: Now is the time to place your new equipment orders. “Get an order on the books as fast as you can,” Nicholson says. “If you’ve got a job starting in September, get with your dealer now to determine the best route to go, whether new, used or rental or a combination,” Hurdis says. Usual buying patterns won’t cut it, says Howard. “There are customers in mid-February that want tractors in May and haven’t done anything about it. They’re not going to get them.” “The orders we now have are out to late this year and starting to look at 2023,” says Stephen Roy, senior vice president of sales region Americas, Volvo Construction Equipment. “People are being forced to place orders and at least get in line,” says Jason Perez, CEO and co-founder of rental platform Yardz. “We’ve had customers who tell us that they can’t get their equipment until 2023.” Be prepared to pay more. AEM reports it saw a 9.7% increase in the price of construction equipment in the last quarter of 2021. Rouse Appraisals, a Ritchie Bros. company, saw used equipment pricing rise 10% to 12% during the past 18 months. RDO Equipment saw price increases of up to 25% for used 4,000- to 6,000-hour dozers in 2021, Howard says. “The supply is so constrained and demand is so strong right now, people are just trying to get something to work. More price increases are coming.” This extends to service costs. Skilled technicians are in demand so expect labor rates to rise. If you’re not using it, sell it. Sell underutilized assets in the next four months, advises Howard. “You can probably make some really good money on it,” he says. Have an extended conversation with your equipment supplier. Discuss your upcoming jobs and what machines might be available. Keep the conversation going throughout the year. And create a 12-month equipment plan, Howard advises. “That’s not something contractors have had to do for a long time.” Remain open. Contractors and dealers have had to be fluid, says Marshall Anderson, executive vice president, RDO Equipment. “We’ve had to share inventory among our stores like we’ve never shared before, and customers are being just as fluid.” Many contractors are recognizing today’s realities and not expecting next-month results. “Customers who have typically rented are willing to buy; customers that typically buy are willing to lease,” Anderson says. “It’s really an all-of-the-above strategy.” Strategize on leasing. “In the past 12 to 18 months many customers have decided to keep product when it comes off lease because they’re not sure when they’re going to get the next piece of equipment to replace it,” says Volvo’s Roy. In other cases, they’re extending the lease. If your lease is expiring this summer, you’ve already passed the time of replacement, Howard says. You can hang on to the machine by renewing the lease or buying it. Another option is to flip it after purchase to take advantage of premium used prices. But know how you’re going to replace it or account for an older-than-expected machine in your fleet. Don’t abandon leasing, Howard says. A three- to five-year lease made now will likely put you at the bottom of next cycle when ownership is less attractive. “Don’t use today’s values as the barometer for four years from now,” he says. Look at other brands. With today’s price escalations and machine availability, it might serve you well to look beyond your usual brands. “It’s a great time to do your homework and give other brands an opportunity,” says Watton. “There’s a lot of good product out there, and now’s the time to get in the seat of them.” It’s a good time to call it quits. If you’re thinking about retiring or getting out of the business, now may be your best bet. A longtime Ritchie customer, for example, sat down with his family this fall. “He told them ‘our fleet has never been worth as much as it is right now,’” Olive relates. He even sold the new machines he had ordered. “On some of his used assets he achieved better than new value,” Olive says. Look at adding technology to your current fleet. Hurdis reports increased interest from contractors on aftermarket technology. “If they’re looking at keeping a piece longer, they’ll want to increase its efficiency,” he says, “so they’re putting in grade control so they can do more jobs faster and with more accuracy.” All of this leads to getting the most out of your current fleet, says Yardz’s Perez. “Contractors are being forced to be more efficient, and they’re going to be pushed into technology platforms.” Consider reconditioning, rebuilding or repowering. While this option does remove a machine from your active roster for a while, it also extends a machine’s life, postponing the need to replace it. “You might have made a simple decision in the past to get rid of a machine,” Hurdis says, “but now you have to look at all the possibilities.” Look for rental supplier consolidation. “2022 is going to be a big acquisition year,” Perez says. “The fastest way for rental companies to bring revenue is by increasing their fleet, and if they can’t get it from OEMs, they’ve got to acquire companies.” “Large national rental companies have gone back to acquiring faster than in 2019, and we don’t predict it’s going to slow down,” ARA’s Nickell says. When will things start to calm down? AEM expects construction equipment demand to grow 6% to 10% over the next 12 months, on top of 2021’s 6% to 10% growth. Factored into that equation is the incoming federal Infrastructure Investment and Jobs Act money that will start to ramp up this year. “We’re bullish on demand; the work is out there,” says RDO’s Anderson. “I think we’re going to be just as inventive as we have been this past year.” Related Stories
Watton Frequently Asked Questions (FAQ)
When was Watton founded?
Watton was founded in 2020.
Where is Watton's headquarters?
Watton's headquarters is located at 9289 North Fairway Drive, Milwaukee.
What is Watton's latest funding round?
Watton's latest funding round is Seed.
How much did Watton raise?
Watton raised a total of $120K.
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