Friday, December 21, 2012

Seasons greetings

It's that time of year when many of us reflect on the past 12 months -- and if we are honest, we give some thought to what we did that didn't quite work out the way we had planned. Out of this may come a resolution to not do such things again in the new year. I come at this from a different, more pragmatic, direction: basically, what happened is history and move on from there.

The reason I bring this up is that I have completed my Annual Industrial Laser Market Review, which will appear in the January/February issue of Industrial Laser Solutions magazine and also be presented at the annual Laser & Photonics Marketplace seminar in San Francisco (February 4th) -- in which I will gracefully acknowledge that I pretty much called the laser economic performance as it worked out.

Nursing a strained arm, a result of too much back-patting, I will bravely attempt to crystal-ball the 2013 markets. Like the most watched prognosticator, the weatherman, I'll take credit for the good forecast and ignore the bad; maybe that's where I developed my pragmatic attitude. (Just kidding, folks -- I don't get, nor want, gold medals for calling it right.)

The industrial laser market was 'so-so' in 2012, with some sectors having a great year and others a not-so-bad year, much of which came in quarterly ups and downs through the year, not too many in sync. However, the third quarter seemed to be the most common for "down" news, a result I posit was due to laser and systems suppliers working off their 2011 backlogs. If companies were supplying the aerospace, transportation, energy, agriculture, personal communications, and medical devices markets, their fortunes were up. Since these sectors represent a major chunk of the total laser market, it was a good thing. My take on the other segments was that they had just an average year and as a consequence 2012 ended up in the mid-single-digit range for growth.

For 2013, I am not convinced that the laser market will repeat the same performance. A message that came across when talking with exhibitors at the last big show of 2012, Fabtech, was to expect a flat year. Projections for 2013 ranged from that to low growth, with the exception coming from some of the 'star' sectors of 2012. I won't give away my analysis results; you'll have to read it in ILS or attend the San Francisco seminar. Suffice it to say, it's not the brightest forecast I have made.

Other than that, please have a happy holiday season -- and let's think positive about 2013.

Tuesday, November 20, 2012

Fabtech 2012: Hiking through an oasis of lasers in the desert

Walking the 450,000 square feet of the Las Vegas Convention Center dedicated to Fabtech for three days is usually a chore. This year, the hike was made longer by the fact that the booth assignment for Industrial Laser Solutions was as far from the main entrance as one could get, against the far wall of the Center hall. Reaching this "home base" location after forays into the Center and North halls of the show at times felt like being a constant hiker to the summit of Mount Everest. You were glad to get there and rest, but apprehensive about doing it again and again as you tried to visit all the laser exhibits among the 1100 spread throughout the halls.

However, like good soldiers, my partner, associate editor Jim Montgomery, and I logged innumerable miles as we managed to see most of the exhibitors until we ran out of time, and energy, at the end of the third day.

As already reported, the show appeared to be a significant success. We did not hear any negative comments about the show, and for the most part the positive comments were effusive regarding the quantity and quality of the show visitors. Business was good, with many orders closed by exhibitors and with others piling up leads as the first two days saw a continuous stream of visitors in the dozens of aisles. As an aside, we wondered where all these visitors were coming from: after all, there isn't much industry in and around Las Vegas since it's mostly desert. So we surmised that these adamant show-goers -- more than 25,000 of them -- came from a distance and spent time and money to see metal fabricating and welding specifically.

On the morning of the final day, after a very strong Tuesday attendance, I recalled a video that was shot of me exiting the 2008 Fabtech (see below), which had been held in this same facility. My recorded comment was that the show had been a spectacular success, with many orders placed and prospects for the coming quarter projected as very bright. That show, like this year's, was scheduled a few short weeks after a very successful EuroBlech -- just as happened this year.

You will recall that 2008 was a year of indecision, where "cautiously optimistic" became a marketing manager's mantra, whereas this year it is "uncertainty." At EuroBlech and Fabtech that year, positive business news seemed to run counter to all the negative financial news in the media. However, in the first week of December 2008, the bottom fell out of the laser market as order cancellations began to flow in, and projects were summarily delayed.

Fabtech 2012 had an eerie feeling of déjà vu. On my iPhone were reports of a return of recession in Europe, unrest in Israel/Palestine, and the "fiscal cliff" in the US. Strangely reminiscent of the negative news in 2008, just of a different character.

I left the Las Vegas Convention Center with an unsettling feeling. Will 2012 be a repeat of 2008? My head tells me that things are different today, but my gut kept rumbling -- déjà vu. I sincerely hope it was just indigestion from the Brazilian Churrasco I had the night before, and not an indication of some negative news to come.

Friday, November 2, 2012

Industrial laser exhibition shows growth

There has been a growing interest, among the industrial laser equipment suppliers, for a trade show of their own in which to promote their products to potential buyers who attend because of this interest. The Laser Institute of America (LIA), an international society mainly known as the organizer of the world renowned International Congress on Lasers and Electro-Optics (ICALEO), stepped up to the plate last year and they organized the first Lasers for Manufacturing Event (LME).

The October 22nd second convening of this event, again held in Schaumburg, IL, was a larger version of the inaugural with an additional 30% exhibitors and a growth in attendance of 37%. Peter Baker, LIA executive director, told me that the growth of LME was akin to that old adage, "You must crawl before you walk." Consequently the LIA, with two years under its belt, has committed to another three years at the attractive and convenient Schaumburg Convention Center.

Attempting to slide an industrial trade show into an already crowded calendar is not an easy task. Many of these trade shows (IMTS, Fabtech, EuroBlech, MD&M, and even the LIA's own ICALEO) have industrial laser material processing related content, drawing away potential exhibitors and attendees. However LME is a truly different show -- it is a show of industrial laser suppliers showing their products to interested laser buyers. As more than one exhibitor told me this year, "The level of interest among attendees is of high quality because this is an industrial laser show, and the majority of visitors came because they have interest in this technology." Another exhibitor said they had doubled their orders this year over last year. Confirming this good news, 90% of exhibitors surveyed advised they will return next year.

Tuesday, October 9, 2012

It's too early for weird

This spot has not been updated for a while due in large part to my relative incapacity -- a result of some unplanned surgery that sapped my energy. I suggest readers might find it amusing to read My View, appearing in the November/December issue of ILS, for details. But I am now almost 100% and back at the keyboard. Again, see My View for more thoughts on this.

So how did the world fair while I was away? Let's see: the Eurozone is still a mess, although Greece is back in favor with a new finance minister in charge. However, Portugal and Spain are still stressing out -- no change there. China remains the big thorn in everyone's side, as manufacturing in that country has contracted for the 11th straight month and the economic expansion in August was the worst performance in three years. The government still seems to be focused on domestic opportunities, and there does not seem to be any support for assisting the capex market to produce sales of sophisticated imported equipment for the production of parts for export. The outlook in China, according to MAPI (Manufacturers Alliance for Productivity and Innovation), is for 2012 manufacturing sales to grow 7.8%, down from previous estimates of 8.6%. For machinery and equipment, sales revenue is anticipated to be down 3% in 2012 and 4% in 2013 from previous estimates.

All of this means that countries exporting equipment into China will have to gut out 2012 and hope the government has another change of policy to open the floodgates for imports in 2013.

Working back down the food chain, this is not pleasant news for European companies dependent on exports to China. In the US, manufacturing grew for the first time in four months according to the ISM (Institute for Supply Management). And this poses a conundrum: are US companies dependent on sales to China or not? It looks like a "not" at this time, as manufacturing is cruising along even though surveys suggest that these companies are anxious about the possibility of a fiscal cliff brought on by domestic tax increases and budget cuts.

Third quarter reports and guidance from our ILS survey companies will start to arrive in our offices in late November, just in time for compilation into our annual economic review of the laser market. As of this writing, I don't have a clue as to what the numbers will look like, but I have the feeling the China situation may finally be rearing its ugly head here, as in other industrialized nations. Whatever happens, it looks like a bumpy ride for the coming weeks.

Monday, September 10, 2012

Eye's East

China, that powerhouse economy, has thrown the world a curve-ball. Some saw this coming, as the financial news from the country had turned neutral and then negative in the past few weeks. But like many Pollyannas, reality in the stock markets never set in and predictions of a government-led turnaround were common in manufacturing industry corporate reports to stockholders. The magic elixir of government stimulation, rapidly applied and instantly effective, was expected to turn this situation around. Weeks went by and this did not occur, at least in the short-run which had been the modus operandi since the recession.

Official figures released over the weekend showed only an 8.7% increase in production, the same rate as the country experienced in the recession three years ago. It wasn't as sharp decline as China's economy had been slipping over the last year or so, refusing to react to government moves to turn it around -- and distinctly sending a message of independence from the non-state-owned manufacturing community. Both imports and exports took a hit with the former down 2.6% and the latter growing only a so-so 2.7%. With domestic demand slipping in China, this prolonged situation is not good news especially in countries and companies for whom exports to China may be their life-blood in a near-recession economy.

Among the industrial laser and systems suppliers, this is troubling news. The end of the third quarter is only three weeks away and the anticipated recovery to stronger shipments to the Far East looks questionable. Some analysts see the government's infrastructure stimulus favoring imports in the coming months but there seems to be little support for an instant boom in the economy. That said, it looks like the industry will settle down to modest growth market in China into the new year.

Thursday, August 16, 2012

Technology to the rescue

I have been trumpeting the resurgence of US manufacturing, and the contribution of industrial lasers to it, since the recession began its recovery. The latest supporting data: July saw a second straight month of higher factory output (0.5%), according to the Federal Reserve, and overall industrial production increased 0.6%, a fourth straight month of growth. And although US manufacturing technology orders inched down in June 2012, according to the Association For Manufacturing Technology (AMT, as backlogs swell in the supply chain, order activity is expected to rejuvenate by summer's end.

Articles are now appearing in all the industrial-related publications, supporting the growth of US manufacturing as the rest of the world has gone into a manufacturing slump. Every once in a while I come across a succinct look at the US manufacturing sector from an observer. Mike Collins, president of MPC Management and the author of Saving American Manufacturing, has nailed it in his latest contribution. I highly recommend it.

Thank you Mike, for reminding us that the US is still a technology leader.

Thursday, August 9, 2012

Making your mark in the world

I've been looking at the quarterly reports, and transcripts of telephone analyst interviews, of several industrial laser industry leaders, and I have also been keeping an unofficial tab on Google postings, and it is clear to me that laser marking is experiencing a strong year akin to pre-recession double digit growth levels.

Laser marking systems are the closest thing the industrial laser industry has to a consumer product. I liken it to a laser printer in the office products business, or a pick-and-place robot in the manufacturing sector. The term "ubiquitous" is apt because there are at least 155 companies in the Industrial Laser Solutions database of global laser marking system suppliers, with more showing up each week.

For those of you who haven't been paying attention to this application, let me explain why it has arrived at its current stature. Simply put, it's because of industry standards and government regulations for product marking and identification for traceability and security purposes.

Years ago, pioneers in the laser industry used to bemoan the fact that the laser was not like a razor, where the aftersales market for the consumable razor blades was where the profits were made. Lo and behold, the consumables issue worked in reverse for the laser companies. Users' issues with consumables when using ink-jet labeling created an interest in the non-consumable laser marking technology. This, along with other technical advantages -- legibility, permeability, readability, and process flexibility -- built the market for laser marking systems. So when corporations, trade associations, and governments looked for a marking technology with these attributes, they settled on the laser. This created a market built on regulations, which carried the industry through the recession in better shape than other laser technologies. This is all neatly spelled out in the now available Industrial Laser Solutions Laser Marking Digest.

By the end of this year, more than 36,000 laser marking/engraving systems worth between three-quarter and one billion dollars will have been installed globally. This will be at least a 10% growth over a good 2011 sales year. And the next time you see one of those 2D bar codes on a package, consider that precise laser marking allows the users to pack more marketing data in this identifier than other processes, assuring continuing growth in this industrial laser sector.

Friday, July 13, 2012

Curiouser and curiouser: Unearthing a gem from ILS' readership data

A good editor looks for trends in the markets they report on. Searching for some clues as to shifts in the industrial laser markets, I have been reviewing the geographic breakdown of Industrial Laser Solutions' international readers, which comprise almost half the total readership. And I found a gem: among the African readers of ILS (we have subscribers in 32 of the continent's 52 countries), 31% are located in Nigeria, making this nation the heaviest reader of ILS. I would have thought this distinction belonged to South Africa which has an acknowledged manufacturing economy, but it is home to only 18% of ILS' African readership -- and it isn't even second, with that honor going to Egypt at 21%.

So I looked back at data from five years ago, and found the African splits were in the same order, but back then Africa only accounted for 0.7% of ILS's readers versus today's 2.7%. Is there something going on in the industrial laser community in that continent that caused a greater than 300% increase in those interested in industrial lasers?

Nigeria is one-third larger than Texas and it is the most populous country in Africa. Industrially it generates revenues from crude oil, coal, tin, palm oil, cotton, footwear, chemicals, fertilizer, ceramics, steel, and small commercial ship construction and repair. Petroleum and petroleum products, cocoa, and rubber are its major exports.

Among our Nigerian readers, 65% identify themselves as CEOs, directors, engineering and production managers, and engineers in companies that seem to be heavily slanted to the petroleum industry and its service companies. That sector is a potential choice market for laser applications such as welding, laser additive manufacturing, and drilling. Without Googling all the readers' companies (which might be fun but time-consuming), it's hard to find an obvious reason why ILS and industrial laser technology seem to be of such interest in Africa's largest nation.

Last year in a My View column on the manufacturing economy, I made a prediction about Africa's place as a factor in the industrial market and when it could happen. It was written as tongue-in-cheek and meant to be a think piece, yet it drew a surprising amount of supportive comments. Others, it seems, are also of the opinion that Africa will be a "hot industrial laser market." Maybe my 25-year horizon was a bit off, as evidenced by this publication's readership growth.

Update 7/17/2012: And apparently I'm not the only one who is turning my attention to Africa as a high-growth region -- the latest issue of Fortune has hit my desk with a special advertising section, "Africa's Moment" [PDF download here], discussing Africa's emergence "as a strong global player" for private sector and economic development activities.

Tuesday, July 3, 2012

Why I hate mid-week holidays

I am just as patriotic as the next guy, I guess, respectfully honoring Independence Day on the 4th of July -- but not when it occurs in the middle of the week. My complaint here is that I experience two "Mondays" in one week, and that's not a good thing. Meanwhile, the rest of the world is working and my international e-mails keep streaming in, waiting for answers while I lounge in the hammock.

To top off this year's July event, the business news is not good. While trying to fathom what impact a reported slowdown in Latin America, Brazil and Argentina will have on industrial laser exports, I was hit by a new Wall Street Journal headline: "Factory Slump Reaches US." In this case, the former feeds the latter. Not a pleasant way to celebrate the 4th.

The Manufacturers Alliance for Productivity and Innovation (MAPI) has revised its Latin America forecast for overall manufacturing output in 2012 down to 3.1% from 4.4%. According to MAPI, manufacturing activity in Brazil stopped a year ago and has been contracting for the past six months. Brazil has been identified as a major market for industrial laser products -- as recently as last month, at a VDMA briefing in Stuttgart, Brazil was identified as prime territory for industrial laser expansion.

In fairness, the MAPI report was very positive on Mexico, which, led by automotive and machinery, is proving resilient to the downward trend in Latin America.

The effects of global economic slowdown have finally filtered down to the US manufacturing sector, where the Institute for Supply Management says exports fell and new orders dropped for the first time since July 2009. Many experts had anticipated this, thinking it was an inevitable action as Europe, a major trading partner, can't seem to get its act together and the stop-gap action by China's government to get that countries economy moving again seems to have had little effect.

As I rock in my hammock, a thought occurs to me. The USA fought for its independence on this day we celebrate -- but some 230 years later our independence is questionable, as a global economy and its effects make us interdependent on the actions of others.

Thursday, June 14, 2012

Lasys 2012: Confidence in Europe, questions about China

A heavy attendance on Wednesday (2500+) had show organizers confident that they can achieve their projected show total of 4500. More importantly, the savvy visitors are here to see the laser and system exhibitors of which there were about half the total. LASYS does not show sheet-metal cutters for political reasons; a competing show here gets them later in the year.

Fiber lasers, diodes, ultrafast-pulse, and disc lasers have been featured at this year's LASYS -- but the industry leader IPG Photonics choose not to show, a surprise to all. TRUMPF and Rofin have major exhibits, and Trumpf has been busy every day. Products attracting interest have been micromachining, marking, drilling, and surfacing; most of these are smallish systems suitable for the size of this show.

LASYS remains very much a German show, with the rare US, Italian, and French systems being displayed. Most of the attendees are from Germany, although the show management did not have demographics available as this is being written. I spoke with a few visitors from Central and Eastern Europe who were job-shop owners shopping for micromachining systems.

Arnold Mayer, a market analyst with Optech Consulting, pegs the total 2012 industrial laser systems market at $10 billion, with projected growth flat ± 5%. This includes excimers used in photolithography, which ILS does not include in our market analyses.

The underlying concern about the European economy surfaces whenever the industrial laser market is discussed. However, the exhibitors here at LASYS seem reconciled to this sorting itself out, and that the situation will change for the better next year. Trumpf, the 800-pound gorilla, claims it will show an increase for the year, but company managers could not be pinned down to a number.

In fact, I have heard more concern about China than about Europe. Mayer pegs China at $1B last year, but he too is concerned that things have slowed for lasers there, at least for the last quarter.

Wednesday, June 13, 2012

Live from LASYS 2012: Savvy crowds return

The second day of LASYS dawned gray, gloomy, and wet, but the anticipated crowds showed up once again, certifying that, in Germany at least, day two is the most heavily attended. The show's six aisles were full early, and through mid-day most exhibitors were busy meeting prospects. Add to this the extra attendance offered by large numbers of attendees at the Stuttgart Laser Technology Congress being held concurrently, and Wednesday should be a good day for exhibitors. Assuming that the attendance holds up, LASYS may make its target numbers by the end of Thursday.

Several new-to-LASYS exhibitors showing ultrafast pulse and/or fiber lasers or disc lasers drew the attention of show goers. Attendees conditioned to these lasers and the applications they process were drawn to the offerings of new suppliers. Counter to shows in the US where these products would be received as novel, potential users in Germany understand the processing advantages of these lasers as a given. This more knowledgeable customer base makes it easier for vendors to present the merits of a given laser system, rather than explain the processing advantages of a technology.

Tuesday, June 12, 2012

Live from LASYS 2012: An encouraging start despite EU sogginess

LASYS 2012, happening this week (June 12-14) in Stuttgart, Germany, opened with a spurt of attendees -- which was unusual for a German trade show, where attendee numbers typically increase on the second day. 179 exhibitors breathed a sigh of relief, as concern for the economy here in Europe is on everyone's mind.

However, mid-day traffic dropped to a more normal level. I'm not sure if it was an early afternoon rainstorm that cut the crowds down, but there were a lot of exhibitor-to-exhibitor conversations as the attendance fell off after 3PM. Nevertheless, several exhibitors we spoke with said that the lower volume inquiries were of high quality, and that was a blessing.

Two adjacent shows on auto technology drew crowds, but these were confined to their respective halls on the first day, and any fallout from these wasn't expected until Thursday of this week. Tomorrow (Wednesday) is the big day at LASYS 2012 -- and we, along with all the other exhibitors, are hoping that the show projections for total attendance (4500) can be achieved and even surpassed.

Thursday, May 17, 2012

Fiber vs. CO2 lasers for job shops: Clarifying the AKL controversy

As expected, I have already received comments relative to the news item I posted from last week's International Laser Technology Conference (AKL) in Aachen on fiber versus CO2 laser cutting. First off, let me be clear on what John Powell from Laser Expertise presented from a paper he co-authored with A.F.H Kaplan of the Lulea University of Technology -- it was a "discussion of the advantages and disadvantages of both types of laser cutting technology from a commercial point of view, written from the perspective of a laser cutting job-shop owner trying to decide between buying a fiber or CO2 laser cutting machine." His early conclusion was that the machine choice is not straightforward, and that "both machines have advantages and disadvantages."

During his introduction, Powell clarified that his analysis considered fiber laser to mean both fiber and disc lasers, and quoted Dr. Dirk Petring's (Fraunhofer ILT) comments made at last year's Industrial Laser Applications Symposium (ILAS, March 2011, Warrington, UK) comparing CO2 and fiber lasers for cutting thin section (Powell's emphasis) metal, that "the CO2 laser is dead." Simply put, for cutting metals thinner than 3 mm the fiber is faster and the edge quality is as good. So, for manufacturers of thin-gauge metal components, the fiber is the better choice.

For a job-shop, though, the choice is not as clear. So he investigated two machines, a 5 kW CO2 from Trumpf and a 3 kW fiber from Bystronic. Setting aside all the detailed data these suppliers provided, Powell decided on "two basic considerations" for the potential job-shop users: what will be the cost/part produced, and how good is the cut quality?

For cutting thin-gauge stainless steel. he gives the edge to the fiber laser which is 25-50% faster than the CO2 laser, especially when cutting large simple shapes. At 4 mm the cutting speeds converge, and above 8 mm the advantage goes to the CO2 laser.

Looking at running costs, Powell gives the edge to the fiber laser, citing its lower maintenance cost -- although he qualified this by noting the dearth of long-term operating data for the newer fiber laser technology.

As to cut quality, he acknowledged that suppliers of both technologies have narrowed the quality differences up to 6-8 mm thicknesses, but for thicknesses above this range the CO2 laser excels. Powell gave credit to the fiber laser for oxygen-assist cutting of mild steels where the cut edges are comparable.

The edge in cutting copper and aluminum alloys goes to the fiber laser. CO2 lasers get the nod for cutting plastic and wood-based products. He noted, though, that most job shops only cut a small amount of these materials.

So, Powell's conclusion: if you are a job shop with a wide range of cutting requirements, you "should buy CO2 machines until you have enough suitable work to fill the capacity of a fiber laser." For manufacturing companies making products from thin section metals, "your first choice should probably be a fiber laser." Prospective buyers, he advised, should get actual cutting trials done on typical jobs by potential suppliers of both types of machines.

Interestingly, many of the questions from the AKL audience dealt with technical aspects, which he answered. But he cautioned several times that his analysis was made from the perspective of a job-shop buyer, and consequently his two basic considerations -- cost/part and cut edge quality -- were the most important factors.

Thursday, May 3, 2012

Good times are rolling in the US

I'm sitting here feeling smug. The business headlines say it better than me: "Industry Picks Up the Pace", "Manufacturing Report Shows Continued Growth", "Dow Headed for Highest Close Since '07 on Manufacturing." All three, and many more references to what is happening in the United States, seem to be confounding the economic experts and stock market analysts. The April numbers from the Institute for Supply Management hit 54.8% in April, the 33rd consecutive month of growth and fastest pace since June of last year.

Sorry folks -- except for those who have been following my ramblings on the health of the US manufacturing sector -- but here's a quote from that WSJ article I just can't help chuckling over: "The report surprised many economists who had forecast a slower manufacturing growth in the face of downturn overseas." Surprised? Come on, people! Come down from your ivory towers on Wall Street and out of your dusty university offices, and get out in the field and talk to the companies that are driving the renaissance in US manufacturing. Maybe they should have read the optimistic news items that have been appearing since the year started. It may be short-lived, but revel in the good news.

In my presentation on the US market for industrial lasers, to be given at the International Technology Congress (AKL) in Aachen next week, I will have to rein in my enthusiasm about the US situation in deference to the gray, and even black, picture for manufacturing in Europe. We here in the US have been there also in the recent past and we know what you are experiencing. For you, it's austerity to avoid recession; for us it was financial market finagling. But the result was the same: pain in the manufacturing sector.

So hang in there -- best-case, you'll either recover soon, or the US will get dragged down by your problems and join you. Let's hope not, or those pesky doomsday analysts might finally get it right.

Thursday, April 19, 2012

Too early to abandon ship

Things are not looking so good for the home team these last few days, and members of the Red Sox Nation are burning up the sports talk show phone lines as the boys of summer can't seem to get started this year, now showing a losing record. On the 100th anniversary of the Titanic sinking -- and that of Fenway Park, ironically -- the fans are lining the railings ready to abandon ship.

As I listen to callers, who must not be veteran Red Sox fans who have learned to take the good with the bad, I marvel at how quickly they seem to have thrown in the sponge, judging that this will be a losing season, after only a dozen games out of 162.

I'm sensing the same from some of the business media who comment on activity in the U.S. manufacturing sector. For some reason, some scribes seem to be obsessed with recession and downturns. One says the U.S. manufacturing sector is showing signs of vulnerability, citing those pesky housing numbers that seem to upset Wall Street every month. (I commented on this in my last blog.) Others see danger in Europe, trotting out the latest grim news from the International Monetary Fund. Specifically pointing to troubles in Spain, another quotes a banker in that country: "Many people think that austerity is going to make the economic situation worse."

A few pieces of negative information has these writers donning life jackets and climbing over the ship's rail. We are not sinking, guys -- its only three months into the year.

I will say this, however -- while there is cause for concern about the health of the manufacturing economy here in the U.S. and some sectors abroad, there is also a level of confidence among industrialists. Most have their houses in order, having played it close to the vest in terms of staffing-up as the recovery progresses and increasing their capital expenditure budgets. This caution, at that time read by some analysts as negative, is now paying off and these companies are poised to make it through 2012 in good shape, for what many think will be a return to global prosperity in 2013.

Here at ILS I decided on a conservative approach in the 2012 forecast, and took a little heat for a modest single-digit growth in system revenues. I'm tweaking that number by a couple of percent in the mid-year report I will present in a June 12th Webcast. Check for details on this.

Tuesday, April 3, 2012

Manufacturing a spring recovery

Memo to economists: What part of the supply/demand principle don't you understand?

I just put down my morning paper after reading an Associated Press news item, "Factory output, hiring go up," in which the good news is tempered by a separate report on construction spending showing that building activity declined again, "disappointing economists." On the same page, directly below, was a New York Times story, "Investors eye tons of homes," describing the investment opportunity to be gained from the massive inventory of pre-owned homes.

Really, economists? You know (or should) that excess inventory unbalances the supply/demand curve. So why would anyone invest in building new homes until that inventory is worked down?

On a more pleasant note, that AP article and one in the Washington Post trumpet the growth and health of the U.S. manufacturing sector, now at 32 straight months of expansion. The Post says slowdowns in China and weakness in European manufacturing are drags on those and world economies. Meanwhile, the U.S. perks along with an ISM (Institute of Supply Management index) of 53.4 for March and employment reaching 56.1 on the ISM index. Any ISM score above 50 shows expansion.

Next month at the AKL 12 meeting in Aachen, Germany, I will present my view of the U.S. market for industrial laser processing systems. I'll show my audience that while the US is in third place among the industrial laser installation sectors, we are serving a half-dozen key industries that have shown resilience in and after the Great Recession, and which offer great opportunities for continuing success in the near term. I'll back up my position with data such as that quoted above.

So economists: Wake up, smell the spring flowers, and rejoice a little in this Easter season. U.S. manufacturers understand supply and demand, so watch what they do, not just the new housing industry.

Monday, March 26, 2012

The winds of change

I’ve always been an admirer of FedEx Corporation, with my respect starting when I did a business school case study on the company when it was known as Federal Express. Over the years I have been attracted to the company’s ability to translate its business plans into success stories, so when the company announced that it will scale-back its global economic growth forecasts and to compensate, park some aircraft and reduce employment numbers, I pay attention.

That resource is not the only clue that I follow; I was also instructed to look at the sales of corrugated cardboard because much of what is manufactured ends up being shipped in a box. And my son, a railroad man, always counsels me to look at freight car loadings for a clue to tomorrow's economy.

Notice I use the word "clue". And that should give tell you: it’s just another piece of the puzzle that I move around as I try to assemble a picture of how the industrial laser business will fare as the year progresses.

Right now I am more concerned about what looks like the beginning of cracks in the normally monolithic hierarchy of the Chinese government. The news out of China, traditionally well controlled by government spinmeisters, has been truly challenged by the pervasiveness of the Internet with its instant analysis and comments that are beyond even their control. With the Internet,  we now hear  about the debates over philosophical differences between conservative Maoists at the top and more liberal pro-capitalists. And this discourse, as they say, is good thing, as long as it is debate and not one-sided dialogue.

My sense is that a fundamental change in the Chinese government could happen, and the stock markets don’t like change. Thus, the news from China is being vetted carefully to sense the impact on the industrial laser market in that country. China is the world's largest market for these lasers, and international suppliers worked their way out of the global recession by trading on the Chinese government's stimulus of its manufacturing industries. I know my friends in Germany are keeping a weathereye out for any pending winds of change that might slow market growth because China is one of their largest export markets. And since Germany delivers a major share of the industrial laser revenues, I, too, have my finger up in the air to detect a change in the wind direction.

Monday, February 13, 2012

First you say you do and then you say you don't

Forecasting may be the easy part, explaining why you got it wrong after publishing it is the
hard part. So I was pleased to read, in an article by Casselman and Izzo in the February 13th Wall Street Journal, that I wasn’t theonly one that guessed wrong on the 2011 economy. It seems that 52 economists WSJ surveyed weren’t great forecasters as they predicted the economy would move forward and things were looking good. Then, as they say, “all hell broke loose” followed by one in Thailand and the economy tanked in Europe and all bets on a good year were off. As the Journal says, “The results reflect the inherent uncertainty of economic prognostication.”
For my part I went the other way on the industrial laser economy and took a more conservative approach. The result, I missed the record year number and had to do a fast shuffle at the end of November to get a more reasonable number in print in the January issue of ILS.
The Association for Manufacturing Technology just reported their calendar 2011 numbers. December U.S. manufacturing technology orders were up 12.2% from November and up 12.7% when compared with the total of $461.48 million reported for December 2010. For the year 2011 was up 66.4% compared with 2010, making 2011 the strongest year in more than a decade and higher than forecasters predicted.
I had noted the strength in the U.S. manufacturing sector but frankly was reticent to report it, as were many other analysts. We were all waiting for the proverbial other shoe, a double dip recession, to drop, month after month, until it became a non-issue in the fourth quarter.
Now I am reconsidering my forecast for 2012, especially since the WSJ economists are predicting only a modestly fast growth in 2012. They got it wrong last year and who says they won’t this year. Their track record isn’t great.

Thursday, February 2, 2012

Good times in the city by the bay

Optimism with caution was the rule-of-the-day among the dozens of exhibitors we interviewed at this year's Photonics West, held in San Francisco last week. This show has grown from an
intra-industry event to one of the world’s premier international photonics exhibitions now expanding into the field of industrial laser material processing equipment.

If it hadn’t been for the continuing mixed economic news from Europe, the gloom and doom of feature stories in the media, and the playoff loss of the local San Francisco 49’s professional football team, nobody would have had any complaints. And why not –about 20,000 visitors, presenters, and exhibitors helped to set an attendance record for show and conference. Almost 1200 exhibitors filled two halls at the Moscone Center, and from the opening bell, the aisles were full of enthusiastic lookers and

Earlier in the week, at the Lasers & Photonics Marketplace Seminar, I had presented a glowing picture of the 2011 market and forecasts for a good but not great 2012. My remarks were corroborated by exhibitors who had attended the seminar with the general consensus being that a modest mid-single digit growth on 2012 coupled with the phenomenal 2011 growth wouldn't be all that bad.

If there was one drag among show-goers, it was the nagging news that suppliers were playing it close to the vest in terms of increasing employment and that Capex was being monitored

From the long dinner lines at area restaurants, it seemed that Photonics West was an economic boom for expense spending, and city officials might take note and lay out a more welcoming carpet for next year's event. You wouldn't even know we were in town, if talking to cab drivers is any indication. Or maybe the laid-back Silicon Valley residents are blasé when it comes to exciting technology shows and

Wednesday, January 11, 2012

Laser microprocessing — a bright future

Laser micromachining was recently defined in a magazine as being “for those who must think small," a good example of tautology (restatement in other words of an idea already stated). I’m often asked to define the term and rather than being tautological I usually say it's processing on a micron scale.

Semiconductor processing and applications in microelectronics fit this description nicely, but the sector on the border line is laser processing medical devices. Is laser welding of implantable devices, for example, pacemakers, a micro or macro application? At Industrial Laser Solutions, we classify this as micro.

As the makers of medical devices strive to miniaturize their high tolerance products such as catheters, thin-wall tubing, stents, and wire insulation — the use of ultra-short pulse laser technology for drilling, welding, and ablating on a micron scale boosted the acceptance of this laser as a means to achieve precision solutions to intricate applications in new materials ranging from memory alloys to polymers.

The "think small" concept certainly doesn’t apply to the market for ultra-short pulse lasers, which has been doubling each year for the past three years — ILS forecasts it will grow 95% in 2012 — and is likely to show more modest growth thereafter only because the base numbers have become substantial. One could get a little cute and say that the laser microprocessing market is "macro".

At Industrial Laser Solutions, we think the micro market, so dependent on the precise nature of the laser processes, has unlimited growth potential.

Thursday, January 5, 2012

Happy New Year, I think

When I reasoned why the manufacturing sectors served by industrial lasers were outperforming analysts' forecasts, I was slightly hesitant to talk about it. I had been stung before in 2008 when I came away from EuroBlech in October touting the optimistic forecast of the fabricating metals sector only to be rudely shocked into reality as that industry collapsed in December of that year as the great recession of 2009 took hold.

But today the industries that exhibit fertile ground for growth in industrial laser processing - energy, transportation, medical devices, fabricated metal products and aerospace - are now acknowledged by even the most jaded analysts as solid factors in positioning manufacturing as an economic leader in an otherwise down market. And by extension these industries are a strong contributor to the record 2011 growth of industrial laser revenues.

However, once stung - forever wary, and I reacted to the beginnings of some less than enthusiastic forecasts by showing caution in my 2012 market forecast, which those of you who are digital subscribers will read on January 15th and others will read online at the next week.

But now, as this is being written, a raft of new information is appearing that suggests that manufacturing, at least in the US, is in for a more active period than anticipated. The Institute for Supply Management cued by a strong December growth in manufacturing suggests that the first half of 2012 should be very good for US manufacturing and in fact 11 of 18 US manufacturing industries will expand in the first 6 months of the year, including those that drove the 2011 market to new highs. Furthermore, 3 of our market drivers are forecast to expand for the entire year.

The Association for Manufacturing Technology and I were on the same track, and they cautiously forecast a positive outlook for 2012. IHI Global Insight was more positive, saying that a 2012 recession was unlikely.

Globally, the picture was not as clear and The Washington Post hedged on the US situation, as seen by surveyed economists, as possibly threatened by the situation in Europe, an issue that I factored into my forecast.

Right now, things look bright in the industrial laser sector at least for the first two quarters. Even problems in solar seemed to be easing as expansion in South America is set to grow this year. So sit back and enjoy 2012, at least the first half, and hope that it is strong enough to offset any potential decline later in the year.