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Leading economist optimistic on growth for industrial markets

By Jack Keough

We’re past the halfway mark in 2012 and the earnings season is winding down. So it might be worthwhile to see how our industry has done and, more importantly, what lies ahead for the remainder of the year.

Sifting through various reports, earnings statements, press releases and news stories, it seems there were some bright spots during the first half—strong but not outstanding numbers—in a challenging economic environment. And some manufacturers, distributors, and economists believe business will pick up in the second half.

Hubbell Inc., a manufacturer of electrical and electronic products, reported sales were up 10% in the first six months compared to the same period a year ago. The company said the sales increase in the second quarter was driven by its electrical and utility businesses.  High voltage test equipment sales were said to be weaker.

In a press release, Chairman and CEO Timothy Powers said he expects net sales to increase 6 to 8% for the rest of the year. He also slightly increased his projections for sales to utilities.

At ABB, the big news was the completion of its acquisition of Thomas & Betts, a manufacturer of low voltage products. Thomas & Betts contributed $310 million in revenues to its new owners’ second quarter results.

ABB’s management said it is “cautiously optimistic” that the business environment over the remainder of 2012 will support continued profitability and growth in line with its 2011-2015 targets.

Eaton Corp. Chairman Alexander M. Cutler says his company expects to see its Electrical America’s segment sales grow 8% for the remainder of the year, 2% higher than previously forecast.

The diversified, Cleveland-based industrial manufacturer reported its Electrical America’s segment quarterly sales were $1.1 billion, an increase of 10% compared to 2011.  “The construction markets, both residential and non-residential were the strongest part of the business in the quarter,” he said.

Eaton also says it expects to complete its acquisition of Cooper Industries in the third quarter.

Coleman Cable, a manufacturer of electrical and electronic cabling products, recorded a 5.2% increase in sales for the quarter. President and CEO Gary Yetman said earnings exceeded the company’s outlook for the quarter and showed strong growth over both the second quarter of last year and the first quarter of 2012.

On the distributor side, W.W. Grainger sales increased 12% in this last quarter. In the U.S., sales were up 7%. All markets showed growth, except for the contractor market, which was basically flat.

Sales increased 8% in Canada, driven by strong performance in the commercial, oil and gas, utilities and contractor markets.

One leading economist is optimistic about growth for industrial markets.

Alan Beaulieu, principal of the Institute for Trend Research (, and a keynote speaker at many industrial trade association meetings wrote recently in his blog that the economic signs are good.  In his recent blog, he says industrial markets will move “onward and upward” in the second half. “Those tied to the industrial side of the economy will be busy throughout the year,” he says.

Beaulieu believes manufacturers should go directly after their competitors. “The timid will not have the means to attract new customers, nor will they have the desire to attract the best available talent. They will also not have the desire to spend the money to train new hires in preparation for the post 2014 economic expansion,” he wrote.

ITR, which has an excellent forecasting accuracy rate, believes the U.S. economy will be expanding for the next two to four quarters.

You might want to check out ITR’s site at www.itreconomics.com.

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