Aaron Merkin, CTO, Fluke Reliability, answered questions from Pumps & Systems for the 2023 state of the industry issue.
Pumps & Systems is celebrating our 30th anniversary in 2023. What do you think has made the biggest impact on the industry in the last 30 years? What do you think needs to happen to push the industry forward in the next 30?
Congratulations on a great run, Pumps & Systems. Over the last 30 years, I think the biggest impact on the industry has been the improvements in our abilities to measure, monitor, and assess the condition of our assets. We have seen an incredible increase in the availability of affordable technologies that enable deeper and more frequent insights into asset health and performance. This started with desktop computing, which allow cost effective execution of first principles modeling. And those improvements continue today through ubiquitous connectivity and the transition to AI/ML models running in the cloud. This is the most impactful of the big trends because it will allow operators to sweat assets while avoiding downtime. Industries can reinvest those retained profits into their people and processes, as well as new products and services.
Fear of displacement is the biggest obstacle to be overcome to continue to reap the benefits of asset performance improvements. Across industries, individuals have spent years and decades developing skills and subject matter expertise to drive operational excellence. It is incumbent upon leaders to chart out a clear path forward for their employees so people can see how technology will augment them and not replace them. As a result, these team members can focus on the most challenging problems and create even more value for their stakeholders.
What are your thoughts regarding Build America, Buy America? How has that impacted your company?
We anticipate this legislation will result in an increase in manufacturing capacity within the United States over the next few years with some resultant uptake in demand for our solutions. However, it is still too early for us to see clear demand growth that we can directly trace back to the Build America, Buy America act.
How have any price increases of products or materials impacted you or your company?
We continue to see strong inflationary pressure on materials and labor increasing our costs.
What needs to happen in regard to industry improvements in the short term?
In the very near term, the biggest opportunity for improvement is the availability of skilled technicians, operators, and supervisors to enable industry to deliver against demand. We hear frequently from our customers that these labor shortages inhibit their ability to produce products as well as maintain their assets.
What issues have you seen with any material shortages or supply chain issues?
While the supply chain situation has improved since the last time we spoke, it continues to be a constant challenge for us to manage to meet customer demand.
What industry trends are you seeing as we go into 2023?
The need to do more with fewer people is the strongest trend we see across the board. For a connected reliability provider such as us, this manifests as continued demand for solutions that empower labor-strapped and expertise-constrained customers to expand condition monitoring systems to balance of plant, without a corresponding increase in their own labor.
What’s on your mind/what are you most concerned about?
My biggest concern going into 2023 is that self-reinforcing fears of a recession will cause consumers and producers to slow spending, reduce demand, and therefore induce the recession they fear.
What are you most looking forward to in 2023?
My hope is that we are able to break out of the inflationary cycle with a short period of contraction in the first half of the year, followed by a return to growth in the second half.
