The Association of Equipment Manufacturers (AEM) is predicting 2022 will deliver strong demand for its members, as the industry continues an uphill climb to achieving a pre-pandemic business climate.
According to new business intelligence data from AEM, the global economy expanded by 5.1 per cent in 2021.
For the construction equipment market, the industry value is expected to grow 4.5 per cent this year, largely driven by residential construction. AEM member perceptions show strong demand, as 83 per cent see year-over-year growth ahead. As well, it’s reasonable to expect growth of six to 10 per cent over the next 12 months on the heels of six to 10 per cent stronger growth than was expected in 2021, according to AEM.
“I believe it’s going to get better in 2022. I don’t believe it will be back to normal in 2022,” said Rodney Schrader, vice chair of the AEM board and Komatsu North America chairman and CEO.
“The overall industry looks to be heading in a positive direction, but we do have to watch some of the headwinds.”
Those headwinds include aggressive cost increases, the ongoing labour shortage and a stressed supply chain.
According to AEM’s most recent quarterly survey of its members, more than 95 per cent of ag and construction equipment manufacturers that responded said they are experiencing supply chain issues. However, it appears either demand is beginning to normalize, or supply chain signaling is improving, as 44 per cent of respondents noted the issues are beginning to turn around.
“We have all gotten very creative in the last couple of years. We have all adapted our resources, processes and actions to mitigate significant impact to our customers and dealers,” said Robert Crain, chair of the AEM board. “No doubt we are still going to face some challenges in the coming months, but we are cautiously optimistic that 2022 will see some improvements across most areas.”
Schrader added manufacturers have taken numerous actions to navigate a difficult supply chain, including using a variety of shipping ports, finding additional suppliers and incorporating new transportation modes that were not typically utilized in the past.
“The challenge has been real for the last 18 months,” Schrader said. “Equipment manufacturers have been working very hard to keep vital industries supplied in the midst of the COVID-19 pandemic.”
Although AEM sees stabilization on the horizon, the pandemic has previously derailed positive outlooks. When the omicron variant emerged earlier this year, a high infection rate meant more employees were forced to call in sick.
“We have had periods where it appeared to be getting better, but got worse,” Schrader said.
The labour force remains a factor for ag and construction equipment manufacturers. According to the results of AEM’s most recent quarterly member survey, 84 per cent of all respondents have experienced recruitment issues.
Inflation is another challenge for AEM members. For construction equipment, the industry has recorded an inflation rate of 9.7 per cent in the last quarter.
While the pandemic created its share of challenges for equipment manufacturers, Schrader noted the challenges are also learning experiences.
“Our teams in our individual companies are spending a lot of effort to adapt in order to minimize risk,” Schrader said. “Not only today, but in the future, so we are more flexible and adaptable to these things happening again.”
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