Hal

Vandiver

Executive Consultant

Material Handling Industry of America

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Using Business Cycles to

Predict Event Outcomes

Hal Vandiver

Material Handling Industry of America

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Material Handling Industry of America

The Industry That Makes The Supply Chain Work ®

• 800 Member Companies

• Umbrella for 18 Vertical Industry Groups

• Programming Includes

– Membership Development

– User Education

– Education Foundation

– Exhibitions

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Exhibitions

• Material Handling, Logistics, Supply Chain Solutions

• Exhibitors are MHIA Members

• Capital Buyers, Specifiers, Influencers

• Atlanta/Chicago; Even/Odd Years

• 180,000 to 300,000 Net Square Feet

• 500 to 750 Exhibits

• 22,000 to 32,000 Attendance

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Re-purposed Skill Set

• Industry

– Business Management

– Economic/Market

Analysis, Demand

Planning

• Association

– Association Management

– Exhibition and Event

Planning

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Would you like to …..

• Predict your Market Size and Growth with

high confidence …

»a YEAR or more in Advance?

»at little or no cost?

• Develop Event and Exhibition Plans that are

»REALISTIC and

»ACHIEVABLE?

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Have you ever …..

• … been asked to deliver an Exhibition or

Event budget that was unrealistic in

unfavorable economic conditions?

• … wished for a simple framework to guide

you through a rational planning discussion?

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Session Objectives

• Enhance your framework for Exhibition

and Event Planning

• Convey basic Cycle Planning Concepts

• Share MHIA results and demonstrate

applicability to other Exhibitions

• Provide a Tool Kit for Exhibition Cycle

Planning

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Observations

• Exhibitors and Attendees are Investors and

Consumers

– Invest in Time, Space, Design, Decorations, Talent

– Consume Content, Entertainment, Hospitality

• Business “cycles” exist in the Exhibition Industry

reflecting market dynamics

• Understanding business cycles is fundamental to

good planning

• Exhibition cycles and activity can be forecasted

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Business Cycles

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Business Cycle Concepts

Annual Rate of Change

Growth

(Expansion)

Decline

(Recession)

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Business Cycle Concepts

Annual Rate of Change

Growth

(Expansion)

Accelerating Decelerating

Accelerating Decelerating

Decline

(Recession)

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Leading Indicator

• A statistic that precedes an economic event

• Can be used to predict what will happen in

the economy or a market

• Can be used to forecast a trend

• Important when the economy is reversing a

trend - either coming out of a recession or

heading into one

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Annual Rate of Change

Leading Indicator Examples

Corporate Profits

Business Investment

---

Annual Rate of Change

Leading Indicator Examples

Consumer Confidence

Personal Expenditures

---

Annual Rate of Change

Leading Indicator Concept

Your Market,

Event or Exhibition

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Annual Rate of Change

Leading Indicator Concept

Leading Indicator

Your Market,

Event or Exhibition

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Forecast Elements

Economic Forecasts

– GDP and Demand

– Capacity, Production,

Utilization

– Profits, Investments

– Capital Spending

Leading Indicators

– Manufacturing Activity,

Production, Utilization

– Investment (Plant &

Equipment) Activity

– Consumer and Investor

Confidence

– Consumption Activity

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New Orders and Shipments

MHEM vs. Industrial Activity

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

Material Handling Equipment Manufacturing

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Shipments FRB Manufacturing

Source: USDOC, FRB

2009

2010

2011

2012

18.0%

12.0%

6.0%

0.0%

-6.0%

-12.0%

-18.0%

Industrial Production

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New Orders and Shipments

MHEM vs. Industrial Activity

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

Industrial Production Leads MHEM by 9 Months

1998

1999

2000

2001

Turning point as predicted

2002

2003

2004

2005

2006

2007

2008

Shipments FRB Manufacturing + 9

Source: USDOC, FRB

2009

2010

2011

2012

18.0%

12.0%

6.0%

0.0%

-6.0%

-12.0%

-18.0%

Industrial Production

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Profits vs. Investment

Investment Annual Rate of Change

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

1993

Profits Lead Investment by 4 Quarters

1994

Profits

+ 4 Quarters

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Non-Residential CP after Taxes +4Q

Source: BEA, Global Insight

2009

2010

Forecast

by

Global

Insight

2011

2012

2013

80.0%

60.0%

40.0%

20.0%

0.0%

-20.0%

-40.0%

-60.0%

-80.0%

Profits

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Profits vs. Investment

MHEM Annual Rate of Change

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

1993

1994

Profits Lead MHEM by 4 Quarters

Profits

+ 4 Quarters

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

MHEM Orders CP after Taxes +4Q

Source: BEA, Global Insight

2009

2010

Forecast

by

Global

Insight

2011

2012

2013

80.0%

60.0%

40.0%

20.0%

0.0%

-20.0%

-40.0%

-60.0%

-80.0%

Profits

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Shipments

MHEM Forecast 2011 – 2012

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

1997

1998

GDP has been offset to

indicate a three quarter lead

of MHEM.

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Forecast

Shipments Shipments Forecast GDP Nominal +3Q GDP Forecast

Sources: USDOC, Global Insight, MHIA

2011f

2012f

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

GDP Four Quarter Percent Change

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MHIA Events

MHIA Events vs. GDP

1994

1993

Nominal GDP Leads

Events 1 Year

1996

1995

1998

1997

Exhibition Forecast 2009

2000

1999

2002

2001

2004

2003

2006

2005

2008

2007

2010

2009

2012

2011

Event 2Yr ROC GDP 2Yr ROC +1

Sources: MHIA and Global Insight

Forecast

2014

2013

2016

2015

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

GDP Nominal

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MHIA Events

MHIA Events vs. GDP

1994

1993

Nominal GDP Leads

Events 1 Year

1996

1995

1998

1997

Exhibition Actual 2010 - 2011

2000

1999

2002

2001

2004

2003

2006

2005

2008

2007

2010

2009

2012

2011

Event 2Yr ROC GDP 2Yr ROC +1

Sources: MHIA and Global Insight

Forecast

2014

2013

2016

2015

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

GDP Nominal

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Why is this important?

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Business Impact is Significant

Exhibitions represent …

– Up to 85% of our Revenue Stream

– Up to 70% of our Member Value Proposition

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Institutionalized Planning

• At every Board Meeting, Financial and

Strategic Planning Session

– Current and Future Macroeconomics

– Industry, Event and Exhibition Forecasts

• Financial and Strategic Plans

– Current Year by Quarter, Each Quarter

– Five-year rolling horizon, Annually

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Events

12.0%

9.0%

6.0%

3.0%

0.0%

-3.0%

-6.0%

-9.0%

-12.0%

CEIR Index vs. Business Investment

2001 2003 2005 2007 2009 2011 2013 2015

2002 2004 2006 2008 2010 2012 2014 2016

NRI NSF Index

Forecast by

CEIR, Global Insight

24.0%

18.0%

12.0%

6.0%

0.0%

-6.0%

-12.0%

-18.0%

-24.0%

Business Investment

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Events

NTEA Events vs. Industry Sales

2001 2003 2005 2007 2009 2011 2013 2015 2017

2002 2004 2006 2008 2010 2012 2014 2016

NSF Paid Industry Sales +1

Forecast by

Global Insight

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

-50.0%

Industry Sales

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Events

NAB Events vs. Industry Sales

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

NSF Paid Broadcast +1

Forecast

by

NAB

20.0%

10.0%

0.0%

-10.0%

-20.0%

Industry Sales

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Events

NAB Events vs. Corporate Profits

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

NSF Paid CPAT +2

40.0%

30.0%

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

Corporate Profits

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Events

NRA Show vs. Industry Sales

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

NSF Paid Industry Sales - Real $

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

Sales

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Events

NRA Show vs. Consumer Sentiment

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

NSF Paid ICS +1

20.0%

10.0%

0.0%

-10.0%

-20.0%

-30.0%

-40.0%

Consumer Sentiment

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Outcomes

• 2007 forecast for 2008 – 2011

– Net Square Feet: next slide

– Cyclical timing: on target

• 2010 Financial Results:

– Decline in space revenue from 2008

– Down from revised revenue volume forecast

– Over profit target at plan level

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Outcomes – Accuracy

Net Square Feet Sold

• +/- 3.5% one year out

• +/- 6.0% two years out

Planning Year

Actual vs. Forecast

2008 2009 2010 2011

2007 3.4% 5.6% -3.6% -9.5%

2008 2.2% -3.6% -9.5%

2009 -2.8% -6.4%

2010 -3.6%

Note: Two-year rolling

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Exhibition Planning Toolkit

• MS Excel Workbook

• Cycle Calculator, Charts

– Your Event, Your Metrics

– Leading Indicators

• Annual

• Quarterly

• Monthly

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Five Easy Steps

1. Determine key macroeconomic elements and track

them monthly or quarterly

2. Identify key leading indicators and track them

monthly or quarterly

3. Obtain or produce an industry or market forecast at

least annually; better quarterly

4. Factor these into your planning discussions

5. Maintain the “Exhibition Planning Toolkit” with key

macro elements and leading indicators

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Information Resources

• US Government Data

– US Bureau of Census www.census.gov

– US Bureau of Economic Analysis www.bea.gov

– US Department of Labor www.dol.gov

– US Federal Reserve Board www.federalreserve.gov

• Economics

– Manufacturers Alliance - MAPI www.mapi.net

– National Association for Business Economics www.nabe.com

– Global Insight www.globalinsight.com

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Many thanks to …

Chris Brown, Executive Vice President, Conventions and Business Operations

National Association of Broadcasters

Steve Carey, Deputy Executive Director

National Truck Equipment Association

Doug Ducate, President & CEO

Center for Exhibition Industry Research

Hugh Easley, VP Meetings & Expositions

National Association of College Stores

Mary Pat Heftman, Executive Vice President, Convention

National Association of Restaurants

Sherry Romelo, VP Meetings & Conventions

National Association of Convenience Stores