Slow progress is still progress

2012 is set to be a positive year, with a very slow growth rate. The key message we have heard over and over has been “Accept the new normal” because the economy is not coming back to where it was in 2007. This year saw many OEMs and component suppliers heading to emerging markets to establish manufacturing and distribution facilities closer to their foreign customer base, and there were countless acquisitions, including the most notable one between Bucyrus and Caterpillar.

The following verbatim responses from industry experts and association leaders attest to 2011 achievements, indicators and 2012 opportunities and challenges, both domestically and globally.

Dennis Slater

President

Assn. of Equipment Manufacturers (AEM)

www.aem.org

How are off-road industries faring? Domestic vs. global markets? Please speak on behalf of the I Make America project, its successes, future goals and how OEMs benefit from being involved.

Our industry sectors are key components to the health of the U.S economy and the strength of the economic recovery. For off-road equipment manufacturing, certainly the construction sector has been hardest hit with the lingering effects of the recession. The agriculture sector has been stronger, helped by commodity prices and positive net farm income of farmers.

In the past few months, the future has become less clear. There’s been little traction in single-family housing. Transportation infrastructure is a key factor for growth, and there’s been no substantial long-term focus on funding. Credit availability has been easing but is still a concern for some customers.

Exports have been a bright spot, but we need action on pending free trade agreements to boost international business. Global business demand helped many off-road equipment manufacturers stay open through the recession, and they still depend on export sales, especially to emerging markets, for improved business results.

Agricultural equipment makers are helped by commodity demand and prices, but for all off-road equipment manufacturers, the lack of leadership and meaningful legislation coming out of Washington presents a real danger of a stalling economy.

This is where AEM’s I Make America grassroots campaign comes in. We want Congress to focus on manufacturing policies that create jobs, and infrastructure investment and export agreements are proven ways to create and maintain jobs for U.S. workers, for a sustainable recovery.

The issue affects not just our industry and not just OEMs. It affects every community, business, family and individual. An adequate infrastructure system translates into safer and more efficient travel to advance commerce and quality of life. For every $1 billion spent on infrastructure, 30,000 jobs are created. It has been estimated that overall for every $1 billion in U.S. exports, 5,000 jobs are created.

The I Make America campaign has made a lot of progress so far with more than 175 member companies officially signing up to get their employees and local communities involved; we’ve already had more than 12,000 supporters sign up on the I Make America website.

Congress has passed an extension of the “highway bill”—this is the eighth one—and it is only for six months. President Obama’s latest jobs initiative includes infrastructure spending, but it’s short-term and piecemeal. In our most recent quarterly poll of members, nearly 60% saw no impact from previous stimulus funding.

Roads, highways, bridges and other infrastructure projects aren’t developed and built a few months at a time. A long-term highway bill provides America’s equipment manufacturers with the certainty they need to hire, contractors with the certainty they need to make capital investments in new equipment and employees, and the U.S economy with a badly needed growth engine.