Notes From The Field – Heavy Equipment Manufacturing
The hallways down to the conference were lighter than expected.
We were the Westec Conference again today. It is our last day of meetings with current and prospective clients. We met many companies that came, from around the world, to see advances in aerospace and light / heavy manufacturing products. The ceiling was often out of view, blocked by large laser cutters and other equipment. Even a mold for a helicopter blade was there, in place we’re sure for the aerospace part of the exhibition.
Many of these machines sell for over $1 million dollars. Clients often buy many when re-configuring at a medium-sized factory. Individual orders include the primary machines along with the related loading and packaging equipment. Combined purchases can easily reach over $50 million.
The most impressive display was a laser welder, who made one of the most perfect welds we’ve ever seen (and much, much faster than a TIG welder would do). I could barely see any ridges in the surface, even close up, and it was done freehand. Very impressive!
Many of the vendors were surprised on the turnout. We did speak to many manufacturing business owners. They echoed our thoughts: 1) the need for more raw and intermediate inventory at their client factories and 2) shared an expectation of the economy slowing down modestly in Q1 & Q2.
We felt sorry for some of the high-end Asian producers. I’m sure that salespeople had to fight the “When can we actually get this product to our factory here?” question due to supply chain problems.
Machine tool orders often lag the economic cycle, with demand rising late as orders exceed capacity to produce. For example: even thought gun sales have softened there were a number of vendors offering machines that drill and rifle the barrels to sell to gun manufacturers.
Interest in our equipment financing services was strong, so we were pleased with our time spent at Westec. That may reflect customers being more careful with cash flow going into year-end. Three people volunteered (without prompting) that forecasting was particularly difficult for 2022.
Perhaps we’ll learn more today, after we come back from the last day there.