Longbow Research's February report is out. Even more so than their January report, the signs of growth in the automation sector are beginning to be unmistakeable. Not only is the zombie stirring in its grave, as HPS President Norm Gilsdorf famously quipped, but the undead has sat up in the box and is levering itself upright.
There are some fantastic quotes in the Longbow report and their conclusion is that the outlook is improving:
Outlook Continues Positive Trend. The largest percentage of our contacts (66%) expects conditions to improve over the next twelve months, versus 60% in January and only 39% in November. Twenty-eight percent expect flat conditions over the coming year (vs. 30% in January and 42% in November). Pessimistic responses decreased to just 5%, after weak expectations were reported by 10% in January and 19% in November. Automation markets generally lag twelve or more months behind the general economy, but it appears that the automation sector has bottomed and is poised to rebound earlier than normal. Our contacts have seen sequential improvements in order activity since our January survey, though order rates remain well below 2007-2008 levels. Winter of 2010 is being called “quoting” season as contacts indicate that they are seeing heavy activity with customers seeking quotes, though at this point those quotes have led to more optimism rather than orders. Anecdotally, the tone among our contacts has shifted to one of cautious optimism; many expect demand to be better year-over-year, with many believing 1H10 will be slow with a return to growth come the third and fourth quarters of 2010. Many contacts gave numerous caveats around this scenario. Among those with a negative outlook, markets are generally expected to improve over the next 10-12 months.
And Longbow also showed this take on the Control/ARC Top 50 with the companies they follow:
[img_assist|nid=3372|title=Control/ARC Top50 Pie Chart by Longbow Research|desc=|link=none|align=left|width=310|height=320]Control pays close attention to Longbow Research, and what they say about the automation market, because the analysts at Longbow have shown really deep knowledge of the market. More than most other financial analysis firms, Longbow Research understands the automation business. Mark Douglass, one of the analysts, for example, worked as a plant engineer before becoming a financial analyst. Nobody at Longbow makes the mistake of calling ROK a motor and machinery maker like some analysts do.
Control doesn't endorse the stock recommendations that Longbow makes in their monthly reports, but what we can tell you is that they are probably good bets.
We do encourage you, especially as an end user, to read Longbow's monthly report. It gives you a really good idea of what your suppliers are doing and thinking that you simply cannot get anywhere else.
Between the Longbow Research report, Andrew Bond's report from Europe (which we publish excerpts from monthly on ControlGlobal.com) and our commentary at Control and ControlGlobal.com, you will be better prepared to understand what's happening outside your company and your job. "Forewarned is forearmed," as the old quote goes. The more you know, the better prepared you are.
