It seems that both US and UK manufacturing is going through a difficult period at the moment for two different reasons.
US Companies such as Caterpillar and 3M have cited higher costs, a stronger dollar and increasing concerns over the US-China trade war as being factors behind their weaker third quarter results and it doesn’t look like they will be the last companies to do so.
The fear is that although Trump’s protectionist measures may have helped jobs in some US steel mills, they have effectively hiked up input costs for other American companies who employ far more people.
For the moment, I think that the American economy can weather the storm, but the longer it takes for a China-US negotiation breakthrough, the more difficult things will become. On the other hand, when and if an agreement is announced I expect there will be a huge relief rally – but in the meantime I expect to hear more gloom from US manufacturers.
Meanwhile, on this side of the Atlantic, the latest CBI survey shows that UK manufacturing orders AND order volumes fell at their fastest pace since 2015 as uncertainty over Brexit continues to take its toll.
I expect this to get worse as the deadline looms but even IF an agreement is announced I think it will take time for the real benefits to come through as nothing like Brexit has happened before and many will be cautious at jumping on any kind of bandwagon too soon.
The second thing I wanted to talk about today was electric cars.
Dyson announced that it’s going to build its electric car in a new plant in Singapore, which is a bit of a slap in the face for the UK, especially considering that Sir James Dyson championed our manufacturing capability in his vocal support for Brexit.
However, if would seem that things like an existing supply chain, access to a well-educated and highly-skilled workforce along with very practical things like a MASSIVE tax incentive and Singapore’s existing trade agreements with the likes of China, India, Japan AND the EU – have won the day.
Tesla shares up by 13%
In other news on Electric cars, Tesla shares shot up by 13% in trading yesterday as the company brought forward its third quarter results announcement, which was originally scheduled for next week or the week after.
Elon Musk has been banging on about improved profit and cashflow so now investors are salivating at the thought of some good news from the embattled electric car pioneer.
Also in Watson’s Daily today:
- In MACROECONOMIC AND MARKETS NEWS, the EU rejects Italy’s budget and markets take a bath
- In MANUFACTURING NEWS, both US and UK manufacturing hit hurdles, Dyson goes to Singapore and Tesla gets a double boost
- In OTHER NEWS, I bring you a grown-up version of the egg-and-spoon race and an annoying game. For more details, subscribe today..