USA: Glass half full?

American businesses might be worried about global economic events, but things are looking up in the home market. Do not get too excited yet, however.

 

Joe DiNovo, Business Development Manager, Grundfos Pumps Corp., USA

By Joe DiNovo, Business Development Manager, Grundfos Pumps Corp., USA

It is finally over – the U.S. election. Maybe we can all breathe again.

Many U.S. business owners have put everything on hold until it was over. They have wondered: What will the coming administration do with fiscal policies? They have simply not been willing to invest in their companies, buying new equipment or hiring new people.

For one, they have feared another possible recession. Two, we have not improved much from the 2008-09 recession. And three, they have been uncertain what is going to happen in the next year, with worries of low consumer confidence, Europe’s ongoing economic problems, China’s economy, the outcome of the U.S. election, and so on.
All those factors have made business owners say, let us wait this out.

I was recently at the Association for Manufacturing Technology (AMT) 2012 Global Forecasting & Marketing Conference. Here, too, the general mood was “uncertainty” and “wait and see.”

This uncertainty was reflected in the speech by Angel Martinez, Manager of Advanced Manufacturing Engineering at Caterpillar Inc., one of the world’s largest construction equipment manufacturers, commonly known as CAT.

Mr. Martinez told about the challenges for his company in the current economic climate. CAT recently reduced its forecasts for of the fourth quarter of 2012 and for 2013 – despite a very positive third quarter 2012 report. The company’s main concerns are the outlook of Europe and emerging countries.

Middle class also waiting
People in the middle class are feeling somewhat similar to business owners. They are also waiting for a good sign. People are still not readily buying new cars or new homes. Food and gasoline prices keep going up, and inflation keeps rising. Salaries are only growing very slowly if at all, and people are seeing cuts in their medical benefits along with premium increases. People are not spending a lot of money, which would otherwise help spur the economy in both the industrial and commercial sectors.

A half glass of water
How long will it take things to change, now that the election is over? I do not have an answer. I would be surprised if anyone had a definitive answer at the current moment. On the other hand, I may be more of a conservative person when it comes to looking at current situations. I try to state what is going on, as I perceive it, and not what people may want to hear. For me, the glass is neither half-full nor half empty. It is just a half glass of water.

Cautious optimism
So here is the other half – maybe the better half of things. There is positive growth in the U.S. – single digit growth. We are not in a depression. People are cautious, but cautiously optimistic. The bar may just be set a little lower nowadays. When companies break even or have moderate growth, they say they are having a good year. For now, this may just be an acceptable new standard.

The atmosphere at the IMTS trade fair in Chicago in the autumn was positive. It was not gloom and doom – it was a feeling of cautious optimism.

In other positive activities, Mori Seki has started to build a 200,000 ft2 (18,600 m2) manufacturing facility in the U.S. and Mazak is expanding its American production. Major global, foreign companies are continuing to see advantages of manufacturing here in the States. For one, overseas manufacturing costs are rising, due to factors like increasing labour costs, longer transportation times, land prices and stricter environmental and safety regulations. Two, U.S. manufacturing costs have been steady and in most cases  improved among other factors.

Does that indicate a boom in the next year or two? I do not think so. However, this does reinforce the cautiously optimistic views of the U.S. economy.

Right now, we are humming along with our half-filled glasses. Some may even say they are half-full!

 

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