“It was a better year than you think. Balanced expectations going into 2020.”
Despite the drop in shipments in the last two months of the year, calendar year 2019 finished at 133, one point off last year’s calendar year final, and up nearly 10 points or 7.8 percent over the average of the last five years 2014-2018. December came in at 110, up 3.4 points and 3.2 percent over the five- year average for the month of December. The 3-month moving average of this sales index is clearly moving away from the 12-month moving average- welcome to Q4 seasonality. Despite the low shipments in Q4, we ended the year essentially even with last year.
On December 10, 2019, the U.S. Department of Labor’s Occupational Safety and Health Administration issued an instruction (Directive) CPL 03-00-022 cancelling the prior NEP CPL 03-00-019 National Emphasis Program on Amputations, August 13, 2015, and describes the policies and procedures for the continued implementation of the National Emphasis Program to identify and reduce Amputation hazards in Manufacturing Industries.
We covered the prior NEP notice in our post HERE
OSHA’s enforcement history shows that employees are often injured when machinery or equipment is not properly guarded or maintained. This NEP targets industrial and manufacturing workplaces having machinery and equipment that can potentially cause amputations. Our 332- manufacturing NAICS codes are identified in this updated instruction.
OSHA Instruction: CPL 03-00-022, National Emphasis Program on Amputations in Manufacturing Industries, is now available:
Directive Type: OSHA Instruction
Directive number: CPL 03-00-022
Directive subject: National Emphasis Program on Amputations in Manufacturing Industries
Effective Date: 12/10/2019
Cancellation/Archive including PDF: CPL 03-00-019, National Emphasis Program on Amputations, August 13, 2015
To support the purpose of this NEP, OSHA is beginning a three-month period of education and prevention outreach to encourage employers to bring their facilities into compliance with OSHA standards. Additional outreach and compliance assistance material will be forthcoming in the near future.
We will be providing reminders to our shops to retrain shop personnel in 1910.147 Control of Hazardous Energy and 1910.212 Machine Guarding – General Requirements. These are relevant to preventing amputations as well as being two of the 5 most prevalent general industry related violations in 2019.
We are hopeful that this time around, the Agency will give equal attention to enforcing part (b) of Section 5 of the OSH Act: “Each employee shall comply with occupational safety and health standards and all rules, regulations, and orders issued pursuant to this Act which are applicable to his own actions and conduct.” OSH Act Sect 5 part (b)
“While we expect some changes in the automotive supply chain, some to the benefit of the U.S. and some to the benefit of Mexico, overall this is a positive outcome for manufacturers.”
On December 10, 2019, the U.S., Mexico, and Canada formally signed an updated NAFTA following months of negotiations between the White House and Democrats in the U.S. House of Representatives led by Speaker Nancy Pelosi. This marks a major victory for President Trump, Congressional Democrats, and most importantly, manufacturers who have sought some stability after several years of uncertainty over trade with Canada and Mexico. PMPA is part of several coalitions who have pushed for an update to the 25 year old NAFTA and believes the new agreement will expedite commerce across all borders. While we expect some changes in the automotive supply chain, some to the benefit of the U.S. and some to the benefit of Mexico, overall this is a positive outcome for manufacturers.
The changes agreed to by Speaker Pelosi, labor leaders, the White House, and Mexico do not significantly alter provisions impacting autos on Regional or Labor Value content levels except one last minute provision requested by the White House that all steel for autos be “melted and poured” in North America (delayed for seven years, Mexico refused the same terms for aluminum).
Sources in Washington indicate the U.S. House of Representatives could vote to approve the new NAFTA on December 19, one day prior to departing for the Christmas break, and one day after voting to impeach President Trump. Senate Majority Leader McConnell indicated he will not schedule a vote until after the Senate concludes the impeachment trial, which many believe could begin around January 7, 2020 and last at least two weeks (President Bill Clinton’s Senate impeachment trial began on January 7, 1999…). This puts Entry Into Force (when the new agreement officially takes effect) still a few months away. Major changes in the White House-U.S. House Democrats-Labor-Mexico update include:
Creating rules of evidence for labor and environmental enforcement;
New labor enforcement applies to all goods and services in Mexico and can apply penalties on goods with labor violations;
A party cannot block dispute settlement panel from being formed;
Creates an interagency committee to monitory Mexico’s labor practices;
Unions may have attaches on the ground in Mexico but unclear if U.S. official or American labor representative may inspect Mexican facilities;
Adds Multilateral Environmental Agreement language for all parties;
New Customs verification system for fauna, flora coming from
Mexico to ensure properly harvested;
Removes requirement to provide at least 10 years of patent exclusivity for biologics;
Content liability protections for internet companies maintained;
Requires steel to be “melted and poured” in North America to meet standards for use in auto production (delayed seven years).
Question: Why don’t the Certs for C12L14 and C1215 cold drawn steel bars have mechanical properties routinely reported? Answer: Because these steels ARE NOT recommended for applications requiring mechanical properties, alternating stress applications, cold metal movement and can also be notch sensitive.
Here are some details from the application notes provided to me when I started as Plant Metallurgist at Bliss & Laughlin Steel in 1985:
The 1200 series steels (1215 and 12L14) are not generally sold for applications requiring high standards of strength, hardness, or other related properties
These steels are particularly adapted to automatic screw machine production of small repetitive parts. The ideal application is one where bulk and shape, as dictated by the design, are the chief requirements.
They may be used for parts which require only nominal strength values providing the factor of safety as in accordance with established practice. This is especially true where the stresses involved are static tension, compression, or shear. Vibratory, torsional, or alternating stress applications approaching the static limits are not recommended; thus these steels should not be used for line shafting.
When cold drawn, the C-1200 steels are notch sensitive and while polished fatigue specimens will show expected endurance limit values, poor finish and processing of parts, or faulty design may cause low or erratic results for finished parts under dynamic or alternating stresses of relatively small intensity.
These steels are not recommended for applications involving cold metal movement, such as crimping, forming or bending. Operations such as knurling and character rolling can be done satisfactorily.
Because of the smaller amount of hot work in rolling, the large size cold drawn C-1200 bars increase in relative brittleness. The large sizes may also be expected to reveal stringer sulfide inclusions on polished surfaces. Further removal will likely reveal more inclusions as they are distributed throughout the bar cross-section.
A cold drawn surface will not plate to the highest quality finish; a turned or ground surface may prove necessary for critical applications
Your customer wants inexpensive parts, and machining them from 12L14 and 1215 minimizes the cost of machining to the desired geometry. But if the parts are not likely to fulfill the properties expected, that is false economy at best. Don’t do it Image
Little Charlie and the Night Cats If you Dig It, Don’t Do it.
“Economic activity in the manufacturing sector contracted in November, and the overall economy grew for the 127th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.”
The decrease in the ISM PMI index of 0.2 percentage point from the October reading of 48.3 percent is modest and not unexpected for this time of year- it dropped 0.5 point in 2017, and three of the last five November ISM PMI’s were negative (2017, 2015, 2014.)
Considering ongoing issues with production at Boeing (737 MAX) and residual slack as a result of the just settled UAW strike against GM, and this 0.2 percent decline is modest.
Is manufacturing in a recession? If we use the definition of “a period of temporary economic decline during which industrial activity is reduced, for two successive quarters,” the answer is not yet. four consecutive months of contraction have been logged, but following 35 straight months of growth in the manufacturing sector, we are not yet ready to throw in the towel.
What are we watching?
We are beginning to pay attention to automobile loan delinquencies which have climbed to 4.7% of the total automotive loans and leases. This is just 0.56% off from the peak of auto loan delinquencies back in 2010 (5.27%). Automotive is our industry’s single largest market served, and if automotive loans continue to go south, our shops may be in for diminished production for a longer period than anyone is expecting.
Link to November 2019 ISM PMI Report.
Link to Calculated Risk November 2019 ISM PMI Chart
In October 2019, at the Annual Meeting held at the Bellagio in Las Vegas, the PMPA installed its new President, Victor DaCruz of DACRUZ Manufacturing. Victor is eager to continue the hard work of outgoing president, Mike Reader of Precision Plus, Inc.