According to the latest report from the Association of Equipment Manufacturers (AEM), while the global economy is expected to expand for 2021 and 2022, there are a number of challenging obstacles for the agriculture and constriction equipment industries ahead.
AEM’s intelligence shows a general global economic expansion of 5.1 percent in 2021 and 3.9 percent in 2022. But specific market conditions could potentially slow growth, particularly in the equipment sectors.
AEM director of market intelligence Benjamin Duyck remarked that the last “recession” in the U.S., which lasted from February to April 2020, “can’t even be accurately described as a recession” in the traditional economic sense because it only lasted two months. “However, this economic disruption has impacted us all greatly, and we are still dealing with the after affects today – labor shortages, supply chain problems and higher interest rates.”
AEM has surveyed members quarterly since the onset of COVID-19 to gauge how optimistic they are about recovery to pre-pandemic levels. For some time, said Duyck, the consensus is mostly positive. “But the data for this last quarter is moving again in the other direction, largely due to the headwinds we’re facing with inflation, workforce issues and supply chain disruptions,” he added.
One of the biggest impacts anticipated for the ag equipment sector is that of inflation. There has been an 11.7 percent year-over-year increase in farm machinery prices, according to AEM’s research. Additionally, AEM describes talent acquisition as a “troublesome” factor; 90 per cent of survey respondents from the ag sector say they have experienced hiring issues. Tactics and strategies suggested by respondents include internships, educational partnerships, higher wages, bonuses, marketing and recruitment efforts, flexible hours and outsourcing.
Supply chain issues remain a lingering concern for 95 percent of ag and construction equipment manufacturers, while 44 percent say the issue is beginning to turn around. Duyck says these issues have been “both domestic and global… but consensus opinion among members is that the issues lie particularly with prices, shipping and quantities of raw materials.”
AEM member perceptions show strong demand (81 percent of ag members see year-over-year growth ahead), and expect a year-over-year growth of six to 10 percent. With farm income on the rise, many members foresee at least the next year being one of growth.