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OTHER VOICES: Expect the unexpected with forecasts

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Crain News Service report

AKRON (Feb. 5, 2014) — With the new year barely a month old, that means it’s still time for forecasts.

The problem is deciding whom to trust, because often the prognostications put forth contradictory information.

For example, a number of economists generally predict sluggish growth—many saying less than 2 percent for the year. On the other hand, 73 percent of CEOs surveyed by the Business Roundtable expect higher sales this year, and another 18 percent look for revenues to remain steady. And a survey of purchasing and supply executives look for manufacturing to grow at more than 4 percent, with the rubber and plastics sector cited as having one of the rosiest outlooks for the year.

The automobile industry is one area where everyone expects good news. That means U.S. light vehicle sales of more than 16 million units, the first time that mark would be reached since the pre-recession year of 2007. Even better, the higher numbers are being brought on by organic growth, not by auto makers pulling sales forward with unsustainable incentives that bleed profits.

Suppliers to the auto industry now should be in a better position to meet higher demand than when the auto market bounced back quicker than expected after the recession, leaving a smaller supplier base scrambling to meet the needs of its car maker customer base.

Another virtual certainty this year is that little will get done in Washington during this mid-term election year. Officials at the Rubber Manufacturers Association say this is a time to “define and defend” the positions of its tire maker members. Scrap tires remain big on the group’s agenda, as does the expected final rule on tire fuel efficiency standards and the funding of transportation projects.

The bottom line: Use the forecasts to help plan your strategy, but have the flexibility to react when the unexpected undoubtedly happens in the coming year.

This editorial appeared in a recent edition of Rubber & Plastics News, an Akron-based sister publication of Tire Business. It has been edited slightly from its original version.

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