The American Equipment Manufacturers Association (AEM) recently released a new survey on more than 150 equipment manufacturing companies, warning that nearly three years after the outbreak of the epidemic, American equipment manufacturers continue to face supply chain problems and continuous labor shortage.
AEM conducted an investigation on 179 senior equipment manufacturing executives, covering the reasons for supply chain disruption and bottlenecks, as well as the impact on production, lead time and profit margins. The survey also covered the availability of components and optimal inventory levels, and asked executives about solutions to these supply chain challenges.
Almost all respondents (98%) said they still faced supply chain problems, and more than half of respondents (58%) said they had experienced a deteriorating supply chain situation. The two driving factors of the current supply chain disruption are the shortage of labor force and the difficulty in obtaining the intermediate parts needed for production.
Kip Eideberg, senior vice president in charge of government and industry relations of the American Equipment Manufacturers Association, said, "Too many equipment manufacturers can still feel the impact of the COVID-19 epidemic and supply chain disruption on operations, parts delivery dates, labor force participation rates and financial performance." The nationwide labor shortage will only exacerbate the impact of the supply chain crisis, especially in workshops. "
"AEM has continued to investigate the executives of member companies to better understand how they are affected by continued high inflation, supply chain tension and global market instability, and to provide elected officials with the data points they need to promote legislation, revitalize the U.S. manufacturing industry and enhance the U.S. global competitiveness." Edberg continued. "Republicans and Democrats can take immediate action to increase R&D costs, implement meaningful licensing reforms, eliminate tariffs on a range of key components, and reach a bipartisan agreement on the debt ceiling."
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.
The main findings of the survey include:
·Almost all respondents (98%) still face supply chain problems.
·60% of equipment manufacturers are experiencing a deteriorating supply chain situation.
·The two drivers of the disruption were labor shortages and the difficulty of obtaining intermediate parts for production.
·60% of equipment manufacturers still have problems in labor recruitment and talent retention.
·So far, the average output loss of equipment manufacturers is 12%. It is estimated that the output loss in 2023 will be slightly lower, but it will still reach 8.2%. In 2023, when the capacity of many equipment manufacturers is completely sold out, the production loss will be particularly serious.
·So far, the profit margin of equipment manufacturers has declined by 8.6% on average, which is expected to be 6.4% in 2023.
·The lead time remains a serious challenge. During the pandemic, it is understandable that the delivery cycle will increase, but as the situation gradually stabilizes, the delivery cycle will still increase, jumping from an average of two months (2.42) in 2019 to seven months (6.92) in 2022.
·Due to the tight supply chain, some parts are still difficult to obtain. In the agricultural sector, the most popular component is the track (and its contained sub components); Only 27% of the inventory can be used for components that the manufacturer believes are most suitable for its manufacturing business. In the agricultural and construction sectors, the average optimal inventory of semiconductors and chips is 44%.
·There is no single solution to the problem of continuous supply chain disruption.
AEM believes that in order to overcome this problem, equipment manufacturers of all sizes are continuing to use a variety of coping measures. Countermeasures include strengthening the inventory and supplier base, enhancing the vertical integration of the supply chain, and certifying alternative suppliers, while paying more attention to the reliability of the supply chain rather than the price.
