In the effort to update their technology capabilities as well as purchase equipment, manufacturers across the globe are using asset financing.
A recent Siemens’ Financial Services Division study, conducted among the global top 40 industrial machinery and equipment manufacturers, including the U.S., reveals that 76% of respondents have seen increased customer demand for asset finance when acquiring manufacturing equipment over the last two years.
“The competitiveness of a manufacturing company is hugely underpinned by the use of sophisticated technology,” commented Gary Amos, head of Commercial Finance Americas, Siemens Financial Services, Inc. “With the help of asset finance, manufacturers can gain access to up-to-date equipment to improve efficiency, productivity and cost-control in a financially sustainable way.”
This method of financing differs according to region. For the past two years in the U.S., the proportion of manufacturing equipment sales enabled through asset finance has risen over 2% per year, compared to over 15% per year in Asia. The large difference in growth rates is attributed to the fact that this method of financing is at a relatively early stage of its development in Asia, compared with the mature economies of the West.
In Europe, the use of asset finance remained static among manufacturing firms, attributable to the slow business investment environment.
Looking toward the future, over the next two years, 93% of respondents expect global interest in asset finance to increase still further from their manufacturing customer base
In the U.S., uptake of asset finance by manufacturing firms is expected to grow by over 3% per year. In Europe and Asia, use of asset finance is predicted to grow annually by over 5% and over 14% respectively. Strong demand for manufacturing equipment finance is expected to come, above all, from China, Poland/Industrial Eastern Europe1 and Southeast Asia.
The growing popularity of asset finance is a direct result of budget pressures, with 72% of respondents reporting a “squeeze” on their customers’ capital equipment budget in the last two years.