Three Stories to Watch This Summer

For the past few years, North American moldmakers have been vigorously engaged in trying to cope with three industry-wide problems. These are: low-cost competition from China; a shortage of qualified workers entering the trade; and the rising costs of materials (i.e. tool steel) and labor (i.e. healthcare costs). These problems are far from solved. The future is far from certain. And moldmakers will continue to struggle with these issues for the foreseeable future.

But just in case you are getting bored or uninspired with the challenges posed by these issues, here are three more storylines that will unfold this summer and which merit your attention.

1)    The crisis in Europe—The Euro Zone is in the midst of an economic and political crisis that essentially stems from having too much debt and not enough economic activity to pay for it all. Sound familiar? It is difficult, it not impossible, to predict how this will play out, but if things continue to deteriorate it will have a negative impact on the sputtering U.S. economic recovery. If Europe fails, then the global banks will stop lending, credit markets will dry up, and a recession in the U.S. will almost certainly follow. Have we learned our lesson yet about too big to fail?
2)    The “fiscal cliff”—As part of the debt ceiling debacle last year, Congress passed legislation that would automatically result in large tax increases and large spending cuts on January 1, 2013 if they could not come up with a suitable plan for addressing the federal budget deficit beforehand. If it is triggered, this policy will certainly push the struggling U.S. economy back into recession. But Congress seems incapable of any real action before the election, and after the election there will be less than two months of a lame duck session in which to avoid the pending deadline. The politicians are betting that the political situation will become clearer after the people have made their choices in November. If you think that you have a problem finding qualified help in the shop, that is nothing to the problem we are all having finding qualified applicants for the House and Senate.
3)    The foreclosure crisis—I have stated many times that the overall recovery in the U.S. economy will struggle to sustain any momentum until the residential construction sector recovers. This sector is showing signs of life this year, but we are at least another full year away from the start of a reliable, self-sustaining uptrend in house prices and construction activity. Any shocks could push the trends in this sector back downward.

So there you have them. Three new stories for this summer that could have a large impact on your future business. We will closely monitor them and keep you informed of any developments. Stay tuned, and if you have any questions, let us know.