2012 State of the Industry: Lasers

Forecast: There will be increasing consolidation in this high growth industry, as advanced automation provides strong opportunities in the agricultural sector and other markets.

Bill Citron
President, Mazak Optonics Corporation
Manufacturer of 2D and 3D CO2 laser cutting machines for the metal fabrication, structural steel, and construction markets.

CURRENT STATE OF BUSINESS
My personal assessment of the current state of the manufacturing industry is stable and increasing. If business owners are highly tuned into their customer base and don’t let the news media put them on edge when reporting about uncontrolled government spending, they will find a continued demand for their products and services.

The businesses that successfully came through the 2001 and 2008 market collapses have proven they are the best of the best and will play a key role in keeping the positive industry momentum going throughout 2012. Overall, I think 2012 is going to be a good year and that the manufacturing industry as a whole will see a growth around 10 to 15 percent. However, at the same time, I think manufacturers are going to be cautious until they see what happens during the presidential elections next fall.

We attended FABTECH 2011 and what we heard from our customers was highly encouraging. They reinforced what I mentioned earlier: if you pay attention to your customers and understand their goals and challenges, there is plenty of work out there. We are seeing the most activity within the agricultural industry. We’re finding global companies such as CNH, John Deere and Caterpillar are growing their businesses by 20 and 30 percent year after year.

When it comes to laser cutting product applications, there seems to be plenty of opportunity, especially when you look at the growth that has taken place over the past year. According to AMT reports, our industry grew between 30 and 40 percent between 2010 and 2011.

MAJOR TRENDS
One of the trends I see developing in the industry during the coming year is increased consolidation, with larger companies buying up smaller, family-owned businesses. Cash-rich companies want to expand their opportunities, and it is much easier to buy your way into a market than develop a market from the ground up.

Increased machine tool automation is another trend I see on the horizon. It appears that virtually every one of our customers are having a difficult time finding qualified machinists and operators. This means they are foregoing the search for experienced individuals and instead hiring people with a good work ethic and training them. As a result, machine tool builders who automate as many processes in manufacturing as possible so that less skilled operators can get the job done are going to come out ahead.

With advanced automation being a hot button issue, we are focusing on simplifying the actual operation of its equipment, as well as automating the machines so that less experienced individuals can successfully operate them. However, the more automation a company uses, the more necessary it is to have an employee who understands the overall system and can serve as a lead to reset the equipment.

CRITICAL ISSUES
One of the critical issues I see facing the industry during the coming year is a skilled labor shortage. While attending FABTECH 2011, almost every single one of our customers expressed how difficult it is for them to find qualified machinists and operators.

Another unfortunate issue is that a lot of smaller companies are still dealing with the fact that credit is not easy to obtain. Before the economy collapsed, we were all accustomed to easy money at low interest rates. These days, however, banks are closely scrutinizing the financials of companies, despite how successful they might be, and making it difficult for them to secure loans intended to help them grow their business.

When it comes to dealing with the skilled labor shortage, we are focusing on simplifying the actual operation of its equipment, as well as automating it machines as much as possible so that less experienced individuals can successfully operate them.

In terms of companies finding it difficult to obtain credit, our company has the wherewithal to work with several large banks to provide credit to its customers. We are willing to back customers who we feel are good risks, even though the banks acting on their own might not be so sure.

PERSONAL INSIGHTS
It is a critical time for our customer base, as they are experiencing increased demands from their customers while at the same time feeling the credit pinch – putting their cash management skills to the test. Therefore, it’s important for manufacturers to become as productive as possible. They can no longer become backlogged and make their customers wait two to four months for a product.

We live in a “fast food” society where customers want their order now, want it to their exact specifications and want to pay less for it. If manufacturers aren’t doing the necessary things to give their customers exactly what they want, they will lose out to the competition.

Mazak Optonics Corporation, 2725 Galvin Court Elgin, IL 60124, 847-252-4500, Fax: 847-252-4599, www.mazaklaser.com.