The Equipment Leasing Association's (ELA) president, Michael Fleming, told industry leaders in Chicago last week that there is pent-up demand for new equipment that will require companies to seek out more flexible financing to meet the demand.

Since the U.S. economic climate has forced many companies to forgo refreshing their equipment, such as trucks and trailers, construction gear, computers, food processing and handling equipment, the consensus among equipment leasing industry members is that aging assets and pent-up demand are reaching a critical point.
"We already see a need for equipment, and the pent-up demand continues to grow," said Fleming. "As companies begin planning for the upturn predicted for later this year, we expect them to discover that the decision it isn't whether or not they can afford to acquire equipment needed to run their businesses, but rather how they are going to finance it."
To underscore the pent-up demand theory, the ELA reported in its March 2003 online quick poll that, out of 118 respondents, 61% say that once the uncertainties of the Iraqi war are over, their customers will begin ordering equipment. Just under 39% answered "no" to whether customers would begin ordering equipment. Respondents of the poll are considered primarily equipment lessors.
At the Funding Exhibition, attendees agreed that while expense management remains a theme among companies scrambling to continue to show profitability, equipment needs cannot go unmet much longer.
"The need for equipment forces businesses to find creative ways to finance equipment they need to stay alive," said Fleming.
Darrell Harmon, president of Alliance Capital Resources Inc., echoed Fleming's comments. "Businesses cannot wait much longer to refresh their IT systems, their transportation fleets, and other critical equipment. With the themes of expense management and pressure to produce profits, companies will look to flexible financing methods, such as leasing, to allow them to move quickly and efficiently to acquire new equipment."
Currently, eight out of 10 U.S. companies lease some or all of their equipment, taking advantage of leasing's 100% financing, quick credit approval and convenient structure.
Said Deborah J. Monosson, president of Boston Financial Equity Corp., "Firms across all industries will need to respond quickly to the economic rebound. Our shop is gearing up for high demand for leasing."
Of the $697 billion spent by American business on productive assets in 2001, $216 billion, or 31%, was acquired through leasing. In 2002, that figure is estimated at $204 billion. The projected 2003 volume is $208 billion.
"The time for finance planning is now," said Fleming. "Preparation will be key to taking advantage of growth opportunities once the economic upturn comes."
Financial decision makers needing more information on leasing should visit www.LeaseAssistant.org.
Organized in 1961, the ELA is a nonprofit association representing companies involved in the equipment leasing and finance industry. ELA's mission is to promote the leasing industry as a major source of funds for capital investment in the United States and abroad. Headquartered in Arlington, Va., ELA has more than 800 member companies and a staff of 27 professionals.