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Fearless predictions for 2011 - by Industry Leaders

It is almost the new year (as I write this), and that means it’s time for all kinds of articles that prognosticate about the future. So, let’s add another one to the pile and talk with some industry leaders about their predictions regarding 2011.

2011_predicitions
2011_predicitions

I spoke with Craig van den Avont, the president of GAM Gear in Mt. Prospect, IL. Craig’s business sells and distributes gearboxes and couplings, and he also does custom manufacturing of those products, so he is both an automation supplier and user. I asked Craig for his thoughts about 2011, but I started with his biggest surprise in 2010. Craig’s response: “we anticipated some growth in 2010, but not this much. Business really increased in the second half of 2010. We saw that many companies held off from investing in equipment and were holding on to cash, fearful of a double-dip recession. When that did not materialize there was a large pent up demand to invest in new technology and replace aging equipment. The net result was a surge of purchasing in the latter half of the year.

So, what is in store for 2011? “We will see spending continue, but not at the same pace” says Craig. “At this time inventories are also being replenished throughout the supply chain, after that occurs we will see some cooling off. However, business will continue to be good for the Automation Market because manufacturers will continue to invest in equipment for two reasons, the cost of automation has come down and some manufacturing is moving back to America. The cost of automation has gone down, which increases the affordability even to small businesses. We are a good example of that. We are considering implementing new equipment with automation to increase productivity.

“Another factor to the increase in domestic automation purchases is the realization that low-cost manufacturing in Asia is not a panacea for everyone. Soft costs, like transportation, quality issues, communication, and the requirement for cash-in-advance elevate the low initial costs that we see from the “low-cost” suppliers. With these additional costs, local manufacturing with automation starts to make more sense.”

“For the new economy, companies need to be flexible when responding to customer demands. You have to be Lean, but you also need good collaboration between the supplier and customer. Customers are not willing to take the risk involved with placing large blanket orders with releases spaced over a long period. Instead, they want to place orders only for what they need, want quick delivery and expect the best price. As a supplier that is possible if we collaborate with the OEM to understand their needs and forecasts. For example, if you get an order of a few hundred pieces, it is almost certain that not every piece is required right away. We work with our customers whenever possible to space out the delivery of this order to match our production capacity. That way, we can produce to the customer’s true needs, while being cost-effective. If you have planning and collaboration on both sides of the table, it is a win-win.”

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