Composite Consultant’s Tips to Optimize the Market Upswing

In 2007 Ray MacNeil, a COMPOSITES 2010 general session speaker, left his job at PPG Industries, where he’d worked for 35 years, and began consulting. With a background in sales and marketing, strategic planning and business analysis, MacNeil does market research and development for a variety of companies within the composites industry. This experience also allows MacNeil to look ahead and forecast the economic future of the composites industry. [caption id="attachment_865" align="alignright" width="244"] Ray MacNeil–Principal at Ray MacNeil Composites Consulting[/caption] Is the recession over? Yes. We hit bottom and in the middle of 2009 the economy began improving. Since then, the manufacturing and other parts of the economy have slowly started to improve and we seem to be moving up slowly. Is there one segment of the industry that would be a good indicator of growth? We look at manufacturing in the U.S. as a whole, which by and large is coming back. Certain segments have regained strength, especially over last few months; however the composites industry has yet to make a recovery. I’d say in the next few months we’ll see more growth within the composites industry as well. Within the composites industry there are some segments that have already started to see improvements, such as automotive that got a temporary shot in the arm with Cash for Clunkers. But now everyone is holding their breath to see if that growth is sustained. Are there economic indicators people should watch? I encourage people to look at the Purchasing Managers Index (PMI), the Index of Industrial Production (IIP) and the production statistics for key industries in the composites industry, such as housing, automotive and infrastructure. It is also important to watch for consumer confidence to increase. Consumers represent 70 percent of the U.S. economy and their attitudes are closely related to the job situation. If the economy is still losing jobs, which it is albeit at a significantly slower rate, consumer confidence will remain lower than usual. I think we are only a few months away from going positive and once we turn the corner on the job market, people will resume purchasing. Why the lag time for composites? It’s a trickle effect and it often depends on where that segment of the composites industry is in the supply chain. Often times, composites aren’t an item or component needed in the early stages of a supply cycle. In regards to economic production, where is the U.S. economy now? The consensus among economists is that the recession ended mid-2009 and the economy is regaining strength. Now, that doesn’t mean that every business and every segment began recovering at that time. We’re waiting for the National Bureau of Economic Research (NBRE), who declares the start and end of recessions in U.S., to formally declare the recession is over. But typically they won’t make an official pronouncement until well after the fact, sometimes a year after. For example, the recession began in December 2007, but they didn’t announce it until December 2008. What are things a company could do to benefit during the upswing? The composites industry needs to be very efficient and demonstrate where it can provide solutions. Of course it’s difficult to do this in downturn economy; sometimes you have to cut costs to survive. But it’s best to take the unpleasant medicine and keep going. I’d also say it is important to streamline operations, which people are already doing. So next, be prepared for when the upturn starts in respective business areas. You don’t want to wait until you hear the robins, or you’ll miss spring. How will your presentation at COMPOSITES 2010 differ from when you presented in 2009? In 2009 people had more doubts about an economic recovery and things were still heading down. But now we can see the turnaround in many industries, for example in automotive and housing. So my outlook for the show will be focused on the more positive signs that recovery is under way. What benefits of composites aren’t promoted enough? I think there are multiple features and advantages that composites offer. The best known of course is light-weight and strength to weight ratio. But other benefits like corrosion resistance and part consolidation is a huge benefit within the automotive industry. With composites, several parts can be consolidated into one. Composites also lend itself to flexibility of design. There are so many benefits that companies need to look at the application, see what is most important to their customers and focus on how it could help them in that application. What do you see happening in regards to unemployment in 2010? I think we will start gaining jobs in 2010, even though the unemployment index will probably not come down very much. Ironically, unemployment may still go up in 2010, but numbers can be deceiving. The current unemployment rate is 10 percent, in a year it is predicted we will close at 9 to 10.5 percent. However, unemployment is the number of people looking for jobs. In 2009 there were many who were discouraged and weren’t even looking. But now that the industry is looking up, some of those people will now come back into the job search pool, which will bump up the unemployment number. An individual’s acid test should be: Are we creating new jobs? The answer to that is that we will see an increase in job creation over the next year. Why was the U.S. so hard hit compared to other countries? How, comparatively, are we bouncing back? I think the U.S. was hit harder because of the overproduction in housing as well as the credit and financial crisis that was largely centered in the U.S., an epicenter of sorts. It spilled over a bit into Europe, but most of Asia was not affected very much. So now, places like Asia are engineering faster growth and recovery while we are slowly recovering. In what industries do you see the most promise for composites growth? I think the automotive and construction industries will cycle back. They are slumping now, but they are traditional leaders for composites. As for growth potential I think that the renewable energy sector, wind energy and infrastructure will steadily climb. Where do composites need to change and adapt in order to succeed? I’m a strong believer in “a rising tide lifts all ships.” So, as the economy improves, composites will benefit. But one area where composites can help themselves is by embracing and endorsing more life cycle cost analysis. I think composites often don’t win the competition because the initial cost is higher over other materials. But we know that in life cycle analysis, composites often win out. It has a low maintenance cost as a result, making it a very economical solution. What were composites’ greatest accomplishments in the last year? Although it had somewhat of a flat year in 2009, the build-up in wind energy manufacturing within the U.S. the past two years has been amazing. Previously, wind farms had to import from other countries, mostly Europe. But many companies have now opened manufacturing plants within the U.S. and the industry is poised to be much more self-sufficient as demand picks up. Another significant event was the first test flight of Boeing’s new 787 Dreamliner. The symbolic value of its all-composite fuselage is a great victory for composites and should inspire confidence in its usage within aerospace and other industries. What message do you want to get across to COMPOSITES 2010 attendees? We have a great industry with accomplishments we can be proud of. We are still a growth industry and once we get through this economic recession, we will once again have a growth greater than the overall economy. We have a lot of creative designers and inventors within the industry who have been able to create new solutions by designing and efficiently manufacturing fiberglass and resin.