Oliver Wyman and AEM Release Report on Equipment Manufacturing Sector

A new report from management consulting firm Oliver Wyman and the Association of Equipment Manufacturers (AEM) finds declining sentiment among equipment manufacturers due to tariff unpredictability, inflation and high interest rates.

The study, titled "The State of the Industrial Goods North America, Non Road Edition," reveals that executives in the construction and agricultural manufacturing sectors rated current industrial conditions an average of 5.7 out of 10, a significant drop from an 8.0 rating last year. The report attributes this downturn to a pervasive "tariff myopia" that limits capacity for innovation and long-term strategic planning.

According to the research, 51% of industrial goods companies are now dedicated to short-term initiatives of less than one year. The changing tariff landscape has caused significant setbacks in long-term planning for 68% of companies. The report notes that many organizations have established dedicated "war rooms" to manage these economic headwinds.

Sentiment was lowest in the agricultural sector, which is experiencing meaningful revenue declines as crop prices fall and input costs rise. The report notes that U.S. agricultural equipment revenue has declined by 3.4% in the last five years, with 63% of marketing leaders expecting this trend to continue.

Despite current challenges, the report indicates optimism for the future. More than 70% of executives expressed confidence in their companies’ ability to adapt and thrive through core product innovation, aftermarket services and international expansion.

“Despite the downturn driven by tariff uncertainty and economic pressures, the industrial goods sector is adapting by revisiting core strengths," said Michael Sharov, partner in Oliver Wyman's Transportation and Advanced Industrials practice. "This is a strategic response that prioritizes product reliability, operational discipline, and customer experience."

Key findings and future trends identified in the report include:

• A strategic shift toward short-term initiatives and core business fundamentals to build resilience.
• The impact of geopolitical tension and talent shortages on corporate strategy.
• An accelerated focus on cost management, business transformation and capital efficiency.
• Fundamental changes to the value chain over the next five to 10 years, including new distribution models, customer segmentation shifts and increased digital tool adoption.

“The challenges are real, but so is our industry’s determination,” said Megan Tanel, president and CEO of AEM. “By embracing innovation, supporting our workforce, and advocating for the right policy environment, equipment manufacturers are positioning themselves for long-term growth and leadership in a rapidly changing global market.”

Access the full report.