Q: How do you ensure your services and products are aligned with the evolving needs of your customers?

A: Wintrust Asset Finance (WAF) takes a focused approach to these market segments by dedicating resources to each industry sector we serve. In addition, when we talk with our clients and ask them questions, we actively listen to their responses. WAF is also actively involved with industry trade associations that serve our customers in order to stay ahead of trends and issues. We are very involved in the Equipment Leasing and Finance Association and the Equipment Leasing & Finance Foundation, having several of our colleagues serving on various boards and business councils. This allows us to stay abreast of regulatory and other changes (such as APR disclosure), which provides us an opportunity to provide a consultative/advisory approach to our clients and prospects.

Agriculture

Q: How are innovations in agricultural technology influencing your equipment finance solutions?

A: Farm automation technologies are changing the type of equipment needed to effectively manage today’s food growth and production. New technologies include self-driven tractors, equipment that can autonomously weed crops, laser “scarecrows,” drones to spray crops, as well as assess crop vitality and progress. In addition, advanced telemetry and GPS have positively affected fleet management in agriculture. Basic systems can locate equipment in use while more advanced systems can give precise information including engine speed, fuel usage and upcoming maintenance. The collection of data can then be analyzed to identify where specific crop inputs are needed and where they are not, making the use of equipment more efficient. All of these trends are affecting customer’s equipment and associated financing needs.

Construction

Q: Where do you see the biggest opportunities in the construction market today?

A: The construction industry has seen a significant increase in opportunity in the manufacturing sector since the CHIPS Act was signed into law in 2022. There are numerous projects underway, including plants focused on chip manufacturing, consumer goods, pharmaceuticals and electric vehicles and batteries. The renewed push to revive American manufacturing away from the decades-long trend of offshoring has spurred private company investment nearing $1 trillion.

Federal spending on infrastructure projects through the Federal Infrastructure Investment and Jobs Act is a significant driver of the construction industry. Governments are allocating substantial budgets to upgrade aging infrastructure, enhance transportation networks and invest in smart city initiatives. These federal funds present opportunities for companies to secure large-scale projects.

In addition, the integration of artificial intelligence and advanced technologies is transforming the construction sector. From autonomous construction equipment to Building Information Modeling (BIM), technology is enhancing project efficiency and accuracy. AI algorithms optimize project scheduling, resource allocation and risk management. Drones and sensors are being utilized for site surveys and monitoring, providing real-time data to improve project visibility. The present construction industry is employing structures with the precision and efficiency made possible by cutting-edge technology.

Q: How do you stay ahead of emerging trends and shifts in Construction?

A: We are active participants in this marketplace and regularly attend industry trade shows and conferences to keep up to date with trends and developments. Further, we actively engage customers and prospects in this sector in order to gain an understanding of issues they are confronting and then we collaborate to develop solutions that meet their evolving needs.

Industrial & Manufacturing

Q: What are the biggest opportunities and challenges your industrial and manufacturing customers face today?

A: The biggest opportunities are onshoring/re-shoring/near-shoring of manufacturing capacity as well as continued technology advancements. Supply chain disruptions have caused companies to consider relocating their facility base either domestically or nearby (i.e., Mexico). Companies these days have a significant opportunity to adopt the newest and greatest technologies to help automate processes to improve efficiencies, cut costs, improve supply chain management, possibly reduce headcount to minimize expenses and ultimately increase productivity.

The biggest challenge seems to be supply chain disruptions. Ongoing supply chain issues, exacerbated by natural disasters, pandemics, geopolitical tensions, etc. all pose a challenge at varying and sometimes unexpected times. Manufacturers also have a tough job of managing fluctuating raw material costs, delays and shortages. All of these factors force industrial and manufacturing-focused companies to be more resilient and flexible within their operations, as well as working closely with their customers.

Q: What are your expectations for the future of Industrial & Manufacturing in the next few years?

A: We expect continued onshoring, or re-shoring, of manufacturing capability to the United States. The supply chain disruption that immediately followed the onset of the pandemic in 2020 highlighted the significant economic and geopolitical risks inherent in heavy reliance on foreign manufacturing, particularly in industries such as pharmaceuticals and semi-conductor production.

IT & Related Technology Services

Q: How has the growth of cloud computing and virtualization impacted the financing needs of your clients?

A: From a lender perspective, the growth of cloud computing and virtualization ultimately changed who our clients are. Lenders previously provided financing products to medium, mid-market and large cap-sized companies with traditional or non-traditional IT needs. Now, we see that lenders’ clientele tend to be that of the larger cloud-service companies such as data centers, AI centers, etc. who specifically buy assets skewed towards a specific task to handle. Most companies may still buy their own IT assets to service their company’s needs, but that market has shrunken in terms of asset specific categories as well as overall spending dollars. Also, companies typically still want their backbone operating systems and forms of mirroring/redundancy kept in-house, but the largest portion of their needs are now typically pushed to the cloud.

From a client’s perspective, the evolution and growth of cloud computing and virtualization has moved almost entirely from CapEx over to OpEx unless your company is providing the assets and services to utilize. Clients have largely switched from traditional purchasing to a quasi-outsourcing model (similar to SAAS). Balance sheets of applicable IT-related clients will grow smaller on this front and their OpEx will continue to see significant growth. It also affects the clients’ reality of whether or not they need to leverage finance companies or banks by instead pursuing a “pay as you go” cloud solution versus the traditional “underwriting to funding” process (aside from mandated in-house purchases). Simply put, a large number of companies that require IT-related functionality are now focusing that spend as part of their operating cash flow and even playing with receivables financing, versus the traditional leveraging of debt or lease products that focus on the actual IT asset base normally attributed to CapEx spend. That is clearly due to the widening balance between a client’s IT CapEx spend versus what they want to push to IT OpEx.

Trucks & Trailers

Q: What strategies have you implemented to maintain your company’s position in the Trucks & Trailers market?

A: We continue to support this asset class and are focused on the larger, more established over-the-road carriers as well as private fleet segment. We provide an array of transportation-related financing products including loan, capital lease and tax-drive TRAC and split-TRAC lease structures to serve our customers varying needs. We also have launched a Commercial Dealer Services initiative in the transportation segment, which provides direct financing to dealers of the major Class 8 OEMs by financing their customer’s other asst-class financing needs (Class 5, 6 and 7).

Q: How are changes in logistics and transportation affecting your customers in the Trucks & Trailers sector?

A: There are several changes in logistics and transportation including, but not limited to, the following:

• E-Commerce Growth: A surge in e-commerce over the past several years has increased demand for providers in the last-mile delivery service segment, pushing companies to manage their fleets accordingly for urban environments and smaller loads.
• Supply Chain Disruptions: Ongoing global supply chain issues have led to fluctuating demand, delivery delays of equipment orders, increased pricing and companies’ need to be more flexible with fleet management decisions (i.e., running equipment longer than they normally would).
• Driver Shortages: Most industries these days are facing labor shortages, and the transportation sector is certainly not immune to that. This forces companies to remain competitive from a pay perspective, offer improved working conditions, better hours, provide better-equipped and reliable equipment and so forth.
• Technology: Advancements in technology, such as GPS tracking, fleet management systems, warehouse management systems, etc. are helping to improve optimized routes, fuel efficiency, freight tracking and provide overall better operational efficiencies across a company’s fleet.