Thursday, October 30, 2008

The Economy and Simulation: Good and Bad

One of the things we do here at PADT is volunteer our time to start-ups who ask various local business groups for mentoring. I got assigned, along with five other local business people, to a company in the mobile phone world that is seeking some funding to allow them to push their product "to the next level" and really break out. All of which has nothing to do with this posting.
Why I decided to jot something down is afterwords the group started talking about the general economy and how what they do has been effected and how they think it will effect them. Most were either business lawyers or former executives who do small business consulting and things are not looking good, except for bankruptcy filings. But I mentioned that our business was actually picking up and that we saw a lot of opportunity in the current horrid situation.

The fact of the matter is that product development competition just got a lot tighter. People have less capital and have a harder time getting customers to buy. So they need better products and they need them made faster. So we are seeing more and more firms come to us to either buy simulation tools, or have us use simulation to improve their products. It is a smaller investment than hiring more people and has a fairly quick return on investment. Talking to others int he simulation world this seems to be fairly common. "Do more with less" edicts tend towards more virtual prototyping.

As an example, the Chairman of United Technologies (UTX) cited simulation as a major reason why they had such a stellar quarter. See that wack job Jim Cramer on CNBC (www.cnbc.com/id/15840232?video=894134987) You have to listen to Cramer rant a bit but in the middle is the quote about simulation (at around 6:40).

But everything is not rosy. What we are starting to see, and what will devastate our industry, are signs of major corporations looking at their reduced stock price and the potential of decreased revenue in a shrinking world economy. And then they start looking for ways in which they can make a bold move that will excite investors. And that smells like layoffs. And often they are arbitrary and will hit simulation even if simulation is critical to growing. Also, if you are in the US or Western Europe, they are may ship more jobs to other countries (Of course, if you are in those countries it is a good thing).

My last thought to share is one I've brought up before. I suspect that whichever senator wins in the US they are going to engage in some old fashioned Keynesian Economics and pump money into the economy through funding of alternative energy development. Other developed countries have already started. This means a lot of engineering and a lot of simulation.

But, as with everything, you have to be at the right place at the right time. It is going to be a bumpy ride, but I think when we get to the other side, simulation will come out stronger as a profession and stronger as a part of mainstream product development.

What do you guys think? Am I just tyring to make lemonade out of a cloud's lining?

1 comment:

Frank said...

You post is encouraging for us who are in the field of simulation engineering during this economic downturn.