The year 2020 will be remembered above all for the COVID-19 virus. The impacts of the virus have spread all over the world, restricting normal human interaction and especially travelling. We have been forced to take new means into use to replace face-to-face meetings. The procedures that have been found to work will certainly remain in place in the future, too. The vaccinations have now been started and hopefully they will lead to herd immunity as soon as possible. After that we can gradually continue normal life, including personal interaction. Day-to-day issues are quite easy to handle online, but development issues need personal interaction and brainstorming.
Another major news headline for 2020 has been the U.S. presidential election. There have also been enough events and surprises surrounding it, which have been relentlessly followed by the economy and which have also had a significant impact on the world economy. The third big economic factor is the large scale support policy initiated by the governments. This has been financed with debt, or actually by printing more money. After all, most companies have survived all of this quite well with the exception of the service sector and travel related business. However, it remains to be seen what the long-term effects of the debt will be on the market.
The impact of COVID-19 on Jame-Shaft has remained relatively small despite the momentary drop in demand in late spring 2020. However, the order income in the autumn was very variable. August started briskly, there was a slightly quieter moment in October-November and, somewhat surprisingly, towards the end of the year, the number of orders started to grow. This was a bit of a surprise for us, because in the previous release at the end of October we still believed that lower demand would continue until the end of the year. Thanks to the increased needs of our customers December was busy for us and the actual invoicing was clearly better than expected. The acceleration was rapid, but thanks to improved capacity management tools and very good staff commitment and flexibility it was handled well. At the end of the year the order backlog was about 15% bigger than year before and the order income has continued to be on a good level in January. After all the autumn half-year sales were very well in line with the budget. Our customers’ forecasts for spring 2021 are generally at a high level, in fact even better than a year before and before COVID-19. Hopefully there will not be any upheavals in the world that will change this positive trend.
We have already started actions to increase capacity in December. The high degree of automation of previous investments can now be fully exploited: Working time arrangements have been agreed with the staff to be able increase the use of the machines unmanned both at night and on weekends. This has led to a significant increase in capacity and it is still possible to expand this operating method to the other machine groups. After a break of a year, investments in machinery will also continue. There are currently two new lathes ordered, the first of which will increase the production capacity of larger turned parts. Another lathe equipped with a robot increases our capacity in finishing smaller products, i.e. in so-called hard turning. In addition, this investment plan includes several other machines to increase capacity, automation grade and efficiency. These will be described in more detail later in the spring when negotiations with machine and automation suppliers have been completed. The most recent of previous investments in full production use is a robot installation to serve a vertical machining center. This enables the unmanned use of this machine. The first weeks in production have been very promising even though this is a completely new robot application for us.
At the moment there are concerns about a significant decline in the availability of raw materials and longer delivery times, as well as the threat of rising prices. The price of scrap on the metal exchange has risen several tens of percent in the last two months. Steel additives have reacted in the same way, e.g. the price of nickel has risen sharply by about 15% in the last weeks. Prolonged delivery times combined with strong growth in demand have also reduced our own raw material stock. So far there have not been problems and if the ordered raw material batches arrive in accordance with the confirmed delivery times there will be no problems in the coming months. In addition, we have alternative sourcing channels available if the situation becomes worse.
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We wish all of you a successful and productive year in 2021!
Hopefully the speed of vaccination will accelerate and a significant portion of the world’s population will be vaccinated by the summer. It would be nice if the uncertainty caused by COVID-19 in both business and private life disappeared and we were able to start making more far-reaching plans again.
Best wishes,
Mika Tuunainen
Managing Director
Jameshaft Oy