The Chinese yuan or ‘remninbi’ hit a record high against the US dollar on Monday amidst the strong volatility visible in the country through December. Yuan gained for a second straight day, reaching a record of 6.3287 in morning trading, after the central bank guided the currency stronger via its daily reference exchange rate, set 0.07 percent higher at 6.3167 per dollar.
In December, the yuan touched the bottom of the daily trading range of 0.5 percent on 12 out of the month’s 18 trading days. The currency also posted a record one-day gain of 0.4 percent on Dec 16.
Bloomberg reports that Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.
There is no doubt in my mind that there are going to be dire things happening in Euorozone currencies this year; this news of the Yuan is something that all U.S. Manufacturers should think about as it’s direct impact on us will be greater than all that Eurozone drama, in my opinion.
Selection of materials for precision machined parts should be held to a higher standard than just “cheapest price per pound.”
Here are 4 questions to help decide if a grade of steel (or other material) is appropriate:
Is it economical in assuring a satisfactory end product?
Does it provide sufficient safety factor for the properties called upon in the design?
Does it provide the most economical means of production?
Is it the lowest cost raw material?
The order in which these questions are asked is critical. Answering number 4 first puts the entire company in jeopardy for product liability lawsuits if the first three questions are ignored in the buyer’s holy quest for cheapest raw material price.
In steel, with many possible carbon and alloy grades, qualities, and finishes (cold drawn, turned and polished, ground and polished, or combinations of these) the end use is of particular importance in arriving at the grade, type, and quality of the steel.
Human safety critical components (airbags, anti lock brakes, climbing equipment) require different thinking than parts for less critical applications where failure is merely inconvenient, not life threatening.
Components for expensive machines and production equipment also fall into this category, where the failure of a part purchased under the assumptions of “false economy” result in extensive downtime of a very high value production asset.
Once the suitability for the end use and safety factor as designed has been determined, then the suitability of the material for the production method becomes the next selection criteria. In high volumes of relatively simple parts, for example, very low carbon, plain carbon steel is the appropriate choice using cold heading. If the volumes are not there, attempting to use this same steel on screw machines would result in inferior finishes and far more expensive parts than if a free machining grade of steel were chosen. Selecting for Manufacturability can help lower the total cost over the entire supply chain as well as for the final consumer.
The final criteria then becomes transactional cost. But even this is more than just dollars and cents- it is both dollars and sense! Is the supplier a legitimate source? Do they have statistically controlled systems? Do they have a mature quality system that has demonstrated it’s strength over time? Do they limit their number of suppliers so that you will not be subjected to the full range of variability of inputs possible in an increasingly global, interconnected world?
If buying for mere cheapness was the point, we could replace all purchasing agents with third graders. By third grade, most kids know which number is larger, and which is smaller.
The professional value that purchasing adds is by establishing and following a process that assures an optimum outcome for the entire value chain, not just one part of it.
PMPA members have a great relationship with the Great Manufacturer at the North Pole. But we heard that it isn’t quite so nice for other folks who don’t make Santa’s “Nice” List.
10. Santa leaves you a ribbon wrapped folder of jobs to bid. They are all cam-swiss jobs, lots of drilling and threading, and the materials are Waspaloy, Refractaloy 26, beta Titanium (Ti-3Al-13V-11Cr), and Pure Tungsten.
9. Santa drops off 10,000 bags of money. Unfortunately it is overstock of 2009 Zimbabwean currency and the total value of the $Z2,621,984,228 notes he left is a little less than $1. And their weight caves in the roof and mezzanine over your Q.A. Dept.
8. Your P.O. for raw materials at firm pricing to North Pole comes back stamped, “Dream on, Chester!”
7. You ask Santa for a new order, what you really get is a new government regulation.
6. When Santa drops off your stuff, he also leaves a hefty bill for Air Freight and expedited (overnight) handling.
5. By the time Santa gets to your shop, all he has left on his sleigh is foam packing which he spills all over your parking lot as he overfills your dumpster while looking for that one box of special inserts he had on his list for you.
4. Week after Christmas you get a citation in the mail from the State Dept. Of Commerce. Seems their field guy caught Santa smoking on your premises.
3. Instead of “Naughty” or “Nice,” Santa has put you on the “Do Not Call” list.
2. Labels on all the packages Santa delivered read “Work in Process” not “Passed Q.C.” And they are in tubs with red tags…
1. Santa tells your inside sales gal “If I wanted them Saturday, I would have ordered them Saturday!”
The DOT has just finalized a rule restricting mobile phone use by drivers of commercial motor vehicles (CMV’s). The new rule goes into effect Jan 3, 2012. The rule restricts CMV drivers from reaching for or holding mobile telephones while operating their vehicles, or pushing more than one button to operate the device.
This rule, which goes into effect on January 3, 2012, was adopted by the Federal Motor Carrier Safety Administration and the Pipeline and Hazardous Materials Safety Administration, which are part of the Department of Transportation. It amends both Federal Motor Carrier Safety regulations and Hazardous Materials regulations. The rule restricts CMV drivers from reaching for or holding mobile telephones while operating their vehicles, or pushing more than one button to operate the device.
The popular Push-To-Talk (PTT) feature used by many drivers is prohibited by this new rule. While, functionally, the PTT feature is similar to the use of a CB or two-way radio (neither of which is addressed by the new rule and therefore still permissible), the final rule advises that PTT is prohibited because the device used for PTT comes squarely within the definition of a mobile telephone prohibited by the rule, and it also requires the driver or user to hold it and push a button more than once. Therefore, its use while driving a CMV is the same as that of a hand-held mobile telephone and is prohibited.
Exception: Emergencies. Using a hand-held mobile telephone is permissible by drivers of a CMV when necessary to communicate with law enforcement officials or other emergency services.
Bottom line, your driver is still OK to use the CB but using the cell phone to get back to you while driving is verboten.
Here are 6 tools that PMPA members use to calibrate their business to the industry and markets.
Every precision machining shop has a calibration system to assure that their products are dimensionally compliant and meet the expectations of their customers. Calibration systems assure that when they say “0.0001 inch,”- that it is in fact 0.0001 of an inch.
How do you calibrate the business of your business? How do you know that you are getting the same share of sales into a market as your peers? How do you know that you are paying the wages that the talent you have deployed are worth? How do you know that what you are seeing for material prices are in fact the trend in the market and not an anomaly?
PMPA members calibrate their businesses by participating in PMPA surveys and reports:
Monthly Business Trends: Sales / Shipments/ Hours scheduled/Overtime/Prospects for Sales, Lead times, Employment, Profitability
Annual Shop Hourly Wage Survey and Report
Administrative and Clerical Wage Survey and Report
Executive Compensation Survey and Report
Material Impacts Report
Annual Business Forecast Survey and Report
Our Business Trends Index correlates well with the markets that determine industry’s shipments. Data and inferences from it have been reblogged on Wall Street Journal online.
How do you know if the wages you are paying are competitive and sustainable? Participants in PMPA’s various wage surveys know because they are calibrated with precision machining shops just like theirs.
Our Annual Business Forecast Survey and Report
looks at participants reports and forecast of sales in various market segments served by our industry. This report includes a longitudinal view as many participants provide data each year so that the trend over time, not just point in time is apparent.
Yes we flood oil and sometimes put a film of lime or borax on our steel hot roll, but the fact is that our cold drawing process is essentially “unlubricated.”
Here are five attributes of Dry Friction and how they apply to cold drawing:
Frictional resistance is nearly proportional to pressure. Check. In cold drawing, friction is not only proportional to pressure, it is also proportional to total area.
Friction is nearly independent of speed at low pressures. While we would be challenged to identify “low pressure” s in cold drawing, the fact that we can start drawing by “pointing” the bar at low speed makes this point. Check.
Friction is not greatly affected by temperature. The first draw bar of the day with equipment at ambient and those drawn mid shift when the dies are reading in the 300-400 degrees Fahrenheit range do not vary in “pull” required. Watch the ammeter. Check.
Friction depends on the nature of the surfaces. If you don’t believe that this is true, just rough up the die and start drawing. This is why die maintenance is so important. Check.
Friction of rest is slightly greater than the friction of motion. Again watch the ammeter. It takes just a small amount more of power to start a pull than it does to sustain the pull. Check.
Bottom line: Only a fool would try to cold draw steel without lubrication. But the fact of the matter is that the cold drawing is essentially an unlubricated process, if one thinks about the attributes of dry friction given above, as applied to our process.
I tend to think of the “lubricants” that we apply as being inert pressure agents that merely separate the surfaces of the die and the work with a few molecules of material to physically prevent the two materials from welding under the extreme pressure. The steel never touches the die- the die just provides a backup for the lube which is really doing the deformation of the steel by hydrodynamic pressure.
Just the top five manufacturing sectors shown below contributed 239,900 net new jobs in 2011 year to date through November according to BLS data.
Precision Machine shops like PMPA members are impacted as follows :
Transportation Equipment: This sector makes up a large share of precision machined industry shipments.
Fabricated Metals: 1) Precision machining is a subset of Fabricated Metals. From our conversations with shop owners almost every shop is looking for skilled people for immediate work; 2) Many of our products are sold to customers that are also considered Fabricated Metals.
Machinery: We both purchase machinery and make components that are critical to the manufacture of machinery and equipment.
Motor Vehicles and Parts: This is traditionally the largest market served by the precision machining industry.
Primary Metals: Our suppliers of the majority of raw materials machined.
Semiconductors, Computers : Yep. We make parts for these as well as equipment used in their manufacture.
Beverages and Tobacco: That fountain drink you purchased probably was dispensed through nozzles and fittings made by a precision machine shop.
Chemicals: We make important sensor, fitting, and pressure vessel components for theis Better things for better living industry.
Bottom Line: almost a quarter million net new manufacturing jobs have been added so far in 2011 in manufacturing areas directly related to proecision machining.
Manufacturing, not politicians, is leading this recovery in jobs.
Normally we’re not enamored of biofuels. Its not the food vs fuel argument. For us it’s the too much input energy goes in for what we get out.
While I’m not certain that that equation has been solved, we found a very interesting discussion of biofuels in a report from Ricardo in Great Britain that bodes well for many of us in the precision machined products industry. Especially those of us who make parts for off road heavy equipment and agricultural markets.
“The impact of biofuels: When considering the outlook for biofuels, the study concludes that the food vs. fuel argument may be poorly supported; for much of the last three decades, the agricultural sector has been constrained more by under-investment than by supply. If crop yields increase at historic rates, there will be enough surplus conventional fuel crops to displace a significant amount of fossil fuels. And more than likely, the higher current selling prices will drive investment in production and research to further increase yields, making more sugar, starch, and biomass available for conventional biofuels production. As a result, the study projects that the production of first-generation biofuels may increase by five to six times over today’s levels, without allowing for any additional contribution from advanced biofuels, whose prospects remain uncertain.” Designfax
If that is the case, I see a major increase in the need for tractors and harvesting technology.