U.S. Manufacturing Technology Consumption Bounces 26% Off Bottom

These numbers are impressive, and they surprised me. But remember, these are numbers that are bouncing back from somewhere deeper than the basement floor. There's a long climb back to the top still ahead of us.

On a historical note, consumption of manufacturing technology, used to count solely metal-forming and metal-cutting machine tools until the late 1980s, when adding things like plastic-forming machinery made a dismal picture look a lot better. At the time, the National Machine Tool Builders Association changed its name to the Association for Manufacturing Technology. Since then, the AMT has apparently joined with the American Machine Tool Distributors' Association to continue compiling and releasing these monthly reports.

Back in the late 1980s, when I was writing regularly on capital goods industries, consumption of manufacturing technology was extremely volatile. When the manufacturing sector felt distress, one of the first things it did was stop purchasing new manufacturing equipment. And it was not until well into recovery that the sector began purchase new manufacturing equipment. Typically, you would see employment gains well before you saw equipment purchases begin to rise. We still haven't seen employment gains in manufacturing this time, which suggests this is either a blip of a bounce off the worst recession since the Great Depression, or that there has been a structural change in the U.S. industrial base.

I suspect that it's a combination of the two. First, the past two weeks have seen more warnings of the second dip just ahead of a double-dip recession. Second, manufacturing technology is much more automated than it was even 20 years ago. CNC (computer-numerical-control) of machine tools moved beyond experimental in the 1960s (and had largely been funded by Defense Department programs to improve the manufacturing technology of the aerospace sector; yet another example of how the conservative theme of "free market" entrepreneurship is largely a myth), but it was not until the early 1980s that CNC machine tools came into wide use in the U.S. Since then, the bugs and kinks have been worked out, and entire lines of CNC accessories and equipment designed and offered, such as automated robots to store, hold, and change cutting tools.

Manufacturing Technology Consumption Up 26%
Orders were placed in December to take advantage of tax relief measures.
by Industry Week

January U.S. manufacturing technology consumption totaled $130.96 million, according to AMTDA, the American Machine Tool Distributors' Association, and AMT -- The Association For Manufacturing Technology. This total was down 40.3% from December but up 26.2% from the total of $103.77 million reported for January 2009.

"Many customers placed orders in December to take advantage of tax relief measures, pulling orders out of January 2010," said Peter Borden, AMTDA President. "The good news is that January 2010 orders are still 26% ahead of January 2009. Fortunately, there are measures moving through Congress that will expand these benefits, incentivizing manufacturers to invest in capital equipment in 2010."

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