CASTINGS:
Buyer data supports economic projections which suggest continued growth for next three years followed by a pause for 3-years and continued upward trend long-term through 2015…
|
2005 |
2008 |
2015 |
CASTING SALES |
$32.93B |
$36.67B |
$42.6B |
GROWTH RATE |
|
11.4% |
29.4% |
GROWTH PER YR:
SHORT TERM (for next 3 yrs)
LONG TERM (for next 10 yrs) |
3.8%/yr |
2.9%/yr |
ECONOMY:
GLASS-HALF-FULL: As of the end of 2005, we have a robust growth in industrial production -- up for 8 consecutive quarters; Corporate profits up strongly – 20-30% increase in 2005 vs 2004; Purchasing managers index showing expanding economy – 50+ reading for 27 consecutive months; Inventory-to-sales ratio – record low levels; Job growth rates very positive – 1.6M new jobs in 2005 pushed the unemployment rate down to 4.9%.
GLASS-HALF-EMPTY: High energy prices – it’s no longer a “temporary spike”, sustained high levels will dent GDP growth rates; Rising interest rates – from 3.5% to 4.5% in one year in federal funds rate will also put brakes on the growth rates; Growing trade deficit – $200B/mo most of it with china (see more below); Loss of automotive jobs – Delphi pays $156,000 in average yearly wages and benefits to a full time Delphi worker in US vs $7300 in China (how long will that go on – In Delphi’s bankruptcy filing, mgt said “a substantial segment of its US mfg base would be sold off or closed in the next two years, however, in China the company is profitable and growing.”)
THE CHINA FACTOR – US-China Commission’s Annual Report to Congress, Nov. 2005 supports the “China Free Trade Bill” that would place across-the-board tariffs on Chinese goods if China does not revalue its currency. With $100B+ in trade deficit with China, China has considerable amount of cash and could be tempted to start buying up US companies. To balance things, for example, we would have to impose a 17% VAT, value-added tax on all castings coming from China to offset the “undervaluation of China’s currency”. Some politicians have called for 40% devaluation in China’s currency to help balance things and reach a truly free trade status.
MANUFACTURING:
In Bush’s recent State of the Union address, American Competitiveness Initiative called for 70,000 teachers in math and sciences, hire 30,000 scientists and engineers to work as teachers, and make permanent current tax breaks for R&D. Mfg must innovate to stay competitive, according to the National Association of Mfrs (NAM). Recent report states that “downward trends in US manufacturing innovation pose a serious threat to America’s long-term economic growth and living standards.”
TECHNOLOGY:
The top five tech trends are…
-
Radio Frequency Identification (RFID) Technology (Wal-Mart to revolutionize the world.)
-
Nanotechnology (As Plastics was for this generation, Nanotech is for coming generation.)
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Wi-Fi (Wireless Internet everywhere – car, office, home, golf course.)
-
Robots (Not just to weld or spray but to vacuum the house and mow the lawn.)
-
Hybrids (Go Green thanks to energy costs.)
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