As 2021 comes to a close, the EnSight team is taking a look back on the trends we saw in the closing year, as well as what we expect to see going into 2022.
Like many organizations and industries across the United States, EnSight Solutions and our customers spent 2021 battling labor challenges, supply chain disruptions and volatile material/parts prices.
In regard to the labor challenges, it’s been heavily reported by the news media that companies are having trouble hiring and keeping employees. In our discussions with our customers, we’ve found that the metal processing industry has not avoided those challenges. Instead, we’ve seen that in addition to having trouble recruiting and retaining talent, those in the metal processing industry are also having trouble getting experienced help. It was only 10-15 years ago that processors could fairly easily find help that had experience in metal stamping and other metal processing roles, or at least had a working knowledge of coil processing. But today, that’s not the case and processors are being forced to hire people with no experience and then train them, which adds another challenge. In response to labor shortages, the EnSight sales team has seen a sharp increase in automation and robotics quotes. It shows that organizations aren’t letting the labor shortages hold them back–instead, they’re taking measures to ensure it doesn’t hurt them as bad in the future by considering how they can automate their processes.
Like other machine OEMs, EnSight uses electrical components to build our products, and in 2021, those were some of the common parts held up by supply chain issues. In addition, we encountered shortages for parts like bearings, motors, gear reducers and belts. To combat this, we started thinking outside the box and looking for different suppliers. It sounds like a simple solution, but it can result in more delays because we design our machines around the parts we normally get. If we have to source a part from a different vendor, we’re chancing getting parts that are sized or programmed differently, which results in our team having to rework our machine designs to accommodate the new products. Sourcing parts from new vendors can also affect pricing, often negatively. Plus, vetting new suppliers and vendors takes time as we have to ensure that the new parts are the same high-quality parts as we normally use.
And then there’s the increase in material and parts prices. Again, this is not exclusive to the metal processing industry. But, because metals like stainless steel have sharply risen in price in recent times, it’s hit metal processing hard. Unfortunately for the consumer, the only way to handle higher parts prices is to raise the price of the final product. This results in a domino effect the end user bears the full brunt of. For example, if EnSight pays more for steel and components to make our machines, we have to raise the price of our machines to the metal processors. Then, the metal processor is paying more for the machine AND their own materials, which means they must raise their product prices even further. The end user is the one who ends up covering all those raised costs.
It’s not all negative, though. In 2021, EnSight enjoyed a great year for sales. Despite the previously listed challenges, equipment and final product demand is high. We’ve seen and heard of many metal processors who have seen such high demand for their product, they’ve started considering or even moving forward with production expansions, including more machines and/or bigger facilities. Unfortunately, we’ve also talked to organizations who want to expand their operations but can’t because they can’t find workers to man the machines they already have, let alone more down the road. The money is there and the demand is there, but the labor isn’t.
One thing the EnSight team saw in 2021 that we found interesting is that companies aren’t just willing to spend money, they’re willing to buy new machines over rebuilding or doing huge overhauls on existing machines. This is likely due to the lack of trained maintenance crews.
2022 Look Ahead
At the moment, the EnSight team doesn’t see any indication that things are going to change significantly, at least for the first part of the new year.
Therefore, we would urge all our clients to start thinking outside the box even more to combat labor and parts shortages. Automation is definitely a direction every processor should be looking at right now, even if just to evaluate the ROI to see if it makes sense for their organization. It doesn’t always, but it doesn’t hurt to find out.
For those looking to purchase machines and/or automate their processes, be patient, plan ahead and start conversations with OEMs and integrators early. Lead times for new machines have grown over the past year, so organizations can expect to wait weeks, maybe even months, before they can get their new equipment. As the current crises play out in 2022, forecasting and planning ahead based on those forecasts is going to be extremely important for all companies to weather the storm that’s currently hindering manufacturing. In addition, OEMs should do the same for their customers. Keep them apprised of any changes as they happen, whether that’s parts or machine delays or price increases. Doing so establishes a trusting relationship where both parties benefit.
At EnSight, our sales consultants are regularly talking to metal processors to help them through these challenging times. Whether you want to overcome labor shortages with automation and robotics or expand your operations, we can help. To learn more, contact our industrial processing specialists now.