Wednesday, April 27, 2011

Growing the industrial laser market

I’ve been looking at the most recent fiscal year quarterly reports from companies in the Industrial Laser Solutions financial database because I was curious to see if a statement I have made a number of times is correct. The statement refers to companies pushing every last order out the door on the last day of their fiscal year so that annual sales were shown most favorably.

I averaged out the published results from a dozen leading suppliers of industrial lasers, laser systems, and related products and found two interesting facts: one related to the statement and the other confirming that the economy in the industrial laser sector was greatly improved.

On average the surveyed companies showed a modest single digit growth in revenues in the first quarter of FY11 compared to the last quarter of the previous fiscal year. Not surprising I guess, confirming my statement. I also noted that the last quarter of FY10 easily outperformed the previous three quarters.

At first I was a little disappointed in the numbers for the start of the new fiscal year, until I considered that fourth quarter FY10 was for many companies a record quarter, with some companies enjoying a 50% growth in revenues over the year coming out of the recession. Thus, a modest single digit growth on top of record revenues meant that FY11 was starting off with a bang.

On another matter, the Laser Institute of America's Northeast Regional meeting, held last week in Nashua, NH, focused on ultra-fast laser processing of industrial material. With a modest promotion, this event drew a record attendance with more than 80 members and non-members showing up, including some from the West Coast, who arranged their travel to include this event.

What drew this audience? For starters, four speakers form the laser supplier industry presented their products in a wide range of material processing applications, much to the surprise of many in the audience who were unaware of the rapid strides being made in the UFP technology. Led by the organizer and moderator Ron Schaeffer (Photomachining Inc.), presenters Bill Clark (Clark MXR), Mike Armas (Raydiance), Sid Wright (RPMC Lasers), and Paul Graham (TRUMPF) made a strong case for impressive sales growth over the coming years.

Even those familiar with this progress were impressed by the inroads these lasers are making into the industrial marketplace. And those of us who are always looking for the next big market push may have found it in the new applications that had, until now, not been laser capable.

Tuesday, April 19, 2011

What the * is going on here?

The world's oldest marathon(115 years), the Boston Marathon, produced a new world record for the men’s winning time and almost did the same for the women. A mild day on Monday with a rather strong and gusty wind at the runners' backs helped them to phenomenal times this year. Unfortunately, an archaic marathon regulation dealing with the total drop in altitude over the course, from start to finish, which should be 150 feet instead of Boston's approximately 300 feet, prohibits this record from being officially world class. But as my neighbor, a four time Boston runner said, “Try telling the runners that the Boston isn’t tough.” Reports are that the winning time, a world record, will be accompanied by an asterisk.

This week is bringing to our attention the early first quarter reports from the public companies and, as expected from the comments we have received over the past three months, activity in the industrial laser sector continues its last quarter of 2010 performance. This alone is noteworthy because the end of the year, as mentioned in earlier columns, is a “clear the house” time at companies anxious to pump up annual revenues. So when 1Q11 numbers exceed 4Q10 numbers, you know that the market conditions are excellent, or as they say in the wine business, it has legs.

This is not in ignorance of the situation in Japan, as cited earlier, as those numbers are not available yet, but will obviously be seriously impacted by the reduced production schedules being experienced by most Japanese manufacturers. We are eagerly awaiting these numbers as we are now preparing a revised 2010 report and a new 2011 forecast to be presented in June on an ILS Webcast. But as we have stated earlier, any drag on the global economy should be noted with an asterisk as it is not a reflection on the market but on the result of the disaster in Japan.

Monday, April 11, 2011

Lasers not so unusual any more

The news early this week is more pessimistic than optimistic, but not enough to cause any media newsbreaks. Stalemates in Afghanistan and Libya, one step forward and one back in Fukushima, and the U.S. Congress kept the government from shutting down, just as most of us knew they would after a lot of posturing.

On a much smaller scale than these events, business in the industrial laser sector is great, sort of contrary to all the dull international and national news. China’s trade balance went negative, ho hum, in sectors not impacting laser sales. Yes, Japan has yet to get their industries perking again and that’s not good, but not news. Industry in the U.S. and Europe are still on an upward arc, even though the latter is coping with a bailout in Portugal.

So the past weekend was peaceful and quiet except for the concern for the Red Sox losing streak; two out of three wins over the Yankees ended that. So my only temporary concern was for the poor golfer who blew a 12 stroke lead in the Masters and plunged out of site on the scoreboard. With a gaggle of very good golfers in the hunt at the end, his disappearance went unnoticed.

Do you ever get the feeling that things are too stable and that something will upset the quiet this week? I’ll be participating in SALA, the Symposium for Advanced Laser Applications, where among my duties I have the pleasure of hosting the Innovation Award for Laser Applications in Manufacturing Operations. I haven’t seen the acceptance speech by the awardee, Dr. Marshall Jones from GE, but I hope that he will mention the impact that the laser technology he championed had on GE to make it more productive and competitive. Because this is typical of what pulled U.S. manufacturing out of the recession so rapidly, manufacturers here are the most productive among industrialized nations.

Here productivity equates to automation and automation is almost connected to the word laser. For the first decade of this technology, equipment sellers were hesitant to use the word automation, as it raised warning signal with unions. Then, as the threat of automation on the job market seemed to disappear, global competiveness made it an antidote for low labor cost competition.

Laser fit nicely into automation systems, and low operating cost and maintenance free operation make them attractive for multi-shift operations.

One aspect that I think has helped is that the mystique of the laser has all but disappeared as tens of thousands of units are operating around the world, many in plants where they are no longer considered unusual. And that is a good thing.