6 Ways the Aftermarket Industrial Parts Industry is Changing
Due to the kind of rigorous environment that industrial equipment is constantly subjected to, there’ll always be a demand for the replenishment of consumables, regular servicing, and the replacement of damaged or failed components. This is what drives the aftermarket heavy machinery parts industry.
That said, there are a number of subtle changes taking place that are creating new opportunities for industrial aftermarket parts manufacturers, distributors, and buyers. We look at some of these below.
The Average Age of Industrial Equipment is Increasing
This trend is not too different from what’s taking place in the general car manufacturing industry. Heavy equipment is lasting longer thanks to a deeper knowledge of the machinery and better maintenance routines.
This is a boon for aftermarket parts manufacturers since the longer a piece of machinery lasts, the more the replacement parts it will need to keep it going each year. This is especially so for industrial equipment because failed or broken parts can have catastrophic consequences and pose a grave danger to workers.
In addition, from a macro perspective, the longer the equipment runs, the more the number of customers that parts manufacturers have.
The Shift of Manufacturing to China
The manufacture of industrial machinery aftermarket parts has greatly evolved over the last two decades. That’s in great part due to the decisive shift in global manufacturing from Western countries into developing Asia and especially China.
The impact of this shift is markedly similar to what has happened to other manufacturing sub-sectors such as electronics, kitchen equipment, children’s toys, and clothing. With lower costs of production in the developing world, customers around the globe are now spoilt for choice in the quality and price points of industrial parts.
Rising Demand for Industrial Equipment
As the world’s advanced economies see persistently lethargic growth rates, it’s a whole different ball game in the developing world. Once again, China has been the standout performer with stellar growth rates catapulting its economy to the world’s second largest (with experts expecting it to surpass the United States in the near future). In this respect, therefore, China has revolutionized both the supply and demand sides of manufacturing.
But China is just part (albeit a massive part) of a broader trend. Other developing countries too are seeing blistering growth including India, Indonesia, Vietnam, Philippines, Egypt, and Pakistan. In tandem with this growth comes an increase in industrialization and with that, heightened demand for industrial equipment and subsequently industrial aftermarket parts.
The Internet has transformed how everyday business is conducted and industrial aftermarket parts haven’t been spared. As Millennials, the first truly digitally native generation, become the dominant demographic in company management, they’re changing how business-to-business commerce is executed.
One hallmark of this change is an insistence on leveraging the power of the Internet in sourcing and selling aftermarket parts. That means parts manufacturers and distributors must ensure their websites are designed to facilitate shopping for and purchasing their product. The buyer should be presented with all the parts data (in text, image, and/or video form) they need to make an informed choice.
Regulators around the world have been pushing the envelope on the safety, fuel economy, and pollution controls of industrial equipment. Inevitably, these new regulations come with changes to the structure, composition, and design of industrial machinery.
This has been a plus for aftermarket parts makers since it means companies have to replace the existing non-compliant parts of their equipment with those that satisfy regulators.
Some upgrades are driven by the need for regulatory compliance. Nevertheless, most parts upgrade are a result of aftermarket parts buyers wanting to tap into features and functions that aren’t available on older parts.
Construction companies, for instance, would prefer to operate more fuel-efficient trucks, earth movers, and other heavy equipment as this has an impact on their returns. Aftermarket caterpillar parts can help them realize this goal without necessarily having to purchase the entire equipment anew.
While these trends mostly portend good news for industrial machinery aftermarket parts manufacturers, many haven’t aligned themselves to take full advantage. There’s a need to recognize and shift parts manufacturing and distribution processes to identify new ways to create value. Aftermarket parts makers who fail to do so risk a decline in relevance, market share, and revenue.