At the NFPA’s recent economic update meeting in Cleveland, Jim Meil of ACT Research Co., LLC talked to attendees about what’s ahead for the industry, from an economics perspective. Meil sees a COVID recovery through 2021, and “into 2022-2023 and beyond,” which is good news for fluid power manufacturers.
Meil sees some definite problems in the current economy:
- We can’t satisfy customer demand
- We can’t get materials, or at least not in an affordable manner
- Because of inflation, we can’t control costs
- We can’t find good workers
- We can’t guarantee delivery times for products
Meil also noted that while there’s prosperity to be had, good times are hard work, and so we can’t sit back and relax.
But he sees plenty of good news, too. Machinery and equipment demand is very, very strong. There’s a competitive advantage for asset holders; just examine the asset and property prices.
Jim Meil of ACT Research Co., LLC.
“Take a look at the stock market,” Meil said. “If you own assets now, you’re in a strong, commanding position. Year-end holidays will be frantic, so for anybody who deals in the world of materials and transportation, know that it’s going to be crazy out there. And the general proposition … is goods are in and services are, if not out, at least iffy. It’s a struggle if you’re in lodging, if you are in personal transportation like airlines, if you’re in entertainment. It’s much tougher than being in the goods manufacturing and goods distribution world.”
Concerning construction equipment, Meil notes that a solid turnaround was in place already. “There was talk about infrastructure, but now apparently, it’s a reality,” he said.
And for U.S. farm machinery, there was a peak about a year ago, but he thinks that the market should see a tailwind in 2022 from commodity prices and demand from China. Oil & gas equipment is in the midst of a multi-year depression, but that is starting to turn positive as oil prices escalate. Meil said that oil prices of roughly $80/bbl is a game-changer for that industry.
“This is a promising market as we start to see a turnaround. I think that’s a solid bet for 2022 and 2023. After that, energy is a crazy field. And then you also have this thought of a political will towards putting constraints on hydrocarbons as an energy source, so you have that element of growth,” Meil said.
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