Suppliers Products CAD Drawings Product News Certifications
Search By: Category Company Name Brand UNSPSC Commodity
Promote Your Business | MyThomas
Friday, April 25, 2014

Even When Economic Data Seems Iffy, There Are Bright Spots

Most commentators on the economy have to cater to a very wide audience — everyone from farmers to doctors to machine tool builders – when they track conditions and present what’s coming next. It is not always obvious how general economic commentary can be applied to a specific company’s near-term prospects. Companies in manufacturing don’t sell to a portfolio of customers that is identical to that of the general economy.

Therefore, some companies will do well while others will flounder regardless of whether the economy is up or down. Sure, in general, if the economy is doing well, the opportunities to be successful are greater, and if the economy is slipping, it will be more challenging to maintain or grow business — but it can be done.

Broad audiences can use broad measurements like gross domestic product. GDP, a measure of economic output, tells us whether the economy as a whole is doing well or not. During the Great Recession (2008-2010), the GDP measures were a bleak picture. Certainly 2009 was bleak for almost everyone, but the manufacturing technology sector bounced back in 2010, posting volume that was nearly twice as good as 2009.

The economic recovery that began in late 2010 to early 2011 was led by the manufacturing sector. This was a time when consumers were still seeing their wealth deteriorate through the rapid drop in the value of their homes — a situation that didn’t truly begin to improve until 2012. In 2012, consumers were contributing more to GDP growth than they did in 2010, but it is still weak. The service and financial sectors suffered similarly by not contributing to economic growth until 2011. So not every element of GDP followed the same rebound trend.

The same is true with the manufacturing sector, which is composed of many pieces. Manufacturing is typically broken into durable and non-durable products. Those two groups are then broken down further into smaller areas.

Durables manufacturing is typically broken down into eight sectors if you combine all transportation into one sector. Occasionally all eight move in the same direction — but never at the same speed. More often than not, there is a wide variety of directions and growth rates.

One of the best measures of the health of manufacturing is the Industrial Production indices published by the Federal Reserve Bank that gauge production levels of products. Currently, manufacturing has grown 1.7 percent over its year-earlier level. The durable goods portion of manufacturing grew at a 2.3 percent pace for the same period, meaning that non-durable goods didn’t do as well.

Within durable goods manufacturing, only three of the major sectors (electrical equipment, primary metal products, and machinery) are operating at output levels below those in April 2012. The other five sectors — transportation, fabricated metal products, computer and electronic devices, furniture, and medical equipment — have been posting growth rates between 0.3 and 19.8 percent.  Even in the sectors where production is lower than it was last year, there are specific elements that continue to expand. For example, the machinery sector is off by a percentage point, but farm machinery is up 19.8 percent and metalworking machinery is up 3.1 percent from April last year.

So while the broader economic measures might suggest a slowing down or easing in the economy, when you look at the details, there are still a lot of opportunities. You just have to look for them, and AMT helps its members in this. Below is a breakdown:

Primary Metal Products: +4 percent

-          Still, construction steel is +7 percent

Fabricated Metal Products: +4 percent

-          Led by hardware manufacturing (+15 percent) and Job Shops (+3 percent)

Machinery: -1 percent

-          But farm equipment and machinery is +20 percent

-          Engines and turbines are -10% — likely because wind energy has softened

Computers and Electronic Products: +3 percent

-          Led by navigation and medical electronic devices, +5 percent

Electrical Equipment and Appliances: -1 percent

-          Losses are in lighting (-11 percent) and small electrical appliances (-10 percent)

Transportation: +3 percent

-          Everything is up but heavy trucks: light trucks (+9 percent) and autos (+7 percent)

-          Rail cars are +10 percent

Furniture: +1 percent

Misc. (primarily medical equipment): +7 percent

 

Pat McGibbon AMT

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 www.amtonline.org.

Advertisements
Add Comment Register



Speak Your Mind

*

Copyright© 2014 Thomas Publishing Company. All Rights Reserved. See Terms and Conditions or Privacy Statement. Website Last Modified April 25, 2014.

Thomas Register® and Thomas Regional® are part of ThomasNet.com.

ThomasNet Is A Registered Trademark Of Thomas Publishing Company.