With the new year freshly underway, it seems a good time to gaze in the crystal ball and consider what trends will likely impact the climate for manufacturing in the U.S. and abroad during this year. What follows is an unscientific, though carefully considered, list of factors that could have some effect on your business. They are not in any particular order, but here we go.
- This is a presidential election year, so wild cards in politics and the economy abound, and economic uncertainty ratchets upward as a result. The contentious political climate in the U.S. will have reverberations throughout domestic and global economies.
- The global purchasing manager’s (GPI) index for manufacturing in the world’s advanced economies is used by some to predict future activity. An index value of 50 is considered the cutoff between economic expansion (above 50) and contraction (below 50). This index flirted with 50 in 2016, but in the second quarter of 2019 it went below and remains there still (about 49) at the time of this writing. This could indicate a slowdown of manufacturing growth in the advanced economies. The outlook for global emerging economies is a little better.
- A continued shortage of qualified and trustworthy manufacturing executive and labor personnel will continue to be at or close to the top of many CEOs’ lists of problems. Overall, the domestic workforce is aging, and the supply of skilled labor is diminishing. The problem is becoming acute enough to hinder manufacturing’s contribution to the economy.
- Global manufacturing now exists in a world of increased tariffs and economic protectionism. The U.S./China tariffs, involving the world’s two largest economies, are leading the news cycle here. But even if trade negotiations yield equitable results, expect the tariff card to be played more frequently by the U.S. and other economies against each other.
- As Brexit becomes reality, expect trade with the European Union to be more tumultuous, and maybe more contentious, than normal.
- Digitization, cloud computing, artificial intelligence, the Internet and the Internet of Things will continue to reshape the profile and efficiency of the manufacturing community in groundbreaking ways. These factors shape how we communicate, market our products, coordinate our workforce, monitor the performance of our capital equipment and much more. The potential for change here is enormous.
- Sustainability in manufacturing, including the use of and investment in renewable energy sources, will continue to emerge as a larger footprint in the industrial firmament. Protecting our planet and making smart use (or re-use) of industrial inputs is becoming good business.
- Every one of the factors discussed so far can increase volatility in financial markets, which is typically measured by percent change. They can affect interest rates, currency exchange rates, the cost of capital, money supply, etc.
- Additive manufacturing (AM) is gaining on traditional manufacturing, and many companies are investing large sums to get better, faster and more versatile at it. The forging community should keep its collective eyes on implicit threats and opportunities as AM technology advances.
- Every electric-powered car you see on the road means demand for automotive forgings has been reduced. Be aware.
Beyond a doubt this list could go on at length, but the preceding 10 bullet points might help prime the pump for the forging industry’s dialog in the year to come.
We at FORGE wish you all a healthy and prosperous 2020.