AEM survey shows supply chain issues still plaguing OEMs

19 December 2022

A new survey of more than 150 equipment manufacturing companies by the Association of Equipment Manufacturers (AEM) warned that U.S. equipment manufacturers continue to face supply chain issues and a persistent labor shortage nearly three years after the onset of the pandemic.

AEM polled 179 equipment manufacturing executives on the causes of supply chain disruptions and bottlenecks and the impact it has on production, lead times and profit margins. The survey also asked about availability of components and optimal inventory levels, and queried executives about solutions to address these supply chain challenges.

ASV production More than 98% of equipment manufacturers surveyed by AEM indicate that supply chains and worker retention are still significant issues. (Photo: Chad Elmore)

Nearly all respondents said they still face supply chain issues, with more than half (58%) experiencing continuously worsening supply chain conditions. The two driving factors of current supply chain disruptions are workforce shortages and access to intermediate components for production.

“Far too many equipment manufacturers still feel the impact of the COVID-19 pandemic and supply chain disruptions on operations, lead times on components, labor force participation, and financial performance,” said Kip Eideberg, AEM’s senior vice president of government and Industry relations. “The impact of this supply chain crunch is only worsened by nation-wide workforce shortages seen across country, which is particularly noticeable on our shop floors.”

AEM conducted this survey in October. Executives from 179 equipment manufacturing companies completed the survey, including 112 original equipment manufacturers and 56 component manufacturers.

The survey’s key findings include:

- Nearly all respondents (98%) are still facing supply chain issues.

- Six in 10 equipment manufacturers are experiencing continuously worsening supply chain conditions.

- The two driving factors of the disruption are workforce shortages and access to intermediate components for production.

- Six in 10 equipment manufacturers are still having issues in workforce recruitment and retention.

- Year to date, equipment manufacturers are seeing an average of 12% production loss and are forecasting a slightly lower, but still significant production loss of 8.2% in 2023. This production loss is especially critical when many equipment manufacturers are fully sold out for 2023.

- Year to date, equipment manufacturers are seeing an average of 8.6% profit margin loss and are forecasting a 6.4% profit margin loss in 2023.

- Lead times continue to be an obstacle. While lead times understandably increased during the pandemic, they have only continued to grow as things stabilized, jumping from an average of two (2.42) months in 2019 to seven months (6.92) in 2022.

- Due to the supply chain crunch, certain parts remain difficult to acquire. In the agriculture sector, the most sought-after component are tracks (and their included components), as only 27% of tracks inventory is available which the manufacturer would deem optimal for their manufacturing operations. In both agriculture and construction sectors, the sticking point remains semiconductors and chips, with an average of 44% optimal inventory available across both sectors.

- There is no single solution to ongoing supply chain disruptions, respondents said.

- Equipment manufacturers of all sizes continue to utilize a multitude of responses to try and overcome ongoing supply chain disruptions. Responses include increasing inventory and supplier base, more vertical integration of supply chains, certifying alternative suppliers and focusing more attention on supply chain reliability over price.

AEM is the North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 1000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide.


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