Unmistakable signs of a slump.Unmistakable Signs of a Slump Last year closed on a down note for most of the 450 custom processors in our fourth-quarter survey. Average machine-capacity utilization dropped two points to 69%, its lowest level since the second quarter of 1983. The 48% of respondents reporting a drop in capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. from the previous quarter was the highest since the end of the 1982 recession; the same was true for the 26% reporting that they had reduced the number of shifts or hours worked from the level of the previous quarter. What's more, the percentage of negative or pessimistic pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" comments about business conditions outweighed favorable or optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op comments by 50% to 45%. Although that balance was less heavily weighted toward pessimism pessimism, philosophical opinion or doctrine that evil predominates over good; the opposite of optimism. Systematic forms of pessimism may be found in philosophy and religion. than in the third quarter, those two quarters together represent the gloomiest outlook since we began evaluating optimism/pessimism quantitatively in 1986. As the graphs show, operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. were down for the quarter in all processing types except custom thermoforming. Custom injection was at its lowest level since the third quarter of 1983, and custom compression/transfer at its lowest since 1982. On a regional basis, New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. was again the softest region for custom processing (and injection in particular), while the South Central region was once again the busiest. Capacity utilization in the North Central region, the traditional Midwest manufacturing heartland with the greatest concentration of injection molding injection molding n. A manufacturing process for forming objects, as of plastic or metal, by heating the molding material to a fluid state and injecting it into a mold. , was at its lowest level since early 1983. TOOLING ORDERS PLUNGE On top of the sobering current data, an important leading indicator--new tooling orders--was down as well. The 235 mold and die shops in the survey reported almost no growth in dollar value and a three-point decline in units--the first time that had happened since fourth-quarter 1986. Also, the 30% of toolmakers reporting shorter lead times (a sign of lower backlogs) was the highest since early '86. Most of the drop was at South Central and Western toolmakers. [Graphs 1 to 8 Omitted] |
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