AEM Members: Despite Inflation, Supply Chain Issues, There's Reason for Long-Term Optimism

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5/19/2022

By Benjamin Duyck, AEM Director of Market Intelligence

Business Intelligence-Inflation-Supply ChainInflation and supply chain constraints remain front-of-mind for equipment manufacturers and the agriculture and construction sectors they serve, but the vast majority of AEM members believe a return to normal will take place within the next year or two. 

The association continues to survey our members regarding the impact of these issues, along with their thoughts on other significant economic trends, through our quarterly Industry Conditions Surveys. This information is then shared via AEM’s quarterly Equipment Market Outlook Webinars, which aim to provide timely, relevant and actionable information to guide our members efforts and help them serve their customers accordingly. 

With our Q2 webinar having just taken place, here are some highlights from the data I presented: 

  • Global turbulence is increasing (and exacerbating ongoing supply chain issues). Unfavorable political climates are impacting many industries, including ag and construction. The ongoing conflict between Russia and Ukraine, along with other political uncertainty and strife, mean additional supply chain obstructions should be expected. 
  • Expect increased lead times for ag and construction equipment manufacturers, as well as component manufacturers. This should come as no surprise, especially given the increased bottlenecks being seen in supply chains right now. For example, delays with semiconductors due to a variety of factors (most notably the rise of silicon and country-wide shutdowns across the globe due to the COVID-19 pandemic) have been especially hard on ag equipment manufacturers. There is hope, however, with many AEM members surveyed expressing that they see resolution on the horizon as early as the end of this year. 
  • End user demand remains strong, particularly in the construction sector. For AEM members, every construction category remains “in the green” so to speak, with increases across the board for all products compared to last year. The outlook continues to look positive for the next 12 months, with just a slight decrease in the outlook for total heavy/light equipment. Many members also expressed that the market for whole goods has increased, while a few feel it’s been stable. As for the market overall, a great majority are confident that it will continue to grow over the next 12 months.
  • Inflation continues to be a concern. Rising rates of inflation have led some to question whether a recession is imminent. While recessions carry with them a lot of worry, they are ultimately part of a natural economic cycle and can be weathered with determination and long-term positive sentiment. 

As we reach the midpoint of 2022, and the equipment manufacturing industry looks to gain timely, relevant and actionable insights regarding forecasts for the remainder of this year and beyond, AEM members are encouraged to attend the association’s Quarterly Market Outlook Webinars. Sign up for webinar registration alerts to stay in-the-know regarding the upcoming webinar schedule.  

Learn More 

In addition to those webinars, AEM continues to offer a wide range of other market data products, including reports, whitepapers and public market intelligence highlights. For more information, reach out to me at bduyck@aem.org

For more AEM staff perspectives, subscribe to the AEM Industry Advisor.     

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