Inside McCormick Place, IMTS 2022 kicked off show season with a massive 86,307 attendees.
And outside, stock markets went down hard. Inflation is climbing, there are worldwide energy shortages, and supply lines are nearly crippled. What gives?
Industry shows, almost by definition, are insular events. A bunch of sales guys descend on a location for a few days or a week. They meet would-be customers and try to make deals.
The beauty of year-end shows is they coincide perfectly with the buying habits of most corporations. Any company using a standard calendar for their fiscal year knows how much they can buy, going into the fourth quarter.
Literally, they will either elect to pay taxes on the year’s profits, or they will forgo the profits and bet everything back, buying equipment that might make them even more competitive the following year.
It’s a big decision, and everyone has a lot at stake. That’s why it’s largely an inward looking event. They all are.
Two Different Worlds
On Monday September 12, 2022, the Opening Ceremony for IMTS 2022 was kicked off by Douglas Woods, President of The Association For Manufacturing Technology (AMT).
That day, the DOW closed at 32,381.34.
On Day 2, the DOW hurtled down 1,276.37 points.
By the end of the week, when IMTS 2022 wrapped up…
The DOW was down 4.81%.
The S&P was off 5.77%.
NASDAQ gave up 6.67%.
[Special Note: There’s no evidence this was Doug’s fault.]
What To Make Of This?
You might think that —of all industries— anything based on productivity and automation would be immune to setbacks, during a period of labor shortages and high demand. Automation is almost a perfect world, right?
Chris Chidzik supports that thinking. He’s the Principal Economist for AMT – The Association For Manufacturing Technology. During the show, Chris reviewed the sales numbers over recent years…
“We’re still seeing really elevated levels of ordering.”
But what about the recession?
(By the way, I posted my own edgy analysis in Recession? That’s The Plan.)
Chris agrees that we are in a technical recession, but “Looking below the numbers indicates [we have] supply challenges as opposed to a lack of consumer demand. (What typically leads a recession is waning customer demand.)
“Consumers are still buying a lot of stuff.
All that demand is still kind of there.
And the jobs are still there.
The labor market is doing incredibly well…
The jobs reports that are coming in indicate the labor market is pretty tight. There are almost two open positions for every person seeking a job right now.”
Ford Is A Perfect Example
Outside the show, Ford Motor Company released guidance, indicating a rough third quarter.
Not for lack of demand.
It was lack of sales.
Ford reported 45,000 trucks and SUVs that are built, sitting in storage because they can’t get the parts they need.
So, an industry that lives and dies with Just In Time technology is dead in the water.
That’s right… industry. GM is siting on 95,000 incomplete vehicles.
They aren’t missing chips, mind you.
They are missing parts that the Tier 2 and Tier 3 providers just can’t deliver.
Part of Ford’s problem is a surprise addition of a billion dollars of inflation-related costs.
No parts, no cars.
No cars, no sales.
Is this a normal recession, or a massive screw up?
Right now, there’s some version of this dilemma in every industry.
Bringing It Together
The entire manufacturing world is a huge community.
In some sense, everybody knows everybody else.
And collaboration is essential for survival.
Outside, there’s a whole different world, pushing crazy levels of insanity.
That’s not typical of engineers.
They concentrate on physical reality.
They work in millimeters and milliseconds.
They solve problems.
For them, micro-aggressions don’t compute.
Thanks to IMTS for bringing together a world of realists and encouraging them to do their magic. -TD