Manufacturing technology suppliers reacted with cautious optimism over reports that Ford posted the first sales gain in two years and that US manufacturing activity slowed less than expected in July 2009. But that's not to say that tough times are over for the manufacturing industry.
“This country's manufacturing sector shrunk at the lowest rate in a year. That's hardly great news,” said Doug Woods, president of AMT — The Association For Manufacturing Technology. “While we hope the July numbers represent a slowdown to the freefall our members have suffered over the past year, there is still a very long road ahead before most of them breathe easier.
“The end to 19 consecutive months of decline in automotive sales that July's sales figures represent is like a loud crack in the ice at the beginning of the spring thaw,” Woods said. “While AMT welcomes the success of the Cash-For-Clunkers program, it can't go on forever … The auto industry will not turn around overnight.”
Most experts agreed that the Ford turnaround could be largely attributed to the popular Cash-For-Clunkers program. AMT Board member Kim Beck, president of Automatic Feed in Napoleon OH, supported the Cash-For-Clunkers program, but stresses that more needs to be done for small manufacturers. His small, third-generation company has been supplying coil handling and other equipment to the automotive industry for 50 years. In the past year, his work force has dwindled by 75% and business has fallen off dramatically.
“My customers still lack the confidence and credit to invest in new equipment,” Beck said. “Real work needs to be done in Washington now in order to save America's small manufacturers.”
“It should not be on the backs of American small businesses that Congress overhauls the healthcare system and strives for energy independence,” said Beck. “Likewise, Congress should target future programs aimed at stimulating the economy to where they will have the greatest impact — the manufacturing sector. My company is not even eligible for the vast majority of federal economic stimulus programs.”
AMT represents mostly small companies that produce the equipment and systems that make virtually all manufactured products. Historically, it takes several quarters for these companies to feel the positive effects of a pick-up in their customers' business. Compounding the industry's struggles is the fact that about two-thirds of AMT's membership has ties to the beleaguered auto industry. Between the first quarters of 2008 and 2009, AMT's members' orders fell 68%, sending them into a fight for survival.
“What we really need now is tax relief for small business,” Beck said. “Until Congress recognizes that this is the quickest and most effective way to stimulate our economy, true economic growth will remain elusive.”
Still, Woods is hopeful. “At least we can see a bottom to this business cycle,” he said. “Maybe Ford's long-awaited return to profitability and the small headway made in manufacturing foreshadows an end is near to the worst single-year decline in our industry's history.”