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Equipment Manufacturers Plugged in for Growth in 2023

Jan. 11, 2023
AEM experts see connection (and reconnection) as a major trend for the new year.

After a year of reconnection with the workforce and disconnection with the supply chain, the outlook for 2023 for equipment manufacturers is to bridge the remaining gaps. That includes a greater emphasis on employee recruitment and development and a greater use of technology to help improve operations and efficiency.

That’s the view of experts from the Milwaukee-based  Association of Equipment Manufacturers (AEM) as they took an in-depth look at the industry and their membership heading into the new year.

Two areas at the top of the AEM list were improving organizational culture and communication. “After struggling through the COVID-19 pandemic, people are now reevaluating their role in the workplace,” said Jaime Vos, AEM senior director of Revenue Development and Cultural Innovation, in a press release discussing the AEM vision for the coming year. “Many have placed a stronger value on their health and have chosen to accept other opportunities better aligned with their personal well-being. Taking this into account, organizations will need to create a shared vision.”

From creating a greater work-life balance and employing better collaboration tools to recognizing the need for improved mental health support, Vos said the need to better engage workers comes at a time of continued uncertainty. “Organizations in many industries, including equipment manufacturing, are being forced to respond by reexamining their business models” Vos said. “Supply chain issues, increased competition, technology advancements and economic uncertainty have all placed pressure on companies to adapt, innovate and rethink how they do business.”

Kate Huskin, AEM senior director of Communications, noted the need to improve communications is not just a matter of words. “The key to driving change in an organization is rooted in an organization’s ability to communicate effectively and build lasting connections with important stakeholders,” Huskin said. “In 2023, communications will take on a leading role in helping organizations address challenges, identify opportunities and drive success. Effective communications happens from the inside out, and a renewed focus on internal communications will be needed to help organizations establish and “walk the talk” of their culture.”

That cultural shift will include the recruitment, training and retention of the next generation of workers. Many of them, notes Julie Davis, AEM senior director of Workforce and Industry Initiatives, will bring new skills to the business and others will need to be trained in those new skills.

“Imagine being able to cast an organizational hiring net to consider people based on the skills, talents and interests that would make working in the skilled trades good fit instead of hiring someone based on skills used in a job a person could get as a 20-year-old,” Davis said. “This is exactly how skills-based hiring works, and it results in having a wider talent pool from which to recruit. The catch is equipment manufacturers must be able to assess individual skills and then train them to competency. This can be done either by partnering actively with education, possessing trainers or a combination of the two.”

Supply Chain, Electric Power Issues

Two specific challenges facing equipment manufacturers are the rapid growth in electric vehicle technology and the related industries and products growing up around it, and the still-shaky supply chain needed to deliver on those technological innovations.

“Diesel fuel is the primary power source for the non-road equipment industry, and it will likely continue to be for the foreseeable future,” said Jason Malcore, AEM senior director of Safety & Product Leadership. “However, if one thing’s for certain, it’s this year will spotlight the many alternative power challenges and opportunities facing the non-road equipment industry and represent an inflection point for new power sources over the coming decade.”

That’s largely because the environmental and governmental pressures on vehicle manufacturers continue to accelerate. “Governmental agencies and non-governmental organizations throughout Europe and across North America and Asia continue to look for new opportunities to transition their automotive and equipment fleets toward new decarbonized technologies,” Malcore said. “These pressures and motivations reveal themselves in the form of new rules and regulations on internal combustion engine emissions and incentive programs for zero-emission equipment purchases. In addition, increasing customer demands for hybrid and zero-emission vehicles also highlight the industry’s evolution and direction in this space.”

The supply chain issues that roiled manufacturing throughout 2022 showed signs of easing near the end of the year. That doesn’t mean there still aren’t some storm clouds on the horizon, however.

“There is no denying the 2020 COVID-19 pandemic turned the world on its head, but it was tough to predict just how long the supply chain would be impacted by the pandemic,” said Kip Eideberg, AEM senior vice president of Government and Industry Relations. “A recent AEM survey of 179 equipment manufacturers revealed that 98% of equipment manufacturers are still battling with an unreliable supply chain – and over half (58%) are experiencing worsening conditions.

“AEM confirmed that the two driving factors of these supply chain woes stem from workforce shortages and access to intermediate components for production,” Eidberg said. “These things coupled together paint a stark picture, but there are reasons to be optimistic that supply chain challenges will start to abate over the course of this year. One thing is certain, equipment manufacturers remain willing to rise to the occasion and adapt.”

This article appeared in Power & Motion.

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