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How Should Engineers Respond to Tepid US Manufacturing Report?

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Rob Spiegel
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A very wide U
Rob Spiegel   10/5/2011 11:05:57 AM
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We've all heard it a zillion times now: recovering from a recession caused by a financial crisis takes longer than recovering from a "normal" recession. For most of us, recessions have been V-shaped. We go down quick. After a couple nasty quarters, we're headed back up. Wow, sure are things different now. The current recession began in the fourth quarter of 2007. And while the recession was officially over by mid-2009, this recovery sure feels like a recession.

I'm not an economist either, but Alex talks about seeing an increase in innovation. Many say that's the sign to look for. The pick-up in innovation is dawn's first light in a substantial recovery. If that's so, bye-bye double dip.

Beth Stackpole
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Re: A very wide U
Beth Stackpole   10/5/2011 12:47:22 PM
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I agree with your take, Rob, and with Alex's inclination to not go down the path of panic and doom and gloom. While I can't say I'm exactly optimistic, it seems like if you look at the numbers around manufacturing and company's financials, the picture isn't all that bad, especially in the context of Rob's points about a U-shaped, slower recovery being more the norm after a recession caused by financial crisis. Maybe along with putting our nose to the grindstone and focusing on work, we should all try to see the positive. Half the battle with this on-going economic dulldrums is perception.

TJ McDermott
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Re: A very wide U
TJ McDermott   10/5/2011 9:38:48 PM
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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.

JimT@Future-Product-Innovations
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Point/Counter-Point
JimT@Future-Product-Innovations   10/5/2011 1:04:22 PM

Alex, I like your Point/Counter-Point argument, and find myself nodding quietly in agreement with both extremes.  Because things are so turbulent, nothing is going work - - - at least at the moment.

 

To the Counter-Point; we are in a saw-tooth economic market; up 300 points one day and down 250 the next. Who can blame any company for not investing in equipment or expanding staff if they think their stock could face a potential slashing on any given day-?  Wall Street investors are as unstable as a school of herring, darting "to-n-fro" on only the slightest information.

 

But to the Point, innovations are quietly budding in the labs, in the factories, and even wading into some cautious markets.  (All good comes around, eventually).  But the general investment population has been so beaten-down that even golden-hot-cakes would be met with only a tepid response today.

 

If we could just turn down the turbulence, the knee-jerk recoils would also settle down.

williamlweaver
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Out of Balance
williamlweaver   10/5/2011 1:26:00 PM
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As a former defense contractor now teaching the innovation process in academia, I ascribe to the Wharton School's description of the Five (5) components of society, namely, Wealth, Truth, Membership, Values and Power. As with any spinning system, things run "smoothly" when the components are in balance. Affect that balance and things whirl out of control quickly, exibiting higher-order modes of oscillation.

My current view from the ivory tower is that the Power dimension is at odds with the other four. The Wealth component has much innovation to leverage thanks to the Research & Development (Truth & Membership) components, however due to uncertianty in short and long term costs of human and financial capital, regulations, and liability the sideline is currently the safest place to be until "the ride" smooths out.

Regardless of political idealogy, it looks like things will stay status quo at least until the 2012 elections when the uncertianty in the Power component has a chance to subside. 

Charles Murray
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Keep your heads down
Charles Murray   10/5/2011 2:02:34 PM
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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.

sensor pro
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Gold
Re: Keep your heads down
sensor pro   10/5/2011 3:10:42 PM
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I agree with you. We should wait and see. Hopefully things will change.

mpr95
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Iron
US Manufacturing
mpr95   10/5/2011 3:34:04 PM
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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.

Alexander Wolfe
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Re: US Manufacturing
Alexander Wolfe   10/5/2011 4:52:38 PM
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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.

Rob Spiegel
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Re: US Manufacturing
Rob Spiegel   10/5/2011 8:53:51 PM
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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.

Ratsky
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Platinum
Re: US Manufacturing
Ratsky   10/10/2011 9:55:08 AM
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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.

streetrodder
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Gold
Re: US Manufacturing
streetrodder   10/7/2011 1:07:06 PM
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mpr95;

 

I have to ask... was 'viscous' a Freudian slip on 'vicious' or was it intentional?

Because it sure seems like the flow of all that money sitting ready to be invested has the viscosity of molasses in january...

robatnorcross
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Gold
manufacturing
robatnorcross   10/6/2011 4:12:44 PM
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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

appreciate me more than the guys in DC do.

William K.
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Platinum
Responding to the tepid manufacturing report
William K.   10/6/2011 8:25:16 PM
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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.

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