Subscribe to our free, weekly email newsletter!


Final thoughts from Supply Chain Advantage

By Bob Trebilcock, Editor at Large
September 13, 2012

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

image
Bob Trebilcock
Editor at Large

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484 and .(JavaScript must be enabled to view this email address)


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!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in November was up 3.5 percent compared to October, which was up 0.5 percent over September at 136.8 (2000=100), marking the highest SA on record.

UPS said that through this acquisition it will augment its healthcare expertise and network in Europe, specifically in the fast growing healthcare markets in Central and Eastern Europe.

Carloads were up 12.1 percent at 312,271, and intermodal at 280,337 containers and trailers saw a 4.5 percent annual gain.

Total November POLB volumes were up 2.1 percent year-over-year at 581,514 TEU, and POLA volumes in November decreased 3 percent compared to November 2013 at 663,346 TEU.

When railroads are doing business with a larger than large customer like UPS, it stands to reason, it can often be the best, and worst, of both worlds, depending on how things are going. That was one of the main takeaways from a presentation by UPS Vice President of Corporate Transportation Services Ken Buenker at this year’s RailTrends conference in New York.

Article Topics

News · Materials Handling · Economy · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA