NORTH AMERICA REPORT
SUMMARY. Many of the biggest challenges facing the U.S. economy in 2022 are continuing into 2023. These problems include supply chain disruptions, the migration of production and use of internal combustion engines to alternative drive types, uncertainty of inflation and rising interest rates, and the war in Ukraine.
There were also positives which came out of 2022, including a return to more face-to-face business transactions and meetings. Trade shows made a big comeback in 2022, and this trend will continue in 2023 as the huge CONEXPO-CON/AGG will be held in March in Las Vegas.
The push towards electrification is not all negative either. Innovation and action around alternative drive types will continue to grow.
When final numbers are compiled, North American production is expected to be up 12%-13% in 2022 over 2021. This is up from the third quarter expectation of 10%-11%. The 2023 forecast includes an estimated growth rate of 7%, an increase over 2022.
AGRICULTURAL. Agricultural machinery production projections are falling in line with last quarter’s growth rates, 6.5% for 2022 and 3-4% growth for this year (2023).
Financing costs for new ag machinery will rise as interest rates are increasing, which could hurt demand. 2024 may flatten out in terms of growth. The war in Ukraine is still a concern with no real sense of when it will come to an end. Crop exports from Ukraine are still uncertain but are dropping.
CONSTRUCTION. Power Systems Research estimates that construction equipment production will increase in North America by 7.5% in 2022 versus 2021. That is down from our estimate of 10.5 % last quarter. 2023 and 2024 are expected to slip with growth of only 5% and 2.0%, respectively. Government expenditures should help push new equipment demand.
INDUSTRIAL. This segment’s growth patterns are very similar to that of the construction segment. Industrial equipment production is expected to slow in 2024 and 2025. New machinery orders in 2022 increased 12% above their level in 2021. With predominant backorders, this is predicted to continue to increase into the future.
MEDIUM & HEAVY VEHICLES. Medium and heavy commercial vehicle production is expected to increase by 12.5% in 2022 over last year, primarily driven by improved class 8 truck production. While not back to pre-pandemic levels, the supply chain has seen improvement during the past few months.
Within the class 8 truck segment, PSR expects truck demand to remain strong into the first part of next year as a result of significant pent-up heavy truck demand. While commercial vehicle demand is expected to decline slightly in 2023, production levels are expected to remain strong through at least the first half of the year.
POWER GENERATION. We expect this market to come in around 6% ahead of 2021, for 2022. This is down slightly from our third quarter projection. This segment’s main drivers for growth come from data centers, infrastructure developments, healthcare and general backup standby. Demand is currently high, and we are projecting growth of 10% for 2023. PSR
Jim Downey is Vice President-Global Data Products for Power Systems Research
