FEATURE | MANUFACTURING
managers index (PMI) – and to a somewhat different extent S&P Global’s manufacturing PMI – has reflected weakness in the manufacturing sector over the past few years. For example, the ISM manufacturing PMI, which had indicated contractionary business conditions for 31 of the past 33 months, slipped for the fifth consecutive month in July to 48% at the same time as the S&P manufacturing PMI fell for the first time this year to 49.8%. Schenker attributed the most recent pullback to the high interest rates and more restrictive monetary policy environment. But there is some question about how
this relates to investments in both new manufacturing facilities and expansions of existing manufacturing plants, therefore, demand by manufacturing companies for overhead cranes and hoists. Schenker pointed out that the results of his company’s MHI Business Activity Index (BAI), which measures demand for material handling equipment, have been consistently stronger than those of the manufacturing PMIs – an indication
that the material handling industry (including the crane industry) is in a stronger position than the manufacturing sectors that use material handling equipment. Comments from certain crane builders have confirmed this. For example, during his company’s recent quarterly earnings call president and chief executive officer Marko Tulokas says that despite some cautious behaviour by his American industrial customers, Konecranes’ order intake for equipment from companies in the aviation and aerospace, energy and metal sectors was strong in the second quarter. However, he is not sure how that will hold up given that demand-related uncertainty and volatility due to geopolitical trade policy tensions could translate into higher uncertainty in the timing of orders and some postponement of maintenance activities with industrial customers, particularly in North America.
Turbulence ahead While overall aerospace is one of the stronger sectors, Justin Rouse, Wemco’s vice president of
business development says it hasn’t been without challenges, most notably because of the well-publicised issues that Boeing recently had necessitating it to upgrade some of its decaying infrastructure. Similarly, he says that while metals manufacturers are generally doing well, Rouse explained that all of the uncertainty in the market has affected aluminium and other metals capital expenditure budgets. But as far as the future of manufacturing activity, Timothy Van Audenaerde, global metals lead with Accenture, says that a lot depends upon the strength of the US economy, which is currently seen as having different impacts from different manufacturing sectors. He noted that, for example, there is reason to believe that there could be increased demand – including demand for material production – from the data centre and defence sectors. Van Audenaerde, however, says that he is somewhat less optimistic on the automotive side given the uncertainty as to where cars will be built – whether the auto OEMs will be
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