Key U.S. Markets Need Parts

It’s pleasant to have a feeling of hopefulness at last after the dark days of the last few years. The American psyche was severely affected by 9/11, which devastated the financial markets and the economy in general. As with major grief, recovery has been slow and painstaking, and cautious first steps were hesitantly taken in the fall of 2003. Now it’s as though many feel it’s safe to go back in the water. Not to say there isn’t that lingering sense of hurt, anger and fear. There is. But we are healing in spite of it and moving on.

The events of 9/11 and the war in Iraq have certainly spurred growth in this market. According to Mindbranch, an industry forecasting company, the budget increase for the Department of Defense and its R&D is expected to boost several technological advancements in satellite communication and surveillance and reconnaissance equipment. Further, with federal, state and local authorities expected to spend approximately $45 billion annually through 2006, both large and small companies are cashing in on the booming market for cutting-edge homeland defense products and services. The government will continue to scout for companies to enter into collaboration for conceptualizing, developing and delivering security technologies for both the military and commercial markets.

A sure sign of consumer confidence, new car sales were robust last spring and summer thanks to manufacturer incentives. Although sales declined through the fall as usual, the industry as a whole has been investing profits in new production models and technological developments. Last January, almost one million car shoppers and other show-goers at the North American Auto Show in Detroit, Michigan, confronted a vast number of vehicle choices. More than 70 new production models and concept cars made their debuts. Noticeable trends at the show included the resurgence of new products from Detroit automakers, along with a shift of focus to cars from trucks; the unveiling of new truck-type products from Japanese manufacturers that have traditionally focused on cars; a proliferation of hybrid technology, especially from Japan; and, at the opposite end of the spectrum, an abundance of “supercars”—super fast and super expensive. What this all means for you, of course, are new programs for parts from OEMs and tier 1, 2, and 3 suppliers, which filter down to thousands of contract shops.

The electronics market is being driven right now from the increase in automotive activity. Electronics already constitute 25 percent of the content and production cost of the average car. This percentage will increase in the next several years. Telecommunications and electronic data processing markets closely follow automotive for electrical and electronic components.

The medical market is the market that has been maintaining many of your businesses during the downturn in other areas. The first wave of baby boomers turns 60 this year, and these are active folks who want to stay that way and look good, too. No canes or wheelchairs for this group if there’s an option to replace joints, and there are many choices in the high tech medical field. Many of you produce a host of bone screws and dental implants and other medical devices for this lucrative market that is certain to remain viable for years to come.

Machinery manufacturers have posted modest gains in orders, production, shipments and exports since last fall and are now set for their best year in 4 years in 2004, and an even better year in 2005, according to Jim Haughey, director of economics for Reed Business Information. These manufacturers, which include companies like Tornos, and which also need component parts from contract suppliers, always have their strongest sales in the mature phase of an economic expansion. In the past 6 months, industrial machinery manufacturers have increased their sales at an 8.5 percent annual pace, aerospace manufacturers at a 4.5 percent pace and motor vehicle manufacturers at 3 percent. Defense, aircraft, construction and mining equipment and heavy-duty trucks have been the strongest markets.

Barring any world disaster, business is back, and you are most likely experiencing a more positive bottom line. If not, consider tailoring your sales efforts to the markets that are active right now. If you are continuously being outbid, you might take a look at new manufacturing technology that can produce complex parts requiring several types of operations in a single setup. Go get ’em!