Slow, but steady, growth

By Staff -- Industrial Distribution, 1/1/2001

Economic forecasters say the expansion of the U.S. economy will continue this year, though at a slower pace than we saw in the late 90s and during 2000.

"It's too much to hope that 2001 will see economic growth quite as vigorous as during 1999-2000," wrote Daryl Delano, an economist with Cahners Business Information, in a recent report for Appliance Manufacturer.

"But although the economic balloon will lose some air during the year ahead, there's no reason to believe that it will burst anytime soon."

Delano went on to say that consensus forecasts show moderation, but no declines, in the growth rates for all sectors of the U.S. economy between 2000 and 2001.

Distributors and manufacturers of abrasives hope to reap the rewards of such predictions in the year ahead. East Coast distributors like Jim Jaques of Massasoit Tool in Warwick, R.I., predict continued double-digit gains. Jaques attributes much of that growth to new product developments and the addition of complementary product lines.

Jim Krause, division manager for the industrial mill supply division of Columbia Industrial Supply in Rockford, Ill., expects eight to 10 percent growth in abrasives this year. That's despite a slowdown in sectors like the automotive industry, machine tools, foundries and primary metals. Those factors signal a slowing economy, but Krause says his firm is countering the effects in two key ways: using value-added services to increase market share and reaching out to customers beyond its core geographic areas.

Manufacturing professionals like Bob Gardiner of Worcester, Mass.-based Norton Co. are upbeat, as well.

"Overall, we see it as a stable marketplace, with some sectors softening in 2001 and some areas of growth, as well," says Gardiner, Norton's director of marketing and distribution.

While economic conditions favor the industry, factors like consolidation and technology remain challenges. For instance, the struggle to develop an e-commerce strategy continues, as do questions surrounding the Internet and what it means to the supply channel. Many in the industry view Internet technology as both friend and foe. While they say it creates tremendous opportunities, they also note the potential for blurred trading boundaries and the possible "commoditization" of abrasive products.

Gardiner, for one, looks at the Internet with an optimistic eye. He says Norton views the Web as an enabling technology that allows manufacturers to communicate "much more effectively with distributors and with end users," a point evidenced by Norton's e-commerce initiative introduced last spring. The program allows customers to purchase from Norton online, while local distributors fill the orders.