Manufacturers See Worsening Supply Chain Problems: AEM

April 12, 2023
According to a study conducted by the Association of Equipment Manufacturers, over 50% of respondents are experiencing continuously worsening supply chain problems, and nearly all still face supply chain problems of some kind.

Most equipment manufacturers responding to a recent survey said that they are still experiencing supply chain issues, with many saying that conditions continue to worsen.

That according to a recent survey conducted by the Association of Equipment Manufacturers of its members.

“Nearly all respondents still face supply chain issues with more than half experiencing continuously worsening supply chain conditions,” said Kip Eideberg, SVR government and industry relations, in a statement. “The two driving factors that we hear are the current supply chain disruptions and the workforce shortages.”

Shortages are not news for managers of equipment fleets. At the end of 2022, 27.8 percent of respondents to the 2023 Annual Report and Forecast said that they had accelerated purchasing plans in order to ensure that they had the machines they need. Results for the Construction Equipment mid-year survey show that number dropping to 15 percent as the year has unfolded. 

Managers are looking for ways to extend machine life as inflation and shortages continue to stress acquisition strategies. At the end of 2022, 44 percent said that they would increase their maintenance budgets this year. Preliminary mid-year data indicate that number has risen to 56 percent.

What lies ahead for manufacturers

In an AEM Q1 webinar regarding what equipment manufacturers in the construction industry will be facing for the remainder of this year, Danny Richards, lead economist, construction, at Global Data, suggested the following:

  • Global construction output growth slowed in 2022 and is to remain sluggish in 2023. Interest rates remain high and could rise further in the first half of this year. If inflation starts to fall, central banks should end this tightening cycle. Energy and construction material prices also remain high, although some have fallen from the peaks of the second quarter of last year.
  • Investment in infrastructure will continue to be a driving force for growth, especially as the Investment Infrastructure and Jobs Act in the U.S. gathers momentum. Energy and utilities will also provide a boost to overall construction activity, with renewable energy projects remaining a key investment focus.
  • The industry is optimistic as it tracks $3.6 billion in projects across multiple sectors. Despite a relatively weak short-term outlook for construction output, there is still a sizeable pipeline of opportunities on the horizon over the next several years.
  • The decline in construction output is expected to slow in 2023. The U.S. was one of the few markets to register positive growth in 2020 and 2021. Output dropped sharply in 2022, driven largely by intense inflationary pressure and a slowing residential sector. Despite the deeper-than-expected decline in the residential market remaining a risk to overall growth, there has been an improvement in nonresidential sectors.

Source: Association of Equipment Manufacturers

About the Author

Rod Sutton

I have served as the editorial lead of Construction Equipment magazine and since 2001. 

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