Repossessions and liquidations of construction equipment nearly tripled in the first quarter of 2009, as did machine tool repossessions, as compared to the same quarter of 2008, according to Nassau Asset Management's NasTrac Quarterly Index (NQI). The figures, culled from the company's activity reports for both repossessions and orderly liquidations, show the dramatic effect of the economy on the construction, manufacturing and transportation industries, even as signs surface of a possible economic turnaround.

Machine tool repossessions have undergone a steady and continuous increase since the third quarter of 2007, according to Nassau's records. Truck repossessions processed by Nassau increased slightly, by approximately two percent in Q1 2009, as compared to the same period in 2008.

"We have said in the past that a spike in the machine tool sector reflects the true economic condition," said Ed Castagna, president of Nassau Asset Management. "That may no longer be true, because the bankruptcy proceedings for Chrysler and GM have clouded the picture for the machine tool sector. With so many machine tools in use by these reorganizing businesses, it is less clear if the spike we saw in the first quarter of 2009 is caused by the failing automakers and their subcontractors, or by the overall underlying economy."

Castagna continued, "It is Nassau's opinion that, since the spike is so drastic, the burst of the automotive bubble is the reason. If that is true, the increase in activity is more of a result of a single industry facing problems and not a sign of overall negativity in the economy."

"What the automotive industry is to machine tools, the homebuilding sector is to construction equipment," Castagna added. "Clearly, the current rise in construction activity shows the continued problems faced by the homebuilding industry. The housing decline first deeply affected the truck sector and it is now reaching into the construction equipment category.

"We have stated in the past that the funding of new projects by moneys in the stimulus package would take some time to have an effect. Nassau believes the increase in repossession activity indicates that these funds have yet to reach their targeted audiences with the speed and impact that was planned. Obviously, our statistics indicate there is a buyer's market in the trucking, construction and machine tool sectors and the good news is that people continue to buy on the secondary market."

Trucking Repossessions and Liquidations

Repossession figures for trucks and tractor trailers increased slightly by two percent in the first quarter of 2009, as compared to the same period in 2008, remaining at a very high level of activity. This appears to mirror the continued steady struggles in the economy, as stated in the Beige Book report issued by the Federal Reserve in April. In that report, several districts within the Federal Reserve reported that the low demand for trucking meant that companies continued to trim their fleets and their workforces.

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