The Association of Equipment Manufacturers queried 170 executives of construction equipment makers, who found ongoing problems with supply chains and labor shortages.
Nearly all respondents (98 percent) still face supply chain issues, with 58 percent of respondents experiencing continuously worsening supply chain conditions. The two driving factors of current supply chain disruptions are workforce shortages and access to intermediate components for production, according to the association.
“Far too many equipment manufacturers still feel the impact of the Covid-19 pandemic and supply chain disruptions on operations, lead times on components, labor force participation, and financial performance,” said Kip Eideberg, SVP of government and industry relations. “The impact of this supply chain crunch is only worsened by nation-wide workforce shortages seen across country, which is particularly noticeable on our shop floors.”
AEM conducted this survey in October 2022. Executives from 179 equipment manufacturing companies completed the survey, including 112 original equipment manufacturers and 56 component manufacturers.
Key findings from AEM survey
- Six in 10 equipment manufacturers are experiencing continuously worsening supply chain conditions.
- The two driving factors of the disruption are workforce shortages and access to intermediate components for production.
- Six in 10 equipment manufacturers are still having issues in workforce recruitment and retention.
- Year to date, equipment manufacturers are seeing an average of 12 percent production loss and are forecasting a slightly lower, but still significant, production loss of 8.2 percent in 2023. This production loss is especially critical when many equipment manufacturers are fully sold out for 2023.
- Year to date, equipment manufacturers are seeing an average of 8.6 percent profit margin loss and are forecasting a 6.4 percent profit margin loss in 2023.
- Lead times continue to be an obstacle. Although lead times understandably increased during the pandemic, they have only continued to grow as things stabilized, jumping from an average of 2.42 months in 2019 to 6.92 months in 2022.
- Due to this supply chain crunch, certain parts remain difficult to acquire. Semiconductors and chips have an average of 44 percent optimal inventory available.
- Equipment manufacturers of all sizes continue to utilize a multitude of responses to try and overcome ongoing supply chain disruptions. Responses include increasing inventory and supplier base, more vertical integration of supply chains, certifying alternative suppliers and focusing more attention on supply chain reliability over price.
Source: AEM
