I was pumping $3.39 per gallon gas into my car and thinking that this fill was going to cost me about $2.00 more than last week and $4.00 more than the last week in February. I don’t use my car as much as many who pile up the business miles each week and consequently feel the pain more. A friend takes a $60 load every week and, since he is a practicing psychologist, the only way he can cover the fuel cost is to slip an extra hour per week of consulting time into his schedule.
The company that picks up my trash weekly bills me for fuel adjustment and if I hadn’t already booked an overseas flight a month ago I would be paying a fuel surcharge. Those who can pass it on will do so now that the weekly changes are in the double digits. Those who can’t will see their cost of doing business increase with an attendant drop in profits.
I’ve been touting the end of the recession and, like many analysts, qualified my forecast by stating that it assumed a status quo in the world economy. Current events in certain oil producing states have slammed the cost of doing business, and some pundits are raising the specter of another recession. Some of these forecasters stubbornly refused to acknowledge the recovery, and, as the weeks went by this year, they railed against the good news with a series of qualifiers, none of which by the way included double digit weekly hikes in the cost of fuel.
The rising cost of a barrel of petroleum, manifested at the world’s gasoline pumps, is one of those few costs of doing business that transcends national interests. The cost of fuel passed on to consumers directly or indirectly eventually impacts everyone.
Talking with an executive of a laser product manufacturer the other day, he was commenting on the power of the Asian manufacturing market to recover from the recession, while here in the U.S. it looked like his manufacturing customers were not recovering at the speed and rate of their offshore competition. He speculated the projected further increases in fuel costs might prove to be the death knell for many marginal suppliers located in the U.S. just when business was beginning to look up.
I countered that all global manufacturers may be forced to pass on the fuel cost increase effects to customers since it is a common global problem and that should level the playing fields somewhat.
Even in a service oriented economy like the U.S., these fuel cost increases will have an impact along the lines of my psycologist friend who ramps up his chargeable hours to offset the rise. So, whether U.S. manufacturers compete or not, the economy here is in for a jolt, and it may be so widespread that spending will drop just when the consumer was bailing us out of the recession. Not a pretty picture.
Thursday, March 10, 2011
Tuesday, March 1, 2011
Manufacturing sector, thus laser industry, on the rise
Manufacturing is on the rise around the globe except in China. The March 1st Institute for Supply Management’s February factory index rose to 61.4 from 60.8 in January, the highest since May 2004 (readings greater than 50 signal growth). In the Euro region, manufacturing grew to 59 last month, the highest since June 2000. In the UK report, Markit Economics, the index held at 61.5 last month, the highest since 1992.The PMI in Japan was up to 52.9 in February from 51.4 in January. But in China the HSBC China Manufacturing PMI fell to 51.7, a seven month low as that country’s central bank raised interest rates three times in four months in an effort to cool-off inflation.
These statistics, even including those from China, are good news for the world’s industrial laser equipment suppliers. First it supports the very positive news generated by pubic company’s quarterly and annual reports. And for those counting on sustained manufacturing health to meet the guidance they issued for the next quarter, it produces an overall sigh of relief. The only tempering news is the price of oil rising to record heights as a consequence of the political turmoil in several oil-producing nations.
Industrial lasers are, for the most part, tied to the fortunes of the world’s manufacturing economy; proof of this is aptly shown by the speed with which the industrial laser revenues tanked at about the same time as manufacturing did. This is a dramatic change from the days when laser sales lagged manufacturing cycles by about six months. Part of this can be attributed to the side effects of today’s lean manufacturing practices where scheduling is tight and buying decisions are made on much shorter lead times.
The message is that laser equipment suppliers need to be paying closer attention to the MPI numbers so they do not get sandbagged as they did in December 2008 when order cancelations flowed in at an alarming rate, not allowing the suppliers time to reorganize and adapt.
Except for any lingering effects of the sky-high oil prices, it looks like clear sailing for the laser industry through the first half off this year. Several key suppliers have backlogs booked well into the second half from industries that made it through the recession in relatively good shape and therefore are well positioned to continue in that mode for several months.
These statistics, even including those from China, are good news for the world’s industrial laser equipment suppliers. First it supports the very positive news generated by pubic company’s quarterly and annual reports. And for those counting on sustained manufacturing health to meet the guidance they issued for the next quarter, it produces an overall sigh of relief. The only tempering news is the price of oil rising to record heights as a consequence of the political turmoil in several oil-producing nations.
Industrial lasers are, for the most part, tied to the fortunes of the world’s manufacturing economy; proof of this is aptly shown by the speed with which the industrial laser revenues tanked at about the same time as manufacturing did. This is a dramatic change from the days when laser sales lagged manufacturing cycles by about six months. Part of this can be attributed to the side effects of today’s lean manufacturing practices where scheduling is tight and buying decisions are made on much shorter lead times.
The message is that laser equipment suppliers need to be paying closer attention to the MPI numbers so they do not get sandbagged as they did in December 2008 when order cancelations flowed in at an alarming rate, not allowing the suppliers time to reorganize and adapt.
Except for any lingering effects of the sky-high oil prices, it looks like clear sailing for the laser industry through the first half off this year. Several key suppliers have backlogs booked well into the second half from industries that made it through the recession in relatively good shape and therefore are well positioned to continue in that mode for several months.
Monday, February 14, 2011
It looks like a duck
Every once in a while I get stumped by a seemingly innocuous question. At a recent presentation before a group of non-laser aware engineers, during the portion describing opportunities for laser welding, I was asked if lasers used for soldering/brazing applications were included under the welding topic. And further, if they were, why wasn’t the topic called laser joining, or better yet since the topic of the presentation was Lasers in Production Operations, why wasn't the section title just joining?
If I was a stand-up comedian I would have had a snappy comeback for that last part that would bring a laugh from the audience. Rather than embarrass the questioner, however, I deviated from my prepared remarks and provided a lengthy rejoinder, which in retrospect was overblown and too weighty. My answer, dealing with a bigger issue, was why we misuse the term laser when we mean laser beam or even more correctly, why not laser energy.
I used the following example. Years ago as the marketing director of a start-up commercial enterprise within a large R & D organization, a new general manager brought in a high-level physicist to help with the development of a multi-kilowatt material processing laser. During weekly staff meetings, each director presented an update on progress and answered questions from the senior staff. The physicist had a partially irritating habit of posing his questions as challenges to a presenter’s knowledge rather than as information seeking queries. He was very critical of incorrect use of terminology and never failed to find mistakes in our reports -. Among these was the use of laser instead of laser beam.
I’ll confess to a personality clash that caused me to take offense at any challenge he raised, factual on not. And I found most unsettling his refusal to acknowledge common usage as an answer to his nit-picking questions. But I must say that even today when I inadvertently use the term laser instead of laser beam, a picture of that insincerely smiling physicist asking that question comes to mind.
This is apropos to a bigger question: Are we now at a point where we can drop the term laser welding and instead refer to welding, soldering, and brazing as laser joining applications? At ILS, we have sort of done this for years as we present applications that include soldering and brazing in our annual market review as laser welding. Admittedly, soldering and brazing are a small potion of annual laser joining revenues, and this is the rational I have used for years. But now it may be time to call it like I see it and refer to the processes under one title: laser joining. This should raise the ire of my nemesis physicist, since he would loudly complain that it is laser beam not laser joining.
If I was a stand-up comedian I would have had a snappy comeback for that last part that would bring a laugh from the audience. Rather than embarrass the questioner, however, I deviated from my prepared remarks and provided a lengthy rejoinder, which in retrospect was overblown and too weighty. My answer, dealing with a bigger issue, was why we misuse the term laser when we mean laser beam or even more correctly, why not laser energy.
I used the following example. Years ago as the marketing director of a start-up commercial enterprise within a large R & D organization, a new general manager brought in a high-level physicist to help with the development of a multi-kilowatt material processing laser. During weekly staff meetings, each director presented an update on progress and answered questions from the senior staff. The physicist had a partially irritating habit of posing his questions as challenges to a presenter’s knowledge rather than as information seeking queries. He was very critical of incorrect use of terminology and never failed to find mistakes in our reports -. Among these was the use of laser instead of laser beam.
I’ll confess to a personality clash that caused me to take offense at any challenge he raised, factual on not. And I found most unsettling his refusal to acknowledge common usage as an answer to his nit-picking questions. But I must say that even today when I inadvertently use the term laser instead of laser beam, a picture of that insincerely smiling physicist asking that question comes to mind.
This is apropos to a bigger question: Are we now at a point where we can drop the term laser welding and instead refer to welding, soldering, and brazing as laser joining applications? At ILS, we have sort of done this for years as we present applications that include soldering and brazing in our annual market review as laser welding. Admittedly, soldering and brazing are a small potion of annual laser joining revenues, and this is the rational I have used for years. But now it may be time to call it like I see it and refer to the processes under one title: laser joining. This should raise the ire of my nemesis physicist, since he would loudly complain that it is laser beam not laser joining.
Tuesday, February 1, 2011
An upbeat buzz at Photonics West
In my last Blog I regaled you with anecdotes about the snowstorms plaguing the Northeast, so this is going to sound like a broken record but we had two more last week. One of them dumped another 69 cm of snow from a fast moving storm that was out of here a few hours before I returned from San Francisco, where I enjoyed record-breaking temperatures in the high 20 cm range all last week. What with record cold temperatures below -18C in Boston and 150 cm of snow on the ground. you’re probably wondering why I came home from that glorious Bay area weather. Me too. It would have been hard to explain to my fellow Photonics West show goers why I stayed after the event was over.
Photonics West was a roaring success, with a record crowd of about 20,000 clogging the aisles in the North and South Halls and the many conference rooms where the SPIE technical sessions were held at the Moscone Center. We knew something was up when the aisles in the South Hall, where we had our booth, filled up just after the opening on Tuesday and stayed that way through Thursday noon.
As I wended my way through the halls to visit other exhibitors, I was impressed by the density of the visitors in the halls and in supplier exhibits. At a Wednesday afternoon LASE conference on Fiber Lasers, my presentation on the fiber laser markets drew a standing-room-only crowd of more than 250. I shouldn’t brag about this as most fiber laser sessions drew full attendance, but when I finished almost half of the audience left the room.
The overall attitude in the exhibit halls and conference rooms and at the annual PennWell-organized Lasers & Photonics Marketplace Seminar was upbeat. Veteran attendees like me recognize that buzz that seems to permeate a show when business is good. It’s an undercurrent of excitement on the part of visitors echoed by the exhibit booth personnel. And one can pick it up in the hotel lobbies and bars where the noise level ramps up after the show and in the restaurants populated by show goers and exhibitors where the bills can be obscenely large. Midway through the week we had our impression of business health confirmed with the reports from two public companies, Coherent with sales up 49% year on year and II-VI, which reported a 76% increase y/y.
There is no doubt about it; business is good in the laser markets and getting better. The manufacturing sector in the U.S. is having a great recovery from the recession, so much so that companies have begun to set aside overtime and hiring is commencing — not a full blown industry wide reaction, but large enough to staunch the unemployment number growth and produce some real downward movement. The Associated Press reports that at Number 1, the U.S. out-produces Number 2 China by more than 40% and does it with less workers; by making complex and expensive goods.
At my Lasers & Photonics Marketplace presentation last week, I was very optimistic about the long term prospects for market growth, so much so that at the lunch break I was jokingly being called Pollyanna by fellow attendees. But you can’t deny the numbers; six months ago, the same numbers were neutral and now they are very positive. So go with the flow and enjoy a renaissance in U.S. manufacturing and the growth of the laser market accordingly.
Photonics West was a roaring success, with a record crowd of about 20,000 clogging the aisles in the North and South Halls and the many conference rooms where the SPIE technical sessions were held at the Moscone Center. We knew something was up when the aisles in the South Hall, where we had our booth, filled up just after the opening on Tuesday and stayed that way through Thursday noon.
As I wended my way through the halls to visit other exhibitors, I was impressed by the density of the visitors in the halls and in supplier exhibits. At a Wednesday afternoon LASE conference on Fiber Lasers, my presentation on the fiber laser markets drew a standing-room-only crowd of more than 250. I shouldn’t brag about this as most fiber laser sessions drew full attendance, but when I finished almost half of the audience left the room.
The overall attitude in the exhibit halls and conference rooms and at the annual PennWell-organized Lasers & Photonics Marketplace Seminar was upbeat. Veteran attendees like me recognize that buzz that seems to permeate a show when business is good. It’s an undercurrent of excitement on the part of visitors echoed by the exhibit booth personnel. And one can pick it up in the hotel lobbies and bars where the noise level ramps up after the show and in the restaurants populated by show goers and exhibitors where the bills can be obscenely large. Midway through the week we had our impression of business health confirmed with the reports from two public companies, Coherent with sales up 49% year on year and II-VI, which reported a 76% increase y/y.
There is no doubt about it; business is good in the laser markets and getting better. The manufacturing sector in the U.S. is having a great recovery from the recession, so much so that companies have begun to set aside overtime and hiring is commencing — not a full blown industry wide reaction, but large enough to staunch the unemployment number growth and produce some real downward movement. The Associated Press reports that at Number 1, the U.S. out-produces Number 2 China by more than 40% and does it with less workers; by making complex and expensive goods.
At my Lasers & Photonics Marketplace presentation last week, I was very optimistic about the long term prospects for market growth, so much so that at the lunch break I was jokingly being called Pollyanna by fellow attendees. But you can’t deny the numbers; six months ago, the same numbers were neutral and now they are very positive. So go with the flow and enjoy a renaissance in U.S. manufacturing and the growth of the laser market accordingly.
Friday, January 21, 2011
Changing attitudes
When last I left you, we were riding out another nor’eastah (as they say down Maine), which ended up leaving 23 inches on the ground, followed by another 4, then 8 and as this is being written, another 8 inches. We’ve already passed the annual average snowfall with another 6 to 8 weeks to go before the weather pattern changes to warmer temperatures.
As you read this, I will be winging my way to milder climes in San Francisco for the annual Photonics West, the SPIE LASE Conference, and PennWell’s Laser and Photonics Marketplace Seminar.
In reverse order, at the Marketplace Seminar, I will be bringing positive news to a roomful of marketing executives, who already know that the tide has turned and business is very good. I’ll be showing them market numbers that suggest the industrial sector will return to pre-recession revenue levels a year ahead of what had been forecast. Suppliers are reporting record sales revenues and profits, and bookings at many are at an all-time high.
I was visiting with a system integrator who said his bookings through 2011 and into 2012 are a record and that his main problem is finding vendors to supply the company’s production demands. It seems we all joked about this situation when we in the depths of the recession, saying, "It’s a problem we won’t complain about” then.
My Seminar presentation is full of optimism, and I will back it up with my view of the industries being served by industrial lasers and their buying plans for the coming year. Even the solar cell business, which looks to be in a cyclical downswing, as some countries cut or drop subsidies, is positioned to work off the inventory as new markets open quickly. This is great for the laser business as this is a key industry for laser processing.
At the LASE conference, I will show the status of the fiber laser industry and how its growth potential will make it a dominant player in the indusial laser marketplace as early as next year. Fiber lasers, along with other solid-state lasers, dragged the laser market up to significant growth last year, but the big growth numbers were with fiber lasers, which will now continue to eat into solid-state sales, especially in microprocessing.
And, finally, I will be meeting with a cross-section of laser and component suppliers, all of which focus on the industrial market. Photonics West set records for exhibitors this year, and its character is changing a bit as visitors are feeling comfortable with their products. I fully expect to hear nothing but good news from those I interview as the timing of the recovery couldn’t have been better.
It will be a busy week, but the show and conferences will be upbeat and a pleasure to attend.
As you read this, I will be winging my way to milder climes in San Francisco for the annual Photonics West, the SPIE LASE Conference, and PennWell’s Laser and Photonics Marketplace Seminar.
In reverse order, at the Marketplace Seminar, I will be bringing positive news to a roomful of marketing executives, who already know that the tide has turned and business is very good. I’ll be showing them market numbers that suggest the industrial sector will return to pre-recession revenue levels a year ahead of what had been forecast. Suppliers are reporting record sales revenues and profits, and bookings at many are at an all-time high.
I was visiting with a system integrator who said his bookings through 2011 and into 2012 are a record and that his main problem is finding vendors to supply the company’s production demands. It seems we all joked about this situation when we in the depths of the recession, saying, "It’s a problem we won’t complain about” then.
My Seminar presentation is full of optimism, and I will back it up with my view of the industries being served by industrial lasers and their buying plans for the coming year. Even the solar cell business, which looks to be in a cyclical downswing, as some countries cut or drop subsidies, is positioned to work off the inventory as new markets open quickly. This is great for the laser business as this is a key industry for laser processing.
At the LASE conference, I will show the status of the fiber laser industry and how its growth potential will make it a dominant player in the indusial laser marketplace as early as next year. Fiber lasers, along with other solid-state lasers, dragged the laser market up to significant growth last year, but the big growth numbers were with fiber lasers, which will now continue to eat into solid-state sales, especially in microprocessing.
And, finally, I will be meeting with a cross-section of laser and component suppliers, all of which focus on the industrial market. Photonics West set records for exhibitors this year, and its character is changing a bit as visitors are feeling comfortable with their products. I fully expect to hear nothing but good news from those I interview as the timing of the recovery couldn’t have been better.
It will be a busy week, but the show and conferences will be upbeat and a pleasure to attend.
Wednesday, January 12, 2011
Oh, the weather outside is frightful
Outside my window it is snowing hard. This is the third Nor’easter in 5 days, the first two being inconsequential, just 1 and 4 inches, respectively. But this one is, as we say here in New England, a "wicked storm", with 20+ inches already down and more to come.
Friends and colleagues across the pond in Western Europe know what I am writing about as they have had one of the worst winters for snow in decades, with some of them living in countries where snow depth records were set. I’ll be seeing many of them in a few days at Photonics West in San Francisco, and I am sure we’ll greet each other with outstretched hands showing the snow depth.
My good friend and SALA colleague, Bob Murray, tells me he and his wife, Pauline, fought their way up Interstate 84 from Danbury, Connecticut to East Hartford in 5 hours Saturday night. It’s only a 60-minute drive normally, but 8 inches of unplowed snow closed the highway, forcing a backroad detour. I can’t believe he left the warmer Hilton Head, S.C., for an old fashion Nor’easter this week.
Bob was calling to bring me up to date on SALA activities. (The 6th Annual Symposium for Advanced Laser Applications will be held in Hartford on April 13 to 14.) Registrations, sponsors, and tabletop reservations are coming in and the speaker’s panel is filling up. This year the Organizing Committee has taken a new tack: All speakers will be end users nominated by a panel of product suppliers. The plan is to meet the goal of being the first “end users” symposium, and attendees are being invited from all over North America. To accommodate those traveling long distances, SALA has been moved to the Sheraton Hartford and a block of rooms at an attractive rate will make attending economical.
The program has been arranged so that attendees can pick and choose sessions and combine this with time to meet and discuss projects with the exhibitors in an adjacent room. For example, there is a session on laser drilling, another on laser welding, and one on surface modification, cutting, additive manufacturing, coating removal and process control.
SALA will be an event where users can get the latest information on their processing activity, and those new to the technology can learn more about the processes and the economics of each as shared by the speakers who themselves are users.
ILS is deeply involved with SALA. I serve on the Organizing and Planning Committees and ILS is the exclusive media partner. So we are looking forward to this opportunity to meet with a diverse group of manufacturing professionals who share one interest: laser materials processing.
Friends and colleagues across the pond in Western Europe know what I am writing about as they have had one of the worst winters for snow in decades, with some of them living in countries where snow depth records were set. I’ll be seeing many of them in a few days at Photonics West in San Francisco, and I am sure we’ll greet each other with outstretched hands showing the snow depth.
My good friend and SALA colleague, Bob Murray, tells me he and his wife, Pauline, fought their way up Interstate 84 from Danbury, Connecticut to East Hartford in 5 hours Saturday night. It’s only a 60-minute drive normally, but 8 inches of unplowed snow closed the highway, forcing a backroad detour. I can’t believe he left the warmer Hilton Head, S.C., for an old fashion Nor’easter this week.
Bob was calling to bring me up to date on SALA activities. (The 6th Annual Symposium for Advanced Laser Applications will be held in Hartford on April 13 to 14.) Registrations, sponsors, and tabletop reservations are coming in and the speaker’s panel is filling up. This year the Organizing Committee has taken a new tack: All speakers will be end users nominated by a panel of product suppliers. The plan is to meet the goal of being the first “end users” symposium, and attendees are being invited from all over North America. To accommodate those traveling long distances, SALA has been moved to the Sheraton Hartford and a block of rooms at an attractive rate will make attending economical.
The program has been arranged so that attendees can pick and choose sessions and combine this with time to meet and discuss projects with the exhibitors in an adjacent room. For example, there is a session on laser drilling, another on laser welding, and one on surface modification, cutting, additive manufacturing, coating removal and process control.
SALA will be an event where users can get the latest information on their processing activity, and those new to the technology can learn more about the processes and the economics of each as shared by the speakers who themselves are users.
ILS is deeply involved with SALA. I serve on the Organizing and Planning Committees and ILS is the exclusive media partner. So we are looking forward to this opportunity to meet with a diverse group of manufacturing professionals who share one interest: laser materials processing.
Monday, January 3, 2011
Wiping the slate clean
It’s the first week of a new year/decade, and here in New England it started bright and sunny, with the temperature above normal. Outside my office, the remainders of an unexpected blizzard a week ago are just about gone as we enjoyed almost balmy temperatures last week, melting the 12 inches of snow on the ground.
I like to wipe the slate clean and forget about last year, just as I turn the calendar page and start the year with optimism, well founded this year as business prospects are looking up and good news abounds in the manufacturing sector. The Monday Wall Street Journal was full of good news, but the item I liked the best was headlined, "Big Firms Poised To Spend Again," which opened with “Big U.S. companies have cleaned up their balance sheets and, flush with cash (my emphasis), appear open to using it in 2011 on factories (again my emphasis), stores and even hiring (me again)." It’s a long article and I encourage readers to savor it.
What could be a better way to start the year than to read about companies primed to boost manufacturing in the US? If you weren't already feeling positive about a fresh new year, this will help you change your attitude.
Many of us charged with forecasting the economy, in my case that of the industrial laser community, were cautious in their year-end reports. There was an optimistic undertone, but conservatism engendered by world events and a little residual bruising after the recession led to a cautious modest growth forecast for 2011. My number is 14%, which isn’t far off the 18.10% CAGR of the market since 1970.
My roadmap for sustaining economic growth includes modest growth rates, led by applications in the medical device, display, semiconductor, energy, and aerospace industries. A return to solid double-digit growth in marking/engraving will bolster the solid state and CO2 numbers.
Application growth in laser assist manufacturing and the buying capacity of the BRIC markets will keep industrial lasers on an upward growth curve.
So my new year optimism is grounded in the reality that the pieces are all in place for a vibrant new year/decade.
I like to wipe the slate clean and forget about last year, just as I turn the calendar page and start the year with optimism, well founded this year as business prospects are looking up and good news abounds in the manufacturing sector. The Monday Wall Street Journal was full of good news, but the item I liked the best was headlined, "Big Firms Poised To Spend Again," which opened with “Big U.S. companies have cleaned up their balance sheets and, flush with cash (my emphasis), appear open to using it in 2011 on factories (again my emphasis), stores and even hiring (me again)." It’s a long article and I encourage readers to savor it.
What could be a better way to start the year than to read about companies primed to boost manufacturing in the US? If you weren't already feeling positive about a fresh new year, this will help you change your attitude.
Many of us charged with forecasting the economy, in my case that of the industrial laser community, were cautious in their year-end reports. There was an optimistic undertone, but conservatism engendered by world events and a little residual bruising after the recession led to a cautious modest growth forecast for 2011. My number is 14%, which isn’t far off the 18.10% CAGR of the market since 1970.
My roadmap for sustaining economic growth includes modest growth rates, led by applications in the medical device, display, semiconductor, energy, and aerospace industries. A return to solid double-digit growth in marking/engraving will bolster the solid state and CO2 numbers.
Application growth in laser assist manufacturing and the buying capacity of the BRIC markets will keep industrial lasers on an upward growth curve.
So my new year optimism is grounded in the reality that the pieces are all in place for a vibrant new year/decade.
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