Executive Outlook 2013: Focus On Jobs, Education And U.S. Competitiveness

Since the beginning of the year, we have seen the industrial sector being very cautious and conservative with regard to plant expansions and projects. We believe that this cautiousness is caused by continued general economic uncertainty. 

MRO spending with our customers remains guarded and slow. However, unlike other slow periods where shift eliminations and employee headcount reductions were prevalent, we are seeing plants continuing to operate at acceptable levels without such adjustments. MRO and capital projects for equipment upgrades and process improvements continue to be planned and developed, but are being pushed out into the future as opposed to spending the necessary money today. The general feeling was that we would have more clarity as to the direction of our economy by this time of the year, but that’s not the case. We look forward to this happening—and those upgrades and process improvement projects being acted upon.

While a large part of our business is MRO, we do sell to quite a few OEMs. Most OEMs, though, are not producing for inventory at this time, but building only what is needed to fill immediate demand. In addition, many OEMs have invested in better equipment over the past few years and, with the help of increased plant automation, have improved their efficiencies and productivity. Although good over the long run, this investment has dampened the immediate need for parts, maintenance and additional labor.

Interestingly, we’re noting that maintenance budgets and spending are not as aggressive as they have been in past years. Many companies have better tracking systems today, allowing them to know what parts they already own that can be used company-wide, versus multiple storerooms that would all stock many of the same products—as was done in the past.  We continue to cycle through this change in buying patterns.

In our opinion, there are several things that could help break up the logjam and begin growing a healthier economy. For example, a government incentive for creating jobs is needed, versus the cost penalties we’re seeing today. There are no consistent or meaningful incentives to offset the increasing costs of programs such as healthcare and competitive benefits that we are all facing.

 In addition, the United States needs a positive program or campaign to show how competitive that products made here have become compared to those produced in other countries. To be effective, this analysis must be based on “total cost”—which includes not just the price of items, but the cost of transportation associated with those coming in from other countries.

From an educational viewpoint, our high schools need to be as positive about the development of careers for skilled labor in industry as they are about the pursuit of a college degree. We are beginning to see a shortage of skilled workers in the plants that we sell to. Ultimately, this could have a negative impact on our country’s global competitiveness as a producer of goods.  

Finally, we as manufacturers and sellers of products and services must continue to invest in industry, adding innovative new products and services for future growth.MT

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