During the 1990s, the same manufacturers who saw rapid gains in labor productivity also saved $25.3 billion in carrying costs between 1992 and 1997, says AMT, largely because of advanced manufacturing processes and their concomitant decline in inventory requirements. In fact, the key industries served by machinery makers realized nearly that amount ($24.3 billion) in labor costs alone during 1997. And that does not even take into account improvements in quality that mean lower prices and less maintenance for the consumer.
      But productivity gains cannot hide some basic economic facts.
      Since July 2000, the U.S. government reports that some 1.2 million Americans have lost their manufacturing jobs, with unemployment reaching 5.7 percent in November 2001, the highest level in six years. Around 400,000 of those jobs were in the electrical equipment and industrial machinery sectors. Through the third quarter of 2001, AMT reported that machine tool consumption was down by more than 33 percent from the same nine months in 2000.
      "What that means in terms of expansion, is that there is very little," says AMT Vice President of Communications Robert Gardner, explaining that many members are smaller shops with a single site. "Automotive, aerospace, and appliance makers are faced with their own problems. If a customer is in that kind of difficulty, it's easy for them to postpone capital spending -- it's like postponing putting a new roof on your home."
      AMT President Don F. Carlson said last fall that part of the rebound will be improving the capital investment environment by implementing a much-debated economic stimulus package. That wish came true this spring, providing a very welcome breather for the industry, especially in the area of depreciation allowances, which ought to help in both the near and long term.
      Almost all of the 300 middle-market manufacturing CFOs surveyed by Fleet Capital Corp. felt that the economy would recover by the end of 2002, with just over half of them predicting their revenues would grow in 2002.
      "The CFOs' optimistic outlook is consistent with the demand we're seeing for financing acquisitions and other growth activities," said James G. Connolly, president of Fleet Capital. Around a fifth of those manufacturers expect to be involved in some kind of merger or acquisition during 2002.
      "They are looking for ways to be more productive in the future," says Gardner. "We're in the business of selling machinery to make customers more productive and competitive. But it's tough, when business is off as far as it is now, to get past battening down the hatches."