Mr. Inch: Industrial manufacturing, as we see it, can be tracked by the Industrial Production Index for manufacturing. Increasingly, the outlook for industrial production is a function of global manufacturing activity. Here, China is a very big piece of the equation. Other parts of the world are also increasingly important, including Mexico and other regions of Asia and Eastern Europe. Secularly, we believe that the North American industrial manufacturing economy is on a downward sloping trajectory. This isn't all bad news for the companies that compete in this space, but, in my opinion, it does imply that most of them have to be well down the curve in terms of implementing their global strategies to position for what we believe is an increasingly competitive dynamic on the pricing front and on other fronts that are not going to abate anytime soon. We believe the competitiveness and overall outlook is becoming tougher, driven by global competitive pressures. This is not a completely bad news story, however, as this global industrialization is presenting significant cost-saving and new product demand opportunities. In the near term, we feel good about the industrial manufacturing cycle, principally because the North American manufacturing economy has been through a steep recession that began roughly in the middle of 2000. There are a couple of exceptions, most notably autos and housing, that have remained particularly strong during this downturn. However, recessions are followed by recoveries and we believe we are in the early phase of a multi-year cycle expansion for manufacturers. To that point, it looked like things were picking up a bit in the earlier part of the year. We think this was due to a bit of inventory restocking. That trend faded over the summer and continued to fade until very recently. There has since been slight improvement in some of the order trends. With regard to autos and housing, our forecasts assume that next year North American auto build will be down somewhere around 10% and housing will probably remain flat. Our autos outlook could be too conservative, but it gives us greater confidence in our forecast estimates. Including this dynamic we think you can still can see an up year next year ' not a V- shaped recovery, but still a decent year. We are assuming that overall sales demand will be up 1%-2% in 2003, and that bottom lines can be up significantly more because of the increased operating leverage that characterizes many of our industrial names today, as they have been aggressively downsizing their work forces and continuing to substitute capital for labor or replacing people with machines to increase their productivity and overall competitiveness. So, again, on balance we feel pretty good about the cycle.
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