Re­cently, the As­so­ci­a­tion of Equip­ment Man­u­fac­tur­ers (AEM) in the US con­ducted its sec­ond sur­vey of member com­pany ex­ec­u­tives, mainly pres­i­dents,

CEOS, and owners, on the con­tin­ued im­pact of the COVID-19 pan­demic on equip­ment man­u­fac­tur­ers. The 102 re­spon­dents weighed in on the ef­fects on the econ­omy, the in­dus­try, their com­pa­nies, sup­ply chain and man­u­fac­tur­ing op­er­a­tions, and their fi­nan­cial ex­pec­ta­tions.

The re­spon­dents con­tinue to over­whelm­ingly agree on the same three chal­lenges with re­spect to the COVID-19 pan­demic: the fi­nan­cial im­pact on the busi­ness, in­clud­ing ef­fects on re­sults of op­er­a­tions, fu­ture pe­ri­ods, and liq­uid­ity and cap­i­tal re­sources, em­ployee health and well­be­ing, and can­celled or de­layed or­ders.

Com­pared with the re­sults of the first sur­vey con­ducted in April 2020, most met­rics have im­proved. Three quar­ters (74%) of re­spon­dents said that the im­pact of the COVID-19 pan­demic on the over­all econ­omy is very neg­a­tive (com­pared to 91% in April). Their out­look on the im­pact on the in­dus­try and in­di­vid­ual man­u­fac­tur­ers is im­prov­ing, but just 47% still said the im­pact on the in­dus­try is very neg­a­tive (down from 56% in April), while 28% said that the im­pact on in­di­vid­ual com­pa­nies is very neg­a­tive (com­pared to 42% in April). The out­look on sup­ply chains and man­u­fac­tur­ing op­er­a­tions re­mains neg­a­tive. Six out of 10 (62%) of re­spon­dents sur­veyed said the im­pact on their sup­ply chain is mod­er­ately neg­a­tive (down from 68% in April), while 61% said the im­pact on man­u­fac­tur­ing op­er­a­tions is mod­er­ately neg­a­tive (com­pared to 65% in April). Nearly 88% of re­spon­dents said that the im­pact on sales is ei­ther mod­er­ately neg­a­tive or very neg­a­tive (com­pared to 93% in April). Look­ing ahead to the rest of the year, 61% said it will im­prove (com­pared to 58% in April).

More than 36% said they have fur­loughed up to half of their em­ploy­ees, while al­most 8% of re­spon­dents in­di­cated that they have fur­loughed at least half of their em­ploy­ees. Roughly 18% of re­spon­dents said they have laid off as much as 10% of their work­force.

For the equip­ment man­u­fac­tur­ers who have fur­loughed work­ers, nearly 31% in­di­cated that they would not bring any­one back to work, while al­most 38% said they plan to bring all fur­loughed em­ploy­ees back to work. The pic­ture is even more grim for those equip­ment man­u­fac­tur­ers who laid off work­ers as a re­sult of the COVID-19 pan­demic, with 81% re­spon­dents say­ing that they will not re­hire work­ers. A clear ma­jor­ity (59%) of re­spon­dents said that the equip­ment man­u­fac­tur­ing sec­tor is not get­ting the sup­port it needs from the fed­eral govern­ment.

Ac­cord­ing to IHS Markit, global com­mer­cial ve­hi­cle pro­duc­tion (GVW 4-8) vol­umes in

2020 com­pared to 2019 are fore­cast to be down 22% (more than 650,000 units) to 2.6 mil­lion units, in the wake of the COVID-19 pan­demic. IHS Markit ex­pects the in­tense phase of the health cri­sis to pass by year’s end, opening the win­dow for truck­ing to re­sume its busi­ness. This means that even though monthly pro­duc­tion vol­umes in the com­ing quar­ters may dip be­low the lev­els seen dur­ing the last re­ces­sion in 2009 in some re­gions, over­all, an­nual fig­ures are still ex­pected to be higher than 2009 to­tals.

S&P es­ti­mates that the global sales of heavy-duty trucks will de­cline by 20%-30% in 2020, to about 1.7 mil­lion units from 2.3 mil­lion in 2019, fol­lowed by a sales re­cov­ery of up to 10% in 2021. Cur­rently, global truck man­u­fac­tur­ers are test­ing their pro­duc­tion and sup­ply chains, and have ei­ther al­ready started to grad­u­ally re­open plants, or ex­pect to do so. Nev­er­the­less, S&P ex­pects in­tense credit pres­sures ahead for truck mak­ers and po­ten­tial govern­ment stim­u­lus pack­ages and cen­tral banks’ ac­tion to fa­cil­i­tate ac­cess to fund­ing will only partially re­lieve th­ese pres­sures.

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