Rockwell expecting sales decline fueled by global trade uncertainty

CEO says trade and tariff discussions prompting customers to reevaluate their supply chains

Rockwell Automation
Rockwell Automation's Milwaukee headquarters.

Last updated on July 26th, 2019 at 12:52 pm

Blake Moret

Executives at Milwaukee-based Rockwell Automation Inc. are now expecting an organic sales decline in the company’s fourth quarter prompted by global uncertainty around trade and tariffs, although the dip may be temporary.

After reporting third quarter results, the company cut its full year sales guidance from $6.8 billion to $6.6 billion, suggesting a 3% to 3.5% decline in organic sales in the current quarter.

Blake Moret, chairman and chief executive officer of Rockwell, which is a Fortune 500 company, said the company saw weakness and order delays in a number of industries during the third quarter that informed the decision to cut guidance.

“We’re watching the development of this quarter, Q4, very closely,” he said.

Moret noted that Rockwell’s review of the projects delayed during the quarter suggested the dip is not the start of a larger slowdown.

“We haven’t assumed that this is the beginning of something that’s going to last multiple quarters,” he said, later adding: “The reasons that are being given are specific and plausible as opposed to some general precursor to further push outs and cancellations.”

He said ongoing trade and tariff discussions are prompting customers to reevaluate their supply chains, potentially moving products to different countries and changing suppliers.

“That’s a lot of work,” Moret said. “The decisions aren’t made overnight and so being able to react to the current environment but in a way that won’t have to be undone in some sort of short-term time horizon, that’s the kind of uncertainty we’re talking about.”

He added that while the company is paying close attention to the current quarter, interest and quoting activity remains healthy.

“We’re going to be looking at the macro. Progress on trade would certainly help but we’re not counting on that at all,” Moret said.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.