Executives for Milwaukee-based
Rockwell Automation say they expect to see continued investment in U.S. manufacturing, even amid growing economic uncertainty and headwinds.
Speaking on the company’s fourth quarter earnings call, Rockwell chairman and chief executive officer Blake Moret described the trend in U.S. investment as “shoring” as opposed to “reshoring.”
“It’s really about the U.S. being an outsized beneficiary of new capex as opposed to shuttering plants in China or other parts of Asia and bringing it back to the U.S.,” Moret said.
He noted companies, including Rockwell, are investing to build redundancy into their supply chains and to make products closer to their end consumer, something he expects will continue even with growing economic uncertainty.
“I don’t see anything with the current economic headwinds that would cause people to (say) ‘just kidding, let’s go back to pushing manufacturing to other parts of the world and chase lower labor rates,'” Moret said.
For the full year, Rockwell reported $7.76 billion in sales, up 11% from fiscal 2021. The company’s net income, however, was slightly lower at $932 million, down from nearly $1.36 billion last year. The decline was attributed primarily to adjustments to the fair value of Rockwell’s investment in PTC. On an adjusted basis, net income was slightly up.
Rockwell also saw $10 billion of orders during the year, a 20% increase over 2021. Nick Gangestad, chief financial officer at Rockwell Automation, described the increase as “unprecedented demand” for the company’s products in an interview with BizTimes Milwaukee.
[caption id="attachment_539351" align="alignnone" width="1280"]
Nick Gangestad
Credit: Jake Hill Photography[/caption]
Gangestad said the pace of new orders has declined some from its peak in the middle of the year, but said orders continue to outpace sales.
“I’m not sure I would characterize that as a change in appetite,” he said of the moderation. “I do find it encouraging that they’re still having that interest.”
Rockwell initiated its guidance for fiscal 2023 on Wednesday, calling for an 11% organic increase in sales for the year.
One element supporting the company’s outlook is its roughly $5 billion backlog heading into 2023. Those existing orders would account for more than half the year in sales. In more normal conditions, Rockwell would have around a month of sales accounted for as it starts the year.
“We’re trying to be conservative, we’re trying to take into account a lot of moving pieces,” Gangestad said.
Another factor shaping Rockwell’s guidance for the year are continued issues with semiconductors, a global issue impacting many industries including nearly everything Rockwell makes.
“We are seeing some stabilization and improvement,” Gangestad said of the chip situation, noting that around 18 months ago suppliers had no idea what they would or wouldn’t be able to ship.
Working together, Gangestad said Rockwell and its suppliers have been able to have a more accurate picture of what components a supplier can ship and then.
“It’s still not perfect,” he said.
On Rockwell’s earnings call, Moret highlighted the potential for strength across a number industries the company serves.
In automotive, for instance, he highlighted continued investment in electric vehicles and batteries.
“We continue to see both the established brand owners and the startups increase capacity in their EV fleets because they have to, otherwise they’re going to lose share and they’re not going to be ready to meet growing consumer demand there,” Moret said.
He also pointed to continued investment in warehouse automation.
“I don’t see an immediate reacceleration in e-commerce, but for retailers wanting to be more efficient in back-of-store and in their own warehouse, we continue to see good business there,” Moret said.
