Demand for machinery had spiked after the Federal Government introduced the $150,000 instant asset write-off scheme.
Demand for machinery had spiked after the Federal Government introduced the $150,000 instant asset write-off scheme.

Pandemic sparks bottlenecks for machinery

THE construction and manufacturing sectors will struggle to source equipment such as earthmovers, generators and trucks this year as COVID-19 causes global supply bottlenecks.

Gold Coast-based online machinery marketplace Machines4U.com.au says slower production in factories across the US and Europe along with reduced shipping to Australia were causing delays for everything from $500 chainsaws to a multimillion-dollar bulldozers.

Machines4U.com.au chief executive Steve Krebs said demand for earthmoving, construction, metalworking and woodworking machinery reached record highs last year while demand for agricultural and generators more than doubled.

But the supply of new equipment was dwindling as the pandemic caused bottlenecks in production and supply lines across the globe.

US-based Caterpillar announced in June it had suspended operations at "certain" facilities due to supply-chain constraints, weak customer demand and government lockdowns.

"There are shipping delays of up to 3-4 months," said Mr Krebs, "Cargos ships have been held up around the country due to equipment breakdowns or industrial action."

He said machinery that had arrived onshore was then delayed further due to strict biosecurity and health protocols on imports.

 

Earth moving and construction machinery is in hot demand.
Earth moving and construction machinery is in hot demand.

Demand for machinery had spiked after the Federal Government introduced the $150,000 instant asset write-off scheme.

The $300m policy allows businesses to claim an immediate deduction for the business portion of the cost of an asset - for example, a truck for a delivery business or a tractor for a farming business - in the year the asset is first used, or installed ready for use.

Mr Krebs said that as new equipment became harder to source, demand for good quality used machinery was increasing.

"Demand for used equipment is expected to skyrocket this year," he said. "In some cases, sellers are moving into the hire game to maintain cash flow, a shift that is likely to become more common the longer the shipping delays continue."

He added online market places for machinery had been embraced more over the past year as physical contact was restricted due to COVID-19.

"The capital equipment game has long been a face-to-face handshake industry," he said. "But people have not been able to attend trade shows and field days and this has forced machinery sellers to move away from traditional channels and embrace digital channels."

He said unique visitors to his company's website had increased from 400,000 a month early last year to about 675,000 a month. "We also added 100 machine dealers to our site last year compared to only 50 in past years," he said.

COVID-19 had been a magnifying glass across the capital equipment industry, highlighting the strengths and importance of individual businesses and industries across the country."Anyone selling machinery of any sort is in a really unique position," he said. "While some sectors such as tourism and hospitality have suffered, others are making more money than ever. There are plenty of roads being built and lot of construction work in places like the Gold Coast."

Machines4U chief executive Steve Krebs.
Machines4U chief executive Steve Krebs.

Demand for trucks had soared 142 per cent from April to June as the surge in online retailing

increased parcel delivery services.

There had even been an increase in demand for small tractors as people moved to acreage properties as a lifestyle choice during the pandemic.

He does not see the delays easing this year as the pandemic continues to rage around the globe causing economic disruption.

 

Originally published as Pandemic sparks bottlenecks for machinery


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