 Tom Grasson |
The largest international manufacturing technology show in the Americas is now history. IMTS 2010 took place the week of September 13 and by all indications, proved to be a show in which both exhibitors and attendees expressed a desire to excel in being world class manufacturers.
From the time the show doors opened on the first day, exhibitors and attendees alike were upbeat about the future of U.S. manufacturing. Deals were being made right on the show floor, especially for machine tools. The vast majority of attendees that I spoke with were seeing signs of improvement over the prior year’s activity. In addition, while they noted that the economic recovery was slower than that of other recessionary periods, they felt 2011 would be a growth year.
However, while U.S. manufacturers are gearing up to become more competitive in a global environment, there remains some strong sentiments about just how optimistic they can be. In other words, there still remains a cautious approach to forward, progressive planning. Manufacturers remain worried about the additional taxes they may be facing in 2011. Their main concern is the uncertainty of additional costs associated with the national healthcare system, Cap and Trade, medical device taxes, and the elimination of the 2001 and 2003 tax cuts. Manufacturers believe these additional tax burdens will hurt the backbone of America’s manufacturing sector – small businesses that provide jobs for an estimated 25% of the American workforce. Furthermore, they don’t view President Obama’s recently announced tax breaks as an effective way to jump-start the economy.
After all, a plan that accelerates write-offs for investments in plants and equipment and expands a tax credit for research and development when current interest rates near zero, does little to stimulate investment and absolutely nothing to stimulate a demand for goods. On the other side of the coin, manufacturers also note that today’s consumers have started borrowing against their retirement funds, namely 401Ks, to pay down personal debt. This certainly implies a reduction in personal savings and therefore a reduction in spending power. The majority of U.S. manufacturers see an increase in their quoting activities, but customers are still in a holding pattern to release purchase orders until they see demand for their products improve.
While it makes good business sense to remain cautious, manufacturers must remain optimistic, especially in a time of uncertainty. U.S. manufacturing is not dead, as some may believe. It is alive and well and by making capital investments in the latest technologies, U.S. manufacturers know they are able to compete successfully on a global basis.
However, in order to compete effectively there must be a demand for their goods. It all goes back to Economics 101 with the basic supply and demand curves.
We need to create demand and the way to do it is to prevent further tax hikes on all manufacturing; make the current tax cuts, which will expire at the end of the year, permanent; and most importantly, let manufacturing function as a free enterprise without policy makers interfering in business decisions. This should create a higher level of confidence and allow manufacturers to make strategic investment decisions within their areas of expertise. In turn, we will see demand rise to unprecedented levels.
tgrasson@gie.net
|
