Silver Lining Amid Market Conditions
ROCKFORD, IL-Is it possible to find even one sliver of good news in today’s global economic crisis? One economist actually has identified three silver linings.
“For starters, the threat of inflation that dominated discussions earlier this year has faded from consideration by most,” says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association International (FMA).
In the new FMA economic update newsletter Fabrinomics, Kuehl reports, “The price of oil has slipped by more than $60 in three months, and steel and copper prices are sagging. In fact, most commodities have slipped, which is good for businesses where these costs are the biggest considerations. Of course, lower input costs don't help much if demand for the finished product is off, but it doesn't hurt to get some cost relief when the recovery begins to surface.”
The second silver lining, Kuehl notes, is the kind of thing that gives economists a bad name. “The fact is that the labor pool is always more shallow than preferred, and when the jobless rate is low there isn't much to select from,” he explains. “The unemployment rise puts some talented people on the market, and that allows smaller companies to have access to people only larger companies were able to recruit in the past.
“There also are more grateful employees in a downturn, and this can lead to productivity gains,” says Kuehl. “In fact, the level of productivity in the U.S. has risen in the past few months. It is not that business wants to see economic stress visited on their employees and others, but when times are too good and for too long, the culture of work changes, and not always in a good way.
“The third positive will develop as banks lick their wounds and figure out how to get re-engaged,” Kuehl asserts. “The winners are going to be the traditional banks that didn't risk that much in the weird credit markets. They were and are ‘relationship banks,’ and will be getting more engaged in that kind of old-fashioned business. Companies with good relationships with their banks are going to be in a good position if that bank is one of those that managed to stay intact.
“The absurd behavior of the boom has left a lot of damage, but there are islands of sanity that will now start to hold their own,” Kuehl concludes.
Based in Rockford, IL, the Fabricators & Manufacturers Association Intl. (FMA), is a professional organization with more than 2,300 members working together to improve the metal forming and fabricating industry. Founded in 1970, FMA brings metal fabricators and fabricating equipment manufacturers together through technology councils, educational programs, networking events, and the Fabtech International & AWS Welding Show. FMA also has a technology affiliate, the Tube & Pipe Association, International (TPA), which focuses on the unique needs of companies engaged in tube and pipe producing and fabricating.
“For starters, the threat of inflation that dominated discussions earlier this year has faded from consideration by most,” says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association International (FMA).
In the new FMA economic update newsletter Fabrinomics, Kuehl reports, “The price of oil has slipped by more than $60 in three months, and steel and copper prices are sagging. In fact, most commodities have slipped, which is good for businesses where these costs are the biggest considerations. Of course, lower input costs don't help much if demand for the finished product is off, but it doesn't hurt to get some cost relief when the recovery begins to surface.”
The second silver lining, Kuehl notes, is the kind of thing that gives economists a bad name. “The fact is that the labor pool is always more shallow than preferred, and when the jobless rate is low there isn't much to select from,” he explains. “The unemployment rise puts some talented people on the market, and that allows smaller companies to have access to people only larger companies were able to recruit in the past.
“There also are more grateful employees in a downturn, and this can lead to productivity gains,” says Kuehl. “In fact, the level of productivity in the U.S. has risen in the past few months. It is not that business wants to see economic stress visited on their employees and others, but when times are too good and for too long, the culture of work changes, and not always in a good way.
“The third positive will develop as banks lick their wounds and figure out how to get re-engaged,” Kuehl asserts. “The winners are going to be the traditional banks that didn't risk that much in the weird credit markets. They were and are ‘relationship banks,’ and will be getting more engaged in that kind of old-fashioned business. Companies with good relationships with their banks are going to be in a good position if that bank is one of those that managed to stay intact.
“The absurd behavior of the boom has left a lot of damage, but there are islands of sanity that will now start to hold their own,” Kuehl concludes.
Based in Rockford, IL, the Fabricators & Manufacturers Association Intl. (FMA), is a professional organization with more than 2,300 members working together to improve the metal forming and fabricating industry. Founded in 1970, FMA brings metal fabricators and fabricating equipment manufacturers together through technology councils, educational programs, networking events, and the Fabtech International & AWS Welding Show. FMA also has a technology affiliate, the Tube & Pipe Association, International (TPA), which focuses on the unique needs of companies engaged in tube and pipe producing and fabricating.
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