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Wednesday, 04 January 2012 20:36

Crystal Ball 2012: More on Manufacturing

Written by  MiBiz Staff
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Robert Roth
President and CEO,
RoMan Manufacturing Inc.

We project that the economy in 2012 is going to be better than 2011. It will be stronger. For us specifically, there will be a very strong first half, (and) then things will be tapering off later in the year.

The industrial capital equipment cycle leads the general economy. We have been doing quite well and will continue to do so. Companies have purchased the equipment and will now have to begin to produce product to sell at the consumer level.

On the positive side of the question, we are very bullish on the activity we’ve had over the last number of years, and we’re positioning ourselves to go after new markets. Those efforts are paying off in a significant way.

Ken Filippini
Hudsonville Ice Cream

Generally, I expect to see continued upward pressure on commodity prices. During the past year, commodity prices were volatile for our industry, which doesn’t look like it will ease much this year. Sugar continues to be a challenge due to import restrictions. We are looking at prices of 30 percent more than what prices should be due to some of the government regulations on imports. The dairy industry is also under a lot of pressure as worldwide consumption has grown. We have the same supply of dairy raw materials with an increased demand.

At the same time, there is not much opportunity to raise prices at the retail level, which will likely continue and translate into continued margin pressure in our and industries. We are managing pricing challenges through improved buying decisions, increasing operating efficiency and planning and following a measured response to any price increases we might make.
Our industry is in somewhat of a unique position: We make an affordable product that people enjoy and see as an indulgent treat they are still able to afford. So despite increased commodity prices that affect our margins, our customers are still purchasing our ice cream, and we will continue to grow in the markets we have recently entered, including Detroit and Chicago. We expect additional growth opportunities in 2012 and expect to hire in 2012, both production and professional positions.

Mark Fazakerley
Eagle Alloy

We had a terrific year — up 50 percent up over 2009. We are predicting well over 20-percent growth (in 2012). We are going as fast as we can. We have been adding about 24 employees a month. Throughout 2012, we will need another 150 employees. We are in the midst of a 70,000-square-foot addition that is underway right now. The land has been cleared and filled, and we’re putting in the footings right now. We are pretty excited about next year, that is for sure.

Marc Schupan
President and CEO,
Schupan & Sons Inc.

In predicting the economic direction for next year, an old saying comes to mind: “People who use crystal balls must learn to eat glass.” I am generally an optimist, so this may color my judgment somewhat.

In spite of European economic challenges, a strong dollar and our own government’s inability to deal with our debt problem, I believe next year will be better for business and manufacturing. My reasoning is our current backlog and new projects that are in the system. The political climate will dictate some stimulus for short-term help. Continued low interest rates are a positive for new investment. The government policies will try to weaken the dollar to help exports improve our balance of payments.

A clearer direction on policies from Washington will be demanded by business. Non-ferrous metal prices, aluminum, stainless and possibly copper will go up as the year progresses. The world we live in will dictate many of the military cuts proposed will not happen.

We are still a few years away from renewed residential building, but a stabilization of the housing market will be positive for consumer confidence. There will be some pent-up demand as shown by the improvement in the auto industry. We will still have a multitude of challenges including unemployment, housing and our deficit, but I see a year of slow improvement.

The poet Robert Frost once was asked, after all his years, what he had learned. He simply stated, “Life goes on.”

Rich Antonini
Plante Moran PLLC

I am optimistic about what we see ahead for our region’s manufacturers. During 2011, we have seen a steady increase in volume and profit margins for many of our suppliers and anticipate that the pent-up demand for new autos and overall consumer goods will continue into 2012.

In the auto industry, we have reached a level of negative sustainability with the average vehicle age reaching eight-plus years. This is good news for the automotive industry, as this will help spur an increase in production volumes. Consumer confidence and spending will also contribute to increased production demands. We have seen modest employment increases in our manufacturing base this year, a trend we expect to continue. While suppliers fully transitioned back to a very lean operating style, which helped significantly improve profit margins, most have found they are a bit too lean. This will help open — and has already begun to open — the employment expansion gates. Is a complete hiring binge therefore expected? All indicators are pointing to it.

Finally, we expect to see manufacturers deepen their geographical footprint. Strategic growth initiatives will be helped by an expected increase in the merger and acquisition space. Those with overseas footprints will deepen their position, focusing on the many opportunities in those regions. The Mexican expansion continues, and the strong Japanese yen is allowing for more U.S. based manufacturers to obtain increased production.

Mike Pepper
Alcoa Power and Propulsion

The aerospace market offers solid growth opportunities today and is projected to continue that trend over the next several years.

Currently, the world’s two major commercial aircraft manufacturers have a combined eight years of aircraft production backlog. As a leading manufacturer of commercial and military jet engine airfoils, Alcoa Power and Propulsion is well-positioned to capture share in this growing commercial jet market. We are targeting $80 million of additional aerospace revenue by 2013 across our global business unit.

Alcoa Power and Propulsion’s Whitehall operations will play an important role in driving APP toward capturing increased share on next-generation engines through advanced products developed in its research center and gains in productivity from new manufacturing processes. One of APP’s competitive advantages resident in its Whitehall operations is the capability to manufacture single-crystal castings — the most difficult to produce — that withstand the high temperatures of clean-burning jet engines. Whitehall operations also manufactures structural castings in titanium, provides value-added finishing operations and produces titanium alloy.

Bruce Goodman
Varnum LLP

Made-in-Michigan renewable products and technology could lead the world. Forget about global climate change as the motivation for “clean energy.” The negative health effects and societal effects that are part and parcel of some current electric generation is enough to cause society to look for better options. And they are right at hand.

Take the solar electric generation arena: Michigan already is a leader in the solar energy field with Hemlock Semiconductor supplying as much as 30 percent of the world’s supply of polycrystalline silicon. Companies are flocking to locate in the mid-Michigan area to be near this source of supply. Another Michigan company, United Solar Ovonics, has a leg up on competitors in the amorphous silicon photovoltaic solar energy material.

Similarly, Michigan has fledgling biofuels, biomass, wind, and geothermal industries and technologies that need to be strongly encouraged in the state, whether that be with grants, tax incentives or other preferential treatment. Our great universities need to be better challenged and better focused on energy problems and innovative solutions. Michigan’s ingenuity and know-how can change the face of energy generation. It can be a real powerhouse of innovation.

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