The economy has rebounded, and the question on every manufacturer’s mind is: how high will it go?
“The U.S. economy is turning around at an incredible pace,” said Raj Batra, president digital industries, Siemens USA, who opened Manufacturing in America (MiA) Connect with his keynote presentation. The event is presented by Siemens and Electro-Matic. “We have an embarrassment of riches. The U.S. GDP is up 6% in Q1. The NAM survey shows very high industry confidence at 88%. And consumers are flush with $3 trillion in excess savings, waiting to be spent. People are feeling really good about jobs and growth.”
This unbridled economic boom means industry is facing very fast-changing market demands. “Consumers have navigated sweeping upheavals,” said Batra. “People want high-quality, personalized sustainable healthy shopping options, and online ordering has increased at an incredible pace.”
To meet these consumer demands, automakers, for example, are retreating from 50 years of just-in-time manufacturing, explained Batra. “It really depends on a superior supply chain and having good economies of scale,” he proclaimed. “Be smart, connect and scale. Digital transformation can help these companies address these demands. It’s all about data. You have to have systems and processes in place to navigate this.”
Infinite opportunities come from infinite data, Batra noted, citing the virtual summit’s theme. “Simulation is the great decisive advantage in industry these days,” he said. “You have to connect the virtual world and the physical world. When you connect the data, you can make decisions with confidence.”
Alan Beaulieu, president, ITR Economics, went into even more detail concerning the economy in his presentation during MiA Connect. “Raising corporate taxes will impact some of us, but it’s not going to break the bank,” he said. “It’s not good for business, but it won’t end your opportunities going forward.”
Any new taxes will likely take effect in 2022, he said. “Interest rates are low and are going to stay low for the next few years,” predicted Beaulieu. “Right now, businesses are investing in themselves and will continue to do so. If you’re hesitating, stop hesitating.”
He also noted that the Biden administration’s Buy American plan will be setting the worldwide agenda for the next several years. “The president is not going to become a bon ami of President Xi,” said Beaulieu. “He’s going to penalize those that are not making it in America. The more we can identify ourselves with that plan, the more we can sell products that people will want to buy from us.”
Leading indicators tell us the world economy is getting better, explained Beaulieu. “The global economy is going to swing upward,” he said. “We’re going to see the United States rising with the rest of the world. We sell more goods here than anyone other than China.”
The job situation is tremendous, and wages are going up faster than inflation, noted Beaulieu. “People have money to spend,” he emphasized. “The housing market is an important part of the economy. It’s a great bellwether. Today’s rate of growth is unsustainable. But, as it normalizes, we’ll see a healthy rate of growth, but not phenomenal. Job growth is extraordinarily strong. The February-March rise is the steepest since 1979. We Baby Boomers are losing our position, and we’re giving way to Gen Xers, who are going to be carrying the football for a while. They’re quickly going to give way to Millennials, who will make all kinds of decisions about the future.”
Beaulieu predicted record-high manufacturing in the United States going forward. “We have a lot of upside demand coming that we need to prepare for,” he said. “Not all manufacturing is the same. High-tech manufacturing is growing at 4.7%. As we go into the future, leading indicators tell us to expect more rise. All things are go and green. It’s good to be you, as we go forward.”
