Prepare for Red Tape; Regulation Is Back in Vogue

As President-elect Obama prepares to take office, there’s a lot of talk about “accountability,” particularly in the face of the large handouts to the banking and now auto industries. It looks like Detroit’s auto makers are going to pay the price for the rather arrogant behavior of the nation’s financial institutions that were quick to take Uncle Sam’s money (actually your money and my money) but haven’t been so quick to tell us what they’ve done with it. Further handouts are coming burdened with rules, regulations and (this being the government) mountains of paperwork to ensure that the government’s money is being used the way they want it to be.

After years of deregulation, which economists say is partly to blame for our current predicament, the pendulum is starting to swing in the other direction. For at least the next decade or so, economic experts expect the U.S. to embrace increased government regulation. In fact, angry citizens, many of whom feel they’re being robbed to support bad business decisions and executive excess, are demanding greater regulation and more stringent government oversight.

Once his team settles in, industry experts expect to see the government sticking an ore in wherever and whenever the President thinks the economy or a particular industry needs a shove. And because of the government’s tremendous investment in the country’s banks and businesses, the President will consider it his right, perhaps even his duty, explained economic analyst Chris Kuehl in a recent Fabricators & Manufacturers Association, International newsletter. “The Fed is already more engaged in the U.S. banking system than ever before, and that involvement will likely expand,” warns Kuehl. “The Treasury Department is already a part owner of most of the major banks in the country, a leading insurance company, and perhaps, in time, the Big Three auto companies. That gives the U.S. government a major stake in the performance of its largest companies, which will mean direction and advice.”

So sharpen your pencils, add an extra box or two of paper to your office supply order this month and prepare to add a chair in the boardroom for Uncle Sam. It looks like the red tape is going to be flowing again!

Peering Into Business’ Future

If America’s future workforce is going to be “more flexible, more freelance, more collaborative and far less secure,” as Time magazine prophesizes in its May 13, 2009 issue, it indicates that the American business paradigm as we know it is going to go through some major upheavals in the coming decade or two. Time suggests that American business is teetering on the cusp of major change. Powerful social forces have pushed us toward this edge, and the current economic disaster appears ready to tip us over and send us careening in new directions.

What’s driving the coming changes?

  • The Baby Boomer generation has been an unstoppable force since its inception. Sheer numbers have changed the focus of society each time Boomers have entered a new life phase. Now poised to enter retirement, America’s most populous demographic will again shift the country’s emphasis, this time to health care and aging issues. By 2030, one-fifth of American citizens will be over the age of 65, with the greatest growth in the over 85 demographic. As they have from the beginning, Boomers will drive the country’s business, social and political agendas. Expect growth in health care, pharmaceuticals, medical aids and equipment, security and alert services, home care, transportation and mobility, shop-at-home opportunities and travel. But don’t count Boomers down and out yet. The last of the Boomers won’t retire for another 20 years and many plan to and will be able to work into their 80s. With far fewer workers moving up to replace them, American business owners need to prepare for a grayer workforce.
  • The new generation of managers entering the business world seems to have been plugged in since birth. Quick to embrace new technology, they’re more comfortable in front of a computer checking their email and Facebook accounts or texting and twittering than they are communicating face-to-face. Expect business communication and social interaction to change to reflect the fast-paced, multi-tasking, solitary preferences of the tech-savvy earbud generation. This is the generation that will take integrated technology to new levels not yet even imagined. Business has already begun to lose its brick and mortar walls as more people work remotely. Expect the next generation to blow them away. The days of the cubicle are numbered!

More on Monday

Material Handling Industry Must Seek Growth in World Markets

Navigating the U.S. economy has been a bumpy ride of late for industry and consumers alike. There is hope for a smoother future, particularly in material handling, but the road to success may lead outside America’s borders.

World market demand for material handling equipment and systems is expected to increase 5% per year through 2012, according to a new study, World Material Handling Products, by The Freedonia Group, Inc. The Cleveland-based industry research firm expects major market gains to come from growth in fast-developing countries in the Asia/Pacific region, Eastern Europe, Africa/Mideast region and Latin America. Growth in these markets is expected to eventually outstrip sales in the U.S., Western Europe and Japan. However, in the near term, the study predicts “renewed strength” in the Japanese material handling market and “acceleration” in the U.S. market driven primarily by automated products such as robots and automatic guided vehicle systems (AGV). 

The Fredonia Group report analyzed the $93.8 billion world material handling industry in 37 major national markets worldwide, predicting global industry growth to $133.5 billion, including price increases, by 2015. Rapid economic growth, increased manufacturing output, greater fixed investment activity and rising motor vehicle production in China, India, Turkey, Mexico and Russia, particularly, will lead demand and sales gains. China, a major producer and exporter to Asian markets, is predicted to account for 30% of total material handling sales growth.

The material handling products demanded by these developing markets will come primarily from U.S., Europe and Japan which are home to the largest and most advanced material handling equipment and systems producers. High-value products, technical expertise, advanced production systems, capital availability and trained labor will give western material handling firms a pronounced sales edge in developing markets. However, that edge may be short-lived. China, with its vast low-cost labor pool, has become a major producer and supplier to Asian markets. While quality and safety issues haunt Chinese-produced products, the country has shown amazing adaptability in other product markets and could become a major world material handling competitor within the next decade.

Next time: Which material handling products will see the greatest growth?