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Economy + Supply

-- Purchasing, 11/19/2009 2:00:00 AM

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Slow GDP Growth Forecast

After reviewing the third-quarter economic growth of 3.5%, Global Insight economist Nigel Gault sees continued expansion of gross domestic product ahead—but at a slower pace. "We have been projecting fourth-quarter GDP growth at 2.6% and first-quarter growth at 1.8%," he says, "and still anticipate that 2.5%–3% for the fourth quarter and 1.75%–2% for the first as the most likely ranges." Reason: Consumer spending and manufacturing growth will be slow for some quarters to come.

DRAM Capacity to Flatten

DRAM manufacturers have enough production capacity to meet demand through 2012 because of huge manufacturing investments the industry made in 2005–2007, according to researcher iSuppli. "Considering it takes about two years to build a new fab, we don't see the need for capital spending to go toward new capacity for the next few years," says Mike Howard, senior DRAM analyst for iSuppli.

Paper Demand Down 19%

Total U.S. printing-writing paper shipments decreased 11% in September compared to the same month last year, according to the American Forest & Paper Association. All major grades of printing and writing papers recorded the lowest year-to-date declines for the third consecutive month when compared to 2008. Year-to-date, printing-writing paper shipments were down 19%.

Denso Eyes Lithium Batteries

Auto parts supplier Denso of Japan plans to make lithium ion batteries for use in hybrid or electric vehicles, something rival Robert Bosch of Germany will do with partner Samsung SDI starting in 2011. Denso has been working on lithium technology for 15 years, originally for mobile phones.

Mixed Signals from Box Firms

Corrugated box sales picked up at the start of the fourth quarter, according to some producers. But others think demand strength in October was related to inventory shifts rather than end-user demand. That's why prices of corrugated containers didn't rise in October, purchasing managers report. Atop that, supply leader International Paper sees "seasonal decreases" in November and December packaging demand.

New Source for Minerals

Ecuador could start exporting minerals in 2012 once the country's nascent mining sector moves into production, according to President Rafael Correa. He signed a mining law reform this month that could help clear the way for gold, copper and silver exploration, production and eventually for export.

PCB Demand Up in September

Shipments of printed circuit boards (PCBs) increased 21.8% in September from August and new order bookings increased 31%, according to trade group IPC. However, shipments declined 14.3% from September 2008 and bookings dropped 6.4%. Year-to-date shipments declined 25.5% and bookings dropped 23.4%.

No Impact Seen on PC Sales

Windows 7, Microsoft's new operating system (OS), will have minimal impact on PC sales, according to researcher Gartner. The OS is not the reason people upgrade their PCs, says Mikako Kitagawa, principal analyst at Gartner. Businesses aren't expected to start buying Windows 7 computers until later in 2010.

E-Outsourcing to Keep Pace

Outsourcing in the electronics industry is "here to stay" and the electronics manufacturing services (EMS) industry will continue to grow, says Jure Sola CEO of Sanmina-SCI at the National Electronic Distributors Association's Executive Conference. He says OEMs will continue to outsource as they look for the lowest total cost of ownership.

Reading the Tea Leaves

There are more signs that the U.S. economy is improving. Here is a sampling:

Durable goods orders increased 1.4% in September.
Only 23% of manufacturers polled feel the U.S. economy declined in the third quarter (down from last quarter's 63%) while 13% felt it actually grew.
More than half (57%) of manufacturers are forecasting positive growth in the next year, with 12% forecasting double-digit growth.
The National Association of Credit Managers' Index ticked up to 51 in October, marking the first time it has reached the growth area (above 50) in more than a year.

DOJ Probes Electronics Firms

The U.S. Department of Justice is investigating the optical disk-drive business units of Sony Corp., Hitachi and Toshiba for possible anti-trust violations. Sony was served a subpoena by DOJ and Hitachi and Toshiba said they were notified that they were being investigated.

Ethanol Demand has Grown

Renewable fuels association says average monthly ethanol sales through July of 862 million gallons, up 15.4% from 747 million in the first seven months of 2008. The rise in national ethanol consumption comes despite gasoline sales falling 12% in the first seven months of 2009.

Anti-Counterfeiting Steps Up

Semi has published new technical standards to help thwart component counterfeiting by validating the integrity of parts of non-authorized distributors and use of strongly encrypted batch numbers.

Alcoa to Fix Forging Press

Alcoa will repair and refurbish the 54-year-old, 50,000-ton press at the company's Cleveland Works that makes large aluminum and titanium forgings. The repair of cracks in the press will be done in 2011.