The Construction and Agricultural Market Conditions Affecting Equipment Manufacturers
Trends affecting industrial manufacturers continue to shift, with the continuation of the labor shortage and activity boosted by the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Inflation Reduction Acts, causing industrial manufacturers to look toward data-driven outlooks.
To help equipment manufacturers better navigate their business in the short term, the Association of Equipment Manufacturers (AEM) holds quarterly Equipment Market Outlook webinars, sponsored by manufacturing technology advisor Net at Work, to examine key issues and industry conditions affecting the construction and agriculture sectors. Industry experts Danny Thomas of GlobalData, Charles Hart from Fitch Solutions, and Craig Hart with AEM highlighted the following updates during the Q3 event in August of 2023:
- Global construction – Output growth in real terms will slow to approximately 0.7% for the year, with emerging markets performing better at 3.0% than advanced economies.
- US construction – While the industrial sector is strong, in large part due to the CHIPS ACT and other legislation, the overall construction industry is expected to contract by 2.5% due to a lower performance by the residential sector. All U.S. states except for North Dakota are experiencing a downturn compared to 2022.
“We are possibly at a turning point where we’re seeing a two-speed [construction] industry, where residential activity may be decreasing from a very high level, but industrial construction activity has not yet hit the ground in terms of projects begun.”
- Agriculture costs – Fuel and farming costs remain high, with the U.S. Department of Agriculture forecasting a 4.0% rise in costs during the remainder of 2023. Tough crop conditions in the U.S., Europe and Argentina are part of this trend, with the removal of rice produce in India, El Nino, and the invasion of Ukraine (with the collapse of the Black Sea grain deal) adding to the volatility.
- Producer uncertainty about inventory – In the previous quarter, 54% of producers surveyed reported believing that their harvest inventories were at an optimum level, while in the most recent quarter surveyed that number had decreased to approximately 37%.
In light of today’s volatile conditions, construction and agricultural equipment manufacturers can ensure that their company’s technology supports all aspects of their business through a digital operations platform (DOP) approach to grant widespread data visibility, thus helping them make quick, well-informed decisions in a complex and ever-changing market. Learn more about how a strategic technology partner can help your manufacturing organization take on a DOP through a technology roadmap built on next-generation ERP solutions, like Sage X3, by accessing this AEM Advisor article.