responses by Dennis Slater, President, Association of Equipment Manufacturers (AEM)
[GLOBAL] What are the emerging economies you see with the most potential for expansion and growth for off-road OEMs?
Global markets continue to be volatile, as some expected. While the US, and especially its rental market, which remains profitable. As always, these assessments depend on how demand will vary for different product lines.
Looking at an emerging region, the Middle East and North Africa (MENA) provide interesting opportunities, not only because of growth in the construction industry, but also because of the scale of the projects in the region. Projects coming online in the region seem to offer relatively good rewards for the risks. That cannot be said of all MENA countries (Iraq, Libya), but it is true for many of them. Looking at individual countries, there are opportunities in China, India, Indonesia, Colombia, Chile, and others.
For construction, in the long term, the economic outlook for all of the above markets continues mostly positive. From a trade show perspective of reaching key customers, AEM members indicate continued interest in Africa, India and Latin America. In the next year AEM has construction shows on three continents: CONEXPO Latin America (2015), and BAUMA CONEXPO AFRICA (2015), and this December we have bC India.
In agriculture, the fundamentals are still very strong despite recent drops in equipment sales. People need to eat, and there are about 200,000 more people every day. One way to meet this need for increased food production is the mechanization of agriculture on a global basis. International markets should be positive for ag machinery sales for one simple reason; what the U.S. went through in the first half of the 20th century is now happening in countries like India and China at an unprecedented rate. As manufacturers, we will continue to provide the equipment necessary to meet the food needs of society.
[GLOBAL] Have the current conditions in Russia/Ukraine or other international/regional situations affected that outlook and opportunity? If yes, how?
Most manufacturers may be focusing more on the US market, as that is the largest construction market in the world.
Ukraine, is reported to be the world's second-largest grain exporter in the 2014/15 year but has suffered major disruption because of the regional conflict. The dangers of harvesting crops in areas of conflict will reduce the harvest by up to 15% which ultimate will also equate to some negative impact on agricultural equipment sales.
[POLITICS] What government regulations, standards and/or bills were passed in the past year that most affected off-road equipment manufacturers?
AEM has been consistently engaged in the battle in Congress to pass a long-term, sustainably funded federal highway bill. Fixing the Highway Trust Fund is of utmost importance to all of our members, whose equipment not only helps build our nation’s highways but also depends on well-maintained roadways to do business. While we were disappointed in the short-term patch passed in July by Congress, we’re continuing to fight for a long-term bill.
Reauthorizing the Export-Import Bank has also been a top priority for us. Many of our members depend on the bank’s support to expand their business to foreign markets, and we were similarly disappointed in Congress’ decision to reauthorize the bank only for a few short months. But AEM continues to work with our coalition partners to secure a long-term reauthorization as soon as possible.
AEM has been additionally involved in a range of other important issues to off-road equipment manufacturers. For instance, Wisconsin’s implements of husbandry (IoH) rules, where we fought successfully for rules governing tracked vehicles on roads. The outcome of the WI IoH legislation provided a positive outcome for equipment manufacturers and ultimately our end customers. There is a balance that needs to take place between moving larger, heavier, more efficient farm equipment from farm to farm safely on our roads without damaging roadways. We think Wisconsin took a thoughtful approach utilizing industry input. The information gathered will help other states address this important issue.
We’ve also worked on Tier 4 engine emission regulations and various environmental and renewable fuels policies to ensure that manufacturers can fairly navigate the complex web of government regulations that threaten their ability to do business.
[POLITICS] How was AEM able to get involved in the conversation on behalf of off-road OEMs? Resolutions or positive outcomes you’d like to highlight?
We’re very proud of the efforts we’ve undertaken as an association this year to raise our profile in terms of advocating for policies important to off-road OEMs. Our “I Make America” Harley Tour visited 26 of AEM’s member companies this year to raise awareness of important policy issues for manufacturers among the companies’ employees as well as their surrounding communities. And we now number 40,000 I Make America supporters nationwide. We’ve also redoubled our efforts in Washington to improve AEM’s outreach not only in traditional media, but also on social media, where we’ve grown our following and integrated the use of video and infographics to promote and expand our message.
[POLITICS] How do you foresee the effects continuing into the upcoming years?
The good and bad news is that many of the issues on which we’ve worked this year are likely to continue into the coming years. We’re well-prepared to continue work on these and other important public policy matters. The gridlock that has paralyzed Washington in recent years has unfortunately made it difficult to advance any one issue too forcefully. But we’re nonetheless engaged in these fights to work on behalf of AEM members of all types.
[CONSOLIDATION] Now that Tier 4 Final is underway, many companies’ engineering resources have been freed up to refocus on developing new products instead of refining existing products to meet regulatory expectations. Have you seen this refocusing? What does this mean for future equipment designs?
Unfortunately, the status of Tier 4 for manufacturers is not as black and white as the question suggestions. Many companies are still focusing on product areas where they have had credits and implementation of Tier 4 is not 100% complete. Many are still trying to get clear direction from EPA what credits they have and when they must start to produce machines with Tier 4 as their customers see no value and have added cost, so they are looking for that exception in some cases. More companies are trying to prove out fuel efficiencies. This will become more evident to them as they implement telematics and are monitoring all metrics of the job.
[TECH OF THE FUTURE] Where is the heavy-duty vehicle industry lagging technologically?
From an OEM perspective, technology is often not lagging, but implementation is. Total machine performance, monitoring pay loads, etc. are here and the machines can already provide contractors with that information. However, implementation is lacking as an investment for the future. Autonomous vehicles are here in off road, but the implementation has yet to catch up.
[TECH OF THE FUTURE] What current technologies have the most potential for future gains?
Customers are already savvy about the total cost of ownership and attention is now turning to other advances. 3D simulation for construction will become very important. Using cost data from previous jobs will drive more competitive bidding. This kind of knowledge analyzed by firms before they develop a bid will have a tremendous effect on how customer approach equipment use.
For ag machinery, big data and precision agriculture are looming large for manufacturers. Manufacturers are providing significant funding for research and development in these areas, because the future of effective agriculture demands getting vital information from the machines to the people making farming decisions. Connectivity and big data are for sharing information from the combine harvester to help insurance companies, seed companies, and of course manufacturers increase efficiency in all aspects of a farming operation. The issues that accompany big data in agriculture are standards, certification, ownership, and data security.
[CHALLENGES] What new challenges have arisen that effect how manufacturers design and manufacture their product, how they do business and/or how they go to market?
Continued advances in additive manufacturing – 3-D printing will be a wave of the future (see http://www.aem.org/News/Advisors/AEM/?HL=Why_manufacturers_are_jumping_on_3-D_printing&A=1511). Challenges will be a new design approach, essentially all new from the ground up, will have to be used. Engineers with that capability will be in high demand and those challenged with flexibility could find the world has really changed. Another concern with this, along with the supply of engineers, could be the difficulty in securing reliable, dependable sources for powdered metal.
Public release of the AEM/AEMP Draft Telematics API (Application Programming Interface) Standard will make it far easier for equipment end-users to manage and analyze their fleet operations. Use of the API Standard will provide them with opportunities for savings in time and money, and should greatly increase operational efficiency, especially for large fleet managers. But there will also be benefits for OEMs, as growth in end-user implementation should lead to greater insight on equipment conditions, and potential improvements that will increase customer satisfaction. It’s really a win-win for OEMs and end-users.