Equipment manufacturers are still recovering from the pressures of the COVID-19 pandemic, but through trial and tribulation, they have been working toward a state of normalcy.
According to AEM Senior Vice President, Government and Industry Relations Kip Eideberg, supply chain pressures and a lack of workforce retention have been ongoing struggles for the industry, and individual sectors are facing their own problems as well.
“Overall, far too many equipment manufacturers still feel the impact of the COVID-19 pandemic and supply chain disruptions in operations, lead times on components, labor force participation and financial performance,” said Eideberg during AEM’s recent quarterly Equipment Market Outlook Webinar. “And the impact of this supply chain crunch is only worsened by nationwide workforce shortages.”
By use of regular surveys, AEM gauges its members thoughts regarding various economic trends and how they are affecting their efforts to do business, both within the United States and abroad. Information gained is detailed in AEM's Business Intelligence Dashboard and then later summarized in AEM’s quarterly Equipment Market Outlook Webinars.
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With 2023 now in full swing, there are several key points from AEM’s most recent quarterly webinar that relate to the strains and pressures that have built up in the global ag sector over the last few years, according to presenter Charles Hart, agribusiness commodities analyst at Fitch Solutions.
• Commodity prices are to remain elevated in 2023 despite the easing of year-over-year prices. Agricultural prices are poised to ease from the highs of 2022, but they remain elevated in recent historical terms while also remaining susceptible to bouts of heightened volatility. Beyond 2023 there is reason to expect continued normalization of prices, but a return to pre-COVID levels is not expected in the near term.
• Interest rates and economic uncertainties are key struggles that will weigh on ag investment. Interest rates are expected to remain elevated through 2023 into 2024, which will ultimately weigh heavily on the broad ag tech market.
• Elevated input prices will weigh on fertilizer usage rates, and energy costs are set to remain higher than pre-COVID levels. The fuel and fertilizer price surge of 2022, which had its origins at the start of the COVID-19 pandemic, is expected to weigh on production volumes during the years to come.
• Grains markets are set for tightness which will drive price volatility. There is reason to expect deteriorating production outlooks to weigh on inventories and export volumes.
In tracking the sales and global data, the ag equipment market is in a good position right now, and there is some optimism moving forward. However, supply chain issues and workforce retention remain to be constant struggles for equipment manufacturers, and their impact on the industry and the ag customers they serve can’t be overlooked.
AEM is the North America-based international trade group representing off-road equipment manufacturers and suppliers with more than 1,000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry in the United States supports 2.8 million jobs and contributes roughly $288 billion to the economy every year.