TUCSON, ARIZ. — A tooling association executive waved a yellow caution flag, warning that the U.S. economy ``could within six months be in a deflationary economy'' for the first time in six decades.
Drawing an analogy to an auto race, Matthew Coffey told the SPI Molders and Moldmakers division members gathered in Tucson to ``step off the gas'' and ``stay in position'' on the track. Coffey is president and chief operating officer of the National Tooling & Machining Association, a Fort Washington, Md., group with 2,750 member companies.
It could be ``two years before [we] go to [a] green'' flag, Coffey said in a Feb. 20 address to a joint conference of the two Washington-based Society of the Plastics Industry Inc. divisions.
``Last year had to have been the best year we have ever seen in tool and die work for a good 10-15 years,'' he said. ``In most cases, we saw orders up 15 percent. That is phenomenal growth.''
He cited a stable economy and ``a very large amount of outsourcing'' as factors working in favor of molders and mold makers.
In the new few months, however, businesses need to choose between a ``pedal to the metal'' approach or one of concern, he warned.
Focusing on Asia, he expressed concern about the tiger countries' currency devaluations and governments taking capital and pumping in low-cost loans to keep firms afloat. He said the International Monetary Fund can't keep up, in part because ``most debt is hidden in these countries.''
Bankers and investors have ``poured billions into Asian countries with intent to expand'' production capacity, he said.
The result: Asia is way over capacity, generating more markdowns and larger rebates for Asian electronic, computer, appliance and automotive products, he said.
At least one listener thought Coffey's midyear prediction ``seemed a little pessimistic.''
In an interview after Coffey's speech, Michael Kelley of Catalina Tool & Mold Inc. said, ``We are cautious this year'' and ``must take that [forecast] into account.'' Kelley is vice president of marketing and sales for Catalina, based in Tucson.