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Manufacturers are upbeat about the United States' economic prospects for the next 12 months, despite ongoing concerns about global economic growth, legislative pressure, and lack of demand.
The attitude has notably improved compared to last year, and optimism for economic outlook among US industrial manufacturers is at its highest level in five quarters, according to the recently released PwC Manufacturing Barometer quarterly survey.
This renewed confidence is impacting industrial manufacturers directly in terms of current and expected revenue growth and could trickle down further into the electronics supply chain.
PwC reported that while industrial company revenue forecasts are projected to stabilize in the next 12 months, about 82 percent of the 60 US-based industrial manufacturers surveyed expect to have positive revenue growth in the coming quarters; only 3 percent forecast negative growth for their own companies, and 8 percent expect zero growth (the remaining 7 percent did not report their revenue projections).
The US-centric hopefulness, however, was tempered by guarded caution related to other key areas. The two main barriers to growth are linked to legislative and regulatory pressures and lack of global demand, and survey respondents also appear worried about competition from foreign markets and the lack of qualified workers, which was indicative of the potential softness in new hiring during the second quarter, PwC found.
Said Bobby Bono, US industrial manufacturing leader for PwC, in a press release:
There remains a persistent dichotomy in viewpoints regarding the outlooks for the U.S. and world economies. Optimism regarding the domestic economy has increased, while worldwide economic sentiment remains restrained, with global uncertainty reaching the highest level in the past 12 months. The U.S. is starting to show signs of healthy demand trends and improving pricing power, supporting positive overall sentiment in the year ahead. However, as a result of the mixed global outlook, combined with the moderate domestic recovery and the specter of increased legislative and regulatory pressures, management teams are continuing to carefully manage their costs, while maintaining a focus on growing profitably.
Some of the dichotomy is already playing out beyond industrial manufacturers and with international companies. Just look at the news coming out of Royal Philips NV this week, for instance.
Philips, Europe's largest electronics company, saw its second-quarter profit jump 30 percent, an increase fueled by growth within its consumer and healthcare units and a pick up in orders from North America and emerging economies, Bloomberg reported. This was the fifth straight quarter the company's profit improved, and a focus on higher-margin lighting and healthcare products, in addition to its legacy consumer-electronic businesses, seems to have helped boost the bottom line, the paper said.
While it's uncertain exactly how the industrial manufacturing sector's economic outlook will influence the rest of the supply chain, you can bet there will be shakeout related to corporate compliance with the Dodd-Frank Act, and specifically Section1502 involving conflict minerals, PwC noted.
Since the act requires, by May 2014, assessment, new procedures and disclosure requirements for companies whose products contain conflict minerals from the Democratic Republic of Congo and its adjoining countries, companies across all industries have started to beef up compliance efforts. More than half of the industrial companies PwC surveyed have taken either some steps to prepare for compliance or are actively engaged in or leading compliance efforts. How these efforts play out will surely impact sourcing and purchasing strategies and protocols and require new standards suppliers will have to follow, PwC suggested.
What does the industrial sector's optimism about the US economy mean for your company?
Any good news about US economony is positive news as this directly or indirectly improve the situation in other companies around the world !
Manufacturing has to come back eventually without any doubt. But at what cost? Do we know how much has China benefiited from the offshoring of manufacturing jobs from US over last decade? The manufacturing that would come back to US…would it be able to compete with cheaper chinese manufactured goods which are now of better quality as well? Does US consumer have sufficient purchaing power today in order to sustain the domestic consumer demand?
May be the following article would be a good read http://www.truth-out.org/opinion/item/16944-loss-of-us-dominance-in-global-electronics-and-semiconductor-industry-causes-revival-solutions-and-associated-us-economic-growth
@ t.alax,
I agree with you on that but do you also think that the effect would circulate or get noticed as soon as possible around the world?
It will be nice to know this feedback from Avnet and Arrow. Theese are two significant players and they must have very good feelings for this. Can they add their comments here?
I find it interesting that there are signs from a number of different parts of the industry are all pointing in a positive (at least slightly so) direction. I find that quite hopeful. On the other hand, i think that things change pretty quickly in the industry too. We'll continue to report the trends as they develop.
Its good to hear about the optimism in the industrial market. Is it specific to healthcare or is there any other major indusries showing positive growth.
@elctrnx: It's a good sign indeed to see an industry like health care coming forward and showing signs of improvement. Other industries are very much in the growing path. The only worry was the industries which did carry high rate of sensitive data.
@elctrnx_lyf, the growth is going to be broader than just health care. From a December 2012 report from the Institute for Supply Management, The 17 manufacturing industries expecting revenue improvement over 2012 — listed in order — are: Primary Metals; Petroleum & Coal Products; Computer & Electronic Products; Wood Products; Furniture & Related Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Paper Products; Chemical Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; and Fabricated Metal Products.
“Manufacturing purchasing and supply executives expect to see continued growth in 2013. They are optimistic about their overall business prospects for the first half of 2013, and are even more optimistic about the second half of 2013,” said Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee.
To see more, click here.
@elctrynx_lyf, one more thought, contract manufacturing is also on a growth curve, which bodes well for the indsutry.
The market is pulling itself up. US is a large economy as well as a large consumer with significant contributions to the world economy. The manufacturers clearly see the prospects of supplying large consumers.
Every maufacturer knows about the shortcomings of a market infested by powerful companies that provide stiff competition. However this can be partly overcome with a little bit of trust and help from the government, the suppliers as well as hiring employees who can take risks and provide new ideas.
Yes indeed, most of the manufacturers have studied the market well and they are much educated about the short comings of the economy but out of that lot most of them have not studied well on how to overcome the issue. That is why the US economy is still struggling.
Are they confident this is real growth and that the recession is over? If they've had 5 periods of growth, it meas something but how confident are they that it's the real thing? – so that they start being more aggresive.
This is a very complex issue. President Obama has his view, it does not mean it is true. Law maker needs listen to all parties concerned. This is a time proven concept and it has very balanced approach. If you tilt law in favour of biigger organization, they will abuse it much much more. It will not be fair to small real innovator. They are the main source of innovation.
Arguing to change law becasue it is costly, does not look valid argument. If judge concludes someone abusing current patent law, they can always give bold judgemet to protect innocent party.
There seems to be a lot of recent legislation around this topic. I found this list on opensource.com:
House Judiciary Discussion Draft. Released by House Judiciary Committee Chairman Goodlatte just before Memorial Day, the proposal includes provisions on cost and fee shifting (i.e., changing the economics of litigation that currently benefit PAEs); transparency of patent ownership; protections for end users; makes permanent the 'covered business method' program (Section 18 of the American Invents Act [AIA]); steps that could lead to greater clarity of pleadings and reduce discovery burdens; and various other provisions. Chairman Goodlatte has been a consistent voice for reform of the patent system. This draft is a good 'first step' to get feedback and scope the issues. As noted below, there are several improvements that would make the bill more meaningful to mitigate the significant impact of PAE's on American competitiveness, which “cost our economy billions of dollars each year.”
S. 1013, the “Patent Abuse Reduction Act.” Introduced by Sen. Cornyn, the bill thoughtfully addresses the issues of cost/fee-shifting; transparency of patent ownership; clarifying pleading standards; the economic imbalance of PAE discovery tactics; and joinder of interested parties. The bill can be expected to be a key proposal when the Senate Judiciary Committee begins its considerations. It has received positive reactions from key voices in the tech and user community.
S. 886, the “Patent Quality Improvement Act of 2013.” Authored by Sen. Charles Schumer, the bill enhances the novel transitional program established in Section 18 of the AIA to give parties an alternative to litigation for business method patents involving a 'financial product.' Sen. Schumer's bill makes the program permanent, and expands it beyond its current limited scope of a 'financial product.'
Senate Judiciary Proposal. This is forthcoming from Chairman Leahy, who is working with others on both sides of the aisle on the Judiciary Committee. Whether its release or introduction occurs before the Senate finishes consideration of the immigration bill (which is a priority of the Judiciary Committee) remains to be seen.
It does seem like there's awareness of both the problem and its complexities. Do you think any of these are useful moves forward?
I just saw this graphic and it's a clear visual of the trends in this area:
I don't know the cost of a PAE that goes to trial, but i imagine its big. Saw another graphic that makes we wonder how much we're spending needlessly on this:
Source: Office of Administrative of the United States Courts ,
Here's the article with more graphics:http://www.ipwatchdog.com/2013/04/09/the-rise-of-patent-litigation-in-america-1980-2012/id=38910/
The technology ownership is owned by the organization those who are trying to control the world and make more money rather than benefit the society. In the long term this would result in more and more lawsuits against the technology companies by the firms who just buy the patent rights from small technology companies. And there is a lot of importance from the companies to actually develop the patentable technologies more than the actual products.
elctrnx_lyf
It is very important for the high-tech industry to have the federal government protect intellectual property rights so that those who have nothing to do with an invention are excluded from making, using or offering for sale someone else's patents. PAEs stand in the way of fair business practices and they must be stopped.
Hailey,
Interesting graphic – it does appear that the non-PAE quantity (number od suits) has stayed relatively constant year over year, and the growth in litigation comes almost exclusively from PAE cases. In fact, the non PAE cases are lower from 2008 on, compared to 2006 and 2007. The number of PAE cases looks relatively through 2009, but doubles year over year from 2010 on. That's a rather frightening trend.
@Eldridge, it's a little bit sobering when you see it in color graphics, isn't it?
Yes, it is, although I think the graph would have even more impact if the order of the stack were switched to place the non-PAE proportion on the bottom – it would be even easier to see that the growth in cases comes exclusively from the PAE fraction.