Editorial: IH Develops Economic Indicators for the Thermal Processing Industry
The desire to know the economic ups and downs of the thermal processing industry has existed for years. For the 70+ years that Industrial Heating has been reporting on the thermal processing industry, there has not been an industry-specific gauge to help suppliers and practitioners know where the economy was or where it is going. Those in the industry were left to make their own conclusions based on their own limited information sources - salesmen, customers, suppliers, and competitors.
Industrial Heating is helping to minimize speculation when it comes to the economic health of the thermal processing industry. Starting this month, you'll notice a column on this page that will report the results of our newly established monthly economic survey.
Here's how the survey works.
Every month, during the first full week of the month, Industrial Heating will fax questionnaires to roughly 400 industry suppliers. The questionnaire has 4 questions. Each question compares how business levels in the most recently completed month compare to the month prior. For example, the questionnaire that was sent out just a few weeks ago (week of September 8) would ask how August business levels compared to July business levels.
The four questions deal with 1) the number of requests for proposals, 2) the number of orders, 3) the size of backlog, and 4) the general health of the industry. A number above 50 indicates an increase or growth.
Take a look at the top graph to the right as an example - Request For Proposals. In August, the index number was 55. This indicates growth in the quoting levels in July compared to June. The July index number is much smaller than the August index number. The July index number (just above 50) indicates that there was a slight increase in quoting activity in June when compared to May. In both cases (May to June & June to July), there was an increase in quoting activity.
If you look at the Orders graph, you'll notice that the August index number was roughly 53. This indicates that the number of orders received in July was higher than the number of orders received in June. July's index number, however, was below 50. This number indicates that the number of orders received in June was lower than the number of orders received in May.
The beauty of this index is that no company is asked to divulge any confidential information - no sales figures, no RFQ total dollar values, no backlog sizes - thus, increasing the participation in the survey. The larger survey participation helps to get a better overall indication of the industry's direction.
Industrial Heating is a technical publication - you'll not often find an article dealing with the business climate. In these uncertain economic times, the players in this market will most likely benefit from some sound business/economic information. Additionally, these indicators will help reduce speculation as to the economic health of the thermal processing industry.
