On the surface, the recent slowdown in manufacturing activity might be viewed as a justification for delaying capital investments. But a cooler economy presents some valuable opportunities for machine shop managers to prepare for better times to come. When a shop is operating near its maximum capacity, it's difficult for managers to think about cultivating new business or buying equipment. But a decline in one industrial sector may coincide with increased activity in another. Thus, pursuing a new direction is often beneficial for a company's long-term development, and shifting gears may require equipment upgrades.
Arelated opportunity in a cool economy is the reduced cost of financing. As the Federal Reserve Board continues to cut short-term interest rates to stimulate consumer spending, loans for metalworking equipment (typically amortized over 5-7 years) have become substantially more attractive. As a result, it's a propitious time for businesses to finance or refinance capital equipment. This situation enhances the resources of borrowers and creates additional options for obtaining the equipment necessary to keep pace with current technology. Furthermore, astute managers understand that seeds planted in difficult market conditions can represent the distinction between tomorrow's winners and losers.
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