Tag Archive for 'construction machinery'

Equipment Leasing and Finance Industry Confidence Up Again in December

The Equipment Leasing & Finance Foundation (the Foundation) releases the December 2019 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 56.2, an increase from the November index of 54.9.

When asked about the outlook for the future, MCI-EFI survey respondent Valerie Jester, President, Brandywine Capital Associates, Inc.,  said, “We are experiencing a strong finish to the year and the fourth quarter. Given all the distractions of the national political stage I am a bit surprised. The tariffs that were imposed earlier in the year are having their effect on certain industries, but we continue to see good investment in equipment with the predominance of our customer base. I believe many have learned to tune out the ‘noise’ and focus on the necessities to compete in today’s markets. Waiting to make certain equipment investments is just not optional if you want to stay in the game.”

December 2019 Survey Results:
The overall MCI-EFI is 56.2, an increase from 54.9 in November.   

•   When asked to assess their business conditions over the next four months, 10.3% of executives responding said they believe business conditions will improve over the next four months, down from 13.3% in November. 82.8% of respondents believe business conditions will remain the same over the next four months, an increase from 73.3% the previous month. 6.9% believe business conditions will worsen, down from 13.3% in November.

•   10% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, a decrease from 13.3% in November. 76.7% believe demand will “remain the same” during the same four-month time period, an increase from 63.3% the previous month. 13.3% believe demand will decline, down from 23.3% in November.

•   20% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, 80% of executives indicate they expect the “same” access to capital to fund business, and none expect “less” access to capital, all unchanged from November.  

•   When asked, 30% of the executives report they expect to hire more employees over the next four months, an increase from 26.7% in November. 63.3% expect no change in headcount over the next four months, a decrease from 73.3% last month. 6.7% expect to hire fewer employees, up from none the previous month.

•   23.3% of the leadership evaluate the current U.S. economy as “excellent,” up from 16.7% the previous month. 76.7% of the leadership evaluate the current U.S. economy as “fair,” down from 83.3% in November. None evaluate it as “poor,” unchanged from last month.

•   13.3% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 10% in November. 80% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 76.7% the previous month. 6.7% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 13.3% in November.

•   In December, 23.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 30% last month. 73.3% believe there will be “no change” in business development spending, an increase from 63.3% in November. 3.3% believe there will be a decrease in spending, down from 6.7% last month.

December 2019 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket
“We’re more hopeful than optimistic that there is pent-up small business capital equipment demand that will release and spur increased financing volume. We wonder whether the trucking recession is the canary in a coalmine for future problems, or an isolated sector problem.” Quentin Cote, CLFP, President, Mintaka Financial, LLC,

Bank, Small Ticket
“Our volume, credit quality and portfolio performance have all remained strong. Economic indicators are positive. Moving into an election year and the uncertainty that comes with it may cause stagnation.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“Demand for financing within our core commercial & industrial loan business remains steady, and the pipeline is strong into the beginning of 2020 indicating continued pent-up demand for capital expenditures. Money costs remain at all-time lows, which may continue to fuel growth. Unemployment numbers continue to decline. Admittedly there is uncertainty in some sectors such as rail, but these seem to be cyclical in nature and focus primarily around energy. We do anticipate growth in the plastics sector to offset some of this.” Frank Campagna, Business Line Manager, M&T Commercial Equipment Finance

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers, and businesses are more apt to acquire more consumer goods, equipment, and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross-section of industry executives, including large-ticket, middle-market and small-ticket banks, independents, and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:
1.   Current business conditions
2.   Expected product demand over the next four months
3.   Access to capital over the next four months
4.   Future employment conditions
5.   Evaluation of the current U.S. economy
6.   U.S. economic conditions over the next six months
7.   Business development spending expectations
8.   Open-ended question for comment

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast eNewsletter, and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

AEM Hails USMCA Agreement

Association of Equipment Manufacturers (AEM) president Dennis Slater issued the following statement today hailing a deal struck between House Democrats and the Trump Administration to move the USMCA closer to ratification: 

Dennis Slater, AEM President

“This is good news for equipment manufacturers, the 1.3 million men and women of our industry, and the entire U.S. economy,” said Dennis Slater, president of the Association of Equipment Manufacturers (AEM). “We’re another step closer to getting the USMCA ratified. Getting this across the finish line will preserve duty-free market access to our most important trade partners, add more than $68 billion to the U.S. economy, and create 176,000 U.S. jobs. We applaud the work done by House Speaker Nancy Pelosi (D-Calif.), House Ways and Means Committee Chairman Richard Neal (D-Mass.), U.S. Trade Representative Robert Lighthizer, and everyone involved in these negotiations. We look forward to Congress ratifying the agreement and President Trump signing it into law.” 

Since the creation of NAFTA two decades ago, equipment manufacturers have benefited greatly from duty-free market access to our industry’s two largest export markets, Canada and Mexico. Equipment manufacturers support 1.3 million jobs in the U.S. and 149,000 in Canada. The industry also contributes $188 billion to the U.S. and Canadian economies.

Over the past two years, AEM has called on both the Trump Administration and Congress to deliver an updated North American trade agreement for the 21st century. USMCA fulfills many of our industry’s goals and strengthens North American equipment manufacturing. Efforts include co-hosting the Honorable Mike Pence, Vice President of the United States, at an equipment manufacturing facility earlier this year in support of the agreement, sending a letter in support of the USMCA to Chairman Neal (D-Mass.) and the nine members of the House Democrats’ Trade Working Group, and running an ongoing public education campaign on the various benefits of a ratified USMCA. AEM is also a member of the USMCA Coalition.

AEM is the North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 1,000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry supports 1.3 million jobs in the U.S. Equipment manufacturers also contribute $159 billion to the U.S. economy. AEM is celebrating its 125th anniversary in 2019.
Visit www.aem.org/advocacy for more information.   

AEM Reports: U.S. Construction Machinery Exports Gain 43 Percent In 2011

U.S. construction equipment exports increased 43 percent in 2011 compared to the previous year for a total $23.5 billion of machinery shipped to other nations, according to the Association of Equipment Manufacturers (AEM). This follows growth of 28 percent in 2010 after a 2009 decline of 38 percent in the depths of the recession.

“Export sales continue to help U.S. construction equipment manufacturers stay open for business and sustain American jobs, especially with the domestic construction sector still recovering,” stated Al Cervero, AEM vice president construction sector.

AEM and its I Make America campaign have pushed for export-friendly policies that create and sustain American jobs. These include free trade agreements such as the U.S.-Korea FTA being implemented, which will eliminate export duties on about 80 percent of U.S. industrial products and about 67 percent of U.S. farm-related products.

In recent AEM action, the association is calling for congressional reauthorization of the Export-Import Bank, with an increased exposure cap so more companies can benefit from its services. Ex-Im Bank is self-sustaining. It focuses on small to medium-size businesses, since private lenders many times are unable or unwilling to extend them financing and insurance support.

Exports by World Regions and Top 10 Countries

Exports to Australia/Oceania led the way in 2011 with a 73-percent gain as the region took delivery of $2.8 billion of U.S.-made construction equipment. Construction machinery exports to South America increased 39 percent in 2011 with purchases worth $4.3 billion, and exports of construction equipment to Central America gained 23 percent and totaled $2.0 billion.

Export sales to Asia grew 44 percent to total $3.1 billion for 2011, and Africa’s purchases of U.S. construction machinery increased 41 percent to total $1.3 billion last year. Exports of construction equipment to Europe gained 49 percent for a total $2.8 billion in 2011, and export business to Canada grew 40.5 percent and totaled $7.2 billion.

The 10 countries buying the most U.S.-made construction machinery in 2011: (1) Canada – $7.2 billion, up 40.5 percent; (2) Australia – $2.7 billion, up 79 percent; (3) Mexico – $1.6 billion, up 28 percent; (4) Chile – $1.3 billion, up 45 percent; (5) Brazil – $951 million, up 25 percent; (6) China – $903 million, up 81 percent; (7) Colombia – $811 million, up 38 percent; (8) South Africa – $683 million, up 72 percent; (9) Russia – $652 million, up96 percent; (10) Peru – $572 million, up 31 percent.

AEM President Dennis Slater Sends Message To Congress On Importance Of Trade To U.S. Economy

The House Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled, “Stimulating the Economy through Trade: Examining the Role of Export Promotion” Tuesday in 2322 Rayburn House Office Building. The hearing examined the role of exports in U.S. economic growth, the impact of export promotion programs sponsored by the federal government, and the assistance available to help U.S. businesses expand markets for U.S. products.

Business advocates testified before the House Energy and Commerce Committee to address the U.S. government’s role in improving and sustaining export growth.

The United States is “missing the boat” when it comes to exporting manufactured products, the National Association of Manufacturers (NAM) vice president for International Economic Affairs Frank Vargo told the House panel.

Vargo said the United States ranks “dead last” among the world’s top 15 manufacturing nations in percentage of manufactured products sold abroad. “We can either leave future export performance at chance, a residual result of other policies and actions, or we must have a national export expansion strategy designed to achieve a large and sustained increase in our exports,” he said.

Government officials from the U.S. Commerce Department, the Government Accountability Office and the U.S. Department of Agriculture were among others who testified before the committee.

U.S. exports, once a steady source for growth, are being pushed to the forefront as a potential economic stabilizer, but business advocates don’t believe increasing promotion funds for trade is a high priority for the Obama administration given the ballooning deficit.

The hearing follows comments President Obama made last week about how U.S. export growth is dependent on stronger growth throughout the rest of the world.

“Until just a few months ago, exports were actually one of the areas where we were still getting some life in the economy,” Obama said last week. “That has now gone away. It’s now banished because purchasing power in many of these countries, as well as credit in these other countries, has contracted.”

He added, “So we’ve got to spend some time thinking about how we’re going to strengthen them, as well, in order to make sure that ultimately our plans here at home are successful.”

According to The Wall Street Journal, U.S. and U.K. officials announced a plan last week to provide several hundred billion dollars in trade financing to boost global trade. The plan is slated to be unveiled when Obama and a group of 20 leaders meet April 2.

Dennis Slater, president of the Association of Equipment Manufacturers (AEM), a leading trade association representing more than 800 companies that manufacture equipment, products and services used worldwide in the agricultural, construction, forestry, mining and utility industries, also submitted a statement that was presented before the House Committee on Energy and Commerce’s Subcommittee on Commerce, Trade and Consumer Protection:

International trade is a critical asset to American manufacturers, particularly during these difficult economic times. Opportunities in foreign markets have enabled our member manufacturers to prosper and maintain growth in recent years. During this current economic crisis it is especially important to promote participation in the global economy instead of turning back to a protectionist strategy. Protectionism will stifle economic growth globally and prolong a down-sloping economy.

Some 96 percent of the world’s consumers live outside the United States. U.S. producers must be able to reach those consumers to expand the U.S. economy and to create jobs. About one of every five-factory jobs – or 20 percent of all jobs in America’s manufacturing sector – depends on exports. And workers in jobs supported by exports typically receive wages higher than the national average.

U.S. industrial equipment manufacturers can compete anywhere in the world if given a level playing field. We know the positive effects of trade and open markets and are responding through an aggressive trade strategy, which includes new products and thinking globally. And it is not only large manufacturers, but also small and medium enterprises (SME’s), which benefit. Small businesses create 70 percent of the new jobs in America and they account for almost 97 percent of U.S. exporters. For example, AEM member and “SME” Stone Construction Equipment, Inc., of Honeoye, NY, with fewer than 500 employees, is a global exporter.

According to Lynne Woodworth, president of Stone, “trade gives Stone access to the 96% of the world’s population that lives outside the U.S. borders. Trade is critical because Stone has many untapped markets. Also, as a privately held, employee-owned company, revenue growth from trade in other parts of the world makes it possible for us to continue to invest in American manufacturing and the American worker.” This is just one of many stories from small equipment manufacturers who benefit here in the U.S. from exports.

Construction Machinery Exports Close Out 2008 With 20-Percent Gain
Despite downturns in the U.S. economy, many manufacturers were able to report strong profits for 2008 mainly because of exports. U.S. construction equipment exports totaled more than $20.7 billion for 2008, which translates into a 20-percent gain over the previous year, according to AEM’s recently released quarterly export trend reports. South America and Asia were among the market leaders for purchases of American-made construction machinery.

Global trade, especially to emerging markets, was a mainstay of our resurgence in recent years. Obviously the situation is much different today. Our industry sector, as with the manufacturing community overall, has been devastated by the abrupt downturn in 2008. These export results were helped by trading terms such as letters of credit, which kept goods in the delivery pipeline.

The AEM trade group consolidates U.S. Commerce Department data for off-road equipment with other sources into quarterly export trend reports. Some relevant figures:

  • Export sales to South America grew 44 percent in 2008 for a total of $3.3 billion compared to 2007. Asia took delivery of $3 billion worth of U.S. construction equipment, an increase of 25 percent, and exports to Central America grew 19 percent in 2008, for a total of $2 billion.
  • Export business to Europe gained 11 percent with purchases of $3 billion in 2008, and construction machinery exports to Canada increased 13 percent for a total of $6.2 billion.
  • Africa recorded purchases of $1.4 billion worth of U.S. construction equipment, an increase of 29 percent. And, exports to Australia/Oceania grew 14 percent, to $1.8 billion.

Farm Equipment Exports for 2008 Increase 26 Percent
Further, AEM’s export trend reports indicate that U.S. exports of agricultural-related machinery totaled $10.4 billion in 2008, an increase of 26 percent compared to the previous year. Australia/Oceania led the way in percentage growth, followed by Canada, South America and Europe.

Export growth was strongest in the first quarter of the year and then dropped substantially by the third quarter. The farming sector has not been immune to the global economic downturn, with continued uncertain conditions around the world, and in some instances staggering economic reversals of recent positive trends in certain world regions.

U.S. farm equipment exports to Australia/Oceania totaled $794 million, a 59-percent increase for 2008. Exports to Canada grew 31 percent in 2008, with purchases totaling $2.8 billion. South America took delivery of $888 million worth of American-made agricultural equipment in 2008, a gain of 29 percent, and exports to Europe increased 23 percent and totaled $4 billion.

Asia bought $793 million worth of U.S. agricultural machinery, a 12-percent increase, while Central America’s export purchases of $813 million represented a 13-percent increase. Africa’s farm equipment export purchases were $299 million, a gain of 21 percent.

Trade Protectionism Is Bad For The U.S. Economy
The U.S. last month passed an enormous recovery bill to stimulate the economy and many other nations are following suit with their own economic Stimulus Packages that could provide opportunities for U.S. equipment manufacturers. Unfortunately, our trading partners may leave behind U.S. manufacturers because of restrictions such as “Buy America” that may lead to retaliation. Leaders from around the world have warned that they will return the favor by also restricting U.S. manufacturers from infrastructure projects in their countries, thereby exacerbating an already dire situation. The European Union’s trade commissioner declared that “the one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore.” The Canadian government has also urged the U.S. to reject protectionist pressures, abide by our promises of open and fair trade, and live up to our treaty obligations.

U.S. equipment manufacturers understand that stimulus spending alone cannot save all the manufacturing jobs lost due to the economic crisis, and our companies are making the changes necessary to adapt. However, we must have fair access to other infrastructure projects globally to maximize our ability to recover and to strengthen – access to those markets is key to helping the economy here at home. Take, for example, the U.S. infrastructure funding from the stimulus, which is less than $120 billion, and compare that to the $200 billion China is spending on infrastructure or the $400 billion that Saudi Arabia will spend over the next five years on infrastructure projects. The market opportunities created by the massive investment of these and other countries will help to keep plants operating and save millions of jobs in the U.S., but if our government restricts our trading partners from the U.S. market, U.S. manufacturers will certainly face retaliation.

Additionally, President Obama’s recently announced trade policy agenda gave credence to concerns that we are seeing a reemergence of protectionist philosophy. This philosophy has been proven over time to be counter-productive to American manufacturing, and thus detrimental to the people and communities relying on the jobs, taxes and other benefits that a strong manufacturing sector provides. Instead of moving forward with the Free Trade Agreements (FTA’s) already signed with Panama, Colombia, and South Korea, the President now says these key FTA’s need more review. The President also indicates he intends to give NAFTA another look, which cannot inspire confidence in our most important trading partners, Canada and Mexico. After the good faith and hard work invested in these agreements, it is an insult to our valued friends and allies and to our vital trading relationships to now revisit signed agreements, which seems to be the course of action proposed by the Administration.

AEM urges Congress to approve the FTA’s with Colombia, Panama and South Korea and not to reopen NAFTA. FTA’s contribute to a higher quality of life and benefit businesses, workers, and consumers in significant ways. These agreements open foreign markets to U.S. exporters and investors. With a stalled Doha round in the World Trade Organization (WTO) negotiations, bilateral and multilateral agreements such as the ones already in effect are even more critical in fostering expanded trade across borders. In contrast to the U.S., the European Union is joining East Asian and Latin American countries in negotiating dozens of FTA’s. Our failure to pursue FTA’s could very well cost U.S. manufacturers much needed competitive advantages by keeping the playing field tilted in favor of our competitors.

Conclusion
AEM welcomes the opportunity to provide these comments on how to stimulate the economy through trade. As indicated above, AEM very strongly urges the United States not to seek refuge in the false comfort of protectionism, but instead to work together with our trading partners to weather the storm of this economic crisis. Industrial equipment manufacturers provide the machines that improve operations and reduce costs of any infrastructure project. Our members’ high-quality machines are critical to delivering the “shovel ready” jobs needed to meet the President’s objective to “keep the U.S. economy strong and competitive.” With such a huge infrastructure task ahead, additional restrictions will only delay the promise to the American people to maintain their jobs and to stimulate the economy.

Free trade is critical to our economic growth, and it is especially important that we have free trade across the Americas. Congress is currently considering the Free Trade Agreement between the U.S. and Colombia. The U.S. manufacturing community is looking for support in backing the ratification of this agreement. AEM has put together a link on its website. To send a letter to your elected officials encouraging them to support the U.S.-Colombia Free Trade Agreement as well as bilateral trade negotiations with Panama, click here.

Greg Sitek