HOW’S 2012 LOOKING? AND HOW’S DAVID CAMPBELL?

November is the month John Muldowney and I usually revise the upcoming year’s FER equipment and supplies market forecast. John is v.p.-marketing at Alto-Shaam and my long-time forecasting partner, in case you don’t know. Back in July, in preparation for our annual forecast meeting, we forecasted 4.7% current dollar and 2.6% real growth for 2012. Of course, a lot has happened since. This includes the debt ceiling impasse, which depressed everyone. The same issue will get revisited in the next couple of weeks (I write this Nov. 12), as the so-call Congressional “Super Committee” does, or more likely, doesn’t get something done. The markets will stay wiggy until something is resolved. There’s Europe’s debt crisis, too, and lots of other uncertainties.

Still, this year, 2011, is turning out stronger than our July forecast of 4% nominal and 2.2% real growth, in spite of some signs of slowing growth for the fourth quarter. MAFSI just released its Business Barometer for the 3Q and sales rose another 4.4%. This is a bit of a slowdown from the 2Q’s 5.7% but stronger than 1Q’s 4% growth. The 3Q number is actually stronger in the U.S.; Canada has been softening and managed only 2.6% growth, pulling the overall number down. The reps do foresee further softening: They forecast growth of 3.6% for the 4Q this year.

The seven public E&S companies John and I track are also doing quite well, thank you. Five of the seven have announced 3Q results and a couple of the biggies reported double-digit revenue gains, though the spec-oriented companies are managing flat at best. The gains are on top of very strong performances in the first two quarters. It should be pointed out that most of the companies saw sales go positive by mid-year in ’10, so the quarterly increases are on top of good gains last year.

Commercial operators, after a slowdown this spring and summer caused mostly by the run-ups in gasoline and food prices, appear to be on a slow-growth track. The retail sales outlook for the holidays looks moderately OK, too. But the key thing for E&S is that operators are renovating and replacing E&S in spite of the uncertainties. So many held off from buying anything for so long during the Great Foodservice Recession, they just can’t wait any longer. Pent-up demand is the current driver of the E&S market.

So how does it all add up for next year? Sorry, but John and I decided to wait until all the public companies report third-quarter results and until we see how goofy things get with the Super Committee. A month ago we discussed taking the forecast—particularly our fairly aggressive predictions of growth for primary cooking and refrigeration and ice—down a bit, a point or two. But now we’re not so sure. Things look better now. We’ll almost certainly have to increase the estimate for ’11. Check out FER’s January forecast issue for what we decide on’12. It looks like it will be a year of moderate growth, no matter what.

David Campbell

On a more important note, I got a call from my golfing buddy and friend David Campbell last week. David—owner and principal at Medley Restaurant Supply, part of Strategic Equipment & Supply Co.—was diagnosed with cancer of the pancreas this past summer. He’s been up to Sloan-Kettering in New York, had surgery and is going through follow-up chemo and other treatment back home in Augusta, Ga.

He wanted me (and I want all of you) to know he’s doing great. As they say about politics, pancreatic cancer ain’t bean-bag, but he told me they caught it early, he has world-class doctors and he’s very hopeful. Since he’s one of the most gracious people I’ve ever met on a golf course or at a cocktail party, and as his many customers, suppliers and fellow dealers know, also one of the most gracious people in this business or anywhere else, we’re hopeful too.

If you want to see how’s he’s doing or send him and his wife, Lynda, a note, you can do so through www.caringbridge.org/visit/wdavidcampbell. He’ll enjoy hearing from you.

Cheers,

Robin Ashton

Publisher

rashton@fermag.com