Executives, economists, analysts and political scientists have pretty unanimously agreed on one thing (and maybe just this one thing?) this summer and fall: The tight presidential election has put a damper on a lot of manufacturing investment as leaders wait for clarity on taxes, tariffs and other measures.
But what if that maxim hasn’t been nearly as true as the commentary has suggested for months?
That idea surfaced on the Ingersoll Rand Inc. third-quarter earnings conference call Nov. 1, when Chairman and CEO Vicente Reynal discussed the manufacturer’s backlog for engineered-to-order compressor systems. Orders for such equipment, he said, are a good indicator for longer-cycle projects such as the electric-vehicle and battery factories and other clean-energy projects being built across the country.
The good news for Ingersoll Rand: The sales funnel for those compressors is 22% larger than a year ago. The wrinkle: Companies are still taking longer than normal to actually make buying decisions—and the election isn’t the main reason why.
“Have we heard that a little bit more often?” Reynal said. “Maybe yes but it is definitely not the No. 1 reason for the elongation.”
Instead, he pointed out, customers and prospects are telling Ingersoll Rand they’re taking longer to make the call because of old-fashioned problems: Permitting and land preparation is taking too long and there aren’t enough skilled engineers and builders to do all the work in the pipeline.
Quite simply, all the mega projects have created a mega traffic jam. And to further elbow aside the election excuse—or at least demote it to a more proper, lower place on the lists of reasons equipment orders have been squishy—Reynal pointed out that a big project for Ingersoll Rand in Saudi Arabia is facing the same delays as many U.S. sites.
“We’re a piece of the entire process,” Reynal said. “In many cases, the other pieces are not ready and we have to come in a certain time. So it has to do with just the logistics.”
