Robert Brooks, editor-in-chief of Foundry Management & Technology and American Machinist, takes a deep dive and provides three perspectives on the state of manufacturing in the first half of 2024 in this episode of Great Question: A Manufacturing Podcast.
No stranger to the industry, Robert has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries.
Below is an excerpt from the podcast:
2024 has reached its midpoint, and in business, that's a good time for evaluation. And in most vertical manufacturing sectors, this has not been an especially positive year. With slow demand leading to weak revenue growth, there's a lot of ominous news about different manufacturing businesses and not a lot of clear analysis, I believe, of what is causing this, what may change it, and what might be done to address it in the meantime. I'm going to devote this brief podcast to some of the surveys and reviews I've received from different sources in the hope that some of these findings will inform manufacturers, or at least support some of the insights or conclusions they have reached from their own recent experience.
First, I refer to a new report from the Equipment Leasing and Finance Association (ELFA), whose monthly leasing and finance index surveys economic activity across the equipment finance sector. They're covering the activity of manufacturing businesses, but other businesses too, who are not making a permanent investment in new equipment but are arranging long-term service through lease. This is transportation equipment, office equipment, or any type of equipment that may be of use on an ongoing basis. In May, ELFA reports that new business volume for equipment financing totaled $10.2 billion, which was up 11% from May 2023. But month over month, the new business volume was down 7% from April. And year to date, the accumulative new business volume is up 6% compared to 2023. This is consistent with other reports. 2024 has seen stability in manufacturing investment in equipment, but it's not exactly robust.
The ELFA President and CEO Leigh Lytle said, “Overall, May monthly leasing and finance index results show solid performance with continued double-digit, year-over-year growth in organizations and positive year-to-date growth. Credit quality is mixed, but within historical norms. The drop in volume from April could be an indication that some businesses are holding off on acquiring equipment until interest rates come down. We'll be monitoring whether the effect of higher interest rates over the summer and into the fall will further delay equipment investments, which would be a headwind to economic activity through the second half of the year.”
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