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U.S. Manufacturing Outlook Winners and Losers

U.S. Manufacturing Outlook Winners and Losers. Frantz Price Managing Director, Industry Practices Atlanta Seminar April 29, 2003. Manufacturing Will Rebound in 2004. Much more volatile than GDP Begins to recover in 2003:H2 Strong Growth in 2004 Performance uneven among industries.

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U.S. Manufacturing Outlook Winners and Losers

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  1. U.S. Manufacturing Outlook Winners and Losers Frantz Price Managing Director, Industry Practices Atlanta Seminar April 29, 2003

  2. Manufacturing Will Rebound in 2004 • Much more volatile than GDP • Begins to recover in 2003:H2 • Strong Growth in 2004 • Performance uneven among industries

  3. An Inside Look at Manufacturing Key Sectors: • Consumer Goods • Investment Items • Materials

  4. Significant Differences by Sector • Strongest growth opportunities from investment sector • Recovery of consumer goods and materials sector expected to be moderate

  5. Breaking Down Consumer Goods • Durables and non-durables turn around in 2004 • But durables grow barely in 2005-2006

  6. Durables: Autos Stabilize After 2004 • Auto sales flatten out after next year, albeit at high levels • Falling housing starts and rising income have mixed impact on appliances

  7. Non-Durables: Drugs and Apparel on Opposite Courses • Apparel improves slightly but imports remain a major drag • Drugs rebound on favorable demographics and strong advertising campaigns

  8. Investment Sector: High-Tech Remains Growth Leader • Overall sector has been hampered by poor corporate profits, cost cutting, overcapacity, and Y2K • Picks up steam in 2004 as business conditions improve

  9. Computers Forge Ahead • Computers rebound from Y2K and poor business conditions • Telecom equipment comes back as supply bubble dissipates

  10. In Traditional Equipment Area, Aircraft Badly Trails • Industrial machinery recovers with profits and rising capacity • Hurt by airlines’ predicaments, aircraft does not recover until 2005

  11. Materials: Recovery Shaped by End-Market Mix • Overcapacity and poor demand have led to plant closings • Petrochemicals hit especially hard by surge in energy prices • Turnaround expected next year • Slowing end-markets after 2004 dampens growth

  12. Materials: Recovery Shaped by End-Market Mix • Uneven end-market performance exert mixed impact on Metals and Nonmetallic Mineral Products • End-markets: autos, appliances, traditional equipment, housing starts, non-residential construction

  13. Manufacturing Outlook: Recap • ManufacturingOutlook . poor 2003:H1 performance . turnaround begins in 2003:H2 . full-fledged recovery in 2004 • Growth uneven across industries • High-Tech sector remains growth leader

  14. Some Words of Wisdom… • General indicators can be misleading • Choose your market indicators carefully • End-market measures are best way to go • Knowledge of market drivers is essential • Use market-basket concept to benchmark and forecast company sales

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