Economic Forces to Anticipate as 2011 Ends


By Brian Huse, Director, Marketing & PR, Robotic Industries Association

How can manufacturers of automation withstand a turbulent, final quarter in the 2011 economy? A new market study from Robotic Industries Association sheds industry-specific insight on the latest economic developments that affect manufacturing. Authored by Paul Kellett, RIA’s Director of Market Analysis, his report, “Major Economies Face Increased Uncertainty – How Will It Affect Manufacturing?” considers a myriad of internationally renowned sources for in-depth analysis.

My first read of the report reminded me of the enormity of what is at stake. As the U.S. economy remains dependent for growth on the over-achievements of its manufacturing sector, the rest of the world is in either better or worse shape depending on their own manufacturing strength. Adding volatility is political disorder that could destabilize entire regions (read sovereign debt crisis), and so far consumers remain missing in action in the U.S.

The world economy hangs in the balance, and a viable antidote seems as elusive as compromise among politicians in opposite parties during an election year.

Just as the world appears doomed, manufacturing crusaders spring up to fight against the Great Recession. A resurgent automotive market seems to come out of nowhere to offer hope. Like superheroes and super villains, two diametrically opposed forces (Manufacturing in the red cape and Great Recession in a grim, black mask) trade thundering blows in a chaotic battle.

This story of dire economic times came to light in 2009, a time when some believed U.S. auto companies were not worth saving and manufacturing was barely acknowledged at the Federal level (other than for tax purposes). Recently, RIA has found allies within government and industry to shape new strategic initiatives such as a $500 million Advanced Manufacturing Partnership with $70 million for a National Robotics Initiative announced by President Obama in June 2011.

There are many good countermeasures in place against recession but is it enough? Autos still stand strong, but general manufacturing is at a crossroads. How can manufacturers in today’s turbulent economy resist the scourge of recession? With intelligence and help from Robotic Industries Association and networking with its elite members, a proper strategy is possible.

Consider the following executive summary from RIA’s “Major Economies Face Increased Uncertainty – How Will It Affect Manufacturing? (An ATC Economic Assessment– October 2011.)”

Automation market trends

Manufacturing activity has fueled much of the growth in the global economy following the Great Recession. Presently, however, there are signs that the manufacturing‐led recovery in the advanced countries may be coming to an end.

In Europe, the manufacturing sector declined in August and September 2011, as measured by PMI (purchasing managers index). In Japan, the manufacturing sector also failed to expand in September 2011. In the U.S. the manufacturing sector continues to expand but just barely. Manufacturing also appears to be slowing in the BRIC countries of Brazil, Russia and China.

Only India has managed thus far to avoid contraction in its manufacturing sector, but the trend in that country appears to be downward.

A decline in manufacturing would clearly mean depressed automation sales, but is a prolonged slowdown in manufacturing likely? The purpose of this white paper is to answer this question by making sense of the dramatic economic events that are now unfolding. We do this by specifically examining the recent performance of the manufacturing sector within the context of the complex and interdependent, economic developments that are now occurring.

We begin with an overall world economic outlook and then zero in on the economies of the U.S., the euro zone, Japan, China, India, Brazil and Russia. Given their importance to the world economy, we also focus on the euro and sovereign debt crises. We then end with some observations regarding likely, longer‐term impacts on manufacturing and automation companies.

Based on deteriorating economic conditions in the advanced and BRIC countries, we conclude that the possibility of a serious and prolonged slowdown in manufacturing worldwide is very real. As a consequence, sales challenges for automation companies will of course increase, but given the current, high degree of economic uncertainty it is it is impossible to chart future automation sales with precision.

Automation companies that are able to limit their dependence on manufacturers might fare better. Also, if automotive sales remain a relative bright spot, automation companies that sell a high percentage of their product to automakers (such as robot suppliers addressing the North American market) might feel less of a sting from a weakened manufacturing sector. Moreover, economic growth –although diminished‐ will remain relatively strong in the BRIC countries, especially China and India, thus supporting demand for automation products, as these countries increasingly modernize their industries.

Free to RIA Members

Odds are slim you will be struck by superpowers that help you escape wild swings in the economy, but if you belong to RIA this report is free and can give you the power to plan smartly. Non-members may obtain the report for $350. Contact Joy Meadows (JMeadows@robotics.org), or navigate with the links below for more information.

Major Economies Face Increased Uncertainty – How Will It Affect Manufacturing?

Join RIA for Exclusive Industry Intelligence

We invite you to join Robotic Industries Association and take advantage of its reports, statistics and unique networking channels. An even more in-depth, state-of-the-industry overview occurs January 18-20, 2012, at the 19th annual Robotics Industry Forum in Orlando, Florida. This event is open to members only. For more information, contact Jeff Burnstein (jburnstein@robotics.org) or call the Association at 734/994-6088.

Other articles that examine economic factors for the Automation industry…

Economic Conditions and Opportunities Bode Well for Robotics Market

Robots for Food and Drink

How Robots Save and Improve Jobs

Career Opportunities in Robotics (an RIA webinar)

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