CONTROL DESIGN's 2006 market update

Machine builders, associations and analysts say common-sense preparation can brighten uncertain futures. So if your silver lining has gotten a bit tarnished lately, now is a good time to shine it up!

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By Jim Montague, Executive Editor

THE FUTURE just isn’t what it used to be, and current events are to blame. Despite the recent U.S. economic recovery, there’s plenty of news certain to screw up the near future for many people. These events include GM and Ford’s numerous upcoming plant closings, Merck’s layoffs, ongoing outsourcing to China and India, accelerating retirement rates and lost expertise, ongoing technological shifts, expanding job descriptions, and many other galloping and/or lurching forces.

Still, because the future remains always unknown, we can pour our fears into it, and use pessimism to justify reactionary laziness dressed in conservative clothing. Or, we can use the best information we have about what’s happening now, do what we know we should doing anyway, make the most informed decisions we can, and prepare to capitalize on our correct guesses and minimize the damage from our incorrect ones. (Please insert your favorite “make your own luck” cliché here.)

Making an educated guess more educated and less of a guess requires using what you know, and finding out what you don’t know. Fortunately, you don’t have to wait for the future to arrive to do this. In fact, if you do prepare well, the future and its inhabitants will have to worry about you rather than the usual reverse.


Packaging Machinery Shipments, 2004-2007 (in millions of $)

 

2004

2005

2006

2007

% increase per year

U.S.

5,240

5,690

5,700

5,980

3.8

Canada

421

446

446

472

3.9

Packaging Machinery Manufacturers Institute’s (PMMI) 11th annual Shipments and Outlook Study states growth will be fueled by growing U.S. and Canadian economies, increased capital spending on equipment, and expanding capacity utilization. Source: PMMI


Builders’ Perspective
“So far, 2006 seems like it’s looking up, and we’ll likely see stable to increased performance,” says Steve Bergholt, chief electrical/electronic engineer at 80-year-old Triangle Packaging in Chicago. "Some industries are hurting and some aren’t. It’s just a matter of keeping up to date with the times and new technologies. If we don’t, then we could have problems keeping up production and surviving. We build packaging equipment for the machine industry, so we have to offer equipment that makes our users more efficient, and helps them achieve the production levels they need, whether it happens with improved data acquisition, better control, or via some other new capabilities.

“Besides designing our machines to take advantage of any new technologies, we also try to educate our customers about what they need to be doing. Sometimes everyone is a little behind the times, and needs to be dragged into the future kicking and screaming. However, once people are educated and learn what they can really do, then they’re very accepting.”

To help users try new technologies and learn their value, Bergholt adds that Triangle often gives machines to its clients, and promises not to charge them until they accept it. “We say, ‘You didn’t ask for this, but it’s what you need, and it’s close to what you want,’” adds Bergholt. “Most of the time they eventually do accept the new equipment, so it’s a very good investment for us.” 

Despite accelerating competition from and outsourcing to the Asia-Pacific regions, increasing energy and transportation costs will help North American manufacturers continue to stay competitive., says Chris Choi, CTO for machine operations at Husky Injection Molding Systems in Bolton, Ontario, Canada. “We think 2006 is going to be a good year for machine builders because business has been relatively slow for awhile, and many manufacturers are looking to renovate their equipment and productivity,” adds Choi. “We think Husky also is going to have a good year because most of our major customers have already scheduled renewals for new equipment. We also supply PET plastic-making machines to bottlers, and that industry is growing too.

“Another trend in coming years is that machine builders are being asked to improve on the energy efficiency of their machines. Most builders in Europe are doing this because electricity costs eight cents per kilowatt hour, while North America still relies on low-cost oil that isn’t going to be there soon.”

Choi adds that North America and Europe also must raise the bar on educating its worker and keep investing in R&D because the recent economic setback and recovery are cyclical. “He recently passed away, but Peter Drucker’s idea of the need for ‘knowledge workers’ is more important than ever now,” adds Choi. “The developed world needs to transform itself from a manufacturing-centric model to a knowledge-centric one, focus on intellectual property and innovations, and learn to cooperate with low-cost labor providers.”

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