VIEWPOINTS INDUSTRY LEADER OPINION & ANALYSIS Unleash New Investment and Manufacturing Growth v T
oday the overall outlook for the US manufacturing industry is optimistic, but I worry that we are missing out on additional opportunities for growth due to poor past experiences and current government policies that dissuade or even inhibit manufacturers from pursuing ongoing investment.
Demand within the machine tool market is a fairly ac- curate indicator for the health of any country’s manufactur- ing sector. Over the last couple of years, US machine tool demand has fl attened out compared to previous years. The fi rst quarter of 2015 has started off rather weak, with unit volume at its lowest level since 2010. These fi gures are star- tling when traditional leading indicators, such as automotive vehicle demand, aircraft production and corporate cash posi- tions, suggest that machine tool investments in the United States should be strong. The juxtaposition of this data hints that more complex issues are infl uencing demand. We frequently hear from OEMs having diffi culty fi nding supply chain companies willing to take on new orders. This is exactly the type of problem that leads to addi- tional outsourcing. Unfortunately, many owners of small and medium shops in the United States are still reluctant to invest and grow their business. Their hesitance isn’t without reason. Many of these shop owners are skeptical about making capital investments now. They have been previously misled by broken promises of part volumes, cuts in production, renegotiations of contracts or potential economic contractions. Rather than take on any potential risks, these individuals are aiming for the short-term goal of profi tability, or passing the business down to their chil- dren without any debt. Our current political climate has added another layer of
concern to these already cautious shop owners, offering a hazy future outlook due to government inaction and poor policies. Why would these individuals seek to increase and grow their business when they are likely to face punitive corporate and individual tax rates? How are our banks sup- posed to focus on helping businesses grow through effective
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loans when they are stifl ed by regulations and oversight? From where will technological innovations stem when de- fense budgets continue to retreat? Who will manufacturers hire in the United States when our schools are not turning out the engineers our companies need, and our immigration policies inhibit hiring some of the brightest engineers attend- ing US colleges and universities? Corporate research and de- velopment budgets are shrinking. Who knows what punitive actions the Environmental Protection Agency will take next? With all of these questions and many more, it’s no surprise that shop owners are hesitant to expand their business with new investments.
We have a chance to reevaluate and form our future to create a climate more conducive to US manufacturing growth.
It’s important to realize that these challenges present opportunity. Today we have a chance to reevaluate and form our future to create a climate more conducive to US manufacturing growth. It is our responsibility to call on our leadership groups in Washington to address the known impediments to business and lift the fog of uncertainty that manufacturing entrepreneurs and leaders stare into daily. Many people have felt that inaction and gridlock in Washington perhaps were okay, as it kept the government from doing harmful things or making hasty decisions. But certainly now the gridlock is causing more harm than good as tax reform, immigration reform, infrastructure and de- fense needs are becoming critical, and the lack of action is encouraging investment to be placed unnecessarily outside the United States. We need to unleash investment and growth in the US manufacturing industry. From the production of new aircraft to innovative evolutions in automotive vehicle design, the demand is there. It’s my hope that we are able to seize these opportunities.
Don Lane
President & CEO Makino Inc.
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