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How Should Engineers Respond to Tepid US Manufacturing Report?

What do we make of new Commerce Department figures that say US capital equipment sales increased in August by the most in three months?

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:

  1. Capital equipment orders were up. Hurray, we're in Fat City.
  2. Factory orders are down. We're all screwed. Get ready for the unemployment line.
  3. 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.

Yet still, we all wonder.

TAGS: Automation
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