The COVID-19 pandemic has impacted the operations of companies under the heavy equipment industries in many ways, from manufacturers having to temporarily stop their operations to others shifting their efforts to the production of medical and cleaning supplies.
To minimize the impact of the standstill status of industrial production and economies, businesses are implementing risk mitigation strategies. Also, self-isolation and social distancing measures, as well as restrictions on travel, have disrupted the global supply chains.
As the world starts rebuilding the global economy, the heavy equipment industry will play a key role in these efforts. But for now, the relative lull of the moment is an ideal time to brainstorm ways to improve production, consider heavy equipment financing, and other strategies to prime the industry’s rise again.
Market Realities & Economic Uncertainties
Before you can gauge how the industry will fare after the pandemic, weigh in on the market realities and economic uncertainties at play.
Disruption in the Global Supply Chain
Despite the local application of heavy equipment, the supply and trade chains of original equipment manufacturers (OEMs) in the industry are complex and distributed across the globe. Lockdown measures have restricted the movement of resources and non-essential goods, which has put the brakes on heavy equipment manufacturing.
Fall in Public Demand
As the government prioritizes health and safety during the pandemic, public spending on infrastructure development and construction slowed down. Since government contracts contribute greatly in terms of business for developers, the change in demand could have a debilitating effect on the sector.
On the other hand, the set lockdown measures have crippled small business owners, particularly those in emerging markets, as they struggle with the loss of sales, liquidity crunches, and insolvency. This could translate to a massive drop in demand for OEMs.
Adapting to the New Normal
Given the heavy equipment and industrial sector’s role in recovering from the COVID-19 slump, OEMs need to apply measures that ensure the workforce and operations are up to speed in the weeks to come.
Responsive & Flexible Workforce
The health risks associated with COVID-19 changed the structure of the workforce. This, combined with fluctuations in demand, required companies to establish more flexible and responsive workforce structures.
Since lockdown measures have enforced remote working, expect this trend to extend to areas that were considered “sensitive” before the quarantine protocols. For that to be effective, however, businesses must establish robust processes and systems that work for both virtual and physical work environments.
Hedging Global Supply Risks
The industry has recently witnessed an increase in offshore sourcing and production trend to international markets such as China. The pandemic, however, has revealed many risks involved when you concentrate on a country or two. Moving forward, OEMs should hedge potential risks by shifting parts of their industrial base to other emerging markets.
Redesigning the Supply Chain
The globalized nature of this sector’s operations, which include sourcing of input and improving lines of communication, have been disrupted due to government-enforced regulatory restrictions. Once manufacturing resumes, OEMs must restructure their global supply chains and optimize them for the “new normal” realities.
From assessing the current equipment designs to evaluating the type and cost of components, your supply chains will need a complete overhaul.
Get Faster, Better Equipment Financing
As the world continues to live with COVID-19 and its impact, OEMs who need to scale up their productions and operations must catch up on lost orders due to the pandemic quarantine measures. Accelerate the financing process by collaborating with experienced partners that have the resources to help your business.