It’s no secret that supply chain issues and demand shocks have caused headaches for manufacturers across many industries - and the compressed air industry is no exception. What can you expect for the coming year? Fluid-Aire Dynamics Director Derrick Taylor shares his insights into compressed air trends for 2023. The bottom line? While the future remains uncertain, we’re forecasting smoother supply chains, more stable prices and some exciting new innovations for the near term.
1. Demand for Compressed Air Equipment Remains High
Demand for compressed air equipment remains strong. In fact, the global market for industrial air compressors is expected to reach $42.9 billion by 2026, up from $32.7 billion in 2021 - growing at a rate of 5.6% annually. Globally, much of the increased demand for air compression equipment can be attributed to increasing rates of industrial automation in the developing world. But we’re seeing increased demand here in the U.S., too, as companies expand local manufacturing capacity and “reshore” overseas operations. After global supply chain disruptions over the last two years, we expect these trends to continue as manufacturers build more local capacity to increase resiliency. We’ve seen demand increases for our products commensurate with these global and national trends. In fact, compressors are leaping off the shelves almost as fast as we can get them in.
2. Lead Times Remain Longer than Normal - Especially for Steel Parts
Supply chains have been disrupted across almost all industries, leading to longer lead times for parts and equipment. For the compressed air industry, the ongoing steel shortage has had the greatest impact. Like many industries, the steel industry experienced disruptions during the COVID-19 pandemic, resulting in decreased production in 2020 and 2021. This has created ripple effects throughout the manufacturing industry as steel mills try to ramp back up to meet increased demand. This directly impacts the availability of steel-heavy parts such as air receiver tanks, air pumps, and even oil filters. Piston (reciprocating) compressors, which have more steel overall, have been more likely to experience production delays due to steel shortages.
The industrial air compressor industry has also experienced impacts from the ongoing computer chip shortage. While the compressor industry is not as chip-heavy as the automotive or aerospace industries, many industrial air compressors do require chips for control systems, such as Variable Speed Drive (VSD) compressors. Other part shortages (belts, gaskets, etc.) have not been as systemic, but have occasionally been problematic at the local level. When one part - such as a fan - is not available, production for complete compressor systems grinds to a halt until the part can be stocked.
All of this means longer lead times for industrial air compressors. Compressors that once had lead times of 2-4 weeks for delivery may now have lead times of 6-8 weeks. For VFD compressors, we have experienced lead times of up to 18 weeks over the last year. Finding parts for compressor repairs has also been more challenging for many manufacturers. We expect to see some continued challenges in this area through the first part of 2023. If you know you will need a compressor in the next several months, don’t wait until the last minute to order; get your order in as soon as practical.
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3. Compressed Air Supply Chains and Prices Are Stabilizing
The good news? Supply chains and pricing are starting to stabilize, and prices may even start to come down for parts and consumables. As we move into 2023, we’re seeing supply and demand getting back into sync and supply chains smoothing out. That means we can probably expect fewer unexpected disruptions in 2023, more inventory in stock, and (eventually) shorter lead times. It may even lead to inventory surpluses for some air compressor manufacturers who have over-produced to make up for recent shortages.
In turn, all of this should lead to better price stability, too. You’ve probably noticed that most suppliers have had to raise prices over the last two years, and Fluid-Aire Dynamics is no exception. While we have done everything possible to keep prices low, we did have to make some adjustments over the last 18 months in response to rising prices across many categories including, compressor equipment, parts, lubricants, freight, labor, vehicles, and fuel. While we’re not anticipating that prices will come back down by much (if at all), we also don’t expect them to continue to rise at higher-than-normal rates.
4. Industrial Internet of Things (IIoT) Applications Are Coming for Compressed Air
Enough about supply chains - what else is happening in the world of compressed air? While the industry as a whole hasn’t changed much over the past several decades, we are starting to see more “smart” machines and cloud-based applications for compressed air. In particular, there is a lot of interest in cloud-based remote monitoring and control for compressed air equipment. Connected, smart air compressors coming to the market are part of the broader “Industrial Internet of Things” (IIoT), which is making manufacturing more efficient and responsive. Remote monitoring and control technologies for air compressors could soon help manufacturers identify emerging problems with equipment, save energy costs, manage banks of air compressors centrally, and optimize maintenance plans to reduce costs and downtime. Stay tuned for more on this from Fluid-Air Dynamics in 2023.
How Fluid-Aire Dynamics Is Helping Our Customers
Fluid-Aire Dynamics is committed to helping our customers weather supply chain disruptions and stay up and running. Here’s what we’re doing to help.
- Working with our suppliers: We’ve taken a proactive approach to address supply chain disruptions, including talking to our suppliers to make sure they have redundancies in their supply chains. Identifying alternative suppliers for parts like fans will help to address unexpected shortages.
- Doubling minimum stock levels: We have more than doubled the minimum stock levels we are trying to maintain for air compressors and parts. It hasn’t always been enough - many models are still flying off the shelves as fast as we get them in stock. But our aggressive stocking strategy has helped to smooth out some of the lead time issues.
- Customer communication: We promise to be honest with you about lead times and shortages that could impact your order. We are keeping communication lines with our suppliers open so we can accurately forecast product availability. That means you can plan effectively for your next compressor purchase and installation.
- Rentals and service: We know sometimes you can’t wait six weeks or longer for a new compressor to be in stock - if you’re down, you need a solution right away. That’s why our compressor repair teams are standing by to keep your current compressor running; we’re also working hard to make sure required parts are in stock when you need them. And if repair isn’t an option, or if you need a compressor for a new facility or expansion, our air compressor rental service will keep you in business while you wait for your new compressor. Talk to us about your rental options.