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Thursday, August 21, 2014

AMT Viewpoint: The Future Is Looking Up!

Pat McGibbon AMTWith the November USMTO data just released, the end of 2014 looks to be finishing better than expected, and the harbingers of future good tidings are knocking on the door of 2014. Manufacturing technology orders for November were up 1 percent from October, and year-to-date orders were down 8 percent from the first 11 months of 2012. All indications are that December will be strong enough to keep 2013 down 8 to 9 percent from 2012 levels. This is better than the 10 to 15 percent declines projected more than a year ago.

The opening of 2014 also seems to bode well. The forecasts for this year were optimistic, and it is likely that industry economists will even revise their forecasts to project manufacturing technology growth in 2014 and beyond.

Many economic indicators around manufacturing suggest continued solid, albeit slow, expansion into this year. Housing starts are firming up, and consumer sentiment is on the mend. Durable goods orders posted a 50-plus-year historical high in June 2013, and the year is likely to finish on a new nominal dollar high as well.

The ISM’s purchasing managers index has been at or above the 50 positive/negative threshold for 52 consecutive months — meaning more than four years of continued expansion. In automotive, light-vehicle production in North America will top 16 million units for 2013. Expansion in the commercial aerospace sector is more than offsetting the softening in defense spending. The energy sector continues to expand at a rapid pace, and medical equipment capacity investments are on the rise again.

Why does the manufacturing sector continue to expand here in North America? Because the future is bright!

Credit: jscreationzs at

Credit: jscreationzs at

The United States is once again at the top of everyone’s list as the place to invest in new manufacturing capacity. The International Energy Agency is projecting that the United States will become the largest producer of energy in the world by the end of 2015. This new strength in energy and the resultant lower domestic costs of energy resources will make investments in this country more attractive. This has had a positive impact on both foreign direct investment in the United States and the reshoring (aka onshoring) of companies’ manufacturing capacity in North America.

Low energy costs are just one thing making the United States attractive for the manufacturing sector. In addition, the country has the brightest minds and necessary resources to develop technologies in lasers, additive manufacturing, nanotechnology, and advanced materials — all contributing to a strong innovation ecosystem.

U.S. R&D spending by public institutions and the government totaled $429 billion, more than a third greater than the next closest nation and more than double the third-ranked country. According to United Nations-sponsored studies, the United States is the home of six of the world’s top 10 advanced engineering universities, suggesting that the nation is generating some of the most innovative engineering minds in the world.

These points clearly paint a picture of a growth-friendly environment for manufacturing.

Also, drawing more investment into domestic manufacturing has been sustained, substantial capacity utilization levels. U.S. manufacturing facilities have been working at 75 percent-plus capacity for more than 28 months. This level of sustained, longer-term use of capital equipment leads to increased investment in manufacturing technology for both expansion and replacement purposes.

Fortunately, both current cash liquidity and profitability of U.S. manufacturing operations are at all-time highs, suggesting that manufacturers are primed with the reasons, needs, and resources necessary to make increased investments in manufacturing technology in North America in 2014 and beyond.

The bottom line is that 2011-2013 have seen the best market levels for manufacturing technology demand in the past two decades, and the landscape for the future suggests that the next two years should see even more acceleration and positive growth.


Pat McGibbon is vice president of industry intelligence and engagement for AMT – The Association For Manufacturing Technology. Based in McLean, Va., AMT represents and promotes U.S.-based manufacturing technology and its members — those who design, build, sell, and service the continuously evolving technology that lies at the heart of manufacturing. For more, visit AMT’s website at

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