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.