APICS News

APICS News

Small Manufacturers Seeing Higher Demand, Equipment Investment

By APICS Staff | 12 | 12 | June 19, 2012

In a hopeful sign for the economy, small manufacturers that produce machines and components for other manufacturers are seeing an upswing in business, the Associated Press reports. Sectors fueling demand vary in range and include medical device makers seeing growth due to aging baby boomers; oil and gas producers supplying energy to developing economies such as China and India; and aerospace manufacturers building specialized, fuel-efficient aircraft and engines. The industries seeing growth have two things in common: They are expected to continue getting bigger and are investing in expensive machinery. 

Industrial and materials manufacturers experienced a 37 percent increase in big equipment purchases in 2011, according to data from PayNet, a company that tracks lending to small businesses.

The boom for small manufacturers may seem at odds with the economy, which is experiencing sluggish job growth. But investments in manufacturing equipment suggest that companies are becoming confident. Additionally, the investments rely on bank loans__evidence that lenders also feel secure. Anthony Cracchiolo, president of equipment finance at US Bank, says that by the end of 2012, this type of lending is expected to be at 90 percent of prerecession levels, and recovery among manufacturers will reach other parts of the economy. His company’s manufacturing vendor services division is up 15 percent this year, while last year’s lending was up 26 percent from 2010.

Counterfeit Drugs Now a $75 Billion Business

The growth of e-commerce has led to a rapid increase in counterfeit drug sales worldwide, AFP reports. Illegal drugs are believed to amount to about $75 billion annually, and about 90 percent of counterfeit drugs are marketed and sold on the internet, says Scott Davis, Asia security expert at Pfizer. 

Websites that sell fake drugs usually do not have physical addresses and exploit weak or unclear customs regulations to achieve sales. These drug makers and vendors “are getting more sophisticated,” as law enforcement officials find it increasingly more difficult to identify fake drugs, Davis says. “We often have to send the pills to our labs to tell us the difference,” he adds.

Pfizer’s own anti-impotence drug Viagra, as well as Eli Lilly’s Cialis are among the most-counterfeited drugs. However, more vital drugs, including anti-malaria medicines, are increasingly counterfeited. 

China is responsible for manufacturing most fake pharmaceuticals, followed by Jordan, the United States, Israel, and Canada.

UK Manufacturing Policy Getting a Boost

The United Kingdom is experiencing a much-heralded rebalancing of its economy toward manufacturing, the Financial Times reports. Data from economics consultancy IHS Global Insight indicate the proportion of output from factory production has risen in both of the last two years. Manufacturing output comprised 12.6 percent of the UK gross domestic product (GDP) in 2011, compared to 12.2 percent and 11.6 percent in 2010 and 2009, respectively. The recent upward movement goes against the trend of the past 50 years, where factory output as a portion of the economy decreased. 

Steve Radley, head of policy at EEF, an organization that supports manufacturing in the United Kingdom, says the data indicate several factors that boost manufacturing, including resilient factory investment, lower prices of silver, and beneficial government policies. “The momentum may be starting to build,” Radley says. Higher manufacturing sector productivity also is supporting growth. 

According to IHS Global Insight, other European countries also raised their manufacturing percentage of GDP. Germany went to 22.3 percent in 2011 from 21.1 percent in 2010, while France’s figures were 10.9 percent in 2011 from 10.7 percent in 2010.

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