Greg Champion is the vice president of sales and marketing at Goellner, Inc., the holding company for Advanced Machine & Engineering Co., which manufactures and distributes precision machine tool components and metal cutting solutions, and Hennig, Inc., which builds machine protection and chip/coolant filtration systems used on machine tools.
CURRENT STATE OF BUSINESS
At this exact moment I see business as strong to stable. Incoming orders continue to hold at stable levels and we continue to enjoy record backlogs.
One major business segment is aerospace, with China buying many 737 platform planes and the Dreamliner 787 going into full production. Another is heavy equipment, where large earth moving companies are purchasing machines that require machine protection products. Still another is power generation, with demand for Genset enclosures and fuel tanks used with power generators and other equipment.
The major trend I am concerned about is machine tool purchases. During the past two years there have been bonus depreciation incentives spurring machine purchases. I am not as confident that the same level of new machine purchases will occur in 2013 and beyond.
I think there will still be aerospace companies requiring new machines, but beyond that segment it is an unknown. Those manufacturing segments providing product to the housing market are not yet healthy.
The traditional domestic automotive sector is seeing a lot of pressure from manufacturing plants being set up in the U.S. by foreign car manufacturers that use primarily foreign-built machine tools. For this reason, we are viewing machine tool service opportunities as a key business strategy in the coming months.
Uncertainty within our government as it relates to the economic policies that will affect all businesses in the near and long term is a critical issue. Taxes related to the fiscal cliff, health care costs, unemployment tax cost, record keeping compliance costs, etc. There are simply too many unknowns.
To navigate through this, manufacturers must place additional emphasis on identifying new sales opportunities in their selling process. They must seek opportunities in non-machine tool markets, such as the Genset enclosure and fuel tank segment. This will assist in keeping the revenue side of the equation stable. Additionally, operating costs must be controlled and rigorous review of any capital asset purchases must be provided.
Businesses do not like uncertainty and typically are not prone to capital investment in times of uncertainty. I hope our legislators understand this point because, if they do not, I fear business will be more likely to curtail capital spending, not expand spending.
Amid Challenges, Majority of Metalformers Predict Little Change in Economic Activity
U.S and Canadian incoming orders expected to remain steady, according to the latest barometer reading from the Precision Metalforming Association.
U.S. Manufacturing Grows in September –– PMI Dips 0.6% to 55.4
The Institute for Supply Management reports that among the six biggest industries, food, beverage & tobacco remains the best-performing sector, with fabricated metal and chemical products growing strongly.