Top 5 equipment manufacturing trends to watch in 2023
By Association of Equipment Manufacturers12 January 2023
With 2022 firmly in the rearview mirror and the new year now underway, it’s clear many of the opportunities and challenges affecting equipment manufacturers today are poised to remain as relevant as ever in the weeks and months ahead.
Though it’s a fool’s errand to try and predict exactly how 2023 will unfold for the industry, equipment manufacturers would be wise to pay close attention to a number of trends and how they may evolve in the near term. With that in mind, the Association of Equipment Manufacturers (AEM) caught up with several staff leaders to hear which trends, specifically, are top-of-mind for them at the moment.
1. The industry-wide emphasis on organizational culture
With so much change taking place in 2022, organizations in many industries, including equipment manufacturing, are being forced to respond by reexamining their business models, said Jaime Vos, AEM senior director of Revenue Development and Cultural Innovation. 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.
In addition to these challenges, leadership will also need to address the morale of their workforce this year, Vos continued. What many have called the Great Resignation has affected organizations of all sizes and has made employee retention the single most important issue of 2023. After struggling through the COVID-19 pandemic, people are now reevaluating their role in the workplace. 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 that supports the following areas for their employees:
- Employee values
- Work/life balance
- Creativity and collaboration
- Mental health awareness and support
- Hybrid telecommuting models
- Opportunities for career growth
Studies show that employees who feel recognized, respected and supported do more than what is expected, Vos said. If organizations want to strengthen employee retention, leaders will need to communicate openly with workers, listen to their concerns, address issues in real time and provide opportunities that empower a healthy culture.
Employees want to feel valued in their roles, Vos said. Organizations that create a shared vision of well-being for their staff will see their culture empowered, inspired and committed to a prosperous new year.
2. The new normal of employee training and development
Workforce issues remain so prevalent in equipment manufacturing today, that it’s simply not enough to foster a strong organizational culture in order to meet workforce demand, said Julie Davis, AEM senior director of Workforce and Industry Initiatives, SHRM-CP.
Fewer people working coupled with more jobs, more diversity in available jobs and more competition across industries make workforce arguably the most pressing issue as 2023 gets underway. Because of these challenges, employee training and development should be a top priority for equipment manufacturers in 2023 and beyond, Davis said. Though employee training and development may be a budgetary afterthought for some equipment manufacturers, it’s becoming increasingly clear that up-skilling, re-skilling and new-skilling employees on an ongoing basis is fast becoming the new normal, and Davis explained why.
Consider someone who has an engine spread out in a garage, is wiring his or her friend’s hunting cabin or is the neighborhood handyman. Based on this person’s hobbies, interests and personal aptitude, he or she would be a good fit to work in the skilled trades. 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 a good fit instead of hiring someone based on skills used in a job a person could get as a 20 year old. (Let’s face it, none of us were working in the job we wanted at that point; we were working in the job we could get).
This is exactly how skills-based hiring works, and it results in having a wider talent pool from which to recruit, Davis said. The catch is that 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).
The U.S. government funded the Apprenticeship Building America grants program to the tune of $121.7 million dollars in 2022. Why? Because apprenticeship and work-based learning programs done right continue to be a proven way to train, attract and retain workers. Can’t set one up? Think again. According to Davis, partners such as Apprenticeship Works, JFF and GPS Education can guide organizations through the process both efficiently and effectively.
The workforce is aging and employees at every level with critical masses of knowledge are walking out the door every day, Davis noted. What questions are asked before they leave, and how is their knowledge being captured and transferred to the person who will be taking their place? Three years ago, before the surge of retirements that came with COVID-19, surveyed Baby Boomers said:
- 57% have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume them after they retire.
- 21% have shared none of their knowledge.
- Only 18% have shared all of their knowledge.
Transferring knowledge is poised to work best when training and development are already normalized within a company’s culture, Davis said. Trainers and educators are taxed to keep pace with technological advancements, yet new skillsets are needed every day.
There is no automation to off-set workforce shortages without up-skilling or new-skilling workers to use advancing equipment. Ready or not, partnering, internal training and ongoing learning are here to stay.
3. The ongoing impact of supply chain issues
It has been an issue for several years now, and unfortunately equipment manufacturers will continue to hear about it for a while – the supply chain. There is no denying the 2020 COVID-19 pandemic turned the world on its head, said Kip Eideberg, AEM senior vice president of Government and Industry Relations. But it was tough to predict just how long the supply chain would be affected by the pandemic.
A recent AEM survey of 179 equipment manufacturers revealed that 98% of equipment manufacturers are still battling with an unreliable supply chain – and more than 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. 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, Eideberg said.
One thing is certain: Equipment manufacturers remain willing to rise to the occasion and adapt.
AEM continues to survey our member company executives to better understand how they are affected by continued high inflation, strained supply chains and global instability, said Eideberg, and to provide elected officials with the data points they need to move legislation that will revitalize U.S. manufacturing and bolster U.S. global competitiveness.
Eideberg added that Republicans and Democrats can take immediate action to alleviate these problems by prioritizing an extension of research and development expensing, enacting meaningful permitting reform, removing tariffs on a host of critical components and reaching a bipartisan, long-term agreement on the debt ceiling this year.
4. The rise of alternative power
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. Jason Malcore, AEM senior director of Safety & Product Leadership, 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.
Malcore cited the following examples of anticipated industry pressures in 2023:
- California Air Resources Board’s (CARB) continued rulemakings and public workshops regarding the next stage of California’s engine emissions regulations.
- The implementation of the Inflation Reduction Act’s tax incentives for the electrification of light-duty, commercial and heavy-duty vehicles.
- Federal and state executive announcements to decarbonize the U.S. economy.
- Zero-emissions requirements for small engines under 25 hp.
Diesel fuel is the primary power source for the non-road equipment industry, and it will likely continue to be for the foreseeable future, Malcore continued. However, if one thing’s for certain, 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.
5. The acceleration of communication and connection
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, according to AEM Senior Director of Communications Kate Huskin.
In 2023, communications will take on a leading role in helping organizations address challenges, identify opportunities and drive success, she predicted.
Effective communications happen 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, putting actions behind the words on their websites and internalizing how they wanted to be viewed and accepted by their current employees, prospective employees, customers, partners and the marketplace at large, Huskin said.
During the pandemic, communications leaders across the globe were faced with unprecedented communications challenges that required a new playbook for sharing up-to-the-minute information, she noted. This has forever changed the way we look at crisis communications, and communications and public relations teams are in a new normal of crisis communications.
The equipment manufacturing trends listed above, from organizational change and employee training and development to supply chain challenges and the rise of alternative power, are challenges that will be driven by communications and an organization’s ability to connect and support its internal and external stakeholders.
The Association of Equipment Manufacturers (AEM) is the North America-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.