Will the Equipment Industry Recover from the Recession?
A survey conducted by the Association of Equipment Distributors confirms impact of the industry depression and recovery priorities.
Compiled by Tina Grady Barbaccia, News/Digital Editor
AED’s 2010 Government Affairs Survey, conducted during the first two weeks of April, provides important about the impact of the equipment industry depression on AED members, the benefits of recent stimulus legislation, and distributor policy priorities.
Here’s a look at its findings:
Impact of the equipment industry recession
The survey confirms the devastating toll the recent economic downturn has taken on equipment distributors. Since January 2007, AED members have taken difficult and painful steps to keep their companies in business, including the following:
- 75 percent of AED members have laid off workers;
- 68 percent have eliminated positions through attrition;
- 64 percent have reduced salaries and wages;
- 64 percent have sold equipment from their rental fleets at a loss
- 36 percent have reduced health insurance benefits
- 32 percent have suspended participation in a workforce development program (e.g., training partnership with a local community college)
- 21 percent have cancelled the opening of a new facility; and
- 17 percent have closed one or more facilities.
On average, the survey found that companies that have reduced their workforces have cut employment by 23 percent since 2007. A 2009 IHS Global Insight study estimated that the equipment industry’s workforce had contracted by 37 percent since the start of the recession. A number of factors explain the difference between the AED survey findings and the IHS Global Insight unemployment data.
First, Global Insight examined employment at all tiers of the industry (including manufacturing and independent product support), not just equipment distribution. Second, and perhaps most significantly, only active AED member companies were asked to participate in our recent survey. [Note: The survey does not account for companies that have closed their doors entirely (and where, presumably, 100 percent of the jobs have been lost) or that are otherwise no longer AED members.]
Fundamentally, AED says the survey results reinforce IHS Global Insight’s original determination that the economic downturn has taken a devastating toll on equipment distributors and their employees.
Impact of the Credit Crisis
Eighty percent of survey respondents report losing revenue over the past year because a qualified customer (or customers) was unable to get credit to finance equipment purchases.
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