I'm perusing the just-released Department of Commerce figures on manufacturers' shipments, inventories, and orders for August, and I want to believe the news is good. I really, really do.
But who can honestly tell? If you look at Bloomberg's coverage of the news, it smartly dove to the bottom of the press release from the Census Bureau (part of the DOC) to extract what's pretty much the lone, unqualifiedly positive nugget: "Orders for US capital equipment increased in August by the most in three months, a sign business investment and exports held up in the face of mounting concern over the European debt crisis."
Not so sanguine was the Wall Street Journal, which took its guidance from the Census Bureau's more somber lead and overall tone. Here's the WSJ take: "Orders fell for US factory goods during August, the second drop in three months as manufacturers struggle to keep growing within a weak economy."
Surveying all the stories on Google News, I'd say the good-bad coverage was split down the middle. Some organizations went with the almost neutral lead that factory orders fell only 0.2 percent in August.
Me, I'm not an economist. So I ask myself what all these numbers mean for engineers. This brings me pretty quickly to one of three conclusions:
Capital equipment orders were up. Hurray, we're in Fat City.
Factory orders are down. We're all screwed. Get ready for the unemployment line.
These numbers don't change anything for me day to day, so I'm keeping my head down and doing my job.
If you buy into No. 1, you're clearly deluded (or demented). No. 2 is unnecessarily negative. If you have a job, you don't want to be focused on the 16 percent of Americans who don't. Fear forestalls the ability to function. Plus, as our recent Design News salary survey showed, employed engineers aren't doing that badly.
So I'm going with No. 3. Some might characterize this as a "head in the sand" response analogous to what we see when there's a political discussion in a trade publication, and the response is "I expect you to stick to technology."
Hey, anything that impacts one's life impacts technology. In this case, there are two salient threads at work: pent-up capital and exciting, emerging technologies. The status of both, I believe, makes my response more sensible than it would otherwise be when observing a laggard "lost decade" economic landscape. Let's take these one by one:
Pent-up capital. If you talk to executives, you find an undercurrent of mystification as to why manufacturing is stuck in a rut. The US has an aging plant and needs investment to compete effectively with the rest of the world. (Read how the Siemens executive Raj Batra put it in June.) Moreover, rising fuel and shipping costs mean some manufacturing that's gone overseas can cost-effectively return stateside. Finally, businesses are sitting on craploads of cash.
Exciting technology. However gloomy you might be, you cannot tell me now is not an exciting time in technology. There's so much innovation staring us in the face and waiting to be embraced and driven forward. Miniaturization in medical devices. Advanced aerospace and automotive composites. The emergence of the digital factory of the future. I could go on and on, but if one decouples the dreary daily economic news from the sizzle that's out there on the engineering side, one could actually become pretty optimistic.
I have to differ with the thought that we need more engineers in government, if only because the two most prominent engineers (Herbert Hoover and Jimmy Carter) were not exactly highly ranked in the list of effective/successful U.S. presidents! This wouldn't invalidate the idea of encouraging more involvement by engineers in the political process; having a few more in Congress (both houses) would probably benefit the nation, especially if they replaced either a lawyer or one of the many making our laws who have been feeding from government troughs for their entire careers, never participating in the private economy at all.
I tend to ignore the words of those who really don't know, and those who clearly have some agenda that appears to be sowing dispair.
Rob is correct in that between the constant addition of government regulations and the constant wall-street manipulations, there must be a lot of "nonproductive" money spent.
The first thing that the government could do is to change the laws so that speculators would need to have cash instead of being able to use credit. Yes, I am fully aware that it would place them at a much greater risk of loss, which is exactly what must happen. Excess credit for speculators was one of the major causes of the Great Depression. Didn't the government learn from that? As an engineer I could see that cheap speculation caused our fuel price spikes, why couldn't the economists see that?
At the same time, to encourage production, the government should relax the controls on credit for infrastructure a bit, in order to encourage investment in real assets.
Of course, to do any of this will require some working togather from both sides of the aisle, which lack of has certainly slowed whatever recovery we could have had. That is not intended to be an endorsement of either side, just an assertion that doing something besides fighting could make progress of some kind.
I've been in manufacturing (electronic) for about 40 years. My biggest problem
other than making payroll has been regulations. I don't want to destroy the
planet and have never tried. If I want to paint, plate, clean, move, update, solder,
ship, import, export, connect, disconnect, erect, remove, hire, fire, you get the
point, I run up against ENDLESS regulations ALL of which cost money.
On top of that I have contend with the price fluctuations of copper, magnetic materials, steel, aluminum, etc. created by some guy in New York because he can make a buck by trading those daily or hourly.
A few years ago I purchased a mercury lab thermometer from a scientific supply company. The thermometer was $7; the hazardous material handling fee was
$10 (and I picked it up at their dock). I'll bet the guys in the far east don't pay that.
On top of that I have to predict the future to know when wall street is about to create the next recession. My employees have always been like members of my family. Some of the worst
days I've ever had was having to lay off someone. Sorry for the rambling but
I'm ready to move to Vietnam to open a factory. I'll bet that government would
It may take a government effort to get jobs moving. Why not fund a real project, say to DESIGN and BUILD the prototype next generation nuclear reactor, with the caveat that the company also consider it a CCC-style jobs project?
Supercollider.
Bridges.
Pick one that is "for the common good", and build it. Not "unemployed retraining". MAKE something.
Good point that those in Congress should be engineers. Lawyers thrive on conflict. As for hiring, when companies cannot meet demand without hiring, they'll hire. If they can meet demand without hiring, they won't hire.
Usually, once a recovery begins, companies bring on part-time and temporary workers just in case the upward tick in demand does not sustain. That's where we seem to be now. And it seems like we've been there for about two and a half years.
The upward tick in the electronics industry softened over the summer. U.S. demand for electronics went flat in August. Inventories are at a two-year high (US Gov.). So hiring may be a bit sluggish in the electronic industry.
I would agree to the extent that ideology(ies) have made it impossible to have an honest discussion of the dynamic in play, and therefore of a solution. This is perhaps another way of saying it'd be nice if the preponderance of people in Congress were engineers, rather than lawyers.
There is a bit of a viscous cycle going on behind the manufacturing report. The main reason manufacturing is tepid is because unemployment is high. Unemployment is high because manufacturers, among others, are hesitant to hire. I'm not a fan of big government spending, but to break this cycle federal jobs programs may be necessary.
Predicting a nation's economic performance is nearly impossible, but I'd say there's good reason for engineers to keep their heads down and hope something good is coming. I agree with Bloomberg's take: If orders for capital equipment are up, that bodes well. Fat City? No. But there's reason for some optimism.
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