The PMPA Business Trends Index for January 2018 jumped to 135, up 25% over December 2017, and up 5% over January 2017. This is up 8.9% over the five year average for January Sales, and is our highest January on record.

January Sales Index up 25% over December, up 8.9% over 5-year January Average

Change your thinking to thrive to this new market.
Cheap inputs that cost your shop capacity are no bargain, when there are no shops scheduling less than 40 hours and 71% of shops are scheduling overtime.  It is all about UPTIME in this current market. There are no bargains worth having that cost you uptime.  And that means training your people is essential as well.
What we are hearing “falling behind…exceeded forecast by 10%…Can’t get it out quick enough…Picking which jobs to run…” Almost three quarters of shops reporting (74.3%) reported sales increases up by ten percent or more in January.
 The Fed reported that Industrial Production (IP) “edged down 0.1 percent in January following four consecutive monthly increases. Manufacturing production was unchanged in January.” Our industry is clearly a leading indicator for IP- they cannot make it until we produce the precision components needed.
Last January we said that “…the animal spirits have escaped confinement and are driving the manufacturing economy to performance not seen in years.” Last month we reported that industry sales “were up 6.8% for the year, a multiple of GDP growth. 
This report for January 2018 shows that our responding shops are outperforming the five-year shipments average for the month of January by almost 9%.
Our Lead Time indicator suggests that some shops are starting to think about capacity constraints.  Strong sentiment for profitability tells me that no one is “buying” business by cutting margins. Our Employment indicator recognizes that to continue production at these levels, we need to add talent.  Our performance and sentiment indicators this month justify our optimism about the markets and employment prospects for our precision machining industry in this New Year.
It is all about UPTIME in this current market. Cheap inputs that cost your shop capacity are no bargain. Change your thinking to thrive to this new market.
PMPA January 2018 Business Trends Report
Fed  January 2018 Industrial Production Report

ITR Economic Report – February 2018

 

 

The Institute for Trend Research (ITR) quarterly reports focus on major areas of economic growth and decline in key market segments for the Precision Machined Products Industry. They are provided to PMPA members as part of the association’s overall business intelligence program and are used as a management tool to help PMPA members plan for what lies ahead and which markets they should focus on in a complex manufacturing environment. 

 

 

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PMPA Business Trends February 2018

 

With 81 companies responding, the PMPA Business Trends Index for February 2018 declined 6 points or 4.4% to 129, the highest index for February on record. At 129, the index is up 10 points or 7.4% above the five-year average for the February sales index of 119.4. While our January value of 135 was a new record, the six-point drop to 129 in February is still in very high territory for our shops. What it feels like- with every order on the books a priority, we are running out of options to add capacity and move orders to the front of the line. Our scheduled overtime remained the same as last month’s, we are doing everything in our power to produce and ship customer orders. What to watch- Lead times. Lead times in our shops and Lead Times on raw materials. Last month, almost three quarters of shops reporting (74.3%) reported sales increases up by ten percent or more in January. This month, that percentage fell to 12.3%, with 61.7 % of shops reporting sales declines in February, compared with January which was-admittedly a record month for sales.

 

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Autonomy in our technology is real! (Photo courtesy Joshua Andrade- Heinlein Forum on Facebook)

I was privileged to be able to witness the live cast of the Falcon Heavy Lift vehicle today. The photo above shows two booster engine modules simultaneously and autonomously landing. This was just a small part of the technology displayed today by the Falcon Heavy launch.
But here is why I say that a new era starts today:

  1. This is proof that Autonomy in our technology is real. It’s no longer about listening to a reporter somewhere talking about autonomous cars on test tracks. We got to see it ourselves today. It works. Now, it’s just a matter of scaling and networking the technology. We’ll be seeing this in our customers products sooner than we expected.
  2. Private enterprise for the win. NASA’s Bill Gerstenmaier, Associate Administrator for Human Exploration and Operations said that “the NASA SLS (Space Launch System) heavy rocket would cost about $1 billion per launch.” The Falcon Heavy cost is about $90 million per Launch. That’s about $910,000,000 in unneeded taxes per launch.
  3. Today’s launch has proven that the existential joy of engineering is alive and well and making cost effective technology in private enterprise. Space is no longer limited to staid, bureaucratic, rationalizations that it is for research for the common good missions. Today, it is about the human spirit and what we can achieve.
  4. This was not cobbled together by the lowest bidder with a bunch of imported parts. Although the label on a circuit board proudly proclaims “*Made on Earth by humans” this is validation of the capability of US private enterprise, engineering, and the entrepreneurial equivalent of  the gold record on Voyager.
  5. This is the defining event of the new renaissance of Engineering, Entrpreneurialism, and Manufacturing to further mankind’s material progress.  Through our own capable efforts.

Made on Earth by humans (Photo courtesy Joshua Andrade)

I am glad to be a witness to this milestone in the renaissance of manufacturing, engineering, and entrepreneurial accomplishment here in America today.  An electric car, is on its way to Mars. I watched two booster engines land themselves simultaneously. I watched the joy of the engineers as their work accomplished its demonstration of the power of our technology. This is the current generation’s SPUTNIK moment.
Baby boomers can just barely remember what Sputnik did  to transform for our culture, but many of us chose science and engineering and technology careers.  Today, we all had the chance to see a similar watershed for technology, manufacturing, and entrepreneurial spirit, and that it is cool again.
Existential Joy of Engineering- Why shouldn’t we love what we do?

The existential joy of engineering is alive and well, and it has just sent a red car hurtling towards a rendezvous with the red planet.
Red car to rendezvous with a red planet

 
…to be continued
Link to video Space X Falcon Heavy Launch– start at 4:14:24 to start with the launch
Photocredits: for Landing and Circuit board: Joshua Andrade (J Meauho Andrade on Facebook)

Positive indicators for our precision machining shops from ISM and PMPA.
According to today’s release of the January 2018 Institute for Supply Management -Purchasing Manager’s Index,  economic activity in the manufacturing sector expanded in January, although at a slower rate than in December 2017. The  January PMI came in at 59.1%, down 0.2% from 59.3% in December. 

Continued strength in Manufacturing according to the nation’s Purchasing Managers at the Institute for Supply Management.

 
A reading above 50 percent in the PMI  indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
While the ISM-PMI report highlighted slight declines in the following indicators for our manufacturing businesses, they still bode well for manufacturing’s strength:

  • The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent.
  • The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent.
  • The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent.

Other comments from this report that convey positivity for our sector including “expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January.” These all signal that manufacturing continues to be very busy up and down the supply chain. The “Customer’s inventories  being too low,”  comment tells me that there will continue to be strength in  demand for manufactured goods in the coming months.
PMPA’s own Business Trends Report for December 2017 and year end summary reported that our companies’ sales were up 6.8% over calendar year 2016’s levels. This  January ISM PMI report continues the positive outlook for manufacturing. PMPA Year End Summary Blog Post
ISM Press Release
Calculated Risk Chart of January 2018 ISM PMI