Many industries have been dramatically impacted by COVID-19 over the past three months. Whether it is agriculture, airlines, food service, or energy, it has been a very bumpy ride.
Not all industries are impacted equally, from a timing perspective. One of the industries that faces longer term challenges is equipment manufactures in the agriculture and construction segments.
The COVID-19 pandemic continues to take a toll on an industry that represents 12 per cent of the U.S. manufacturing sector, according to a new survey released by the Association of Equipment Manufacturers (AEM). While equipment manufacturers are adjusting to the changing economic conditions, three-quarters of U.S. equipment manufacturers say that the impact of the COVID-19 pandemic on the overall economy is still very negative. In addition, six out of 10 executives say that the federal government has not done enough to support the industry as it continues to face decreased demand and disrupted supply chains.
“The COVID-19 pandemic continues to negatively impact equipment manufacturers and the 2.8 million men and women of our industry,” says Dennis Slater, president of AEM. “We have seen some improvements to the operations and financial outlook for our member companies, but the industry still faces a long road back to normal. Even as our industry continues to help build, feed, and power our country, far too many of our member companies are running out of time.”
The second survey of presidents, CEOs, and owners of leading equipment manufacturers comes as more states are opening back up for business, and congressional leaders negotiate a fifth stimulus package. Slater says, “While it is very encouraging that equipment manufacturers are adjusting to the new normal and re-opening all of their facilities, the impact of this unprecedented crisis is far from over and will be felt for a very long time. Equipment manufacturers have not received the support they need from the federal government, and it is therefore imperative that they take immediate and aggressive steps to support our industry.”
The survey was in the field from May 28 to June 15, 2020. The 102 respondents weighed in on the effects of the COVID-19 pandemic on the economy, the industry, their companies, supply chain and manufacturing operations, their financial expectations, as well as the challenges they continue to face and specific ways the federal government can keep equipment manufacturing strong and ensure the nation’s economic resilience.
The survey’s key findings include:
- Three quarters of respondents said that the impact of the COVID-19 pandemic on the overall economy is still very negative, while just under half said that the impact on the industry is equally bad.
- One-third of respondents said they plan to lower their financial outlook by up to 30 percent over the next 30 days, while another one in eight respondents indicated they expect to reduce their outlook for the rest of the year by up to 30 percent.
- Executives said that employee health and well-being, lack of new orders, and continued supply chain challenges are the three biggest issues they face as they re-open their facilities.
- The COVID-19 pandemic is taking its toll on the industry’s workforce. More than one-third of respondents said they have furloughed up to half of their employees, while roughly one in five of respondents indicated that they have laid off as many as 10 percent of their workforce.
- The road to recovery is lined with warning signs. For equipment manufacturers who have furloughed workers, nearly a third said they would not bring anyone back to work. For those who laid off workers, eight out of ten said they will not rehire them based on current market conditions and challenges.
- More than eight out of 10 respondents said they would like to see a significant investment in infrastructure to help keep equipment manufacturers in business during the crisis and set the stage for the economic recovery.
- Looking ahead, a clear majority of respondents said that the equipment manufacturing sector is not getting the support it needs from the federal government as it continues to navigate the various challenges caused by the COVID-19 pandemic.