Likely hesitant due to difficult markets in the first quarter, ITAD industry players were fairly conservative in their capital expenditures early this year. But company leaders foresee bigger spending ahead, according to a new survey.
E-Scrap News and ITAD industry consulting firm Compliance Standards have released the results of a joint survey of industry executives. The analysis, which covers the first quarter of 2023, is the first of an ongoing, quarterly survey.
The second-quarter survey is now live, and leaders of ITAD companies and adjacent market segments are encouraged to contribute their insights. Each quarter, industry professionals who participate are invited to a webinar recapping the major takeaways and are provided an in-depth written report summarizing findings of the research.
E-Scrap News covered some high-level takeaways from the first-quarter 2023 survey in a story last week. The following are some additional insights from the first survey.
Capital spending looking up
In the survey, respondents indicated business conditions were generally difficult in the first quarter, with rising costs and lower prices for used equipment.
Perhaps unsurprisingly, they indicated they were fairly conservative with their capital spending during that quarter. Just under 26% of them indicated they made at least one capital investment above and beyond normal maintenance and repair.
Of those indicating they made capital investments, most of them (54%) said the dollar amount was $500,000 or less.
But looking forward over the next 12 months, they’re feeling pretty positive overall. During the first quarter, 23% of respondents said they made capital investments valued at $500,000 or more. But over the next 12 months, 63% said they’re planning $500,000-plus investments; of those, 11% indicated they’re looking at projects of between $1 million and $5 million.
Widely shared optimistic outlook
The anticipated increase in capital project spending comes alongside general optimism that business conditions will improve.
When asked how they expect business conditions to change over the next year, 52% said they expected conditions to either improve a little or improve a lot. Another 26% said they expect them to remain the same, and only 18% indicated they anticipated conditions worsening. The rest said they didn’t have a prediction.
“As businesses continue to rightsize employee headcount nationally, ITAD opportunities will increase,” one respondent wrote.
“Labor market is expected to stabilize – both wages and quality/supply of employees. Training costs will decrease, and productivity should increase,” another wrote. “Pandemic period refresh volume should be absorbed and expect wholesale prices to rise.”
Another survey taker noted that prices are already improving: “Resale and recycling scrap revenues per unit are improving. ITAD service contract requests and projects are increasing,” the person wrote. That being said, macroeconomic concerns persist, they noted, writing that “there is a concern about the overall economy with the ongoing war in Ukraine and U.S. fiscal policy (debt ceiling debates).”
Variety of ITAD firm sizes reflected in data
A wide range of small, medium and large companies provided insight for the analysis. Nearly one-third were small businesses with 25 or fewer employees, just over half were medium-sized companies with between 26 and 200 employees, and the rest had over 200 employees. Nearly three quarters of the respondents indicated their core business is an ITAD service provider, and the rest were equipment/products/software suppliers, commodities recovery companies or “other.”
Compliance Standards and E-Scrap News have launched our survey exploring ITAD market conditions seen in the second quarter of 2023. Fill out the survey today to get the first look at results. All responses will be kept anonymous.