As we begin 2016, we look back on another year of rather meager economic growth and forward to more of the same.
Reflecting macro-economic trends in the US, the industrial gas industry is growing in a few manufacturing sectors and struggling in many others. As we go to press, US manufacturing business in 2015 is down significantly from 2014 and industrial gas customers, like steel producers and equipment manufacturers, are not predicting a turnaround anytime soon, especially those who make equipment used in any commodity business. The strength of the US dollar, low oil prices, and relatively slower global demand continue to be challenges for industrial gas producers and customers.
While macro-economic conditions will remain challenging, industrial gas companies serve a variety of markets and can pursue growth in less-cyclical end-markets, such as food and beverage and healthcare. With a large and diverse economic base and domestic energy supplies, the US represents much lower risk to investors than most other global economies, making it an attractive place to do business. For example, energy costs in the US are very low compared to the rest of the world. The currently abundant and inexpensive energy in the US should begin to encourage the building out and upgrading of infrastructure, which has been sorely neglected, particularly its energy infrastructure. This will be very positive for the economy. In the short-term, the industrial gas industry needs to deal with today’s macro-economic factors, but in the mid- to long-term, the US business environment should contribute to solid growth for the industrial gas companies.
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