After a hiatus in Q3 2021, a sixth industry survey reveals challenges including material shortages and bright spots, such as employment.
Elevator World, Inc.; the German elevator association VFA Interlift e.V.; and fair organizer AFAG, in association with Credit Suisse, shared results in January of its sixth survey of elevator industry representatives on current industry status and future business outlook during the COVID-19 pandemic. The survey received 543 responses — comparable to past iterations — and a question about raw materials impact remained, as it has become a big issue. Credit Suisse Managing Director Andre Kukhnin assisted with the preparation of a chart analysis, including breakdowns by country, of the results.
Following are some key findings:
The current situation assessment improved slightly further into positive territory, with the most improvement seen in Europe (excluding Germany) and some moderation in North America. Elevator manufacturers saw a clear improvement in trading, service providers remained stable and component suppliers worsened.
The outlook for the next six months moderated overall, but remained clearly in growth territory. North American outlook remained most positive — unchanged versus July 2021. Europe (excluding Germany) moderated, but continued to indicate growth, while Germany moderated to a now-stable outlook.
Across the board, the competitive situation assessment became more cautious versus the middle of 2021, most dramatically in Europe (excluding Germany). Manufacturers’ competitive assessment improved slightly, while component suppliers’ worsened the most.
Employment prospects remained clearly positive, and even improved slightly.
Materials and equipment shortages remained the key limiting factor and, unsurprisingly, became even more acute.
Raw materials inflation risk remains prominent, but moderated somewhat since six months ago (as of January). It is now seen as a significant risk (by 45% of respondents, versus 60% in July 2021).
Detailed Review
Assessment of the Current Economic Situation
The overall industry view on current trading has remained broadly unchanged versus mid-2021, with 47% of responses in the “good” territory versus 14% in “bad,” a net positive of 33% versus +30% in the July 2021 survey. This was driven primarily by Europe (excluding Germany) seeing a meaningful improvement to 29% net positive (from 23%), while Germany and North Americas saw a moderation from very high levels in mid-2021 (still staying net positive — 56% and 26%, respectively — from 60% and 40%, respectively).
Question 1: How do you rate your economical situation in the last three months?
Industry perspectives over the next six months moderated somewhat, but remained clearly positive, with a net positive response rate at around 10% versus 20% in July 2021 and broadly neutral at the start of 2021. Europe (excluding Germany) and Germany, specifically, saw a moderation, with Germany now seeing a balanced rate of positive versus negative responses. Europe (excluding Germany) stayed net positive at 10%. North American outlook has remained broadly unchanged and clearly positive (20%).
Question 1: How do you rate your economical situation in the last three months?
Looking across the layers of the industry supply chain, interestingly, manufacturers saw a clear improvement in the last six months, while components suppliers’ trading moderated and service providers stayed broadly unchanged (all remaining in clear net positive territory).
Question 2: How do you estimate the development of your economical situation for the next six months?
Expressed as a PMI-like (Purchase Managers’ Index, which is an index of the prevailing direction of economic trends in the manufacturing and service sectors) diffusion index, globally, the assessment of the current situation score is 62, a slight moderation from a very positive score of 65 six months ago (results over 50 indicate growth; results under 50 points to contraction). Forward-Looking PMI-like score of responses to outlook for next six months question is now 54, a moderation versus 59 in July 2021, but continuing to point to further growth ahead. Outlook moderated across Europe, while it remained clearly positive in North America. PPMI is an index of the prevailing direction of economic trends in the manufacturing and service sectors.
Looking across the supply chain, outlook remained most positive for manufacturers (broadly unchanged since mid-2021), followed by service (slightly moderated) but deteriorating clearly for component suppliers (and now becoming broadly balanced versus net positive before).
Summary of PMI-like diffusion index calculation reflecting recent situation
Summary of PMI-like diffusion index calculation reflecting recent situation
Optimism index
Question 3: Which main factors are currently limiting your business?
Shortage of materials and/or equipment remains the dominant limiting factor, extending its lead to “uncertainty over economic policy” and “shortage of labor force” — factors that remained largely unchanged. Consistently with the above readings, concerns over insufficient demand faded further slightly.
Question 4: How do expect your firm’s total employment to change over the next three months? It will. . .
Overall, industry employment prospects edged up slightly further into the positive territory, with now 34% of respondents indicating an increase, versus 7% expecting a decrease (59% pointing to stable) and hence a 27% net positive reading. Hiring intentions improved slightly in Europe (excluding Germany), stayed unchanged in North America and fell slightly in Germany. All three remained firmly positive.
Question 4: How do expect your firm’s total employment to change over the next three months? It will. . .
Overall, industry employment prospects edged up slightly further into the positive territory, with now 34% of respondents indicating an increase, versus 7% expecting a decrease (59% pointing to stable) and hence a 27% net positive reading. Hiring intentions improved slightly in Europe (excluding Germany), stayed unchanged in North America and fell slightly in Germany. All three remained firmly positive.
Question 5: How do you assess the risk of rising raw materials costs to your business in 2021?
This remains one of the key questions across the industry, given the degree of materials-spot price inflation. Hence, we continue to gauge industry views on the risk from commodities inflation. More than 10% of overall respondents now anticipate a neutral impact (similar to mid-2021) and a further 40% expect a slightly negative one (30% before), with now nearly 50% expecting a significantly negative impact. Looking across the supply chain, component suppliers expect most negative impact (60% in “significantly negative”), followed by manufacturers (50%) while service providers remain relatively more benign.
Question 6: Do you feel the competitive environment in your space has recently become. . .
Responses to this question pointed to a continued tough competitive environment globally and across the supply chain, with a small reversal of the positive trend seen around mid-2021 (now total net reading of 39% versus 32% in July 2021 and 35% in April). North America saw an improvement, while Europe (excluding Germany) and Germany deteriorated. Looking across the supply chain, interestingly, the competitive environment responses improved for manufacturers versus a clear deterioration for component suppliers (and slight deterioration for service providers).
For just $7.99 per month, you can gain access to more than 5,000 articles from all Elevator World Publications, this includes EW Global, EW Europe, EW India, EW Middle East, EW Turkey, and EW UK.
