Don't fear the inevitable end-of-year slowdown

Are you worried about the new year? I'm not.

That wasn't the case back in 2008.

I remember a conversation I overheard at the 2008 FABTECH International &AWS Welding Show in Las Vegas that year. I was probably in search of a Diet Coke, so I was standing in line with a bunch of people waiting for their special coffee creations. CNN was on, and the talking heads were discussing the deteriorating economy.

"The media is trying everything it can to run this economy into the ground," a voice in line said to no one in particular.

I nodded my head because I was trying to be nice. I actually was in agreement with the talking heads. I was amazed how the metal fabricating industry had held on for so long in the face of the real estate collapse. Sure enough, that moment came at the very end of 2008 or the very beginning of 2009 for most metal fabricators.

Steve Hasty, president, A&E Custom Manufacturing, Kansas City, Kan., told me in an interview that he remembers thinking that January 2008 was seeing just an ordinary slowdown, nothing really unusual. But by the third week in January and no jobs were coming through the door, he knew something was up.

"It just never came back," he said.

Luckily, he and his management team took steps to soften the blow of loss revenue. Everyone took a 10 percent pay cut, and some people were laid off. But in about four months, A&E believed the rebound it was seeing would last and brought back those key players who had not found other jobs. They also restored salaries and wages to what they were before.

Hearing recent news about manufacturing in the U.S. slowing down, I'm starting to wonder what the start of 2012 will hold. What I do know is that the end of 2011 is going to be a bit slower. That's just the way it is.

Some fabricators might find themselves busy, but for the most part, I think larger manufacturers are looking to thin out inventories before the end of the year. It also gives everyone in the manufacturing world an opportunity to catch their breath after spending the last year trying to read tea leaves in an effort to forecast during these unpredictable economic times.

Unlike the end of 2008, I'm actually confident that manufacturing will bounce back in the first quarter of 2012. I don't think it'll single-handedly correct the unemployment problems in the U.S., but manufacturing won't be a drag on the overall economy.

Why do I believe this? The FABTECH industry tradeshow is going to be the largest it's ever been (more than 500,000 square feet), and the number of attendees might be the highest in a decade. Also, metal fabricators shouldn't have to worry about rising raw material prices; the metals industry is suffering, which indicates to me that demand is a long way from the go-go days of 2007. Also, metal fabricators I've chatted with seem to be optimistic about the new year. A&E, for example, has seen consistent growth since the second quarter of 2009. If a big project finally comes to fruition in 2012, the company could have its biggest year ever.

One other thing to remember—it's an election year. That should get everyone excited, right?