Are we being overly cautious?

When a person’s been scarred by a bad experience it’s human nature to be excessively cautious next time around, and I think Paul Kellet, Director of Analysis at the Automated Imaging Association (AIA) is suffering from just that syndrome.

In “New Machine Vision Market Study Reports the Latest on Product Results and Trends through 2009 and Forecasts through 2014,” (what a mouthful!) Kellet says, “Overall machine vision sales should increase by 2.6% to 4.6% in 2010,”

With respect Paul, I disagree, and let me cite three sources of evidence that suggest the recovery is proving much sharper you anticipate. These are, the first quarter financials from Cognex and Dalsa and the contents of my email in-box.

Both Cognex and Dalsa said that they are seeing a rapid and accelerating rebound from the low sales volumes of twelve months ago. In effect, it seems we’re experiencing a ‘U’ shaped recovery, which my in-box appears to confirm.

Okay, I accept that my emails are scarcely a reliable economic indicator, but let me explain what I see: no one has any inventory and as a result I’m being quoted some ridiculous delivery dates. Why? Well manufacturers have been taken by surprise by the sudden upturn in business and are scrambling to meet demand. Add to this the lack of inventory in the system – and it was the destocking that induced much of the panic of ’08-09 – and I believe we’re seeing a kind of accelerator effect. In fact I think the biggest constraint to growth this year will be lack of manufacturing capacity.

So what do I expect to see? I’m going to go out on a limb here – I have no supporting data, just my feel for the machine vision market – but I think many companies will see revenues up 10 – 15% over 2009. Those who kept their capacity and inventory intact will see more while those who saw only doom and gloom and cut capacity will struggle to react.

In fact I’d argue the biggest threat right now is that growing demand and limited supply will give rise to inflation, and that’s something we could all do without.