The State of Manufacturing in the Current Economy

Aug. 15, 2011
At the beginning of 2011, manufacturing numbers were positive. But then the economy started showing signs of uncertainty. Andy Gravitt, senior vice president, Industry Business at Schneider Electric, talked with Automation World Editor in Chief Gary Mintchell about what has been happening to the economy and Schneider Electric in particular.

Gravitt is responsible for developing a consistent and aligned strategy for Schneider Electric's Automation and Process business, while overseeing Schneider Electric's position in the solutions and services market in North America.

"We were coming off a pretty good year when we met in February at the ARC Forum," Gravitt said. "The comparisons were great, but we were not back to 2007 levels, yet. In February we were looking forward to continued growth. We had introduced PlantStruxure, MachineStruxure and Production Energy Optimization--taking our competencies and relating them around a unit of output. We were feeling good about 2011 then. We continued to see improvement in the Purchasing Managers Indes. Then things became uncertain. The first quarter was strong, but then economic uncertainty made everyone nervous. The PMI has dropped from 60s to low 50s back up to 56 or so. Not many jobs have been created. There has been some great performance but much driven by outside the US."

Gravitt noted it seems like recovery is sputtering a bit. There are the debt ceiling issues. "Even if they solve the debt situation, we won't see a QE3 [quantitative easing by the U.S. Federal Reserve]. So there is probably a slower 3rd quarter/2nd half," he continued. "Customers are cautiously flexible. The falling dollar encourages exports. HVAC and machines are seeing export growth. We still see a lot of manufacturers moving closer to demand and that is looking like overseas."

So, what industries have opportunity right now? Gravitt sees opportunities in metals, mining and mineral sector with some comeback in automotive. Speaking of the latter, Gravitt says, "They need to update their installed base--it's pretty ancient. We had a good year in water/wastewater last year, but the American recovery act has dried up. They pulled 2011 volume into 2010 so that affects us now."

After many years of talking energy management, Schneider is surprised to see it going mainstream. Sustainability seems to be catching on, and Gravitt is seeing energy czars or energy directors coming on board. Manufacturers used to see it as a fixed expense, but now they are seeing it as a variable (controllable) expense. He even hears some OEMs starting to talk about making a more energy-efficient machine as a way to entice some customers.

One little noticed fallout from the housing crisis of the past couple of years includes challenges in workforce, that is, getting people in the right place geographically. People just can't move right now because they are either underwater or can't sell their current home.

Gary Mintchell, [email protected]

Related: Click here to read Gary Mintchell's FEED FORWARD blog on all thing automation and manufacturing.

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