Question-and-Answer Session
Operator
(Operator instructions) We’ll go first to Henry Kirn with UBS.
Henry Kirn – UBS
Good morning, guys.
John Engquist
Good morning.
Henry Kirn – UBS
Question for you on the longer term outlook for crane demand. What happens if crane demand rolls faster than expected? How solid do you think the orders for 2010 are, say?
John Engquist
Well, I think – we have not placed or taken orders for 2010 as of yet. We have taken some probably, but they are few and far between. And I think you really need to look at the drivers of our crane business. I mean, it’s heavily weighted to the energy sector, regulated public utilities, international oil companies. That’s big, big drivers of our crane business. And I think those orders are going to remain pretty solid for us. I have no significant concerns there right now.
Henry Kirn – UBS
Okay. And as far as commodity prices falling back, how do you expect them to impact petrochemical or oil patch or mining demand going forward, if at all?
John Engquist
Right now, we are seeing tremendous demand in oil and gas exploration. If oil goes to $60 and stays there, could that impact that? Sure it could. Right now we have tremendous demand. And I think it’s anybody’s guess what oil pricing is going to do. Obviously, demand is down. It’s certainly not going to go back to $140 a barrel, but I don’t expect it to stay at $60 either. I think we’re going to continue to see pretty good demand in oil and gas sector.
Henry Kirn – UBS
How quickly does the demand respond to changes in prices? Do the producers look further out than the spot price today?
John Engquist
Absolutely. No question about it. And they have to. It’s been too volatile to make short-term decisions.
Henry Kirn – UBS
Okay. Thanks a lot. Good quarter.
John Engquist
Thank you.
Operator
We’ll go to Seth Weber with Banc of America Securities.
Seth Weber – Banc of America Securities
Hi, thanks. Good morning, everybody. Can you comment on the used equipment market a little bit more? I think I heard you say you made some fair value adjustments to your assumptions there. Can you just talk about what you are seeing on pricing and demand trends in the used market?
John Engquist
Well, we didn’t make any fair value assumptions. In the Burress acquisition, there were some purchase accounting adjustments where we had to reprice that fleet to fair market value. So that has impacted our margins in the Burress territory. But so far, we’ve seen used equipment pricing hold up very well. Obviously, on the crane side, it’s a supply and demand issue. I mean, those residual values couldn’t be stronger. But even in our aerial business and our earthmoving business we have not seen a lot of price deterioration. We’ve seen lower demand, but not a lot of price deterioration. We are very fortunate that our sector today is not dealing with the overcapacity issues we had in the last downturn. If you go back to ’01, ’02, ’03, we had real capacity issue then. We’re not dealing with that today. So pricing is holding up quite well.
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