Tuesday, July 13, 2010

Is a puzzlement

I’m sitting on a hill in Little Compton, RI, above a tidal pond connected to the Atlantic Ocean, admiring what would be a great view except for heavy, black clouds that are being sundered by lightning flashes. It just figures that three weeks of hot and rain free weather were broken by a Canadian cold front moving through on a day that was planned for some R & R with classmates. Before you hand me that old saying about needing the rain, consider that it didn’t have to be today.

It’s all about expectations. Most every time I go down to the Maine coast I can count on foggy weather, save a glorious week in Boothbay Harbor when it only rained one day. So my expectation when planning a trip there is that inclement weather will occur.

A few weeks ago I had expectations about the country talking itself into a double-dip recession, and sure enough we seem to be doing it. I grant you that the economic news is not great, and were it not for the distractions of the World Cup, it likely would have been worse.

One of the songs in the movie Anna and the King of Siam is titled A Puzzlement. The King sings “Is a puzzlement” because he does not understand the changes that are happening. I have adopted this phrase when I am frustrated with certain events.

For example, U.S. unemployment figures were down last week, but the inevitable "but" was that they were not down by as much as anticipated. Housing starts were up last month, but not by as much as hoped. Steel production was down more than expected, but still was up from the preceding period. It’s when good news is not so good news, is a puzzlement.

And thus comes the second half of the "W" recession, or when a recovery is not large enough to be a recovery. Congress is back from another of its vacations so I expect that rhetoric will fill the news and talk shows about a slowing economy. The political right is using this to shoot at the president, while the political left will use it as raison d’√™tre to spend more stimulus money. No matter how you cut it, we’ll all be the losers one way or another once the pols decide to use the double-dip as a political tool. Another puzzlement.

The laser business is having it mild ups and downs, with some sectors experiencing a mid-summer dip, but when haven’t they gone through this? I recall when I was in the capital equipment business we wrote off July as a month when we could not expect orders at the previous month's levels. So what’s changed? It wasn’t a recession then, just the summer doldrums. Now as it occurs in 2010, some say it’s the precursor to another recession. Is a puzzlement.

Expectations are that consumers will spend us out of recessions, and yet we chastise them for running up credit and going deeper into debt. I was on a rare shopping trip for summer wardrobe bargains on a weekday last week. The department store was pretty much empty, especially the men's department. I asked the sales clerk if he was concerned about the economy. No, he answered, a flier just came out advertising a big sale next week, and all the customers are holding off making purchases until then. I didn’t see that flier or I would have waited myself. . Luckily, the clerk kindly set my goods aside to be paid for this week at the sales prices. Consumer recession? Is a puzzlement.

As I wandered the store, waiting for my wife to find some bargains to lay-away for the sale, I perused the clothes racks looking at sewn-in labels. It’s a game I play when I kill time in the women’s department while she tries on possible purchases. My tops on international manufacturing locations has been 10 countries, but this day I could only make seven as China and Vietnam seemed to dominate certain brand names.

It occurred to me that the U. S. clothing manufacturers aren’t feeling the impact of the shoppers for these goods as they are all made offshore. Retail sales may be off, but that impacts the stores not the manufacturers. Simplistic? What else do you expect? I’m relaxing watching the storm move offshore and a brighter sky approaching from the West. It will be a better afternoon with the expectation for a lovely sunset; and that’s not a puzzlement.

Tuesday, July 6, 2010

The next big fireworks

I’m sitting on the side of one of three hills that make up most of a bowl; dense woods comprising the rest shields us from the launching point of the annual July 4th fireworks display. About 6000 others join my family for what has become a holiday tradition.

Those of you who have experienced it know that the anticipation level for the first explosion ratchets up as darkness finally settles in about 90 minutes after sunset. In this period, costumed villagers mingle with the crowd and hand out lollipops to the impatient children. Meanwhile the odor of mosquito spray mingles with the smoke from the rifle fire of the local militia who entertain the mostly happy crowd.

So I had some uncomplicated time to think about the next big fireworks in industrial laser material processing. I thought back to the 1990s when the tapering off of older technologies and the decline of the semiconductor and microelectronics sectors were offset by the growth in processing sheet metal, followed by the rapid acceptance of laser applications in the medical device business, which accounted for most of the growth rate. Since then, we have been looking for the next big bang.

Slyly, seemingly unnoticed, microelectronics came back midway through the first decade while aerospace and marking/engraving held their own. The recession was the great leveler and only application in semiconductor (surprisingly) and energy (photovoltaics) bucked the trend. Medical device processing prompted by new laser technology, fiber and ultra-fast pulse took us out of the recession as noted by quarterly reports of public companies.

A few weeks ago I had walked through the laboratories of Fraunhofer ILT in Aachen and saw several dozen early developments in laser material processing, many in the microprocessing category. At that time I mentioned to several of the innovators showing their work that ILS had christened the first decade of this millennium as the era of microprocessing, a prediction that was slightly premature as this sector only caught on towards the end of the decade as the new lasers offered users a better approach, making up for some of the declines of the older lasers.

At LASYS in Stuttgart a raft of new ultra-fast pulse lasers were introduced to serve the growing needs of the microprocessing sector. And across the plaza at the Congress Center 500 attendees were listening to advanced material processing technology, much of it in the microfabrication sector.

Has the era of the high-power laser cutter run its course as the major revenue producer? I think not, at least for the foreseeable future as pent-up buying demand will boost sales sometime and the advent of multitudes of high-power fiber laser cutters will expand the process into new market subsectors. Bu the handwriting may be on the wall and a shrinking market share may make metal fabricating less than the 800 pound gorilla of the system revenue picture.

The problem is that even with ultra-fast pulse lasers at $200K plus, it will take a lot of them to make up for the almost $1 billon of high-power lasers sold in 2008, the last great year for this product.

Maybe I was in a too laid back frame of mind July 4th evening, but I just couldn’t quite see a major explosion that would vault another application - other than sheet metal cutting - into the revenue lead in the next couple of years. But just then the fireworks company unloosened a barrage of magnificent bombs that took our breath away. And maybe, just maybe, I thought I might be wrong.