Some factory owners, apparently distrustful of the recovery, are delaying taking delivery of new machinery, belying a statistical increase in machine-tool orders that usually signals economic improvement.
Many makers of factory automation equipment--robotics--and machine tools say customers are either postponing delivery on existing orders or writing new orders with unusually long-term delivery schedules, apparently to avoid paying for the machinery until interest rates drop and cash flow improves and until demand for their products picks up and makes the new manufacturing equipment necessary.
"Our orders are actually ahead of last year, but our shipments are about 60 percent behind last year," said Frederick W. Searby, president of the Bendix Industrial Group division of Allied Corp.
"We're seeing a pickup in order activity . . . but the order activity is not demanding immediate delivery," said John A. Blaeser, executive vice president for electronic systems at Gould Inc., a maker of factory automation equipment. "It's not a panic that they have to have them next month or this week."
Industry officials and observers speculate that many plant owners, faced with production lines running at a fraction of their capacity, are putting off installing new equipment until demand for their products forces them to increase manufacturing capacity. They also save money, because machine tools are not paid for until they are delivered--an important consideration at a time when cash is tight and interest rates are still high. Simply placing an order costs virtually nothing.
Not all companies report customer reluctance to take delivery on equipment they have ordered. "I get no sense that people are hesitant," said an executive of one company. "People are planning for higher production levels."
Other firms say they still have so few orders that it's hard to say whether there has been a change in delivery patterns.
New machine-tool orders totaled $145.2 million in June, according to the National Machine Tool Builders Association, up nearly 50 percent from January levels but off sharply from the monthly average of $458 million in 1979, at the industry's peak.
But while the trade group keeps tabs on new orders, the best measure of shipments is on the machine-tool companies' bottom lines. So experts say it's hard to chart the health of the industry based solely on the statistics for orders.
"I've been looking at the orders numbers as being too high," said Robert Scott, an economist at Chase Econometrics. "When you see strong orders for machine tools and you know damn well nobody needs them, it makes the numbers look funny."
Scott speculated that many machine-tool customers are placing orders for later delivery just to "get on line" for equipment they'll need when the recovery arrives in force.
"It's a hedge move early in the recovery," he said. "You're hedging, betting on stronger markets in your field, but you're not actually spending the money."
Industry executives also say that, while they are seeing some postponements, cancellations of orders seem to be declining, indicating most customers are hoping to take delivery eventually.
Order cancellation usually carries a high financial penalty.