MANUFACTURERS SEE SLOWDOWN ----Unresolved problems with the Year 2000 computer...Ch. Trib

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I suppose there is not much 'new' news here, but the big headline on the front page of the business section is somthing to take note of.

MANUFACTURERS SEE SLOWDOWN

By Sallie L. Gaines Tribune Staff Writer March 16, 1999

Unresolved problems with the Year 2000 computer glitch, coupled with continued economic problems in Asia and Brazil, are likely to put a brake on the U.S. economy in the fourth quarter, the nation's manufacturers say.

But the group isn't willing to predict that the slowdown will last beyond next year's first quarter because so many other factors affecting manufacturers remain strong, said Jerry Jasinowski, president of the National Association of Manufacturers.

For all of 1999, the group is predicting that the U.S. economy will grow about 2 percent, compared with 3.9 percent in 1998.

"We're really concerned about later this year, and in particular 2000. I'm not optimistic about things turning around very quickly," Jasinowski said Monday at the association's annual trade show at Chicago's McCormick Place.

The NAM's findings run contrary to many surveys that predict that the Year 2000 computer issue will be small potatoes. The issue concerns software and embedded chips programmed to read "00" as 1900 rather than 2000, which would cause many date-dependent systems to go haywire.

Jasinowski said NAM's fear is that too many manufacturers may have waited too long to identify and update affected systems.

According to the NAM's survey of its 14,000 members, 29 percent say their computer systems already are Y2K compliant and another 12.4 percent expect to achieve that by the end of the first quarter.

The largest number--34.4 percent--say they expect to be compliant by the close of the second quarter. Another 14.6 percent have a target date of the end of the third quarter, and 4.5 percent by year-end.

Jasinowski said a target date of the second quarter or beyond "is a little late."

More significant, he added, "most foreign companies have not prepared at all." But he did not give any data to explain that fear.

The computer issue will be "a source of significant disruption to the U.S. economy," he predicted. That's because manufacturers, anticipating glitches after Jan. 1, plan to boost inventories during the fourth quarter so deliveries won't be affected. That means production will slow during the first quarter as the extra inventories are absorbed.

But the good news is that he said the unpleasant shakeout should be short-lived, measured in weeks rather than months, said NAM Chairman Calvin A. Campbell Jr., chairman and chief executive of Goodman Equipment Corp. in Bedford Park.

Of longer-term concern are economic problems abroad, particularly Asia and Latin America, with Brazil being a particularly troubling issue.

"Half the world is in recession, and there is overcapacity in most of the rest of the world," Jasinowski said. "Europe is slowing and is not likely to be as strong," he added. And Brazil is "on the verge of a disaster."

Campbell, whose company does business in China, South Korea and Taiwan, said, "We're beginning to sense that the worst may be over" in those countries. Jasinowski said he's more pessimistic about Asia overall into 2000.

Overall, the NAM is predicting that a global upswing isn't likely before the end of 2000--if then.

To U.S. manufacturers, that translates into enormous pressure to keep prices down, meaning profit margins are paper thin.

(snip)

The complete text can be found at:

Chicago Tribune



-- Deborah (infowars@yahoo.com), March 16, 1999

Answers

(Sorry about the all caps in the subject line ---I cut & pasted & 'spaced' it out.)

-- Deborah (info@wars.com), March 16, 1999.

Good info - thanks. It makes sense, I know many companies will get done this summer - I just wish I could better predict the percentages of failures, the percent of "schedule slipping" that occurs.

In other words, of the 20% who plan on finishing in 3rd qtr and 4th qtr 1999, how many will actually get down on time, how many will be 1 month late (Nov), 2 months late (Dec), and how many will fail to finish at all; or finish some repairs and have mixed compliant and non-compliant machinery, but with no time to test?

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), March 16, 1999.


thanks, deborah! my particular concern is for machine shops, especially CNC machines.

-- jocelyne slough (jonslough@tln.net), March 16, 1999.

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