Final thoughts from Supply Chain Advantage

If the materials handling industry is any indicator, the economy is healing.

By ·

Editor’s note: this article originally ran on the Web site of LM’s sister publication, Modern Materials Handling.

Let’s go out on a limb: I think the economy is improving. I say that despite the headwinds we all acknowledge, such as persistent unemployment, a continuing crisis in Europe, a potentially nuclear Iran, an election that’s too close to call and the impending fiscal cliff.

A reasonable person might ask: What the heck does this guy know? He was an English major. Fair enough. My wife and daughter would probably nod in agreement.

So why am I an optimist? For one, I’ve noticed that the dialogue among the analyst and professional investment community is changing. The other day on CNBC, one commentator pointed out that all of the headwinds I mentioned above have been plaguing the economy since 2008, and yet we continue to see incremental improvement. And Ken Langone, a legendary investment banker, and Richard Grasso, the former head of the New York Stock Exchange, both opined that the economy has bottomed—they’re expecting a nice turnaround beginning in the second half of 2013. That’s a time when many have been predicting the start of a double dip.

On Tuesday evening at Supply Chain Advantage in Park City, Steve Forbes, the editor of Forbes magazine and former Republican presidential candidate, acknowledged the tough times we have come through, but predicted good times ahead. The way Forbes sees it, our current situation is not the new normal. It’s an anomaly that will pass. He added that if five years from now he’s proven right, he’ll never let us forget and if he’s wrong, well, he’d blame it on the wine. Smart man.

What’s the view from the materials handling industry? I put that question to John Baysore, president and CEO of Dematic North America, at Dematic’s supply chain conference on Tuesday. For starts, Baysore says Dematic is planning for growth and not a recession. “We divide our business into three segments,” he said, outlining the degrees of automation a company may deploy, from simple pick-to-light or voice-pick solutions all the way up to complex integrated systems with multiple automation technologies. “We’re expecting growth in all three segments,” he said, “with the most significant growth in complex integrated systems.”

He pointed out that Dematic is increasing it’s R&D spending, especially in the development of software solutions and its portfolio of technologies.

More importantly, he noted that the materials handling industry, and not just Dematic’s business, is outpacing economic growth in all of the regions where Dematic does business. “In North America, GDP is growing at 1-1/2 percent a year and the industry is growing from 8-to12 percent,” Baysore said. “In Europe, our CEO believes the industry is growing at 4 percent a year. In South America, Brazil is an economy that has taken off. And in Asia, Australia is healthy and China is doing extremely well, as is Korea.”

Baysore attributes the industry’s growth to a number of dynamics, some of which are specific to certain geographies. In China, for instance, where wages are still relatively inexpensive, the need for accurate inventory and orders is driving automation. Here, manufacturing is automating to take labor out of the equation and get more competitive. In distribution, the e-commerce boom and the increase in each picking is driving the demand for labor saving innovation. “It’s just not practical to add hundreds of employees in a piece picking operation,” Baysore said. “More importantly, it’s difficult to find them. Labor availability is an issue.”

I agree with everything Baysore said. I am hearing similar insights from other executives in our industry. At the same time, as Steve Forbes suggested on Tuesday, I think good times are coming, slowly, inexorably and surely. And, hey, if I’m wrong, I can blame it on the wine. 


About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Economy · Materials Handling · All Topics
Latest Whitepaper
Reduce Order Processing Costs by 80%
Sales order automation software will seamlessly transform inbound emailed and printed purchase orders into electronic sales orders that can be automatically processed into your ERP system with 100% accuracy.
Download Today!
From the June 2016 Issue
In the wildly unstable ocean cargo carrier arena, three major consortia are fighting for market share, with some players simply hanging on for survival. Meanwhile, shippers may expect deployment shifts as a consequence of the Panama Canal expansion.
WMS Update: What do we need to run a WMS?
Supply Chain Software Convergence: Synchronization Realized
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Optimizing Global Transportation: How NVOCCs Can Use Technology to Operate More Profitably
Global transportation isn't getting any easier to manage, especially for non-vessel operating common carriers (NVOCCs). Faced with uncertainties like surcharges—but needing to remain competitive when bidding against other providers—NVOCCs need the right mix of historical data, data intelligence, and technology support to make quick and effective decisions. During this webcast you'll learn how Bolloré Transport & Logistics was able to streamline its global logistics and automate contract management.
Register Today!
EDITORS' PICKS
Details Key to Cross-border Ease
Ever-changing regulations are making it risky for U.S. companies engaged in cross-border trade...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo