One year after the economic recession arrived in full fury, pummeling industrial companies in the United States and abroad, a clear sense of confidence in a recovery has surfaced as manufacturers shift their focus to growth initiatives that will help them climb out of the worst downturn since the 1930s.
Manufacturers across the United States and Europe say that their feelings about the health of their economies and their own business prospects going into 2010 have improved by a wide margin since the dark months of late 2009, when financial markets were teetering on the brink of collapse, credit dried up, consumer spending sagged, and the unemployment rate surged toward double digits. Since then, stabilization in the financial and housing markets, slowing unemployment growth, and early signs of a return to stronger production activity have combined to ease the sense of crisis that marked 2009.
As a result, U.S. and European manufacturers now say they expect a gradual recovery in 2010, but they also signal that they will proceed very cautiously through the new year with capital and technology spending plans, and, most particularly, renewed hiring.
These are just some of the top-line findings of Managing Automation Media’s annual Outlook poll, conducted last month among readers of Managing Automation and MA’s year-old sister publication in Europe, Manufacturing Executive. Nearly 400 readers in the United States and Europe voiced their opinions on the state of their economies, their confidence levels in their own businesses, and their attitudes about technology investments this year. In addition, they shared their views on the year-old Obama administration’s efforts to revive the economy and aid manufacturing’s recovery.
Overall, confidence levels in the economy have improved dramatically. The new poll shows that a strong majority of manufacturers in the United States and Europe — 57% and 55%, respectively — expect their economies to improve moderately in 2010. Last year, this key measure of confidence dropped to 26% in the United States and nearly collapsed in Europe at 13%. Moreover, far fewer manufacturers expect their economies to decline in 2010. This year, only 7% of U.S. respondents expect a further economic decline, compared with 34% last year. In Europe, 11% expect a continued decline this year, but, again, this is far better than the more than 50% that anticipated a decline in last year’s poll (see Business).
This big shift in attitudes is reflected in how industrial companies feel about their own business prospects going into 2010. Overall, 59% of the U.S. group are expressing greater confidence in their own business prospects for this year, compared with only 28% last year. In Europe, feelings are pretty much the same, with 60% saying they are more confident this year, compared with only about 25% last year.
“We are absolutely more confident today than we were a year ago,” says Phil Meister, IT manager at Quality Bolt and Screw, a $12 million maker of cold-formed parts and fasteners and a poll respondent. “Our optimism started in the middle of last quarter when we saw a dramatic increase in new bookings. We rely on customers in the construction and agricultural industries making machinery, and right now we’re seeing growth.”
But the Obama administration isn’t getting much credit for helping to turn things around, according to the poll. More than 55% of U.S. respondents say the stimulus program has had no impact in helping to revive the economy and manufacturing, and an even larger majority, 66%, say the federal government hasn’t done enough to help industry cope with the recession (see Economy).
Some manufacturers say that, while they haven’t benefited directly from government stimulus programs, they may have indirectly.
“The stimulus programs haven’t helped directly, but some of our partners have been helped by government spending,” says Rodney Babcock, president of Next Intent, a small maker of fixtures and other components for aerospace and defense customers, and a respondent to the poll. “The industry, as a whole, is seeing some impact from the government spending.”