With 2022 firmly in the rearview mirror and the new year now underway, it’s clear many of the opportunities and challenges impacting equipment manufacturers today are poised to remain as relevant as ever in the weeks and months ahead. While 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. This article is caught up with five such equipment manufacturing trends by experts from the Association of Equipment Manufacturers (AEM).

1. The industry-wide emphasis on organisational culture

With so much change taking place in 2022, organisations in many industries, including equipment manufacturing, are being forced to respond by reexamining their business models. 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. 

“What many have called the great resignation has affected organisations 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 roles 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,” said Jaime Vos, Senior Director, Revenue Development and Cultural Innovation, AEM.

He further adds, organisations will need to create a shared vision that supports the following areas for its 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 recognised, respected and supported do more than what is expected. If organisations 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. Organisations that create a shared vision of well-being for their staff will see their culture empowered, inspired and committed to a prosperous new year,” told Vos.

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 organisational culture in order to meet workforce demand. Fewer people working coupled with more jobs, more diversity in available jobs and more competition across industries make the 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. “While employee training and development may be a budgetary afterthought for some equipment manufacturers, it’s becoming increasingly clear up-skilling, re-skilling and new-skilling employees on an ongoing basis are fast becoming the new normal,” said Julie Davis, Senior Director, Workforce and Industry Initiatives, SHRM-CP, AEM.

Davis explains, consider someone who has an engine spread out in a garage, is wiring his or her friend’s hunting cabin, or is the neighbourhood handyman and, based on his or her hobbies, interests and personal aptitude, the person would be a good fit to work in the skilled trades. Imagine being able to cast an organisational hiring net to consider people based on their skills, talents and interests. It 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. This is exactly how skills-based hiring works and 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. “The government funded the Apprenticeship Building America (ABA) 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 think again. Can’t set one up? Think again,” said Davis. Partners like apprenticeship works, JFF and GPS education can guide organisations through the process both efficiently and effectively.

The workforce is ageing, and employees at every level with critical masses of knowledge are walking out the door every day. 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 per cent have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume them after they retire, 21 per cent have shared none of their knowledge, and only 18 per cent have shared all of their knowledge.

“Transferring knowledge is poised to work best when training and development is already normalised within a company’s culture. Trainers and educators are taxed to keep pace with technological advancements, yet new skill sets 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,” told Davis.

3. The ongoing impact of supply chain issues

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. A recent AEM survey of 179 equipment manufacturers revealed that 98 per cent of equipment manufacturers are still battling with an unreliable supply chain – and over half (58 per cent) are experiencing worsening conditions. “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,” said Kip Eideberg, Senior Vice President, Government and Industry Relations, AEM.

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. 

“One thing is certain, equipment manufacturers remain willing to rise to the occasion and adapt,” said Eideberg. “AEM continues to survey our member company executives to better understand how they are impacted by continued high inflation, strained supply chains and global instability, and to provide elected officials with the data points they need to move legislation that will revitalise US manufacturing and bolster US global competitiveness.” Republicans and Democrats can take immediate action to alleviate these problems by prioritising 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

Jason Malcore, Senior Director, Safety and Product Leadership, AEM, says, governmental agencies and non-governmental organisations throughout Europe and across North America and Asia continue to look for new opportunities to transition their automotive and equipment fleets toward new decarbonised technologies. 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.

A few examples of anticipated industry pressures in 2023 are—California Air Resources Board’s (CARB) continued rulemaking and public workshops regarding the next stage of California’s engine emissions regulations; the implementation of the US inflation reduction act’s tax incentives for the electrification of light duty, commercial and heavy-duty vehicles; federal and state executive announcements to decarbonise the US economy; and zero-emissions requirements for small engines under 25 horsepower.

“Diesel fuel is the primary power source for the non-road equipment industry, and it will likely continue to be for the foreseeable future. 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 inflexion point for new power sources over the coming decade,” concluded Malcore.

5. The acceleration of communication and connection

“The key to driving change in an organisation is rooted in its ability to communicate effectively and build lasting connections with important stakeholders,” said Kate Huskin, Senior Director, Communications, AEM. In 2023, communications will take on a leading role in helping organisations address challenges, identify opportunities, and drive success.

Effective communication happens from the inside out, and a renewed focus on internal communication will be needed to help organisations establish and ‘walk the talk’ of their culture, putting actions behind the words on their websites and internalising how they wanted to be viewed and accepted by their employees, prospective employees, customers, partners, and the marketplace at large.

“During the pandemic, communication leaders across the globe faced unprecedented communication challenges which required a new playbook for sharing up-to-the-minute information. This has forever changed the way we look at crisis communication and communications and public relations teams are in a new normal of crisis communication,” told Huskin.

Courtesy: Association of Equipment Manufacturers (AEM)