“I see no signs of the much-hyped manufacturing renais- sance,” Steven Ratter, former head of the Obama administra- tion’s auto task force, wrote in June on Twitter after a monthly loss of 10,000 manufacturing jobs in May.
Manufacturing Tech
Another economic indicator with rough patches in 2016 was the Association for Manufacturing Technology’s monthly report on orders for machine tools and related equipment. For much of the year, those orders fell compared with the
previous and year-earlier months. By the end of the sum- mer, there was some signs of life. Still, AMT (McLean, VA) expected that 2016 would lag 2015’s results. For expansion to occur, “You have to have a signal the economy will be better,” Pat McGibbon, vice president of analytics for AMT, said in a June interview. “You’d like to have the backlog pick up a little bit. Confidence and backlogs are a little soft.”
In the fall, in an AMT video concerning results for August, McGibbon said progress had been made. “We’re making our way back through the negative num- bers to a positive number,”McGibbon said at that time. “It looks like we’re heading in the right direction.”
“Volatility is more the norm than it is unique anymore.”
AMT also held its mammoth IMTS trade show in Chicago in September, which typically provides a bump in manufac- turing tech orders. The 2016 edition of the show finished No. 3 in its history for registrants (115,612) and the most ever for exhibiting companies (2407). Still, AMT was not forecasting a sustained recovery until next spring. “We’re looking for a soft end to 2016 and a pickup in stronger order levels in the second quarter of 2017,” McGibbon said. For much of 2016, aerospace and automotive were the
strong performers in manufacturing. They showed signs of softening by mid-year. “The world aircraft industry is still growing. That’s the good news,” Richard Aboulafia, vice president of analysis for Teal Group Corp. (Fairfax, VA) wrote in a report about the aero- space industry. “The bad news is that the industry’s growth rate downshifted significantly last year. Meanwhile, the slug- gish level of growth that remains is threatened.”
He wrote that production goals “appear out of line with economic reality.” China, “now the largest jetliner market in the world, is weakening noticeably, with GDP growth falling below 7%.” Other international markets, including Brazil, India and Russia are weakening, Aboulafia wrote. Another factor causing a softening for aerospace is low oil prices, according to the analyst. “Inexpensive fuel reduces the incentive for airlines to replace their older jets,” Aboulafia wrote.
For 2017, AMT is expecting a more widespread recovery in machine tool orders.
No ‘One Big Thing’ “It’s not going to be one big thing,” McGibbon said in the fall video. “No big program, no big industry. It’s going to be a lot of little things.” There was one other topic that kept arising during 2016 that didn’t have a hard number but may have had an impact anyway.
That was uncertainty spurred by political events. “One thing always mentioned is uncertainty,” said ISM’s Holcomb. In international markets, the primary example was the UK vote to exit the European Community, known as Brexit. It will take years before the UK actually extracts itself from the EU. Still, that spurred concern it will affect trade of goods. It also caused a drop in the British pound. The US, meanwhile, held a contentious presidential elec- tion between former Secretary of State Hillary Clinton and businessman Donald Trump, a Republican. The chairman of one major manufacturing group, the National Association of Manufacturers, said companies need to get used to such uncertainty. “Those are the kinds of things that one day people are feeling good about and the next day they’re not so sure,” said Gregg Sherrill, the NAM chairman who is also CEO of auto supplier Tenneco Inc. In 2017, major elections are scheduled in Germany and France, which have the potential to also spur uncertainty for business, he said. Germany has Europe’s largest economy and Chancellor Angela Merkel is one of the most powerful figures on the continent. “Volatility is more the norm than it is unique anymore,” Sherrill said in an interview following a speech at the Detroit Economic Club. “We just need to be able to live in that world, to be successful in that world.”
December 2016 |
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