Producers of durable goods such as automobiles, agricultural machinery, and washing machines all anticipate a challenging business environment for the remaining time this year as consumer demand in the USA slows down, and have begun to lay off employees and reduce production.
After a period of prosperity following the pandemic, the US manufacturing industry appears to be facing a slowdown in growth.
According to media reports on Monday, the slowdown in production activity in factories across the United States is due to factors such as high interest rates, rising operational costs, a strong US dollar, and falling commodity prices.
From automobiles to agricultural machinery, and even to the production of durable goods such as washing machines, manufacturers are predicting that the business environment for the remainder of this year will be very challenging, as US consumer demand slows down.
Companies are beginning to lay off workers and reduce production in response to declining orders and rising inventories, preparing for what could be a prolonged period of weak demand.
As consumer demand slows down, various industries are laying off workers and reducing production.
Deere, the world's largest agricultural machinery manufacturer, has laid off approximately 2,100 production workers, accounting for 15% of its hourly workforce, since November last year. Its competitor, AGCO, also announced in June that it would lay off 6% of its global workforce, about 800 people, by the end of the year.
These measures reflect the severe market conditions facing the agricultural machinery industry. The US Department of Agriculture predicts that farm income will fall by about 25% this year. This is mainly due to falling prices for crops such as corn and soybeans, which have weakened the purchasing power of farmers. Data show that in June of this year, retail sales of high-powered tractors and combines in the US and Canada fell by 12% and 29%, respectively.
Manufacturer of recreational vehicles$Polaris (PII.US)$The manufacturer also felt the decrease in consumer demand for non-essential products. The company reported a 49% drop in quarterly revenue on Tuesday, with sales of motorcycles, ships, and SUVs all declining. CEO Michael Speetzen told analysts,
Home appliance giant Whirlpool said that the sluggish real estate market is suppressing demand for household appliances such as refrigerators and dishwashers. This weakening demand is not only affecting end-product manufacturers but also the entire supply chain.
The home appliance giant$Whirlpool (WHR.US)$said that a weak real estate market is suppressing demand for household appliances such as refrigerators and dishwashers. This weakened demand not only affects end-product manufacturers, but also ripples throughout the entire supply chain.
The steel industry has not been spared either. Jeremy Flack, CEO of steel and aluminum distributor Flack Global Metals, said that steel buyers are currently making small purchases and that prices are expected to continue to fall. Weak demand for steel this year has led to a continuous decline in prices for several months. The current spot price for steel is $655 per ton, down 22% from a year ago and down 40% from the beginning of the year.
Despite the overall difficult situation, there are still some bright spots. The US government's support plan for new factories in industries such as semiconductors, electric vehicle batteries, and electrical utilities has partially offset the industry's weakness. In addition, ongoing conflicts in Ukraine and Gaza have kept production of weapons and other equipment strong for some defense companies.
Despite the harsh overall situation, there are still some bright spots. The US government's support plan for new factories such as semiconductors, electric vehicle batteries, and electrical utilities has partially offset the industry's weakness. In addition, due to the ongoing conflict in Ukraine and Gaza, the production of weapons and other equipment by some defense companies remains strong.
Editor/ping