Taking care of domestic interests
U.S. wage earners have seen more money in their pockets, thanks to the new tax laws that went into effect at the beginning of 2018. The jury is still out about whether people are spending at a higher rate to make up for the lower tax rates. Currently, there is high consumer confidence, which generally leads to spending—and everyone likes spending because it leads to growth. However, fears of inflation in 2019 have affected the stock market, and a decline in consumer confidence could be around the corner.
Big businesses are enjoying a tax rate drop from 35 percent to 21 percent, and small businesses have seen a 20 percent deduction to reduce their taxes. More money in the pocket of businesses seems to have spurred machine sales and growth. With a steady decline in U.S. manufacturing production from 2010 to 2016, an upward trend began in 2017 and seems to have gained strength in 2018.
Automation and employees
An expanding economy needs workers, but a talent pool deficiency already exists for manufacturers. How are we going to find talent to fill the new positions if we are struggling already? One of Wilson Tool’s Pittsburgh-based customers recently installed a robotic cell to help with growth. The owner of the company told me he would cancel a $1.2 million purchase order if I could find him labor. He was being forced into automation due to an inability to recruit talent.
Because hiring continues to be many companies’ No. 1 challenge, we have seen and will continue to see more spending on automation. Robotics will continue helping to fill repetitive, rules-based positions, and it won’t stop there. Adaptive robots are making leaps and bounds in their ability to make more complex decisions and to learn about their environment.
This learning process is taking place now in development labs. Until recently, robots have been rules-based, and adaptive knowledge has been applied, but emotion has been a missing factor. Not any longer. Developers are creating robotics that can take in the environment around them, process the information to make decisions and understand and show emotion as a result.
Looking ahead
So, what does this mean for manufacturing in the United States? Cautious optimism. With our market so closely tied to the world economy, downturns in other countries greatly affect the United States. If we try to squeeze foreign economies with enough taxes and sanctions, we may see our market respond negatively, as well.
But knowing the United States’ economy is estimated to be $19.39 trillion vs. China’s $12.01 trillion, and China’s overall merchandise trade surplus to the U.S. is 88.8 percent (product shipped to the U.S. is a huge part of their economy), the U.S. has some pretty strong cards to play. If there is a short-term dip, look for the U.S. to come out as a winner in the long run. The modern American fabricator that has been paying attention to lean manufacturing and automation is in a better position than ever to compete and bring jobs back to the United States.
Fabrication machinery is seeing a large backlog. With an assumed steady business going into 2019, it seems like it will take most of 2019 for that backlog to subside. At Fabtech 2018 in Atlanta, I talked to several machine manufacturers who anticipated a continued backlog, due to the large year-end surge, and expected business to continue into 2019.
Even if there is a market correction in the next year or two, it likely will not be as long or as painful as the 2009 correction. Wilson Tool International is looking forward to continued growth in 2019 and will keep our foot on the gas and continue to evolve with the needs of our customers, the marketplace and our employees. FFJ
Steve Brown is the press brake product manager at Wilson Tool International and has 24 years of industry experience. Prior to his current position, he worked for Wilson Tool as a leader of the press brake internal technical resource team and was a sales and distribution SAP project lead.