IMTS Spring Economic Outlook: Approaching the Shallow
By Kathy K. Webster, AMT Exhibitions Content Manager Correspondence
Lady Gaga and Bradley Cooper may be far from the shallow, but manufacturing technology orders are not. In his Spring Economic Outlook, AMT Chief Knowledge Officer Pat McGibbon forecasted a shallow downturn beginning this September and lasting 15-16 months. He outlined bright spots for opportunity and how disruptive technologies such as artificial intelligence may alleviate manufacturing productivity challenges.
First, the bad news
Pat forecasts a contraction of 10 percent for manufacturing tool orders in 2019, and a zero percent growth rate for 2020.
The good news
The downturn will be short and shallow lasting only 15-16 months — a downturn cycle not seen since the 1990s. “When the United States hits the bottom of the dip about the spring of 2020, other countries well into their expansions will help us emerge more quickly,” said Pat.
The bright spots
The aerospace and medical industries are expected to have the most growth, and luckily for manufacturers, both industries are geographically diversified with large projects spread evenly across the United States. Sizable aerospace construction projects include those by Spirit AeroSystems, FireFly Aerospace, Leonardo, and General Electric. Notable medical projects include Seqirus, MaSTherCell, and Abzena.
Although the automotive industry appears strong with some notable investment projects, Pat's numbers indicate there will be a softening of production rates in 2020.
The wild card
The off-road/agriculture and construction industry remains a “wild card” because of the politics involved with funding the overhaul of our nation's infrastructure. Pat hopes leaders in Washington, D.C., will move forward to fund repairs and improvements of infrastructure as this will have a significant impact on machine tool orders and a trickle-down effect for the economy. Notable projects include those by Emerson Electric, Sequatchie Concrete Services, and Charah Solutions.
Toward the second half of 2019, Pat estimates some growth in the energy and power generation industry with its investments in renewable energy. Notable projects include those by Qatar Petroleum, Intel, British Petroleum, Canyon Midstream Partners, and the Pennsylvania pipeline construction.
Top 10 economic indicators
Pat notes that while the indicators look good now, more will likely point downward in September. He expects decent numbers for the second quarter of 2019. Trade around the world is signaling a decline in machine tool orders.
Barriers for growth & an antidote
Pat cites unclear government policies on trade, decisions on spending, and unstable international relations as barriers for growth as they make it hard for manufacturers to plan. A workforce shortage and a flat productivity rate for manufacturing are also impeding growth. “With baby boomers retiring and not enough young people pursuing a career in manufacturing, I see artificial intelligence and automation as two possibilities that may offset some of the barriers to productivity,” says Pat.
A downturn is approaching, but it will be short and shallow. Aerospace and medical offer plenty of opportunity across the United States. But pay attention to changes in government policies and advances in technology because they may reveal even more opportunities.
“Remember, we'll be starting a downturn later than the rest of the world. Other countries will start to expand before us and help pull us out of a mild downturn,” said Pat.