Certainty in uncertain times
During uncertain times, there can be comfort in things that change little. For some, it's faith-based—that there's a higher power guiding, overseeing, or protecting. Others sometimes joke that there are only two certainties: death and taxes. While I prefer the eternal timeline of a faith-based approach, I also find comfort in information gathering to augment the here and now: •Whe...
During uncertain times, there can be comfort in things that change little. For some, it's faith-based-that there's a higher power guiding, overseeing, or protecting. Others sometimes joke that there are only two certainties: death and taxes.
While I prefer the eternal timeline of a faith-based approach, I also find comfort in information gathering to augment the here and now:
When inventories fall, manufacturers make more. Manufacturers Alliance/ MAPI's (Arlington, VA; www.mapi.net ) 'Survey on the Business Outlook' released Jan. 16 saw inventories fall to 22% in December 2002, from 24% in September. Likewise, Purchasing magazine's (Newton, MA; www.purchasing.com ) 'Top 100 Markets: How we see 2003 economy & prices,' also Jan. 16, cites lower inventories and a positive 2003 outlook: 'Business inventories have become far too thin and staffing levels far too skeletal to support even the meager demand levels of Q3 and Q4 2002.' The article cites a variety of forecasts from 2.6% to 4.4% for 2003 growth in U.S. Gross Domestic Product; Purchasing predicts 3.4%.
When consumers are confident and have money in their pockets (such as during peacetime and when oil prices are low), they often spend more, which reduces inventory. After a point, manufacturers need to invest more capital to increase production. The same Manufacturer Alliance/MAPI survey cited an increase in its capital investment index to 57% in December 2002, up from 45% in September. More than 50% translates into expectations for higher investments and expansion for 2003. Proposed tax breaks may free up additional capital (that's the theory), spurring more investments. Middle East war could increase oil prices and eat into any tax-cut benefits.
When business is good, manufacturers should make wise investments in automation, system integration, related services, and training to increase margins and production. Likewise, when business is flat or down, manufacturers should do the same. In a Jan. 15 report, 'The Weakest Link: Is Business Equipment Investment Directly Tied to Capacity Utilization Levels,' chief economist for Manufacturers Alliance/ MAPI, Daniel J. Meckstroth, supports continuing investments. 'Firms that purchase new equipment are able to achieve a big productivity advantage over competitors' with older technology. He cites 'high return on equipment investment' related to superior technology in newer equipment versus installed base. Point is: don't wait until it wears out to invest.
We're here to help you prepare for those investments with five articles in this issue with the latest technology in a specific area of automation and control; a sixth article provides a small sampling of the National Industrial Automation Show at National Manufacturing Week, March 3-6. I'd recommend that you make travel plans to Chicago next month...or send a designated 'technology driver' from your department. More than 100 conference sessions are planned; see and compare technologies across exhibits. There are significant reasons for making the trip-see pages 57-58 of the print Control Engineering www.manufacturing.net for more.
How's that for present-day comfort?
-Mark T. Hoske, Editor-in-Chief; MHoske@cfemedia.com