A recent statement by the Danish company NDI, would not, at first glance, appear to be anything to get over excited about.
The firm distributes tyres throughout the Nordic countries, both at a retail and wholesale level, and also manufactures new wheel rims for tractors and industrial vehicles.
NDI backs up its claims
It is a forward-looking company that has organised its own field trials in support of its range of dual wheel rims and spacers, which is a notable commitment given the company’s modest size compared to many other manufacturers in the business.
Yet the latest media information was not to just to remind us of the virtues of dual wheels, but also to express NDI’s confidence in the present market and its optimistic expectations for the year ahead.
It has, we are assured, been producing dual wheel rims to meet an expected increase in demand. There are currently 1,500 units stacked in the warehouse awaiting the new season.
A light in the darkness
This position is somewhat at odds with the general doom and gloom spread by tractor manufacturers who talk of continued supply chain delays while quietly upping their prices.
On the other hand, the smaller family-owned implement-producing companies assure us they are keeping the increases as restrained as possible.
Wheel rims are simple affairs requiring only steel, paint and energy, and while the shortage of the latter has been eased by a mild autumn the price has remained high.
Steel, however, has defied expectations and has come down in price. Hot rolled coil steel (sheet steel) stood at $850/t last month, down from $1,950 in the summer of 2021.
This huge reduction has yet to be reflected in the price of machinery. Unsurprisingly, it is not even spoken of.
More than iron alone
Tractors and, more recently, implements, require a good deal more than metal, specifically rubber, plastics and silicone chips.
Tyre rubber is mainly derived from mineral oil rather than latex, so its price is highly dependent on the value of crude, likewise plastics.
The electronic element, however, is far more diverse in its requirements. A problem often cited is that it is a shortage of the more complex chips that is the issue, due to the increased demand from the automotive sector.
The simple answer is to reduce the demand for complexity, but that will impact on profitability, so it is not going to happen, yet we still suffer the wails of despair from manufacturers as they continue to report ever larger profits.
Shifting goods
The transport of goods is also cited as a major cause of supply bottlenecks and here the truth lies within the dense fog of complexity that is the global shipping industry.
In between the jigs and the reels, the overall cost of shipping a container from China to Europe has dropped by at least 40% over the last 12 months. Getting stuff moved is not the expensive headache that it was.
These positive movements suggest that confidence should return to the industry and that does appear to be the case according to CEMA, the trade association for European machinery manufacturers.
In its latest report the organisation notes a definite uptick in confidence from a summer of lowered expectations, while order books are filling up and the average lead time has extended to almost seven months.
Still some clouds
Yet, not all in the garden is rosy, there is still a degree of reservation about long-term prospects and the order situation is described as ‘dynamic’, by which it might be understood that not all orders progress to a final sale.
Back in Denmark, NDI remains bullish about prospects, declaring that the reason why it has stocked up on its standard dual wheels is to release capacity in the factory to reduce the production time of their customised, welded rims, which should now be no longer than a week.
The machinery trade as a whole no doubt hopes that they have called it right.