Guest Post by Professor Peter Morici.Peter Morici is an economist and professor at the University of Maryland School, and former Chief Economist at the U.S. International Trade Commission. 

The economy is growing too slowly for it to be considered robust- adverse developments in four areas could derail the recovery:

  1. China
  2. Dodd Frank Regulations
  3. EU
  4. U.S. Student Loans
Higher probability of economic disruption than zero...

1. China faces real challenges-falling property values, questionable accounting standards and state banks burdened with bad loans. Foreign investors cannot ignore the size of its market, and firms like GM, Ford and Apple will continue to invest to produce for and distribute products in China. However, rising labor costs and increasing revelations of corruption and intrigue, up to the highest levels of China’s leadership, are causing investors to cast a more jaundiced eye on the Middle Kingdom as a place to invest for serving markets in North America and Europe.

A crisis of confidence in China could disrupt both the Chinese and U.S. economies, and such an event has a much higher probability than zero.

"If I wanted to paralyze the recovery of American economy, I would use Dodd Frank to strangle the flow of cash to small business job creators and potential homeowners to do it." -Miles Free

2. Dodd-Frank regulations are severely handicapping small and moderate sized banks. Writing conventional mortgages has become an increasingly challenging activity, and securitizing commercial loans quite difficult. Despite the fact that these bank woes pose significant barriers to recovery in the housing sector and jobs creation among small and mediums sized businesses, Washington appears disinterested, and smaller banks are selling out to their larger brethren.

Wall Street banks now control more than 60 percent of deposits nationally. The absence of competition in many markets has driven down CD rates, and seniors are losing a lot of purchasing power as interest on their retirement savings shrink. Wall Street banks are less interested in making loans to Main Street businesses than were the regional banks they absorbed.

Not looking so rosy in Eurozone despite the easy credit of the ECB's.

3. The EU is in recession and remains in deep trouble-fixes for Greece, Portugal and Ireland are inadequate and eventually will need to be reworked. Spain is teetering on crisis-a failure of its government to meet budget targets or a further spike in unemployment, already about 23 percent, could set off a contagion beginning with Italy.

European banks are highly stressed. Those have not used the grace afforded by easy credit from the European Central Banks to properly add to capital and rework loan portfolios. Rather, they have often adopted gimmicks to paint up bad loans or move those into offshore vehicles-all reminiscent of tactics employed by U.S. major backs when mortgage backed securities became problematic before the financial crisis.

Average debt per Bachelor's degree holder was ~$18,300 in 2010.

 4. U.S. higher education loans-now more than $1 trillion-are a ticking bomb. Most education loans are not dischargeable through bankruptcy, and big debt coupled with disappointing pay will become an increasing drag on consumer spending.

Undergraduates are borrowing too much against future incomes, and many graduate students are borrowing to obtain degrees that will not markedly improve their circumstances.

In the face of all this, the U.S. private sector is proving remarkably resilient.

Neither policy missteps in Washington nor purposeful incompetence in Europe can keep American capitalism down.

However, the economy would be doing a darn sight better with better leadership on both sides of the pond.

Peter Morici


Robert H. Smith School of Business

University of Maryland



China Real Estate Woes

Dodd Frank

Greek Riots

Student debt

We  get pretty excited when we learn of new photographic technology, just like when machinists  learn of a new tool coating or substrate material.

So we were really excited when we learned  of the Mesolens Confocal Microscope  being developed at the University of Strathclyde in  Glasgow.

The mesolens is capable of showing three-dimensional images within cells and tissues at the same time as showing the whole organism, something which is currently not possible with any single imaging device.

Fleas typically aren't much larger than the period at the end of this sentence.

According to Dr. Brad Amos, Visiting Scientist there:

“The information provided by microscopes is vital to this process but can take hours at a time to emerge. The confocal lens can be trained simultaneously on or inside an individual cell and the full organism, with strong resolution and will have the capacity to deliver 3D images which go far beyond the limitations of 2D representations.

“This level of detail can open up vast possibilities for discoveries which can contribute to the fight against disease worldwide.”

Dr Gail McConnell, a Reader at the Strathclyde Institute of Pharmacy and Biomedical Sciences, is a partner in the research. She said:

“Our research fits with Strathclyde’s ethos of technical innovation with universal impact. We already have the two-dimensional technology for the lens in place, but a third dimension will allow us to take the revolutionary step of presenting images with a range and versatility which no single imaging platform can currently offer.”

I like her thinking: “…ethos of technical innovation with universal impact.”

It reminds me of our role in the precision machining industry making  human safety critical, highly engineered products with our own ‘ethos of technical innovation with universal impact.’

Attendees and shop owners agree: The 2012 PMPA National Technical Conference was a major success!

Who thinks that this is a great conference?


“All the sessions I went to this year were excellent, with many items to bring back both professionally and personally. Tools to use, help train others in our shop and increase our competitiveness.”– Shop owner

“As a group of all first-timer’s this year we found it to be a great networking experience and all brought back something to share with our colleagues.”- First time attendee.

If the just wrapped up PMPA National Technical Conference held over the weekend in Wheeling, Illinois on Chicago’s North Side is any indication, our Precision Machining Industry is doing very well these days.

  • Over 420 people in total attended, over 100 of the attendees were attending our conference for the first time.
  • More than 160 companies  sent people who were actively involved and networking.
  • Technical, management, quality, and certification programs gave everyone take home value to make their shops more competitive and sustainable.

Our industry is thriving and working to upgrade the skills and knowledge of our people. PMPA’s NTC gave all attendees “Tools They Can Use” back at the shop to make their shop more competitive and sustainable.

This year’s NTC event turned out to be one of the most successful conferences to date. Just ask  someone who attended! The link below will take you to the handouts, if available, for each session.

Thank you to the Technical Program Committee and to the many contributors to this program’s content.

PMPA members can download program handouts here. (pass word protected)

Robots continue to find their way into our precision machining shops as we move away from departments of similar machines as a business model.

Savvy shops today are creating cells that use the robot to efficiently transfer work from one type of machine to another.

Robots can also deburr, pick and pack or present to inspection equipment.

As robots become more common in our operations, we need to assure that we are up to date on safety practices and procedures for our employees who are now sharing the same  shop floor work environment with our robots.

Chapter 4 of the OSHA Technical Manual is a “must understand” reference for shops with Robots. You can get it at the link below for free:

Industrial Robots and Robot System Safety

This is a comprehensive resource covering an introduction to robotics, types of robotic systems etc.

I believe that you will get your greatest takeaway in the sections covering hazards and control and safeguarding personnel.

Also you need to be aware of the ANSI RIA 15.06 Standard.

The current US robot standard is the 1999 version of R15.06 which was reaffirmed in 2009.

You can buy it from ANSI here. (cost $45.00)

This standard is currently being updated, with a major focus on risk assessment.

ANSI/RIA R15.06 will combine the ISO 10218-1 standard  ( cost: 146 Swiss francs) which applies just to the robot, with ISO 10218-2 (cost 184 Swiss francs) which covers the integration of the robot into your systems. While these have been finalized by ISO, the final adoption into ANSI RIA 15.06 has not yet taken place. The updated  ANSI/RIA R15.06 standard will include both of these as well as some additional USA requirements. The Canadian standard Z434 committee is also at work on the national adoption of these ISO standards. We have our fingers crossed that the U.S. and  Canadian robot standards will be harmonized.

While we’re waiting for the updated ANSI/RIA R15.06 to be published, you probably ought to make sure that your team is up to speed on the OSHA material mentioned above.

And for $45 the current (2009) version of ANSI R15.06 is worth your time and monies to obtain.

Just remember that when the update is released, it will be best practice and authoritative.

Want more info? Siemens is sponsoring a webinar on April 25, 2012 at 2:00 P.M. Eastern time.

Here’s a link: Siemens Industry Robotics Changes Webinar

PMPA is not a sponsor of this webinar.

But we are committed to giving our members tools they can use to keep their shops safe, competitive, and sustainable.

The March 31st explosion at Evonik Industries in Marl, Germany is likely to have the same effect on worldwide automotive production as last year’s Tsunami and reactor accidents in Japan.

We remember the first time we got a letter from an automotive supplier in the 1980’s  “awarding us sole supplier status” for a couple of items, followed immediately by a fire and security survey to assure that we would not shut down our customer in the event of a “problem” in our shop.

“I think that we should tell them that in order to give them the low price they wanted, we had to cut somehere, and fire protection at our one truck loading area was what we chose,” suggested a young member of the commercial team who even then couldn’t abide the bankrupt thinking of the great Detroit automotive industry.

That young man has matured, and understands that sole sourcing reduces variation for all downstream processes.

But he still wonders how business men can make “Business Plans” that fail to intelligently manage risk of failure at sole supplier facilities of critical, essential, non- substitutable materials?

The economists will insist that there is a loss to society if backup stocks are held any where in the supply chain.

The geniuses in finance and purchasing will strut how they have eliminated every bit of waste  by maintaining “lean inventory” thus maximizing profits- without any understanding at all about supply-chain implications and risk factors.

And the finance boys are right, as the sales team will surely raise the price of autos in light of strong demand but greatly reduced supply due to the supply chain’s failure to have adequate -dare I say it- safety stock?

The loss to society will be the sum of the costs of the damages at the plant that was destroyed, as well as the lost wages of workers who will NOT be building autos due to this accident, and the increased price paid by buyers who must pay the price demanded because they need to replace their car. Plus  the cost of a gazillion PPAP’s and material trials for the  substitution / replacement of Nylon 12, knowing the automotive industy’s love of  and addiction to documentation.

Yes, that sole  sourcing lean inventory business strategy that is unthinkingly accepted throughout the automotive industry  is perfect- for a world in which accidents don’t happen, chemical plants don’t explode, and tsunamis and nuclear plants don’t lay waste to entire districts of manufacturing.

Sole sourcing and Lean inventory is perfectly calibrated to a world where those things don’t happen.

Unfortunately, that is NOT the world we live in.

Instead of minimizing stock at each and every inventory in the supply chain discretely, perhaps it is time for the “businessmen” to do some supply chain contingency planning to assure that adequate stocks are distributed throughout the supply chain to mitigate the possibility of a single source failure.

The OESA Original Equipment Suppliers Association  is doing yeoman duty to  fact find, manage this, and help their members understand the impact to their business.

You can find their sensemaking on their home page here. Look under the OESA HEADLINES for the latest developments.


The pundits lately are all increasingly pessimistic about manufacturing these days. Industry Week, NFIB, Bloomberg.

Please ignore the negativity in the press, we have some positive data to share.

The PMPA Business Trends Index was reported to be 125 in March, up 6 points from February.

PMPA members can access the current report here. (Accredited media can contact mfree(at) to receive a copy.)

Compare that to March ISM report which showed manufacturing up just 1 percentage point.

Why we are excited about prospects for manufacturing in 2012:

The correlation coefficient for our first four months of the year sales  to the end of the year average is 0.958.

If you don't know what correlation coefficient means, ask a Statistics Professor.

As the graph below shows for the years from 2003 to 2011, the blue line is the average of our Index for the first four months of each year; the red line is the Shipment Index’s year end average.

It looks like our Index's average of shipments for the year could be around 123.

Last year’s average was 113 ( 2000, 2010= 100). Our current look (three months data) could be that  precision machined products manufacturing in 2012 is up 10% from last year.

Our products are embedded as components in practically all manufactured goods- automotive, aerospace, off road, heavy truck, agriculture, food service, appliances, munitions.

Our data strongly suggests that suppliers who are fixated on fear, uncertainty, and playing defense may be doing a far greater disservice to their company’s performance this year than any external factors.

What are you doing to help assure that your company is prepared to deliver a possible 10% greater sales performance in 2012 than you did in 2011?

After all, it’s not really about our numbers.

It’s about how you manage your business.

Our  Business Trends Index numbers suggest you should be managing for growth!

Ignore the negative_pundits behind the curtain

Statistics Professor (Ben Stein)

We first used a digital infrared non-contact thermometer back in 1993 to get some diagnostic insight into the failures we were having in my cold finished mill. Unscheduled equipment and electrical breakdowns were keeping us from profitability.

With this technology we could see mechanical failures developing before they shut us down.

When we built the mill in Georgia, the engineers never gave a minute of thought to the  operating temperature differences the equipment would have to endure compared to our experiences up North. We just  ‘knew‘ our problems were thermal, the failures ‘clustered’ in the summer months. How to prove it?

The first bearing we found running hot with our IR thermometer allowed us to plan for a repair rather than lose valuable production time.

That first preventive/proactive repair paid for our investment in what the boys in the shop thought was a “heat gun.”

But when we turned this technology to the electronics controls- that is when we hit the real pay dirt.

At a $3000 per circuit board and 5 days via air freight from Europe, our IR thermometer helped us justify to the stingy “Just say NO'” bean counters that air conditioned electrical enclosures would pay for themselves by reducing both downtime and  unbudgeted expenses to replace failed  sensitive electronic components.

And they did. The IR thermometer properly deployed helped us finally achieve our business plan.

Its much easier to achieve your business plan when your equipment is actually operating.

Today, IR thermometers are very affordable. But if I was managing a shop today, I don’t think that I’d be satisfied with just a “heat gun.”

Would you rather have just temperature numbers to base your decision on,  or a compelling image of the problem? (Images courtesy of FLIR)

This photo is worth a thousand words to the maintenance team, eh?

Electrical issues become pretty obvious using infrared imaging- don’t you agree?

Why wouldn't you want to know what this technology has to show you?

One of my favorite quotes came from one of the Dune series books by Frank Herbert- “Who knows what senses we lack that we might better see the world around us?” the hero asks.

Today I can answer that question.

“With Infrared Thermographic imaging-  we can see electrical and equipment failures before they happen.”

I can’t imagine trying to keep a shop running without it.

Video of IR imaging in your shop

Video- not just for the shop

Fluke IR


Talking with a colleague about riding lawnmowers the other day.

It’s that time of year around here in Ohio.

He thought that a riding lawnmower symbolized the apogee of human evolution-

“What else demonstrates how far we have come than being able to sit down, ride around for a couple of hours, listen to some tunes, maybe enjoy a cold beverage, and at the end look around and say I did this? I mowed a couple acres of lawn.”

He has a point. Our ability to engineer, combine bits of metal and ingenuity have made our lives better in so many ways.

During my time in the mills I kept score similarly with calculating how many cars could be made from the the dozen or so  180 ton heats of steel  that we produced that day… or how many millions of  razor blades  or piano pins could be made from the last ingots of Open Hearth Steel we had in inventory before the plant closed?

Or the 14 frozen railroad bin cars that I personally unloaded one particularly nasty 4 to 12 shift back in 1974.

So in honor of my colleague’s salute to engineering’s contribution to human evolution, here are a couple of my favorite riding lawnmower photos. Enjoy!

I wonder if the paint scheme merits a cease and desist letter?

You know the wife will think you’re having too much fun:

Honey, can I go mow the lawn today? Please?
Maybe this guy ought to grow some lawn first...

Pedal power riding mower


Redneck Lawnmower

High tech,  get a well paying job, kind of skills.

Watch the video here.

PMPA Member Darlene Miller, member of the President’s Job Council and Creator/ Champion for  RightSkillsNow said, “The skill set that we need, compared to ten years ago, is  enormously different. Math skills, problem solving skills are absolutely  critical.”

The students said they are excited and hopeful the skills they learn will  lead them to a job and a lifetime of possibilities. Many local employers have stepped up to provide internships where the students can get additional time on task and real world experience.

Brandon Eide said, “It’s something to look forward to in the future,  definitely.”

The BLS just launched its updated New Occupational Outlook Handbook Online last week, on March 29, 2012.

We were pleased to see this given some attention.

We were also pleased to have provided information to the BLS on some of the job titles occupations that they updated.

It is an improvement, but the absence of “manufacturing” from the list of Occupational Groups is puzzling-

Has no one at BLS been listening to all the speeches by the President about “Manufacturing” and its importance to America?

To look up Manufacturing, you need to select “Production” as an Occupational Group.

Farmers produce, miners produce, those of us in Fabricated metals / machining- we manufacture. We make things.

But in the new OOH, we’re filed under production.

Production, you know, like Food Processing Operators, Water and Wastewater Treatment Operators, and Laundry and Dry Cleaning Operators.

I guess they think manufacturing (making things) is like running a sewage treatment plant or doing somebody else’s laundry?

Why is Manufacturing like doing someone elses laundry? It makes perfect sense to the folks in Washington D.C..

So here’s the scoop- the contents of the new OOH  are current, authoritative, and useable .

And hard to find. I asked a colleague and he required several tries to find CNC operator.

But you need to find them. So here’s the key:

Machinist and Tool and Die Makers (But NOT CNC!)

CNC Machine Operators and Programmers (hint, you’ll find these under Metal and Plastic Machine Operators.)

Heres what the BLS has to say about Metal and Plastic Machine Operators:

How to Become a Metal or Plastic Machine Worker

“A few weeks of on-the-job training are enough for most workers to learn basic machine operations, but 1 year or more is required to become highly skilled. Although a high school diploma is not required, employers prefer to hire workers who have one.”

Okay, so they didn’t get this one right.

Well maybe they did for machine tenders, but certainly not for CNC machinists.

And you won’t find Computer Numeric Controlled Machine Programmer under the Computer and Information Technology Occupational Group.

You’ll find them in the alphabetical list which links to the second tab of that metal and plastic machine operator page.

According to Tab 3 on the metal and plastic machine operator there are just 16,600 Computer Numerically Controlled Machine Tool Programmers, Metal and Plastic.

2010-2020 Job Outlook for CNC Operators and Programmers can be found here.

The way I see it, Taxonomy is difficult, and the BLS’s decision to hide “Manufacturing” under Production doesn’t make sense to this aging baby boomer.

I see the world through Fabricated Metal Glasses and  manufacturing is people making things, not tending to  waste water or dry cleaning.

But the data and information that is available on the new site is current, authoritative, and I can say from my perspective – was vetted by people like me who helped the economists at BLS see these jobs from outside the beltway.

Congratulations for updating the Occupational Outlook Handbook Online.

We may not agree with all of your wording or taxonomy, but we are pleased to see good information about the opportunities for work in Manufacturing.

Even if they can’t say “Manufacturing” in Washington D.C..

Why do you think the officials in Washington D.C. can’t say the “M” word?”

Shrug photo link