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Global Recovery: Opportunities and Challenges
SUMMARY. The global economy, especially within the Engine, OEM and Components industries, has felt the immediate impact from COVID: assembly line shutdowns, labor issues, supply chain issues, logistics and transportation to name a few. The pandemic has exposed many weak links in the global economic chain. However, by end of summer, most of these challenges were either completely resolved or temporary solutions had been put in place.
Yosyf Sheremeta Diversification has become the theme during the pandemic recovery, and we expect this trend to continue. Not only are companies looking for new markets and suppliers to grow top and bottom line revenue as well as to minimize risks, but we see a shift into new industries. Furthermore, rapid developments of new technologies create massive opportunities for OEMs and suppliers as well as posing real threats to OEMs that solely rely on traditional products that are powered by fossil fuels.
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Expansion of “Amkodor-Onego” Plant Started
Currently construction at the plan includes rebuilding of warehouses and administrative buildings in preparation for installation of new crane equipment.
Maxim Sakov “Amkodor-Onego” LLC was established by Belarus holding “Amkodor” in 2019 following the bankruptcy if the “Onego Tractor Plant”. The plant needed an investor, and “Amkodor” stepped up. “Amkodor” is going to create a site for assembly, and then – for import substituting full cycle production of forestry machines – harvesters, forwarders, etc.
An investment contract was signed in June 2019. Under the contract, full modernization of the warehouses and major overhaul of the buildings are planned. Total cost of the project is estimated by US$ 220 million. The government of Karelia (Russian region) assumed the priority of the project and established several requirements.
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Rural Economy Helping Ride Out COVID Impact
With extended lockdowns in most parts of India, the production of all non-essentials was at a halt or at minuscule levels in April and May until the economy was unlocked. This move reduced demand in the short-term, but owing to intrinsic domestic demand, we are optimistic about future business expectations
Aditya Kondejkar Better Outlook of Rural Economy
However, hope has arisen from India’s rural part as the agriculture sector appears to have been relatively less impacted by the lockdown. This part of the country never truly went into a harsh lockdown, and thus procurement, harvest, and consumer activities have remained unaffected. Farming continued during the lockdown, especially for rice and wheat cultivation. The return of migrant workers caused a surplus of agricultural labor. This resulted in the fact – more land was brought under cultivation than ever before. As a result, the country has witnessed a good season of rabi harvest.
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Brazil CE Sales To Grow 15% Despite COVID
Fabio Ferraresi Construction Equipment Internal Sales in Brazil from January thru May grew 35% over the same period of 2019. The Brazilian Machinery Builders´ Association (ABIMAQ) expects 2020 sales to hit 20,000 machines, 15% more than in 2019.
Source: Valor Econônico Read The Article
PSR Analysis: The Construction segment was the less affected by the pandemic than some other segments. The interest reduction directed investment to real state, especially housing, and some measures, such as the new regulation for sanitation, recently approved by the parliament, will boost the Construction business in 2020 and more significantly in the coming years. PSR
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COVID-19 2020 North American Impact: Ag, -12%, Construction, -14%
HDMA-PSR COVID Webinar Presentation
COVID-19 continues to batter production of off-highway equipment as we continue to move through 2020. The effects of the virus on Agricultural and Construction equipment production in North America were analyzed in a June 17 webinar presented by the Heavy Duty Manufacturers Association (HDMA) and Power Systems Research (PSR). The webinar updated information presented in PSR’s webinar in April.
Jim Downey The PSR webinar team was Jim Downey, PSR vice president-global data products , and Yosyf Sherementa, PhD, PSR director-product management and customer experience.
PSR projects AG to be down 9.4% and CN to be down 11.3% when comparing global production for this year (2020) to last year (2019).
China and India which have the largest volumes for ag machinery are the lower side for production percentage drops this year. China which is also the largest producer of construction equipment is not expecting a decline this year.
Yosyf Sheremeta A slight recovery for Construction equipment is expected in 2021, but not until 2022 for Agricultural machinery. Ag sector recovery will ultimately depend on overall economic recovery from the COVID-19 pandemic.
The construction segment will not return to pre-virus production volumes for another few years, at best. We’re looking out to 2024 or possibly 2025 to get back to 1.48 million units.
We don’t see a V-shaped type scenario on the horizon in North America, but rather recovery will look like something between a “U” and an “L.” Somewhat of a swoosh shape or upward sloping L. Economic activity will slowly return to a sense of normalcy as the curve of new COVID-19 cases flattens.
Government support and intervention will be needed, and stimulus will provide an economic backstop. We expect modest growth in 2021. Pent-up demand and continued economic stimulus should also help with rebound.
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John Deere Starts Grader Production in Brazil
Fabio Ferraresi John Deere announced the start of production of G series of Graders in Brazil in the coming months. It had previously imported these units. With the movement, John Deere will attend the South American Market with 90% of products made in Brazil.
Source: AutoData Read The Article
PSR Analysis: The decision of nationalization started in 2018 and makes more sense with recent local currency depreciation. With this movement, Deere will be more competitive in delivery…
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COVID-19 Webinar Scheduled With HDMA
Power Systems Research will work with the Heavy Duty Manufacturers Association (HDMA.org) to present a one-hour webinar examining the impact of COVID-19 on the industrial segments of Agricultural and Construction in North America.
The webinar will be presented Wednesday, June 17. Watch hdma.org and powersys.com for details. PSR
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COVID-19 Update: ARGO Tractors Resumes Manufacturing
Production has resumed in ARGO Tractors plants after being shut down for almost two months. Different measures were put in place in order to comply with government health regulations. In April ARGO started to sanitize the factories and prepare to resume operations. Protection equipment is distributed to workers who must keep social distancing and whose temperature is registered at the entrance of the factories.
Source: Argo Tractors Read The A…
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JAPAN REPORT: The Impact of COVID-19 on Manufacturers
Japanese OEMs are struggling to adapt to the COVID-19 problem. Plants are being temporarily shut down and production adjustments are being made.
Akihiro Komuro While domestic plants are generally operating quietly, overseas bases are being affected in various ways, depending on the country. Here is a summary of announcements by the major companies.
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Impact of COVID-19 in India on Engine-driven Applications
As of today, India is relatively less impacted by COVID than other nations. Because of the very bold and unprecedented move of a complete lockdown for about 40 days, India has managed to restrict the number of positive cases to 17,000.
Ritvik Kulkarni Considering that India is a country with a population of over 1 billion persons living in challenging on-ground conditions, it is a phenomenal effort of proactive and timely response from the government as well as restraint observed by citizens.
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