Archive for '2011'

"Non-conventional" industry breaks 2008 record

December 20, 2011 2:16 PM by David Belforte

It won’t be long before that bearded guy in the red suit will be making his annual appearance and right behind him that little kid in the diapers that welcomes the new year. You’ll pardon me if I protest that it seems like yesterday when they showed up last year, my how time flies.

I just finished my PowerPoint for the late January "Marketplace for Lasers & Photonics" meeting in San Francisco (www.marketplaceseminar.com) and have been making a last review of the numbers. Each year I cut it closer and closer to the deadline for submission of this file as I massage the final 3rd quarter numbers that continue to come in. For example, I've received changes in the financials of companies that suffered losses as a result of the flooding in Thailand, II-VI Corp. was one of the more notable ones.

As a little Christmas gift, I’ll give you a hint of what will be disclosed in my forthcoming report in 2011. Sales revenues for industrial lasers (almost $2 billion) and systems (more than $7 billion) broke the 2008 records by 11%, wiping out the losses of the recession a year ahead of what the industry expected.

Historically, since 1970, the year I date as the beginning of industrial laser sales, more than a half million lasers have been sold – valued at close to $22 billion – which were integrated into systems worth more than $75 billion – for a CAGR of 17%. Not bad for an industry that was labeled, in it’s early years, as "non-conventional" by statisticians. In fact, last time I looked, laser machines represented about 10% of total world machine tool sales.

And as I will report in the new year, even with some cooling-off in the markets, industrial lasers and systems should grow another 5% in 2012

So, Happy Holidays to all and see you in 2012.

Enthusiasm and expansion evident at Fabtech

November 28, 2011 9:23 AM by David Belforte

We had early clues that Fabtech International (Chicago, November 14-17) was going to be a success from exhibitors and from the FMA/SME organizers' preregistation numbers. But when the doors opened at McCormick Place, thousands of visitors lined up for badges, and at the opening bell, mobs of determined manufacturing people surged into the North and South Halls, many heading purposely for specific exhibits. And the second day of the show was even more packed than the first.

I was sitting on the mezzanine of the large TRUMPF exhibit as the opening bell sounded. Hordes of visitors could be seen rushing toward the major exhibits that were clustered near the front of the South Hall. Below me in the TRUMPF exhibition area, every system and sales representative were immediately engaged in discussions. The same held true at many other exhibits I could see from my perch.

At the end of the first two days, exhibitors had all met or exceeded past show records, and many were posting sold signs on the equipment on display. Several major exhibitors told me about sales consummated at the show. For example Burke Doar, VP Sales of TRUMPF Inc. said the 12 units booked on the first day was in-line with good show records of the past.

So I set off to ask all the major industrial laser system exhibitors their show experience and their impression of the current year's sales and prospects for 2012. Exhibitor after exhibitor praised the show; expected to have a good, great or record sales year; and looked forward to a continued good, but not great 2012.

These opinions were backed up by solid facts on the strength of key markets: agricultural and heavy equipment, aerospace, transportation and energy. Asked about the fabricated metal job shop sector, most were equally positive about it, even though it has been feeling the pinch of tight bank lending policies which has required some creative financial arrangements on the part of the equipment sellers.

The companies that participate in the annual market survey I conduct all modified the conservative estimates they made at the beginning of the year. It looks like the North American sheet metal system sales for 2011 will be about 725 units, a number equal to the very good pre-recession year of 2001.


So how to explain this excellent performance of the laser cutting system suppliers in light of all the negative media comments on the state of manufacturing in North America? I received a number of explanations, but the one that seemed most factual was that the industries served by laser cutting systems were not experiencing market problems, and buyers of capital equipment had the resources to expand their business, even in what seems to be a shaky economy. Yes, I heard that some buying decisions were made after long deliberations, but in the end these buyers were betting that the manufacturing market had a positive future.

Fabtech 2011 was a great show. As this was being written we still had not received the official show attendance figures. Exhibitors left with good feelings about near-term prospects, and visitors were upbeat about their business prospects. Counter to prevailing sentiment among the economists, yes, but I could not find weaknesses in the market forecasts we heard.

Posted by David Belforte



Enthusiasm and expansion evident at Fabtech 2011

November 28, 2011 9:23 AM by David Belforte

We had early clues that Fabtech International (Chicago, November 14-17) was going to be a success from exhibitors and from the FMA/SME organizers' preregistation numbers. But when the doors opened at McCormick Place, thousands of visitors lined up for badges, and at the opening bell, mobs of determined manufacturing people surged into the North and South Halls, many heading purposely for specific exhibits. And the second day of the show was even more packed than the first.

I was sitting on the mezzanine of the large TRUMPF exhibit as the opening bell sounded. Hordes of visitors could be seen rushing toward the major exhibits that were clustered near the front of the South Hall. Below me in the TRUMPF exhibition area, every system and sales representative were immediately engaged in discussions. The same held true at many other exhibits I could see from my perch.

At the end of the first two days, exhibitors had all met or exceeded past show records, and many were posting sold signs on the equipment on display. Several major exhibitors told me about sales consummated at the show. For example Burke Doar, VP Sales of TRUMPF Inc. said the 12 units booked on the first day was in-line with good show records of the past.

So I set off to ask all the major industrial laser system exhibitors their show experience and their impression of the current year's sales and prospects for 2012. Exhibitor after exhibitor praised the show; expected to have a good, great or record sales year; and looked forward to a continued good, but not great 2012.

These opinions were backed up by solid facts on the strength of key markets: agricultural and heavy equipment, aerospace, transportation and energy. Asked about the fabricated metal job shop sector, most were equally positive about it, even though it has been feeling the pinch of tight bank lending policies which has required some creative financial arrangements on the part of the equipment sellers.

The companies that participate in the annual market survey I conduct all modified the conservative estimates they made at the beginning of the year. It looks like the North American sheet metal system sales for 2011 will be about 725 units, a number equal to the very good pre-recession year of 2001.


So how to explain this excellent performance of the laser cutting system suppliers in light of all the negative media comments on the state of manufacturing in North America? I received a number of explanations, but the one that seemed most factual was that the industries served by laser cutting systems were not experiencing market problems, and buyers of capital equipment had the resources to expand their business, even in what seems to be a shaky economy. Yes, I heard that some buying decisions were made after long deliberations, but in the end these buyers were betting that the manufacturing market had a positive future.

Fabtech 2011 was a great show. As this was being written we still had not received the official show attendance figures. Exhibitors left with good feelings about near-term prospects, and visitors were upbeat about their business prospects. Counter to prevailing sentiment among the economists, yes, but I could not find weaknesses in the market forecasts we heard.

Posted by David Belforte

ICALEO more international than ever

November 10, 2011 3:05 PM by David Belforte

This comment on the recent ICALEO held in Orlando is being written rather tardily as I am just now recovering from the 7-day power outage in my area brought on by the ravages of what is now being called THE October Northeaster, not with any fondness.

ICALEO 2011 was, judging by attendee comments, a very successful event, with 523 registered for the Congress with 51% coming from the US. Attendance was up 12.5% from last year's event in Anaheim. 262 papers and posters were presented in several concurrent sessions, a decrease of 6%over last year. Of the papers presented 82% were by international authors, a situation that caused considerable talk among long-time attendees. Some Program Committee members attribute the limited papers from the U.S to restrictive non-disclosure arrangements imposed by US research sponsors preventing this work from being shared.

On the other hand, ICALEO is as, the name says, international, and the organizers, the Laser Institute of America, has become an international society, so a diverse membership and subsequent diversity in conference presenters is a natural consequence.

Five ILS Editorial Advisors attended this year's event along with me, which made coverage of concurrent sessions and the micro (LMF) and macro (LMP) conferences easier. Their thoughts are incorporated in this conference perspective.

The large discrepancy in paper sources is seen as both a plus and minus, with one advisor commenting that a large number of papers from Germany was "a delight," while another remarked that only 18% of papers were US-originated and that some of these were from authors working for foreign companies. The two conference program committees were actually about evenly split in terms of domestic versus international membership so one can’t find obvious prejudice in author selections with them.

Several advisors sensed the lack of US papers and assigned the blame, in part, on the US government, which, as one said, "has never been able to devise and implement a complex action plan to support industrial research." Another noted that, "Someone needs to lead a credible lobbying effort to find federal funding to help US companies apply laser technology to compete with similar efforts in Europe."

To most observers, this year's ICALEO was slanted toward solid-state laser applications with fiber and disc lasers making up two-thirds of the macro (LMP) sessions, of which 2/3rds were fiber related and 1/3rd disc. The papers featuring disc lasers were mostly from Germany and the ratio of fiber to disc was 3:1. In the micro (LMF) conference, 40% of the papers featured ultra-fast pulse (ps and fs) laser applications and the remainder were ns lasers (36%) and long pulse (24%).

The conclusion one can draw from the preponderance of solid-state applications in the papers would be that most of the advanced laser material processing work being done today is with these lasers as opposed to the CO2 laser, which, while being used in more mature applications, commercially dominates annual sales: about 50% of 2011 revenues.

ILS picked up on this trend several years ago and has been featuring applications with fiber, disc, and UFP lasers in many issues.



The weather outside is frightful

November 2, 2011 8:26 AM by David Belforte

In this spot was intended to be a report on ICALEO 2011 by the Industrial Laser Solutions Editorial Advisors and me, but Mother Nature played a dirty trick on most of southern New England. She dropped an historic, for October, snowfall (12-18 inches) that coated the fully-leaved trees, causing severe damage to the trees and subsequently to the power lines. This is being written from my car, where I have cruised central Massachusetts looking for WiFi to connect with.

So just a brief note to say power is off, but when it returns, a full report on ICALEO will be posted.

Update from Japan

October 19, 2011 11:54 AM by David Belforte

I've been reviewing this year's Shimpo report, "2011/2012 Japan Laser World and Trend," which is a task made more difficult as it is published in Japanese, a language I have yet to master after more than 30 years of travel to that country. Over the years, friends and associates have translated the many tables and charts in the reports so that I can at least recognize certain repetitive characters, allowing me to follow trends years after year.

This year’s report adjusted the FY 09 results, as estimated last year, to a 10-year low for high power CO2 laser sheet metal cutting systems. And because of this low number estimate, the FY10 production would be increased 23%. This is a consequential growth rate as it means an additional $210 million or more units will be shipped. For FY11, the laser system suppliers are predicting a 26% growth which, if accomplished, will raise the Japanese production of flat sheet cutters to at least $1.4 billion, or more than 50% of the world total.

The recession apparently affected the production of laser micro-via drillers more than I had anticipated, with an 89% increase in units shipped in FY10 and a projected 59% increase in FY11 shipments. Micro-via drilling is one of the bright market sectors in Japan’s laser industry.

Laser marking, a usually dependable double-digit-growth rate application, also took a recessionary beating in Japan with shipments dropping 20% in FY09, but recovering nicely in FY10, up more than 60%. However, forecasts for FY12 are for single digit growth. The solid-state laser market dropped 27% in FY09, rallied 8% in FY10 and is expected to grow 34% in FY11 and 12% in FY12.

What does all this mean? I was ruminating on the role Japan’s industrial laser and system suppliers were playing in today’s global markets for these products. While these suppliers do not seem to be at the cutting edge of laser technology as they were in the glory days of the 90s when innovations were springing from research laboratories and system developments were common at all the trade shows, survivors of the extended economic decline in Japan have carved out niches that their well-engineered products can sell into growing markets in Asia, North and South America, and to some extent in Europe. The Shimpo report is encouraging about the industry’s recovery from the global recession and another year of sustained albeit reduced growth is in the cards.

Dow Jones reports that the Japanese government has stated that: the pace of recovery from the March disaster has slowed; the global slowdown has affected exports and production; energy constraints still chaff; and the strong yen continues to be a headache. Even so, the government says the economy is still picking up, even though the pace has slowed mainly due to the Great East Japan Earthquake's effects, which still persist.

On a more personal note, I have learned that one of the pockets of radiation measured away from the disaster area was found in Yokohama, where I spent a week. Each night I ask my wife if I am glowing green.





In Japan, the sun also rises

October 12, 2011 9:36 AM by David Belforte

I arrived in Tokyo two weeks ago to find a country recovering from the most recent of two major coastal typhoons that added to the already lingering after-effects of a serious earthquake and the resulting tsunami that devastated the country's power supply.

My visit was centered on Yokahama, the largest port, which did not experience any direct damage but like all of the Kant? Plains area was still under tight government restrictions on power usage. To a guest at a first-class hotel, the only visible signs of any problems were a raised air conditioning temperature and the lowering of lighting in public spaces. I am sure that behind the scenes of a well-run hotel, the problems were greater, but they managed to keep these from affecting guests.

At the Pan-Pacific Exhibition complex, the same power requirements were also in place and other than a slightly discomforting higher temperature in the halls and conference rooms one would not know that the country was in a recovery mode. The most visable tip-off was the general absence of ties worn by visitors, a distincly non-Japanese dress mode occasioned by the working envirornment temperatures.

I came here to partcipate and speak at LaserTech 2011, one of four co-located exhibits featuring complementary laser technology and products. The organizers said they came close to 12,000 attendees, exceeding their forecasted 10,000. Was this a sign that the Japanese economy was taking an upward turn after years of being depressed? It’s hard to say as this was very much a domestic show with all exhibits signs in Japanese, and for the most part, exhibits were staffed by Japanese-speaking marketing and sales people so surveys of exhibitor satisfaction were hard to obtain. I judged the continuous activity at exhibits adjacent to mine as an indication that business prospects among the attendees were good.

One of my goals on this trip was to learn how Japanese suppliers of industrial laser products survived years of stagnation and the recent disasters. I spoke with managers and officers of both large and small companies and found that their attitude, at least to Westerners, was upbeat. An interesting twist was that the severe goverment restrictions on power usage and the crushing economic climate had caused companies to dramaticaly change their operating procedures. And now that restrictions were easing and the economy was turning up, these same companies intended to keep in place many of the changes forced on them to become, as a result, an even leaner, tighter operating entity. Basically they said they learned they could operate comfortably with reduced energy and other restrictions. As one CEO said to me, "It was a tough learning experience."



Looking to The Rising Sun for answers

September 20, 2011 2:03 PM by WRITER FIRE

I'm preparing for a trip to Japan next week where I will be presenting my mid-year report on the industrial laser marketplace. Because my PowerPoint slides will be shown in Japanese, they were submitted for translation several weeks ago, and therein lies a conundrum- present what I had prepared or, because the market seems to be leaning more towards a slow-down, extemporize – possibly causing the simultaneous translator a migraine.

For months I have reported the strength of the markets served by industrial lasers and touted their ability to overcome downward adjustments that all the experts were predicting. And I still believe this, even though daily news shows softness developing in some of the market stalwarts that have kept sales and revenues at a high level.

At this point in time, the laser system supplier’s books are, for the most part, full for 2011, with backlogs in place into the early weeks of 2012. By all accounts these orders seem secure and I have yet to hear of concerns about cancellations or shipment delays.

My colleague, Dr. Tom Hausken of Strafegies Unlimited, reports that a round of recent West Coast corporate interviews confirmed the "jobless recovery" scenario, seemed to show some market uncertainties and expected flat sales for 2012. Tom and I share a lot of data and therefore I tend to listen more attentively to what he says, even though we have been known to object to each other's conclusions at times. So I'll file away his notes for consideration as I start my 2011 annual report in November.

One thing I intend to discuss with executives of Japanese companies I will meet with next week is how they survived the recent 10 year economic stagnation in Japan. The idea of a similar situation in the U.S. has been floated by some economists and I intend to see how such an occurrence might impact the dynamic laser market.

Stay tuned for my Japan report in a couple of weeks.



Oops

September 7, 2011 9:37 AM by zapper

After 27 years of editing Industrial Laser Solutions, it was inevitable that I would make a significant error, since one of magnitude had never been made previously. I should qualify that — once we published an issue with the cover image upside down. This was never noticed by readers, perhaps because the subject was five-axis laser cutting and the photo looked like it could be a multi-axis machine.

The error I refer to was in a News item posted on the ILS home page, referencing exhibitor comments about the upcoming trade show LaserTech India 2011. Inadvertently, by my mistake, their comments were attributed to another trade show, Laser India 2011, which will be held a few weeks later. Complicating this was the fact that ILS is a media partner of this trade show; ironically, the original News posting was done because ILS supports all events that promote the industrial laser technology, regardless of affiliations.

The error might have been noticed by one of our staff and corrected if it had not been for two mitigating factors. First, our offices were powerless, as was most of our geographic region from the effects of the powerful hurricane Irene. Secondly, the timing of a potential error notice was poor because our offices were closed for the long holiday weekend, and our staff was widely scattered, enjoying the last holiday before schools reopened.

Thus the error was called to my attention by e-mails from the principals of the two trade shows, an unfortunate situation because affected parties seek immediate relief. To make matters worse, the battery in my laptop gave out while I was driving around in my car to find some free Wi-Fi, so I was unable to respond to the e-mails until power was restored at the time our offices were closed.

With some assistance from an obliging company IT person on his holiday, a short corrective News notice was posted followed by a corrected rewording of the first notice that was intended to set the record straight. The offended parties were generally understanding about the unintended error and mostly mollified by my suggestions for ongoing corrective actions.

The object lesson for this embarrassing imbroglio: check and recheck your facts, just like the saying, "measure twice and cut once". Also, have a plan for quick response after catastrophes strike.





The glass is still half full

August 8, 2011 12:12 PM by zapper

As this is being written, turmoil in the global markets caused by a downgrading of the US credit rating by Standard & Poor’s has Wall Street and other financial centers in a panic. Our befuddled leadership in Washington is busy pointing fingers of guilt at each other or chortling as the political fallout may likely fulfill their wish for a one-term presidency. Meanwhile, the elected representatives have taken a five-week hiatus while Rome burns, except for the Republican presidential hopefuls who are being fed so much fodder by a summer-bored media that they are falling all over each other competing for one last vote in Iowa.

Lost in all this is the impetus of the President's bullish stance on revitalizing the health of the manufacturing industry. It was just another mouthful of words that rings hollow as it is now obvious he doesn’t have the political wherewithal to move anything through a divided Congress that senses blood.

This, the 100th in this series of blogs, was originally planned to be a celebration of the good news emanating from the major public corporations that have just reported their latest quarter financials and the powerful news from industry leader TRUMPF whose 2010/11 preliminary figures were nothing short of spectacular: sales up 51% from the second-highest ever sales and bookings for 2010/11 at € 2.22 billion.

However, it is now a blog about the facts. Yes, we have heard the rumblings of concern within the global manufacturing economy, causing us to look more and more like a male version of Little Mary Sunshine; make note of my sensitivity on this subject.

And here are the facts: the manufacturing sectors that use industrial lasers are not those that are directly affected by a rise in the interest rates, such as the housing industry. Those that are driving the good news reported in the guidance issued by the public laser product suppliers are the aerospace industry, which is locked into long term contracts for new aircraft (and engine) deliveries for the next five years; the alternate energy industry where solar -rich countries are finally pushing photovoltaic installations instead of the nuclear options that were already on the drawing boards; the medical devices suppliers that are experiencing a global surge in preventative medical treatment; the microelectronics industry which cannot seem to fully satisfy the volume of laser drilled micro-substrates; the alternate energy vehicle suppliers whose order books are full of battery-operated vehicles even as the President gave the industry a “kiss-of-death” with his proclamation for doubled gas mileage regulations (try selling this one Mr. Obama); and a booming product marking sector that is sold on laser-generated 2D barcodes both for regulatory and inventory purposes

These are real, growing markets that will sustain the laser business for the rest of this year and well into the next. Yes, I hear the groundswell of support for a second recession that could wipe out these markets, and I am enough of a pragmatist to believe that this scenario is stronger today than six months ago when I poo-pooed the idea. But, as far as the industrial laser business goes, I see the glass of water as half full. And if I am wrong, it really won’t matter, as we will all go down in flames this time around because no amount of water will quench the global fire.




Relax its summer

July 26, 2011 3:13 PM by zapper

Two "hot" news items have crossed my desk in the last few days, both by coincidence related to news from Germany: one on a positive economic note and the other not.

TRUMPF, the leader in the industrial laser products market, reported a 51% increase in 2010/11 fiscal year sales, with 2.025 billion Euros compared to last year's sales of 1.340 billion Euros. This is the second highest revenue year, only topped by 2007/08 with 2.144 billion Euros. However, bookings were 2.22 billion Euros, topping the 2.15 billion Euros booked in 2007/08. And the frosting on the cake is that profits last year are expected to hit triple digits in the millions, and the company will need to add another 500 jobs worldwide.

The less than auspicious news is that the mighty German manufacturing engine is sputtering, according to two closely watched indices, the Ifo and ZEW monthly reports. Both reports were negative, with analysts titch-titching that “Expectations are clearly weakening.” The blame rests on, of all things, three problems: the budget impasse in the US, a slowdown in the expanding Chinese market, and a drop in German consumer spending. Where have we heard this before?

We are not supposed to get overheated in these “dog days” of summer, the weather forecasters remind us, but most of the US has been posting record high temperatures the past few weeks, thereby driving up our personal heat indices. So I think I’ll head for the lake for a few days to cool off and to savor the great news from TRUMPF and ignore the not-so-good news from the manufacturing front. Relaxation is what summer is made for.



Made redundant by the Web - again

July 5, 2011 6:12 PM by zapper

It was a Friday afternoon and the sales team, winding down a three day corporate sales meeting, restively awaited the final speaker, me. Heavy early weekend traffic slowed down my arrival and had me in a bit of a funk as I breathlessly arrived 30 minutes late.

I should have taken a short break to catch my breath, but recognizing that I had three dozen sales people ready to head home for the weekend, I proceeded to deliver what was supposed to be a positive state-of-the-market rouser guaranteed to have these reps outperform their monthly quotas.

Normally, I open such presentations on a light note with a laugh-generating anecdote. I don’t know what possessed me, except the lack of energy after a hard week of travel, but my opening remark was: “I’m glad I had this opportunity to meet with you today, because next year most of you will be gone, as the era of the machine tool salesman is over.”

Nervous laughter broke out as I continued, “Yes, most of you will be redundant, made so by the power of the Internet.” Now, sensing that I was not joking, I was bombarded by objections and then questions about my premise, which in essence was, buyers will get their machine information off the Web, analyze it and make a buying decision without your influence. The general objection was that the Web could not sell a machine tool. My counter was, people already buy their new cars off the Web, and many car dealers have an internal Web salesman just for that purpose.

These sales guys still thought I was joking, and I managed to leave on rather tenuous grounds, with a parting shot from the sales manger: “That will be the day,” he growled.

A few short years later, that day has arrived.

In his new book, Selling Change, 101+ Secrets for Growing Sales by Leading Change http://http://sellingchange.com/author/brett-clay/ , Brett Clay says, “The trends of globalization and Internet empowered buyers are devaluing the roles traditionally filled by salespeople - to provide product information and take orders.”

In case you haven’t had the occasion to shop for a new machine tool on the Internet, trust me all you need to know is out there in Cyberspace. Retrieving this information is getting even easier as potential buyers realize the power of the Web and learn how to make it work for them. The marketplace has changed and, like others made inconsequential by the power of the Web, the salesman's denial was short lived.

I had occasion to see the sales manager of that company I spoke to, at a recent trade show, where he walked the floor as an independent sales rep. I was surprised when he went out of his way to greet me, thinking that he probably never forgave me for what I said. Instead, the subject never came up even though he told me he had recently been made redundant. I was glad we were still friends and I knew that his remaining productive years would not be bitter ones.



Those who serve

June 29, 2011 8:04 AM by zapper

In the United States of America, we pause on the Fourth of July, more properly called Independence Day, to commemorate the signing of the Declaration of Independence, declaring our independence from Great Britain in 1776. This is the most patriotic day in the year, celebrated throughout the 50 states with the showing of the national flag.

This is a national holiday that fortuitously this year occurs on Monday so that the country enjoys a long weekend at the beginning of the summer. By tradition. it is a patriotic day, during which we experience outdoor activities, parades, concerts, political speeches rife with overblown patriotism, family food fests and above all fireworks.

Typically we Americans are not flag wavers unless we are rallying around some event that stirs repressed patriotism. Currently, we are showing support for our armed forces, fighting 2 ½ wars in the Mideast, while many at home complain about the high gasoline prices this causes.

I served the USA on active duty and reserve status and took advantage of veteran’s benefits that covered my education and assisted me in buying a home. I’m one of those Army veterans whose records were destroyed in a fire at the St. Louis National Personnel Center. The US Congress amended a law and appropriated funds to rebuild the destroyed files, which are the only official record of my, and tens of thousands of others, military service.

In the doing, over the past few months, I have been supplying the government with documentation that will partially restore my official records. As a consequence, a few weeks ago I was notified that medals for which I had been recommended were going to be sent to me. This is a little late, you may say, but then they are service medals, not medals for valor or meritorious service, so they had never been a priority.

But it’s now the Fourth of July and on the town common a patriotic concert will be held, the conclusion of which will be a medley of marches to honor those who served the country. This year I will stand with other Army veterans, proudly wearing the ribbons that denote my service as they play “The Army Goes Rolling Along.”

That’s it, my once a year concession to personal patriotism. Actually, I stand to honor those who can’t be here and who are serving the country on our behalf. I know what they are experiencing from my own similar situation when I served. We were asked to serve and did; that's the best that can be said on the Fourth of July.



US employees are not happy

June 22, 2011 1:30 PM by zapper

Guess what? According to Industry Week , in a survey by Mercer http://www.mercer.com/ , it was found that, “diminished loyalty and widespread apathy can undermine business performance, particularly as companies increasingly look to their workforces to drive productivity gains and spur innovation.” Mercer’s Mindy Fox says, “The business consequences of this erosion in employee sentiment is significant, and clearly the issue goes far beyond retention.”

Why? In Mercer's survey of the last two quarters, the company found that 32% of workers are seriously considering leaving their companies, and 21% of those staying view their employers unfavorably and show a very low score on loyalty, commitment, and motivation.

Well duh! We just survived the worst recession since the 30s and those who remain employed are still reeling from the impact on their jobs, with many living in dread of the pink slip that will add them to the 9% looking for work today. Meanwhile their workload has increased again, and again, under the threat of a pink slip if they should balk; consequently, their work may be shoddy and unfinished. And the media are touting a double-dip recession. It takes a special kind of employee to come into many companies smiling on a Monday morning.

Other Mercer findings:

- Only 43% of employees believe they are doing enough to financially prepare for retirement and just 41% believe their employers are doing enough to help them prepare.
- Just 68% of employees rate their overall benefits program as good or very good.
- Just 42% of employees agree that promotions go to the most qualified employees in their organization.
- Among the youngest workers, 40% of employees age 25–34 are most likely looking to depart.

You may recall the story of Damocles and Dionysius where the latter offers the former a trial as ruler to enjoy all the perceived fruits of this position. And so doing, Damocles looks up and sees a sharp sword suspended over his head. Supposedly, when queried about the threat, Dionysus makes it clear that, as a ruler, there can be nothing happy for the person over whom some fear always looms



A big noise may be a little indigestion

June 8, 2011 2:08 PM by zapper

What is this, a conspiracy? No sooner did I return from Munich, where optimism on global economics reigned supreme, then I began to hear that old bugaboo: double-dip recession. The one not-so-positive Manufacturing Index report after a string of upbeat months caused the scare birds hit the media. This, of course, was fodder for the announced and soon-to-announce presidential candidates, quadrupling the noise.

As the days went by, the recession drumbeat grew louder as employment news was less than stellar, and it didn’t help that the President was wishy-washy speaking? about the economy on Tuesday.

All I have to say is: Thanks, guys. I spent a week in Munich at Laser World of Photonics singing the praises of recovery in the manufacturing community and bragging about the performance of the industrial laser leaders who were on a tear revenue-wise. The dozens of companies I interviewed in Munich, for the most part, supported my optimism, and I only heard a few concerns about how the US housing market would hamper further growth.

So here I am three weeks prior to my Mid Year Report on the Global Laser Marketplace and I’m having second thoughts about my PowerPoint slides. Come on, guys, cut me some slack and at least let me make it past the 30th before I have to retract my glowing forecast for the remainder of 2011. Especially you, Mr. Bernanke . You have been, self-admittedly, wrong before; are you sure your gloom is couched in reality?

When queried about my optimistic forecast at a meeting last week, I stated that I could not see any reason why US manufacturing couldn’t weather a little negative news. Foreign exchange rates make exporting a joy here in the States and businesses are expanding with caution so they haven’t overloaded payrolls, and what they are selling is wanted everywhere in the world. So maybe we have a little indigestion, but it's nothing a good burp can’t handle.

Finally, thanks for the many concerns received from friends and acquaintances, near and far, concerning my status after the EF3 tornado cut a ¼ mile swath through Sturbridge. We did not experience any damage to our house even though the storm passed less than a mile away, spawning several random microburst’s, one about a 1000 yards from my house. Thirty-nine miles of South Central Massachusetts from Springfield to Charlton took a devastating beating, but we are all rallying to help the recovery in that good old Yankee community spirit.



The industrial laser spring

May 31, 2011 3:13 PM by zapper

Why do most people seem to need external reinforcement of situations they have already evaluated? Over the past two weeks, two events, EASTEC 2011 in the U.S. and Laser World of Photonics in Munich , put the seal of approval on the roaring recovery in the industrial laser market. No longer is it a wish; it is a full blown phenomenon.

At EASTEC, a regional manufacturing trade show which has become a must-do for makers of laser marking and engraving systems , about two dozen companies showed their products, many new to market, to a crowd of 11,000 Northeast manufacturers who braved three days of rain to scurry between five halls at windy West Springfield fairgrounds.

The common thread this observer picked up was that suppliers were dancing on the grave of the recent recession. Not only was it dead and buried, it’s ugly memory was almost erased as the industrial laser market is booming with record sales and bookings, and the future looks very bright for continuing good business at pre-recession levels.

Four thousand miles and a week apart, the good burghers of Munich welcomed a record crowd to this year's renewal of the biennial event. We knew that this one would be different when on opening day, which traditionally does not attract German visitors in large numbers, crowds entered the halls as the opening bell rang, a pattern that was in effect for three of the four show days. As the closing bell sounded. more than 27,500 visitors, an 8% rise over 2009, had pushed through the turnstiles.

What they saw was one of the most powerful displays of innovative industrial laser technology in the two Production halls of the six hall show. Product suppliers had used the recession to advantage, marshalling their reduced work force to focus on new products to introduce to a post-recession market.

On top of this, the German VDMA announced a 57% increase in industrial laser sales over 2009. But more exciting was the 2010 order intake of German companies: 90% over 2009 and within 25% of the record year of 2007, which looks to be reachable in 2012, a year and a half ahead of the industry consensus schedule

The more than 3200 attendees at the concurrent World of Photonics Congress heard hundreds of papers on the new applications, such as ultra-fast laser processing , that will be using the new products shown at the show. Topping it off, if you are a German supplier, was the Federal Ministry of Education and Research's announcement at this trade fair of itsone-billion Euro, ten-year investment to promote photonics research and development. Line up at the trough, guys.

Euphoria was the rule as personnel from over 1100 exhibitors made their way home from this -- the most successful ever -- Munich Show, The consensus of exhibitors and attendees was that business is great and will continue for the next 12 months.



Laser World buzz: Phenomenal growth

May 25, 2011 10:28 AM by WRITER FIRE

After two days here at Laser World of Photonics in Munich, it is clear that the laser business, especially the industrial laser sector, is having a great year globally and is recovering nicely from the recession which had left a lot of companies shaken about the future.

The VDMA , the organization that represents the machine tool industry, reports that orders received for new laser equipment in 2010 surpassed the record set in 2008. This suggests that laser revenues for 2011 may be able to exceed the record year of 2007.

Germany thrives on industrial laser and system exports, primairly to Southeast Asia (17%) including India. When shipments to Japan are factored in, Asia represents 23% of German exports. This is expected to drive their laser markets for the coming year or two.

Most of the buzz in the halls is about the phenomenal growth of the industrial laser market last year and this. Companies are projecting growth percentages from 35 to 65%, with bookings guaranteeing a record year for many.

Euphoria compared to two years ago reigns supreme amongst the hundreds of exhibitors here. You can confirm this by observing the show crowds filling the Munich beer gardens at night. I can vouch for this as I made an exhaustive survey.



Laser marking leads the manufacturing recovery

May 20, 2011 12:01 PM by zapper

This week, for the 35th time, Eastec - the East Coast’s largest annual manufacturing event - was held in West Springfield, Mass. The show's organizer, the Society of Manufacturing Engineers, was concerned that an entire week of rain and chilly weather would hold the expected attendance of 11,000 down, but this was allayed as cars started filling the parking spaces early on Tuesday and continued for the first two days.

This was the first Eastec since the recession turned the corner and the US manufacturing economy started its remarkable recovery . New England has responded more slowly than the national average, but you wouldn’t know it from the crowded aisles in the five show halls that featured over 900 exhibitors.

I attended because Eastec is a showplace for industrial laser systems exhibitors, especially those with laser marking equipment, of which I counted 24 companies showing markers powered by: fiber, solid-state, CO2,and diode lasers. Other suppliers showed laser welding , cladding , and microprocessing equipment.

I spoke at length with representatives of more than half the laser exhibitors and received almost uniform consensus that business had turned around during 2010 and that growth was continuing, for some at a record pace, into 2011 . And the laser systems exhibitors, even those experiencing modest growth, were optimistic that 2011 would be a good year for their business.

Admittedly my survey was heavy with marking system suppliers, an industrial laser segment that historically has experienced double digit growth every year but one. Laser marking applications cut across the entire manufacturing sector so, in that respect, its success this year may be a stronger indication of the overall health of the manufacturing economy here in the US.



End educational turf wars to foster skilled workers

May 9, 2011 12:38 PM by zapper

In an article entitled, "Help Wanted on the Factory Floor," by James R. Hagerty, appearing May 6th on the Wall Street Journal Digital Network, the author cites three factors that are causing the shortage of factory floor workers in the US. First is the remarkable growth in employment numbers for the last seven months. In seeming contrast to all the gloom and doom on the unemployment front for the past few years, US companies roared out of the recession, loaded for bear with a lean manufacturing team. Nice scenario, but they got caught in a dilemma as orders rolled in at an unexpected pace, which these companies were unprepared to handle with current staffing.

The second factor, baby boomer retirements, is starting to impact companies as their most experienced and productive workers are opting out for the “good” life. Hagerty says 25% of US manufacturing workers are 55 or older.

And finally, he, like many others, faults the US education systems for neglecting to nurture the skills that modern factory jobs require: math, science, and computer programming.

Of these factors, one, education, could have been corrected years ago. Job growth in the industrial market is a phenomenon. After two decades of reductions in factory employment, the US lost hundreds of thousands of manufacturing jobs that will never be offset by employment blips such at we are now experiencing. Just drive around Michigan if you need an object lesson.

Yes, the baby boomer retirements on top of this will make manufacturing a bright spot on the employment scene, but this is not the cause for the lack of employable young people in what is left of the US manufacturing base.

I personally have been involved with the “technical education” problem for several decades. I got involved with a southern state educational system as it moved to lay a base for trained technical workers to serve relocating industry. And as president of the Laser Institute of America, I dedicated my term to fostering support of the nation’s secondary schools offering laser processing curricula. And I was enmeshed in a political tug-of-war at a state university that missed an opportunity to become a leader in industrial laser material processing education. There, I ran into one of the most hierarchal and entrenched groups: professional educational administrators.

In this example, as the department head I was advising struggled with an academic turf war, I used to ask, “Who is representing the students in these discussions?” It got so bad that when he and I went to the faculty club for lunch, we were made to wait or if we were lucky, we were led to a table near the kitchen door.

After years of observing how other countries approached the same educational situation, I remain more convinced that we here in the US talk a good game but rarely follow through with positive action. I have heard and read about the same problems finding trained skilled employees for decades and Hagerty’s examples could have applied 30 years ago.It’s great to acknowledge a problem in our educational systems but when solutions are bogged down by internal territorial protection policies, then we should address that problem first.

I am very impressed with the community college programs I have witnessed in the states that are attracting new industry. Administrators at these colleges, backed by state educational programs, are tuned into the needs of local industry and follow through by initiating new programs to supply the needed employees. I have met several enlightened and committed administrators of these programs who place students first. It's one bright light I see to alleviate the lack of skilled employees.



Growing the industrial laser market

April 27, 2011 5:26 PM by zapper

I’ve been looking at the most recent fiscal year quarterly reports from companies in the Industrial Laser Solutions financial database because I was curious to see if a statement I have made a number of times is correct. The statement refers to companies pushing every last order out the door on the last day of their fiscal year so that annual sales were shown most favorably.

I averaged out the published results from a dozen leading suppliers of industrial lasers, laser systems, and related products and found two interesting facts: one related to the statement and the other confirming that the economy in the industrial laser sector was greatly improved.

On average the surveyed companies showed a modest single digit growth in revenues in the first quarter of FY11 compared to the last quarter of the previous fiscal year. Not surprising I guess, confirming my statement. I also noted that the last quarter of FY10 easily outperformed the previous three quarters.

At first I was a little disappointed in the numbers for the start of the new fiscal year, until I considered that fourth quarter FY10 was for many companies a record quarter, with some companies enjoying a 50% growth in revenues over the year coming out of the recession. Thus, a modest single digit growth on top of record revenues meant that FY11 was starting off with a bang.

On another matter, the Laser Institute of America's Northeast Regional meeting, held last week in Nashua, NH, focused on ultra-fast laser processing of industrial material. With a modest promotion, this event drew a record attendance with more than 80 members and non-members showing up, including some from the West Coast, who arranged their travel to include this event.

What drew this audience? For starters, four speakers form the laser supplier industry presented their products in a wide range of material processing applications, much to the surprise of many in the audience who were unaware of the rapid strides being made in the UFP technology. Led by the organizer and moderator Ron Schaeffer (Photomachining Inc.), presenters Bill Clark (Clark MXR), Mike Armas (Raydiance), Sid Wright (RPMC Lasers), and Paul Graham (TRUMPF) made a strong case for impressive sales growth over the coming years.

Even those familiar with this progress were impressed by the inroads these lasers are making into the industrial marketplace. And those of us who are always looking for the next big market push may have found it in the new applications that had, until now, not been laser capable.



What the * is going on here?

April 19, 2011 3:16 PM by zapper

The world's oldest marathon(115 years), the Boston Marathon, produced a new world record for the men’s winning time and almost did the same for the women. A mild day on Monday with a rather strong and gusty wind at the runners' backs helped them to phenomenal times this year. Unfortunately, an archaic marathon regulation dealing with the total drop in altitude over the course, from start to finish, which should be 150 feet instead of Boston's approximately 300 feet, prohibits this record from being officially world class. But as my neighbor, a four time Boston runner said, “Try telling the runners that the Boston isn’t tough.” Reports are that the winning time, a world record, will be accompanied by an asterisk.

This week is bringing to our attention the early first quarter reports from the public companies and, as expected from the comments we have received over the past three months, activity in the industrial laser sector continues its last quarter of 2010 performance. This alone is noteworthy because the end of the year, as mentioned in earlier columns , is a “clear the house” time at companies anxious to pump up annual revenues . So when 1Q11 numbers exceed 4Q10 numbers, you know that the market conditions are excellent, or as they say in the wine business, it has legs.

This is not in ignorance of the situation in Japan, as cited earlier , as those numbers are not available yet, but will obviously be seriously impacted by the reduced production schedules being experienced by most Japanese manufacturers. We are eagerly awaiting these numbers as we are now preparing a revised 2010 report and a new 2011 forecast to be presented in June on an ILS Webcast. But as we have stated earlier, any drag on the global economy should be noted with an asterisk as it is not a reflection on the market but on the result of the disaster in Japan.



Lasers not so unusual any more

April 11, 2011 2:54 PM by zapper

The news early this week is more pessimistic than optimistic, but not enough to cause any media newsbreaks. Stalemates in Afghanistan and Libya, one step forward and one back in Fukushima, and the U.S. Congress kept the government from shutting down, just as most of us knew they would after a lot of posturing.

On a much smaller scale than these events, business in the industrial laser sector is great, sort of contrary to all the dull international and national news. China’s trade balance went negative, ho hum, in sectors not impacting laser sales. Yes, Japan has yet to get their industries perking again and that’s not good, but not news. Industry in the U.S. and Europe are still on an upward arc, even though the latter is coping with a bailout in Portugal.

So the past weekend was peaceful and quiet except for the concern for the Red Sox losing streak; two out of three wins over the Yankees ended that. So my only temporary concern was for the poor golfer who blew a 12 stroke lead in the Masters and plunged out of site on the scoreboard. With a gaggle of very good golfers in the hunt at the end, his disappearance went unnoticed.

Do you ever get the feeling that things are too stable and that something will upset the quiet this week? I’ll be participating in SALA, the Symposium for Advanced Laser Applications, where among my duties I have the pleasure of hosting the Innovation Award for Laser Applications in Manufacturing Operations. I haven’t seen the acceptance speech by the awardee, Dr. Marshall Jones from GE, but I hope that he will mention the impact that the laser technology he championed had on GE to make it more productive and competitive. Because this is typical of what pulled U.S. manufacturing out of the recession so rapidly, manufacturers here are the most productive among industrialized nations.

Here productivity equates to automation and automation is almost connected to the word laser. For the first decade of this technology, equipment sellers were hesitant to use the word automation, as it raised warning signal with unions. Then, as the threat of automation on the job market seemed to disappear, global competiveness made it an antidote for low labor cost competition.

Laser fit nicely into automation systems, and low operating cost and maintenance free operation make them attractive for multi-shift operations.

One aspect that I think has helped is that the mystique of the laser has all but disappeared as tens of thousands of units are operating around the world, many in plants where they are no longer considered unusual. And that is a good thing.



Potential nuclear fallout in the laser market

March 30, 2011 8:14 AM by zapper

I’m getting more concerned about the nuclear accident situation in Japan than I was when I wrote last week’s blog . At that point I could envision a sooner rather than later return to normalcy at Fukushima, but now, as this is written, it’s beginning to look more like Chernobyl.

Setting aside the human misery connected to this event is difficult; here in my home state we are already measuring increased, but said to be safe, radiation levels in our drinking water, and the neighboring state of Vermont reports measureable radiation level increases in the snowpack on the mountains.

I’m far from being knowledgeable about nuclear power plant meltdowns, but many years ago, a good friend, Professor Vladimir Kovalenko of Kiev Polytechnical University, shared his observations on the Chernobyl solution with me. He had asked my assistance in soliciting funding from the U.S. Department of Energy to work on a solution to dismantling the Chernobyl reactor. It turns out we couldn’t get anyone interested in his approach, but in the doing I learned a little about sealing off reactors. Thus, I have a hard time seeing Fukushima’s three reactors being sealed as successfully as Chernobyl. I certainly hope they will.

Thursday at midnight is the end of Japan’s fiscal year. In the past, this was “hell week” as companies worked 24 hours a day to ship every billable order in their plants to insure a healthy end of year revenue report. It’s too late for many of the companies this year as it will be nearly impossible to get enough product shipped to influence the numbers.

I don’t have the facts, just reports here in the U.S. media about no shipments of parts, for example in the automotive industry, from Japan. At the very least, this lack of billable shipments has to hurt the last quarter and year end numbers. I estimate that Japan accounted for more than a $1 billon of industrial lasers and systems last year, and at 15% of world share any change in sales will be noted in the total global number for 2011.

I am currently working on a Mid-Year Report on the Industrial Laser Market that will be presented as a Webcast on June 30. I am going to delay making my final PowerPoint slides as long as possible so that I can get the Japan numbers right. The total impact of the Fukushima accident won’t likely be known until the end of the first half year here in the U.S. when public companies report their 6 month revenues.



Indicators point to disruption in Japan market -- maybe

March 22, 2011 3:43 PM by zapper

As this is written, the disaster in Japan is 10 days old and the initial shock and awe is past. We are now coping with the recovery from the earthquake and tsunami and living in dread that more bad news will emanate from the nuclear power plant in distress.

Fortunately, to the best of my knowledge, my friends and associates in Japan are all accounted for and safe, and for that we are extremely thankful, even while we share the sadness of the Japanese people for those dead and missing.

To talk about the economic condition of the country and specifically the situation in the manufacturing sector almost seems blasphemous since there is so much personal suffering to get past. But our attention has been diverted by events in Libya where once again our armed forces are involved in another political action so we can view global things more dispassionately

Several querists have asked my opinion of the Japan disaster's effects on the industrial laser industry. Since the issue is far from settled, it is hard to project the impact that a nuclear event might have because the situation, as they are wont to say, is fluid.

Already we have heard about the impact in the semiconductor and microelectronics industries and today’s Web alerts spoke of auto plant shut downs here in the U.S. as plants are coming up short on component inventory. At breakfast this morning, my wife, commenting on TV news about a shortage affecting GM, said that it “wouldn’t have happened if they placed orders here in the U.S.” I think that was a sarcastic remark, not typical of her.

According to my records, Japanese suppliers were planning to ship mot=re than 900 laser sheet metal cutters, 500 via hole drilling machines, and a couple of thousand laser markers along with assorted industrial lasers products. Word is that many of the suppliers are on a short work schedule or closed. So shipments will be affected; the questions are for how long and can the companies recover?

It is the end of the Fiscal Year in Japan and the last quarter revenues will be seriously impacted. I guess I'll have to put an asterisk against the Japanese numbers in my report this year, signifying that the numbers must be read in light of the earthquake and tsunami disaster.



Japan tested by earthquake and tsunami

March 14, 2011 10:23 AM by zapper

Along with countless others who have travelled in Japan, I am watching the news showing the results of the horrible earthquake and tsunami that struck the coast of Japan last week.

I made the first of many trips to Japan in 1978, and I still recall the thrill of landing in Asia for the first time at- Narita airport, which had just opened and was being besieged by protesters because local farmers objected to the government’s eminent domain policies. I spent three weeks and traveled many hundreds of miles visiting companies and touring most of the major cities. On that trip I met and/or was introduced to hundreds of Japanese citizens as I made presentations at the US Embassy and several major companies and universities involved in laser material processing. Many of the people I met remain among my valued acquaintances. They welcomed me to their country, gave freely of their time and knowledge to see that I was educated about their country, and made to feel at home.

A most memorable visit on the first trip was an unescorted walk through the Hiroshima Peace Memorial Park one Friday afternoon. I was one of the day’s last visitors and the only Westerner at that late hour. When you are all alone on such hallowed ground, you have the opportunity to think about the destruction and disruptions the atomic bomb caused. That visit was one of the most poignant I have ever made to memorials around the world. I left with a deeper appreciation for the resilience and dignity of the people of Japan who had suffered from the event.

As I watched the news reports flooding in, I was struck by the similarity of my feelings. Here was another sudden disaster visited on the peoples of Japan. My first thoughts went to many friends, associates, and acquaintances I am privileged to have in Japan. I contacted my closest acquaintances to ascertain their situation. One, my colleague who manages Industrial Laser Solutions – Japan, responded to my e-mail with a message that she and her family who live in Hokkaido were all OK. She ended her message by saying “I would like to say thank you to the US government that sent a big support to the afflicted area. It encouraged us a lot.”

As the weeks go by, we will follow the recovery in Japan. I am scheduled to be in Yokohama late in September; by that time, some level of stability should have been reached, but the lingering effects will be as indelible as the Hiroshima Memorial.



Fuel costs dampening rising economy

March 10, 2011 12:46 PM by zapper

I was pumping $3.39 per gallon gas into my car and thinking that this fill was going to cost me about $2.00 more than last week and $4.00 more than the last week in February. I don’t use my car as much as many who pile up the business miles each week and consequently feel the pain more. A friend takes a $60 load every week and, since he is a practicing psychologist, the only way he can cover the fuel cost is to slip an extra hour per week of consulting time into his schedule.

The company that picks up my trash weekly bills me for fuel adjustment and if I hadn’t already booked an overseas flight a month ago I would be paying a fuel surcharge. Those who can pass it on will do so now that the weekly changes are in the double digits. Those who can’t will see their cost of doing business increase with an attendant drop in profits.

I’ve been touting the end of the recession and, like many analysts, qualified my forecast by stating that it assumed a status quo in the world economy. Current events in certain oil producing states have slammed the cost of doing business, and some pundits are raising the specter of another recession. Some of these forecasters stubbornly refused to acknowledge the recovery, and, as the weeks went by this year, they railed against the good news with a series of qualifiers, none of which by the way included double digit weekly hikes in the cost of fuel.

The rising cost of a barrel of petroleum, manifested at the world’s gasoline pumps, is one of those few costs of doing business that transcends national interests. The cost of fuel passed on to consumers directly or indirectly eventually impacts everyone.

Talking with an executive of a laser product manufacturer the other day, he was commenting on the power of the Asian manufacturing market to recover from the recession, while here in the U.S. it looked like his manufacturing customers were not recovering at the speed and rate of their offshore competition. He speculated the projected further increases in fuel costs might prove to be the death knell for many marginal suppliers located in the U.S. just when business was beginning to look up.

I countered that all global manufacturers may be forced to pass on the fuel cost increase effects to customers since it is a common global problem and that should level the playing fields somewhat.

Even in a service oriented economy like the U.S., these fuel cost increases will have an impact along the lines of my psycologist friend who ramps up his chargeable hours to offset the rise. So, whether U.S. manufacturers compete or not, the economy here is in for a jolt, and it may be so widespread that spending will drop just when the consumer was bailing us out of the recession. Not a pretty picture.



Manufacturing sector, thus laser industry, on the rise

March 1, 2011 2:12 PM by zapper

Manufacturing is on the rise around the globe except in China. The March 1st Institute for Supply Management’s February factory index rose to 61.4 from 60.8 in January, the highest since May 2004 (readings greater than 50 signal growth). In the Euro region, manufacturing grew to 59 last month, the highest since June 2000. In the UK report, Markit Economics, the index held at 61.5 last month, the highest since 1992.The PMI in Japan was up to 52.9 in February from 51.4 in January. But in China the HSBC China Manufacturing PMI fell to 51.7 , a seven month low as that country’s central bank raised interest rates three times in four months in an effort to cool-off inflation.

These statistics, even including those from China, are good news for the world’s industrial laser equipment suppliers. First it supports the very positive news generated by pubic company’s quarterly and annual reports. And for those counting on sustained manufacturing health to meet the guidance they issued for the next quarter, it produces an overall sigh of relief. The only tempering news is the price of oil rising to record heights as a consequence of the political turmoil in several oil-producing nations.

Industrial lasers are, for the most part, tied to the fortunes of the world’s manufacturing economy; proof of this is aptly shown by the speed with which the industrial laser revenues tanked at about the same time as manufacturing did. This is a dramatic change from the days when laser sales lagged manufacturing cycles by about six months. Part of this can be attributed to the side effects of today’s lean manufacturing practices where scheduling is tight and buying decisions are made on much shorter lead times.

The message is that laser equipment suppliers need to be paying closer attention to the MPI numbers so they do not get sandbagged as they did in December 2008 when order cancelations flowed in at an alarming rate, not allowing the suppliers time to reorganize and adapt.

Except for any lingering effects of the sky-high oil prices, it looks like clear sailing for the laser industry through the first half off this year. Several key suppliers have backlogs booked well into the second half from industries that made it through the recession in relatively good shape and therefore are well positioned to continue in that mode for several months.



It looks like a duck

February 14, 2011 2:53 PM by zapper

Every once in a while I get stumped by a seemingly innocuous question. At a recent presentation before a group of non-laser aware engineers, during the portion describing opportunities for laser welding, I was asked if lasers used for soldering /brazing applications were included under the welding topic. And further, if they were, why wasn’t the topic called laser joining, or better yet since the topic of the presentation was Lasers in Production Operations, why wasn't the section title just joining?

If I was a stand-up comedian I would have had a snappy comeback for that last part that would bring a laugh from the audience. Rather than embarrass the questioner, however, I deviated from my prepared remarks and provided a lengthy rejoinder, which in retrospect was overblown and too weighty. My answer, dealing with a bigger issue, was why we misuse the term laser when we mean laser beam or even more correctly, why not laser energy.

I used the following example. Years ago as the marketing director of a start-up commercial enterprise within a large R & D organization, a new general manager brought in a high-level physicist to help with the development of a multi-kilowatt material processing laser. During weekly staff meetings, each director presented an update on progress and answered questions from the senior staff. The physicist had a partially irritating habit of posing his questions as challenges to a presenter’s knowledge rather than as information seeking queries. He was very critical of incorrect use of terminology and never failed to find mistakes in our reports -. Among these was the use of laser instead of laser beam.

I’ll confess to a personality clash that caused me to take offense at any challenge he raised, factual on not. And I found most unsettling his refusal to acknowledge common usage as an answer to his nit-picking questions. But I must say that even today when I inadvertently use the term laser instead of laser beam, a picture of that insincerely smiling physicist asking that question comes to mind.

This is apropos to a bigger question: Are we now at a point where we can drop the term laser welding and instead refer to welding, soldering, and brazing as laser joining applications? At ILS, we have sort of done this for years as we present applications that include soldering and brazing in our annual market review as laser welding. Admittedly, soldering and brazing are a small potion of annual laser joining revenues, and this is the rational I have used for years. But now it may be time to call it like I see it and refer to the processes under one title: laser joining. This should raise the ire of my nemesis physicist, since he would loudly complain that it is laser beam not laser joining .



An upbeat buzz at Photonics West

February 1, 2011 8:37 AM by zapper

In my last Blog I regaled you with anecdotes about the snowstorms plaguing the Northeast, so this is going to sound like a broken record but we had two more last week. One of them dumped another 69 cm of snow from a fast moving storm that was out of here a few hours before I returned from San Francisco, where I enjoyed record-breaking temperatures in the high 20 cm range all last week. What with record cold temperatures below -18C in Boston and 150 cm of snow on the ground. you’re probably wondering why I came home from that glorious Bay area weather. Me too. It would have been hard to explain to my fellow Photonics West show goers why I stayed after the event was over.

Photonics West was a roaring success, with a record crowd of about 20,000 clogging the aisles in the North and South Halls and the many conference rooms where the SPIE technical sessions were held at the Moscone Center. We knew something was up when the aisles in the South Hall, where we had our booth, filled up just after the opening on Tuesday and stayed that way through Thursday noon.

As I wended my way through the halls to visit other exhibitors, I was impressed by the density of the visitors in the halls and in supplier exhibits. At a Wednesday afternoon LASE conference on Fiber Lasers, my presentation on the fiber laser markets drew a standing-room-only crowd of more than 250. I shouldn’t brag about this as most fiber laser sessions drew full attendance, but when I finished almost half of the audience left the room.

The overall attitude in the exhibit halls and conference rooms and at the annual PennWell-organized Lasers & Photonics Marketplace Seminar was upbeat. Veteran attendees like me recognize that buzz that seems to permeate a show when business is good. It’s an undercurrent of excitement on the part of visitors echoed by the exhibit booth personnel. And one can pick it up in the hotel lobbies and bars where the noise level ramps up after the show and in the restaurants populated by show goers and exhibitors where the bills can be obscenely large. Midway through the week we had our impression of business health confirmed with the reports from two public companies, Coherent with sales up 49% year on year and II-VI, which reported a 76% increase y/y.

There is no doubt about it; business is good in the laser markets and getting better. The manufacturing sector in the U.S. is having a great recovery from the recession, so much so that companies have begun to set aside overtime and hiring is commencing — not a full blown industry wide reaction, but large enough to staunch the unemployment number growth and produce some real downward movement. The Associated Press reports that at Number 1, the U.S. out-produces Number 2 China by more than 40% and does it with less workers; by making complex and expensive goods.

At my Lasers & Photonics Marketplace presentation last week, I was very optimistic about the long term prospects for market growth, so much so that at the lunch break I was jokingly being called Pollyanna by fellow attendees. But you can’t deny the numbers; six months ago, the same numbers were neutral and now they are very positive. So go with the flow and enjoy a renaissance in U.S. manufacturing and the growth of the laser market accordingly.



Changing attitudes

January 21, 2011 2:37 PM by zapper

When last I left you, we were riding out another nor’eastah (as they say down Maine), which ended up leaving 23 inches on the ground, followed by another 4, then 8 and as this is being written, another 8 inches. We’ve already passed the annual average snowfall with another 6 to 8 weeks to go before the weather pattern changes to warmer temperatures.

As you read this, I will be winging my way to milder climes in San Francisco for the annual Photonics West, the SPIE LASE Conference , and PennWell’s Laser and Photonics Marketplace Seminar.

In reverse order, at the Marketplace Seminar , I will be bringing positive news to a roomful of marketing executives, who already know that the tide has turned and business is very good. I’ll be showing them market numbers that suggest the industrial sector will return to pre-recession revenue levels a year ahead of what had been forecast. Suppliers are reporting record sales revenues and profits, and bookings at many are at an all-time high.

I was visiting with a system integrator who said his bookings through 2011 and into 2012 are a record and that his main problem is finding vendors to supply the company’s production demands. It seems we all joked about this situation when we in the depths of the recession, saying, "It’s a problem we won’t complain about” then.

My Seminar presentation is full of optimism, and I will back it up with my view of the industries being served by industrial lasers and their buying plans for the coming year. Even the solar cell business, which looks to be in a cyclical downswing, as some countries cut or drop subsidies, is positioned to work off the inventory as new markets open quickly. This is great for the laser business as this is a key industry for laser processing.

At the LASE conference, I will show the status of the fiber laser industry and how its growth potential will make it a dominant player in the indusial laser marketplace as early as next year. Fiber lasers, along with other solid-state lasers, dragged the laser market up to significant growth last year, but the big growth numbers were with fiber lasers, which will now continue to eat into solid-state sales, especially in microprocessing.

And, finally, I will be meeting with a cross-section of laser and component suppliers, all of which focus on the industrial market. Photonics West set records for exhibitors this year, and its character is changing a bit as visitors are feeling comfortable with their products. I fully expect to hear nothing but good news from those I interview as the timing of the recovery couldn’t have been better.

It will be a busy week, but the show and conferences will be upbeat and a pleasure to attend.



Oh, the weather outside is frightful

January 12, 2011 11:28 AM by zapper

Outside my window it is snowing hard. This is the third Nor’easter in 5 days, the first two being inconsequential, just 1 and 4 inches, respectively. But this one is, as we say here in New England, a "wicked storm", with 20+ inches already down and more to come.

Friends and colleagues across the pond in Western Europe know what I am writing about as they have had one of the worst winters for snow in decades, with some of them living in countries where snow depth records were set. I’ll be seeing many of them in a few days at Photonics West in San Francisco, and I am sure we’ll greet each other with outstretched hands showing the snow depth.

My good friend and SALA colleague, Bob Murray, tells me he and his wife, Pauline, fought their way up Interstate 84 from Danbury, Connecticut to East Hartford in 5 hours Saturday night. It’s only a 60-minute drive normally, but 8 inches of unplowed snow closed the highway, forcing a backroad detour. I can’t believe he left the warmer Hilton Head, S.C., for an old fashion Nor’easter this week.

Bob was calling to bring me up to date on SALA activities. (The 6th Annual Symposium for Advanced Laser Applications will be held in Hartford on April 13 to 14.) Registrations, sponsors, and tabletop reservations are coming in and the speaker’s panel is filling up. This year the Organizing Committee has taken a new tack: All speakers will be end users nominated by a panel of product suppliers. The plan is to meet the goal of being the first “end users” symposium, and attendees are being invited from all over North America. To accommodate those traveling long distances, SALA has been moved to the Sheraton Hartford and a block of rooms at an attractive rate will make attending economical.

The program has been arranged so that attendees can pick and choose sessions and combine this with time to meet and discuss projects with the exhibitors in an adjacent room. For example, there is a session on laser drilling , another on laser welding , and one on surface modification , cutting , additive manufacturing , coating removal and process control.

SALA will be an event where users can get the latest information on their processing activity, and those new to the technology can learn more about the processes and the economics of each as shared by the speakers who themselves are users.

ILS is deeply involved with SALA. I serve on the Organizing and Planning Committees and ILS is the exclusive media partner. So we are looking forward to this opportunity to meet with a diverse group of manufacturing professionals who share one interest: laser materials processing.



Wiping the slate clean

January 3, 2011 12:18 PM by zapper

It’s the first week of a new year/decade, and here in New England it started bright and sunny, with the temperature above normal. Outside my office, the remainders of an unexpected blizzard a week ago are just about gone as we enjoyed almost balmy temperatures last week, melting the 12 inches of snow on the ground.

I like to wipe the slate clean and forget about last year, just as I turn the calendar page and start the year with optimism, well founded this year as business prospects are looking up and good news abounds in the manufacturing sector. The Monday Wall Street Journal was full of good news, but the item I liked the best was headlined, "Big Firms Poised To Spend Again," which opened with “Big U.S. companies have cleaned up their balance sheets and, flush with cash (my emphasis), appear open to using it in 2011 on factories (again my emphasis), stores and even hiring (me again)." It’s a long article and I encourage readers to savor it.

What could be a better way to start the year than to read about companies primed to boost manufacturing in the US? If you weren't already feeling positive about a fresh new year, this will help you change your attitude.

Many of us charged with forecasting the economy, in my case that of the industrial laser community, were cautious in their year-end reports. There was an optimistic undertone, but conservatism engendered by world events and a little residual bruising after the recession led to a cautious modest growth forecast for 2011. My number is 14%, which isn’t far off the 18.10% CAGR of the market since 1970.

My roadmap for sustaining economic growth includes modest growth rates, led by applications in the medical device, display, semiconductor, energy , and aerospace industries. A return to solid double-digit growth in marking/engraving will bolster the solid state and CO2 numbers.

Application growth in laser assist manufacturing and the buying capacity of the BRIC markets will keep industrial lasers on an upward growth curve.

So my new year optimism is grounded in the reality that the pieces are all in place for a vibrant new year/decade.