Equipment Cost Index
MEP equipment manufacturers continue to publish price increases. Fourth Quarter announcements impacting 2023 are anticipated to be in the 8% to 14% range. Despite continued drops of select raw material prices and maritime freight, the factors of increased labor costs (14% avg), domestic transportation, and rising insurance costs combined with the backlog of record order levels contribute to this increase. Factory loading is not expected to lessen this year and some factories are reporting full bookings into early Fourth Quarter 2023.
Lead times for electrical and mechanical equipment have significant ranges depending on features and size. Despite unprecedented orders in 2022, manufacturers are beginning to successfully engage additional suppliers and complete quality testing to utilize varying OEM components. To manage lead times, it is recommended to place orders early and closely coordinate on alternate products.
| Estimated Equipment Lead Times Varies Due to Equipment Sizing |
||
|---|---|---|
| Equipment Type | Previous | Current |
| Cooling Towers | 14 - 31 wks | 25 - 30 wks |
| Chillers | 16 - 50 wks | 25 - 55 wks |
| Air Handling Units | 25 - 95 wks | 25 - 95 wks |
| Generators | 46 - 110 wks | 51 - 100 wks |
| Switchgear | 40 - 75 wks | 65 - 90 wks |
| Uninterruptible Power Supply | 24 - 65 wks | 30 - 55 wks |
Long lead times of VFDs, ECM fans, and PLC components has led manufacturers to review alternate motor sources, which are typically smaller, or combine a compact VFD to create a similarly packaged motor assembly. In select cases, shorterlead times are being achieved while meeting or exceeding efficiencies. Electrical manufacturers similarly are strengthening their supply chain and are adding production capacity towards meeting the demand.
International shipping costs have been decreasing. In general, lower demand in the local China market is reducing component lead times which could result in less available labor when local demand rises again. Year to date industry data for 2022 versus the same time in 2021 shows electrical equipment orders increased (+7.9%) and shipments also increased (+10.5%). For the same time period, mechanical equipment orders increased (+13.1%) and shipments increased (+12.7%)
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