ler and Navistar indicates that these smart trucks will soon become common on the nation’s highways. Last October, one such vehicle transported a load of Budweiser beer from Fort Collins, Colorado to Colorado Springs, two hours away. Says Esposito, “Potentially beginning in 2017 but certainly in the years following, the driverless truck fl eet will become a hot item.” Hazelhurst looks for high-production, tier-one auto-motive manufacturers to remain busy supplying parts to OEMs (original equipment manufacturers). He joins Esposito and Kramer in thinking that segments of the medical market will also remain strong, and he expects aerospace to do well. Says Hazelhurst, “In general, man-ufacturing companies are optimistic about the impact of the new administration.” “ There’s access to so much more data out there than ever before that the question becomes, can you make sense of it all?” — Wade Whitenburg , Ritchie Brothers Regulation and Residuals How government regulation will aff ect equipment manage-ment in 2017 is anyone’s guess. “Across the board, regulation typically adds cost without adding value to the product de-livered,” says Whitenburg, “and it has been one of the biggest issues facing equipment managers.” But the environment could change dramatically under President Trump, and equipment managers will be watching. Kramer believes some of the heaviest requirements on energy production and clean air could be lift ed, and Whitenburg thinks coal would be an excellent export commodity. But it’s too soon to know how the political pendulum will swing, so the industry waits. Hazelhurst says that as a service provider, his company has been aff ected by increased compliance requirements. Five Reasons Not to Miss the 2017 Equipment Management Conference 1. Network with your peers and industry colleagues. 2. Learn about industry trends and developments at educational sessions. 3. Inspect equipment 4. Tour equipment facilities and gain insight into a variety of equipment. 5. Visit the exhibition and discover essential products and services. Get all the details about this event, Feb. 26–28 at the Hilton Americas in Houston, at www.elfaonline.org/events/2017/EMC/. “More finance companies are requiring documented qualifi cations, higher levels of insurance, and a willingness [by their service providers] to have transactions audited,” he says. At Independent Equipment Company, they’re already feeling the impact of the new lease-accounting rules. “Th e frequency of requests for portfolio reviews has increased, particularly from bank lessors,” says Esposito. She antic-ipates a further acceleration in portfolio reviews as the new accounting rule-compliance deadline grows closer and leasing companies adjust their equipment holdings to comply with the new categories. In the meantime, residual values hang in the balance. Esposito sees companies setting consistent residuals for equipment in stable markets. “But for other equipment, we’re seeing much more conservative residuals than in the past—or companies are leaving entire sectors altogether,” she says. An overwhelming change in residual positions has occurred “in equipment sectors operating in industries left decimated by the previous administration, such as rail, mining and energy,” she says. Hazelhurst sees residual values as a percentage of new equipment about the same now as in the past. “But the dis-counts being off ered that aff ect original equipment cost lower the residual in dollars,” he qualifi es. “We consider a host of factors when looking at setting re-siduals,” says Kramer . “For example, we analyze the portfolio equipment mix and determine if we want to grow in a certain sector. We may be more aggressive than a competitor in this case. Or, if we have a large portion of certain types of equip-ment coming off lease, we will look for transactions that re-build this section of the portfolio. Our appetite for asset risk will be infl uenced by these factors as well as how strong we think the secondary market will be in future years.” Sensenbrenner suggests a normalized and measured approach in setting residual values. “You need to plan for industry cycles and normalize your values,” he says. “Th ere is never a need to be aggressive in setting residuals. Having a balanced and measured valuation approach helps our risk analysis and lets us be opportunistic when appropriate.” May 2017 be rife with opportunity. ■ Susan Hodges writes about equipment fi nance and other business topics from her offi ce in Wilmette, Ill. 26 JANUARY/FEBRUARY 2017 EQUIPMENT LEASING & FINANCE MAGAZINE