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.

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.

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 www.industrial-lasers.com) for details on this.

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.

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 http://online.wsj.com/article/SB10001424052702304636404577297191613373980.html?mod=WSJ_business_whatsNews 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. http://www.industrial-lasers.com/articles/print/volume-27/issue-1/features/2011-annual-economic-review-and-forecast.html

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.

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.

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
buyers.

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
closely.

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
conference