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.

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.

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.

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.