17 Apr 2009
The tough times continue for industrial laser vendors, although the gloom is not spread equally across all sectors.
While companies with broad exposure to industrial laser markets are dealing with the continuing fall in demand for laser systems and optical components as best they can, those vendors able to focus on niche applications or contract business believe they see a healthier outlook, and in some cases even detect signs of strengthening demand. That's the headline conclusion of a new market report from Longbow Research (Cleveland, OH).
"Forty-two percent of our contacts reported weaker demand, 37% felt demand has strengthened and 21% are flat," said Mark Douglass, lead author of the study. "Some industrial markets appear to be picking up, reflecting our contention that industrial production should rebound after the severe contraction of 2009's first quarter."
However, the recovery is only expected to be to recessionary levels and comes with many caveats. "The case for improvement is based largely on expectations of stimulus-related spending, current enquiries becoming firm orders and no further postponement of existing orders," noted Douglass.
In line with findings from other analysts, Longbow believes that OEMs dealing primarily in fibre lasers are outperforming the market as a whole. Even though fibre-laser revenues are likely to decline throughout fiscal 2009, they should suffer less than the 15–20% declines expected across the wider laser industry.
"The broader a company's exposure to the laser market, the more they are following the downward trends seen in all industrial data," Douglass told optics.org. "Those tied to really poor markets such as automotive were down substantially more, while those tied to specialized and relatively healthy markets like medical device manufacturing were doing better. We wouldn't conclude that certain market sectors are unaffected, but in relation to laser technology there would still seem to be room for growth even in the midst of an overall contraction."
Given the parlous state of the wider economy, it might seem odd that as many as 51% of Longbow's contacts expected to see any improvement at all over the next year. "The optimistic outlook is partly attributable to people's need to remain upbeat," said Douglass. "Aside from the few that could cite specific projects on their books, most of the positive responses we received were general feelings, believing we are now at the bottom of the cycle and that things can't get any worse."
A few companies also mentioned possible help from stimulus packages intended to boost the global economy, but struggled to cite anything specific that would be of immediate benefit, according to Douglass.
"Most companies have slashed capital budgets across the board, and high-ticket items like lasers, no matter how much more productive than other technologies, are going to have a tough time for several quarters," he commented. "As analysts we aim to identify companies whose customers have money and are looking to spend it. Right now, there aren't many that fit this profile."