06282017Wed
Last updateTue, 27 Jun 2017 5pm

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Lubricants: Always Important—Sometimes Essential

Lubricants: Always Important—Sometimes Essential

Most valve professionals take more notic...

Why Air Valves are Needed in Water Applications

Why Air Valves are Needed in Water Applications

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Achieving Profitability Through Maintenance Management

Achieving Profitability Through Maintenance Management

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Control Valve Positioner Performance Diagnostics

Control Valve Positioner Performance Diagnostics

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Industry Headlines

Emerson in Talks to Acquire Software Company Paradigm Ltd.

15 HOURS AGO

According to Bloomberg , Emerson is in talks to acquire software company Paradigm Ltd. for approximately $1.5 billion.

“Paradigm specializes in seismic data interpretation and imaging equipment to help oil and gas companies know where to drill. The logic of such a deal seems sound and will help Eme...

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VMA Members Lead MDM Top Industrial PVF Distributors List

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Modern Distribution Management (MDM) recently published its Top Distributors list for 2017. Four of the top 5 distributors in the Industrial PVF category ; MRC Global, NOW Inc., Wolseley Industrial Group and FloWorks International; are currently VMA members.

“While oil & gas markets have start...

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Mountain Valley Pipeline Gets Environmental Approval

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The Federal Energy Regulatory Commission (FERC) determined that construction and operation of the Mountain Valley Pipeline would result in some adverse environmental impacts, but the majority of these impacts would be reduced to less-than-significant levels. This determination is based on a review o...

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Delta Chemical Plant Planned for Houston Area

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U.S. Durable Goods Orders Fell the Most in 18 Months

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New orders for manufactured durable goods in May decreased $2.5 billion or 1.1% to $228.2 billion, the U.S. Department of Commerce announced. This decrease, down two consecutive months, followed a 0.9% April decrease. Excluding transportation, new orders increased 0.1%. Excluding defense, new orders...

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Texas Manufacturers See 12th Consecutive Month of Growth

18 HOURS AGO

Texas factory activity increased in June, according to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 11 points to 12.3, indicating output grew but at a slower pace than in May.

Other measures of current manufacturing activity also i...

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Market Outlook 2011: Clear Skies? Wait Until 2012

2011 market outlookMany of the attendees of this year’s Market Outlook, held Aug. 12-13 in San Francisco, came hoping (at last) to hear some good news. The last two years of workshops—put on annually for members by the Valve Manufacturers Association and featuring a dozen economists and industry experts—saw the nation in its worst recession since the depression and most forecasts were pretty bleak.

But probably the most encouraging news to those in attendance is that almost every speaker emphasized they see no double-dip recession in sight.

HIGHLIGHTS AND COMMON THEMES

  • Stimulus packages have helped: Beyond the water/wastewater industry, several other U.S. industries have been helped by federal stimulus, especially those that have to do with building infrastructure. Speakers also pointed out, however, that stimulus packages in other countries have benefited North American industrial manufacturers by creating new markets.
  • Take advantage of low interest rates: Several presenters pointed out that the nation is not likely to see interest rates as low as they were at the time of the fall 2010 workshop anytime soon. While credit is still tight, it’s about to open up, speakers said, so companies should look for ways to take advantage of that situation.
  • Global warming concerns will affect most industries: Almost every speaker this year talked about greenhouse gas and other environmental concerns as well as the possibility of new legislation both at the state and federal levels. From the fact the nuclear industry may benefit because coal is getting a bad reputation, to the effects the Deepwater Horizon disaster will have on drilling, speakers shared new possibilities about what might happen.
  • China has become a better consumer; Brazil a good place to do business: Although it’s still tough to enter the Chinese business world, the country has become a better place to sell for some industries, such as the pulp and paper market, where production of paper goods cannot keep up with Chinese demand. Meanwhile, several speakers talked about developments occurring now in Brazil, including recent discoveries of massive oil deposits in deep-sea, “pre-salt” layers of the earth. Attendees were encouraged to look into finding partners in this business-friendly country.

 

THE DOMESTIC MARKET IS RECOVERING… SLOWLY

Last year, when meeting attendees heard Alan Beaulieu, economist, Institute for Trend Research, speak, “the picture was disturbingly gloomy. But I told you there would be a recovery,” and that recovery has occurred, Beaulieu said. Also: “For those worried about a double-dip recession, relax and take it down a couple notches. Because while there is uncertainty everywhere, there will be no double-dip recession and recovery will be here in 2012,” he said.

However, before meeting attendees could get fully comfortable with that good news, Beaulieu went on to say that the biggest change over last year’s forecast is that “it’s not going to be much more fun” in 2011 than 2010—2011’s move upwards will be milder than originally thought.

The nation’s unemployment rate (which was 9.5% at the time of the outlook workshop) has acted as he predicted last year, which was to stay high, and it may stay that way for awhile, he said.

“You have to look at how many jobs are created in a month. When we get to 200,000 to 300,000 jobs a month, that’s a real recovery,” but at that rate “it will take us three years to create all the jobs we lost, and there is no government initiative out there to help,” he pointed out.

Still, there are many signs that are more positive, Beaulieu said, starting with the lending situation. As far as commercial lending, which is still tight, the competition will begin to heat up soon, and when that happens, standards go down and credit loosens, which “is grease for the economic engine and good things begin to happen.” In the consumer realm, this is already occurring, he pointed out, and commercial is usually right behind.

Regarding inflation, Beaulieu originally predicted it would begin in 2010, but now says “it will hold off until the second half of 2011, but it’s coming.”

Interest rates are at an all-time low, though Beaulieu predicted the trough would be reached soon and then rates will creep upwards until the 2030s, when they may be as high as the Carter years. He advised attendees to “borrow. Invest in anything that will drive your efficiencies and do it in the next six months.”

Meanwhile, manufacturing “is coming back with a vengeance,” he said, pointing to the U.S.’s industrial production figures as well as GDP (gross domestic product) figures that measure rates of change going forward. Both are trending upwards, and demographics for long-term success are favorable in the U.S., he said. For example, the United Nations predicts this nation’s population will grow to 400 million (from 300 million today) by 2050, which compares favorably to places like China, with its birth restrictions and Russia, where the average age is increasing.

Still, Beaulieu had one piece of news that had the audience groaning—he looked down the road 20 years and announced that another great depression is coming—brought on by many factors such as high interest rates, inflation and a government that owes too much. “This won’t be our problem [referring to those at the workshop because of their age], but it will be the problem of the generation behind us,” he said. (Editor’s note: Read our interview with Alan Beaulieu in “Conversation with…” on page 52 of this issue.)

However, he ended by saying that proactive companies, those that look at leading indicators and how their particular companies fit into the current economic picture, will win out over the competition.

“Don’t wait for anyone to make your future. It is up to us to what happens to our world,” he said.

FORECAST: The stock market will return to a bull market going into 2011 and the economy will continue to expand for another six months, but this will not be an easy market in which to make money. Equity will offer a better return than counting on inflation (rising prices). Once inflation hits, lack of spending power may become a problem.

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