Podcast: What Manufacturing Technology Orders Tell Us About the U.S. Manufacturing Economy

AM: OK. What happens in this sector is important to all of those downstream operations. Could you define manufacturing technology with some easy-to-recognize examples?

CC: Yeah, absolutely. So even though manufacturing technology might not be as forefront as some other particular sectors, it's integral to almost everything that we do or consume. If you imagine an automobile, that's a pretty easy example. There's lots of metal parts in there. You have the engine block. That needs to be cut out. You have the hood, things like that that need to be stamped. Even if you look farther beyond goods, the service sector is pretty heavily reliant on manufacturing technology as well.

Everybody knows you need to make an airplane out of metal parts, but nobody really buys an airplane. You buy the ticket on an airplane. So even though that's a service, it's heavily reliant on manufacturing technology. Even things like a haircut, which you might not think about, the scissors need to be made out of metal. Even the ball bearings that make the chair swivel, they're made on the machines that our members make.

AM: That's a great example. What type of businesses invest in manufacturing technology?

CC: So it's pretty wide-ranging. Probably the largest consumer of manufacturing technology is job shops. They're machine shops that just contract with OEMs, make specific parts, things like that. Beyond that, it's generally large manufacturers such as aerospace, automotive. Basically anybody who wants to make a part out of metal would be a customer of manufacturing.

AM: OK, let's get closer to the point. What do manufacturing technology orders indicate about the manufacturing economy.

CC: So it's a really good leading indicator of where capacity needs are going to be. For example, certain automotive manufacturers may need to anticipate that demand is going to be down in a couple months. So they need to adjust their production lines. Not only to manufacture the volume of cars that consumers are going to demand, but also the exact types that consumers are going to demand. So taking a look at where that investment is happening is a really good indicator of where corporations think that either consumer demand or B2B demand is going to be in the near future.