“Steel is in short supply.”
Double meaning to the short comment. Farmers are still having trouble buying machinery. Builders who do steel construction projects continue to have difficulty finding materials.
Last fall, farmers across the country, desperate to upgrade equipment, found dealer and auction lots empty. Dealers of all brands were out of machinery and were running low on some parts.
Manufacturers of both agricultural and construction equipment lacked everything from tires to steel components to computer chips.
A year later, the situation isn’t any better, according to Machinery Insider. The impact on agriculture is telling.
About 45 percent of producers recently surveyed by Purdue University reported that insufficient supplies have impeded their equipment purchases.
For manufacturers, lack of supplies has created a nightmare situation, Association of Equipment Manufacturers (AEM) officials said. They’re uniting from assembly to a hold lot because unavailability of component parts.
Often it isn’t big-ticket components that are fouling up manufacturing. There are short supplies of small parts like knives, chains, connector pens and the like.
Manufacturers have become adept at shopping around for different vendors for supplies but that’s no guarantee. Neither is ordering supplies a year in advance
“Some supply issues have improved but getting back to business as normal seems far off,” AEM officials said.
The situation is even worse with construction equipment because of high demand for machinery caused by a three-year building boom.
This has resulted in manufacturing lead times that grew from three months to more often more than a year.
Plus, manufacturers are faced with major price increases for supplies They have turned to boosting salaries and offering hiring bonuses to entice needed factory workers, AEM executives reported.
Trying to find equipment replacements after discovering new iron wasn’t available, farmers have scoured dealer and auctions for replacements.
The run on late-model, large equipment in good condition wiped out available inventory in 2021. “Thus, making 2022 the year for like-new prices for late-model machines,” it is reported.
The bigger challenge is just finding equipment. “Whether it’s construction equipment or farm machinery, the good stuff sells fast and sells high,” dealers state “You better be prepared for sticker shock because the prices some of this equipment is bringing are astronomical.”
Trend lines reflect low used machinery prices from 2014 to 2019 followed by the fervent demand for used equipment since 2021.
A turnabout with used machinery is beginning to present itself, however. Sluggish sales of new equipment between 2013 and 2019 shorted restocking of used inventories.
However, new equipment purchased in the past three years is starting to come in on trade replenishing the used marketplace. Reports show the decline in used inventories seems to have reached a bottom this past summer.
Year-to-year used equipment inventories were down 22 percent, but the downward trend of the past three years appears to have reached an end.
This should have sent sales for 2022 off the charts. But sales of large new equipment remained the same because of the lack of inventory.
AEM and Machinery Insider provide advice”
Order early. Forecast machinery replacements now and plan to order at least a year in advance. And look beyond next year, planning out two to three years for equipment needs.
Anticipate parts needs. Parts have largely been in good supply, but that is no guarantee certain parts will be available when needed. If planning to rebuild equipment next winter, order replacement parts for those projects now.
Shop the internet for used iron. Look over the entire area to find the machine wanted particularly if it is late-model and in good shape. When locating machinery at a distant dealership, work with a local dealer to secure purchase and arrange transport. Internet sites provide a monitor of what is available for a particular model and year implement including the price.
Sell idle equipment. There is no better time than now to sell for the highest price used equipment in the machine shed. Consigning such equipment has never been easier or more secure.
“Steel is in short supply.”