The COVID-19 pandemic continues to take a toll on an industry that represents 12% 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 the impact of the COVID-19 pandemic on the overall economy is still very negative. In addition, six out of 10 executives say 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,” AEM president Dennis Slater said. “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.”
As the country navigates the ongoing COVID-19 pandemic, equipment manufacturers, suppliers and distributors have largely remained open and continued to supply the equipment necessary to keep the country moving forward and help lead the recovery and renewal of the American economy. However, many equipment manufacturers are still struggling to keep workers on the job, with eight out of 10 executives indicating that they will not be able to rehire workers laid off earlier in the year.
The second survey of presidents, chief executive officers and owners of leading equipment manufacturers comes as more states are opening back up for business and as Congress negotiates a fifth stimulus package. Slater continued, “While it is very encouraging that equipment manufacturers are adjusting to the new normal and reopening 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 AEM survey ran 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.
Three-quarters of respondents said the impact of the COVID-19 pandemic on the overall economy is still very negative, while just under half said the impact on the industry is equally bad.
One-third of respondents said they plan to lower their financial outlook by as much as 30% over the next 30 days, while another one in eight respondents indicated that they expect to reduce their outlook by as much as 30% for the rest of the year.
Executives said employee health and well-being, lack of new orders and continued supply chain challenges are the three biggest issues they face as they reopen 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 much as 10% of their workforce.
The road to recovery is lined with warning signs. For equipment manufacturers that have furloughed workers, nearly a third said they would not bring anyone back to work. For those that laid off workers, eight out of 10 said they will not rehire those workers 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 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.