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High-tech manufacturers here are casting a cautious eye on 2009, and indicate that they plan to stay as lean as possible to be ready if sales growth, which already is beginning to soften, turns to a decline.
For one such company, the economic uncertainty its customers face could lead to greater demand for a product it believes helps customers become more lean themselves. That company, Next IT Corp., a Spokane developer of artificial intelligence technologies, says its ActiveAgent Web-based software, which can be used in lieu of human labor, is getting a closer look these days by airlines, financial, and other industries looking for ways to weather the economic storm.
"Our sales pipe has gotten bigger," says John Dale, Next IT's executive vice president of finance and administration. Still, he says, customers are being very cautious and demand a return on their investment when buying software. "They can control their expenses, not their revenue," he says. "We make it easier for them to control their expense side."
Also, because of its own efficiency efforts, Next IT has been able to hire fewer people this year than it had anticipated, Dale says. Still, the company forecasts hiring as many as 100 more employees over the next year, which would give it a work force of 255 here, he says. Next IT will roll out a new application for the financial market soon, he says, and has entered into an agreement for its third year of supplying software to the U.S. Army.
Lee Tate, president of Tate Technology Inc., a Spokane contract electronics manufacturer, says he's reticent to predict what will happen in 2009, since sales have fallen off at his company during the last couple of months. His bullish predictions this time last year for 2008 were borne out. Tate Technology's sales shot up by 41 percent this year and it hired nine additional workers.
Tate says that because sales have softened recently, the company has prepared itself to stay nimble by keeping most of its new employees on "temporary" status, so it can reduce labor expenses as needed, and will seek to remain flexible to ramp up production when lenders get more confident and its customers boost manufacturing. Two encouraging signs are that customers are asking for new types of parts and are requesting a lot of quotes for potential orders, Tate says.
Wayne Williams, CEO of Liberty Lake-based telecommunications gear maker Telect Inc., says he anticipates some erosion in demand in the telecom market as a result of the recession, making expanding market share a key focus in the coming year. Telect saw its revenues climb about 10 percent in the first half of 2008, only to lose those gains in the latter part of the year, he says.
Williams says he remains positive about the industry, especially as cell phones and Internet access have become viewed more as necessities than options, but adds that if the downturn deepens, people could postpone replacing phones or adding new services.
"Our customers' customers are hurting," he says.
Williams says one of the biggest issues for 2009 is that if one telecom company doesn't expand, the others won't follow.
"We need competition to create economic stimulus," Williams says.
Itron Inc., of Liberty Lake, said it had a total backlog of $1 billion for its meter reading technology as of Sept. 30, compared with $668 million Sept. 30, 2007. Meanwhile, Key Tronic Corp., the Spokane Valley-based contract manufacturer, reported third-quarter revenues up more than $16 million over the year-earlier period. MacKay Manufacturing Inc., of Spokane Valley, says it anticipates a flat year coming up, following record sales in 2008.