Top executives from four AEM member companies recently provided their outlook related to the equipment manufacturing industry for this year and beyond at AEM's Annual Conference, held in Napa, California, this past November.
Tadano Chief Marketing Officer Ingo Schiller, The Toro Company Group Vice President Rick Rodier, Parker Hannifin Vice President of Sales and Mobile Solutions Doug Gilbert, and LBX Company President and CEO Eric Sauvage joined moderator Kristie Stern, president of AEM service member company Green Mountain Lion, for a panel discussion on industry disruptors, obstacles to growth and more.
Below are some excerpts from the discussion. Check out part one, which was featured in the AEM Industry Advisor earlier this month.
Stern: What is the single most important factor you are using to forecast the 2024 market?
Sauvage: I think we can’t just single out one factor. I think they’re all intertwined. We need to look at the key industry drivers, macroeconomics and policies. Ultimately, we need to talk to our dealers and users to see what they see on their end and correlate the different aspects of macro, micro, and KPI. I think it is hard just to look at that in a single way. And you never get the right answer.
Some of our drivers, there is no correlation of one. It doesn’t exist. It’s also a lot of guesswork. The most you can use of those factors, in addition to the intelligence you get from the market directly from your customers and dealers, the better, especially in today’s volatile and ever-changing environment.
Stern: When discussing market dynamics, how do you see the strength of the market going forward?
Gilbert: We look across several different markets -- mining, recreational, construction, agriculture and general industrial. What’s unique about where we are right now is all of them are very strong. Recreational is starting to taper off a little bit, but that just continues to fuel the demand and the oversold from a capacity standpoint that we’re seeing.
The strength of the market is going to continue in terms of some of those things starting to taper off are the overall water level is lowered. We’d never wish a recession on ourselves, but I think that in some areas, that is what is going to help alleviate it.
And to the comments earlier just on automation, everyone is trying to automate as quickly as they can. All those manufacturers that make automation equipment, the lead time gets pushed out. So, that fuels the challenge as well.
With regards to reshoring, the new term I heard was deglobalization, which seems to be the trend to try and overcome some of the government intervention or other market dynamics that take place. However, I think the future trend is in-region-for-region style manufacturing, so you’re not relying on transportation and logistics to get parts from this side of the world to the other. There are several market dynamics that come into play, and I think that will be the challenge moving forward and trying to determine how it tapers off.
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Stern: What’s your confidence level in your 2023 backlog? When you get inventory in, are orders being taken? Are you having to go down the list to find the next end user because your first end user has moved on to something different, or has spent their money, or the interest rate is too high?
Schiller: 100%. We have pushed back on a lot of orders, and our customers have said we are willing to put our money where our mouth is and secure orders with down payments. So, for 2023, 100%.
Sauvage: Same here, I’m very optimistic about 2023. But at the same time, we’re planting the seed for the following year. So, we don’t have to forget about this. It's not just about the 2023 backlog. It’s beyond that. And how do we prepare for the further growth beyond 2023? I think we must be careful and resilient, and we can't sit idle.
Rodier: We would say it would vary by customer, by brand, by market, by type and by channel.
As is the case with many of you, we’re taking orders every day and we’re working through our backlog every day. So, it’s a constant, steady stream of put-and-take so to speak. I often say the backlog is important. We want to take care of our customers and our channel partners, but we have our eyes laser-focused on our markets. That is what we want to understand day-in and day-out: where are the markets going? Because we will get through the backlog. We’re confident about that. But it is really about when you emerge, how healthy are the markets and are we doing what we need to in order to take care of them beyond 2023.
Gilbert: As a components supplier, I’d say we’re 100% positive until you're not. We’re monitoring the backlog daily, just to look for any changes in certain markets or trends that might be taking place. But we feel the same. It’s pretty strong across board with the various markets that we serve and talk to a lot of different customers on what they are seeing and the strength of their backlog. It has been consistent: 100% positive.
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