Top executives from four AEM member companies recently provided their outlook on the equipment manufacturing industry for this year and beyond. AEM 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, barriers to growth and more.
Below are some excerpts from the discussion. Watch the first partwhich is shown in AEM Industry Advisor earlier this month.
Stern: What is the single most important factor you use to predict the 2024 market?
Sauvage: I guess we can’t just pick one reason. I think they are all related. We need to look at the main drivers of the industry, macroeconomics and policies. Finally, we need to talk to our vendors and users to see what they see on their end and correlate the various aspects with macro, micro, and KPIs. I think it’s hard to see that one way. And you won’t get the right answer.
Some of our drivers, there is no correlation with one. It doesn’t exist. There is also a lot of speculation. The more factors you can use, in addition to the intelligence you can get from the market directly from your customers and vendors, the better, especially in today’s fast-paced and ever-changing environment.
Stern: Speaking of market dynamics, how do you see market dynamics moving forward?
Gilbert: We look at many different markets – mining, entertainment, construction, agriculture and general industry. What is unique about where we are today is that they are all very strong. Entertainment is starting to taper off a little bit, but that continues to fuel demand and the oversold from a capacity perspective that we’ve seen.
The strength of the market will continue in terms of some of the things that started to taper off the general water level is lowered. We certainly don’t want to have a recession ourselves, but I think that in some areas, that will help ease it.
And in the comments earlier about automation, everyone is trying to automate as fast as they can. All manufacturers that make automation equipment, the lead time is obtained. So, that also highlights the challenge.
Regarding reshoring, the new term I heard is deglobalization, which seems to be a trend to try and overcome some government intervention or other market dynamics that are happening. However, I think the future trend is in-region-for-region manufacturing style, so you are not relying on transportation and logistics to get parts from this part of the world to another. There are a number of market dynamics at play, and I think that’s the challenge going forward and trying to figure out how to slow it down.
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Stern: What is your confidence level in your 2023 backlog? When you get into inventory, are orders taken? Do you have to go down the list to find the next end user because your first end user moved on to something different, or spent their money, or the interest rate was too high?
Schiller: 100% We are pushing back a lot of orders, and our customers say we are willing to put our money where our mouth is and secure orders with payments. So, for 2023, 100%.
Sauvage: Same here, I’m very optimistic about 2023. But at the same time, we planted the seed for next year. So, we should not forget about it. It’s not just about the 2023 backlog. More than that. And how do we prepare for further growth beyond 2023? I think we have to be careful and strong, and we can’t sit idly by.
rodier: We say it varies by customer, by brand, by market, by type and by channel.
As with many of you, we are taking orders every day and working on our backlog every day. So, it’s a steady, steady flow of put-and-take so to speak. I always say hindsight is important. We want to take care of our customers and our channel partners, but our eyes are laser-focused on our markets. That’s what we want to understand day in and day out: where are the markets going? Because we can get through the backwardness. We are confident about that. But it’s really about when you get out, how healthy are the markets and are we doing what we need to take care of them beyond 2023.
Gilbert: As a component supplier, I can say that we are 100% positive until you are not. We monitor the backlog daily, just to look for any changes in certain markets or trends that may occur. But we feel the same way. It’s very strong in the different markets we serve and talking to a lot of different customers about what they’re seeing and the strength of their backlog. It is consistent: 100% positive.
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