PMPA shares important precision machining information you may have missed while you were making essential parts.
Sept 22, 2023
NAM Reports Post Pandemic Low for Manufacturers Sentiment
Chad Moutray cited NAM’s latest Manufacturers Outlook Survey that just 65.1% of respondents felt positive about their company’s prospects in the third quarter. He reports that this is the lowest level of optimism since Q2 2020 among NAM members.This was the fourth consecutive reading below the historical average of 74.9%. Concern about an unfavorable business climate was the highest in six years (Q2 2017).
One positive note: the September sentiment was somewhat higher than that in June.
Our take: Top challenges faced by manufacturers – Attracting and retaining quality workforce, weaker domestic economy, Ever increasing regulatory burden, rising costs of health care / insurance as well as raw materials, supply chain have become a chronic drag on our shops.
https://www.nam.org/2023-third-quarter-manufacturers-outlook-survey/
UAW Strike
We are currently experiencing an unprecedented strike by the UAW on all of the big 3 at once. That is lost production of 3200 vehicles a day. Which amounts to about 150 million dollars per day figuring an average cost of vehicles of 48,000 dollars. The UAW now has pushed for serious offers by noon on Friday or other walkouts will begin. Currently, the UAW strikes are only affecting 3 plants – one from each of the big 3. This is currently a fluid situation and a long-term strike that expands in scope will not be good for either side. If all union members go on strike, it would reduce non-farm payrolls by roughly 146,000 employees, but the economic ramifications of lost production could increase our recession risks.
https://worldsteel.org/media-centre/press-releases/2023/june-2023-crude-steel-production/
Industrial Production
Industrial Production increased 0.4 percent in August, and manufacturing output inched up 0.1 percent, according to the US Federal Reserve..
The August reading for Manufacturing Production was held back by a drop of 5 percent in the output of motor vehicles and parts; factory output elsewhere rose 0.6 percent.
Durable Goods showed a 2.4 percent decrease from July, and was down -0.8 from Aug ‘22 to Aug ’23 (Table 1)
Our take: These numbers will certainly decline as the UAW strike progresses. Now is a great time to work on training and upskilling and tackling long overdue maintenance and continuous improvement projects.
https://www.federalreserve.gov/releases/g17/Current/g17.pdf
Cyber Attacks
Clorox is still experiencing production problems after last months cyber security attack. The attack caused widespread disruption to their operations. Caesars paid millions in ransom after having their system shutdown. MGM Resorts recent cyber attack may have a material effect on the companies operations. In an era of massive security breaches ,we are becoming more reliant every day on computer systems to produce our parts. Cyber attacks are becoming more common. Our systems have to be secure. Our shops need to have up to date backups so you can restore systems in the event of an attack.
https://www.cnbc.com/2023/09/13/mgm-resorts-cyberattack-and-outage-stretches-into-third-day.html
PPI
The Producer Price Index for final demand increased 0.7 percent in August, seasonally adjusted, after rising 0.4 percent in July. The August advance is the largest increase in final demand prices since moving up 0.9 percent in June 2022. On an unadjusted basis, the index for final demand rose 1.6 percent for the 12 months ended in August.
In August, 80 percent of the rise in final demand prices is attributable to a 2.0 percent jump in the index for final demand goods.
Over 60 percent of the August rise in the index for final demand goods can be traced to prices for gasoline, which jumped 20.0 percent. (That is NOT a typo!) The indexes for diesel fuel, jet fuel, home heating oil, beverages and beverage materials, and iron and steel scrap also moved higher.
Our take: The 12 month increase (inflation) of 1.6 percent gives us hope, while the actual experience in our accounting department (20% higher gasoline prices, anyone?) suggests that inflation remains sticky and persistent.
https://www.bls.gov/news.release/pdf/ppi.pdf
PMPA Craftsman Cribsheet #118: Defeating the Hanging Cross-Hole Burr
PMPA shares important precision machining information you may have missed while you were making essential parts.
Sept 8, 2023
ISM PMI
The media is reporting the ISM Manufacturing PMI came in at 47.6% over the expected 47.0. This number was slightly higher than the July reading of 46.4. The index saw Production portion rise by 1.7 percent and Employment component rise by 4.1 percent from the previous reading. The New Orders and Inventories components falling by .5 percent and 2.1 percent respectively. Our take, second month of growth in the PMI is giving more indication we have reached a bottom in the index. The index is still indicating contraction, but we are approaching a turnaround in the index with better than expected results.
Steel Production
World steel production was 158.5 million tonnes (Mt) in July 2023, a 6.6% increase compared to July 2022. India saw a gain of 9.0% over same period in the previous year. China saw 2.5% increase and the US had a 2.3% decrease. Our Take, a significant bump for steel production in July moving just above the seven year average for July of 154.36. Steel production looks to remain flat for this year with total production for the year to date just down .1% from 2022.
https://worldsteel.org/media-centre/press-releases/2023/june-2023-crude-steel-production/
PrecisionPath Community Outreach
PMPA is proud to introduce the PMPA’s Educational Foundation’s PrecisionPath Community Outreach program. This initiative can help create a more diverse and vibrant precision machining industry by tapping into an underserved market. How will the program work? Statistics show that minorities in our industry is low. Our goal is to go into the middle schools, high schools and present at career fairs in minority settings to help people to understand that precision machining is a viable career option. We hope to help alleviate our shops’ employee shortage.
Article: Slings-Critical Infrastructure in Your Shop
PMPA shares important precision machining information you may have missed while you were making essential parts.
Sept 1, 2023
Machine Tool Orders
June orders of machine tools reach 411.3 million. Orders were up 12.6 percent over May 2023 but just slightly below June 2022 being down 1.7 percent year over year. Our take, machine tool orders are still outperforming long term averages. This bodes well for the end of this year and next year given implied confidence of machinery buyers from higher than normal machine tool orders.
Cutting Tool Orders
US cutting tool orders totaled $217.3 million in 2023 up 3.2% from May 2023. Cutting tool orders are up 23.5% compared to June 2022. The year to date total is $1.24 billion dollars up 17.4% over the same period last year. Our take, cutting tool orders are strong and moving in the right direction. With machine tool orders being in line with last year and cutting tool orders being up it shows that shops are more effectively using capacity. Ordering the same level of machines but using more cutting tools overall.
Healthcare
Open enrollment is right around the corner and healthcare can be a hot topic. It is important to have an open line of communication with your employees. Let them know if there have been any changes from the previous plan and what to expect for this coming year’s plan. Also highlight any new offerings you have and any voluntary benefits available. According to the Society of Human Resources Management QUOTE … persistent high cost of living has had a detrimental effect on employees and is causing them to evaluate more offerings that could help ease financial pressures UNQUOTE. Employees are looking for benefits that will aid them in protecting their families. Make sure your employees are well versed on yours.
PODCAST – Preventive Maintenance
PODCAST – Producing Parts at the Speed of Demand (Speaking of Suppliers)
PMPA shares important precision machining information you may have missed while you were making essential parts.
August 25, 2023
UAW Strike
UAW strike for just 10 days would cost $5 billion dollars according to the Anderson Economic Group. The last time a strike happened during negotiations it lasted for 40-days and cost GM $3.6 billion dollars. There are currently about 150,000 workers in the UAW and thousands of more employees in the supplier tiers. Our take, a work stoppage at the automotive plants has billions of dollars in 2nd and 3rd order effects. Being the largest industry we serve, PMPA is watching this issue closely with updates as they come.
https://www.cnbc.com/2023/08/17/uaw-strike-cost-aeg-analysis.html
GDPNow
GDP Estimate- Too Big to Believe
The Atlanta Federal Reserve’s GDPNow real time estimate for GDP in the third quarter jumped to 5.8% last week.
The report stated, ”The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.8 percent on August 16, up from 5.0 percent on August 15… the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 4.4 percent and 8.8 percent, respectively, to 4.8 percent and 11.4 percent.”
Our take, there is a lot of territory to cover for the economy between now and the end of the year- even between now and the first estimate in October. Including a possible UAW strike. Nevertheless the existing data indicates rock solid GDP growth for the year so far. And our shops continue to make the parts that are crucial to that growth. Stay tuned!
Link: https://www.atlantafed.org/cqer/research/gdpnow
Manufacturing Day
Manufacturing Day is on October 6 this year. PMPA and PMPA Educational Foundation are developing even more materials to provide PMPA members. Manufacturing day plays a critical role in spotlighting not only the current but future possibilities within manufacturing. This initiative fosters valuable connections between students, teachers, and the manufacturing sector, enhancing awareness and enthusiasm for these professions. Please watch for emails for the release and instructions on ordering.
10-Year Treasury Yield
10 Year treasury yields hit the highest levels since 2007. The 10 year inflation protected security increased to over 2% for the first time since 2009. Our take, underlying strength in the economy is pushing the yield curve higher. We have been slightly inverted now for about 1 year but never reached the point of a steep inversion. Longer term rates are now rising flattening the yield curve. If the trend continues it indicates a strong economy is to come.
PODCAST – Benefits of Turned and Polished Steel Barstock
PODCAST – Producing Parts at the Speed of Demand (Speaking of Suppliers)
CRIBSHEET – #37 Thirty (30) Potential Causes of Part Length Variation on Screw Machine Parts
PMPA shares important precision machining information you may have missed while you were making essential parts.
August 18, 2023
Steel Update
Your job of finding steel that is compliant with various US government sourcing requirements just became more difficult. Late last week we learned that the last 500 workers at Republic Steel were furloughed indefinitely, as Grupo Simec consolidated the Republic production to its new TLaxcala Mexico mill. Operations idled include Republic Steel mills in Canton, Ohio and Lackawanna, New York. We learned this week that US Steel had refused an unsolicited buyout bid from Cleveland Cliffs that offered an approximately 54% premium over the current share price. I released a video explaining the repercussions to our industry covering leaded steels, Buy American, and DFARS requirements. Our members received it via email early this week and it was posted on our PMPA LinkedIn feed yesterday. This is an important update, and we encourage you to watch it.
Final Demand Goods
Prices for final demand goods edged up 0.1 percent in July after no change in June. The July increase is attributable to the index for final demand foods, which rose 0.5 percent. Prices for final demand goods less foods and energy and for final demand energy were both unchanged. The headline final demand indicator increased 0.3 percent in July, seasonally adjusted.
For our precision machining shops , the factors of importance in this report involved processed goods for intermediate demand which fell0.6 percent in July, the sixth consecutive decline. Over 60 percent of the July decline in prices for processed goods for intermediate demand can be traced to a 7.6-percent decrease in the index for steel mill products.
Link: https://www.bls.gov/news.release/pdf/ppi.pdf
U.S. Trade Deficit
The nation’s international trade deficit in goods and services decreased to $65.5 billion in June from $68.3 billion in May (revised), as imports decreased more than exports. Exports of goods decreased $0.2 billion to $165.1 billion in June. Capital goods exports increased $0.8 billion, while other industrial machinery exports increased $0.5 billion.
Our take: It is a positive sign to see imports declining, but we are cautious not to assume that this is coming directly out of China’s balance. Many intermediate goods are still being manufactured in China and then “near shored” t omexico for final assembly and packaging.
Link: https://www.census.gov/economic-indicators/ click on Press Release for International Trade : Goods and Services
Industrial Production
According to the US Federal Reserve, “In July, total industrial production increased 1.0 percent following declines in the previous two months. Manufacturing output rose 0.5 percent in July.” The increase in Industrial production was led by Transportation (the production of motor vehicles and parts jumped 5.2 percent), while factory output elsewhere edged up just 0.1 percent. This latest reading shows Industrial production at 102.9 percent of its 2017 average, 0.2 percent below its year-earlier level. Capacity utilization moved up to 79.3 percent in July, a rate that is 0.4 percentage point below its long-run (1972–2022) average.
Our take: the importance of Transportation Markets to total industrial production cannot be overstated. It was responsible, it appears, for 90 percent of the month’s increase in July.
Link: https://www.federalreserve.gov/releases/g17/current/default.htm
PODCAST – E-Mobility: Opportunity, Not Existential Crisis
PODCAST – Producing Parts at the Speed of Demand (Speaking of Suppliers)
ARTICLE – A Contract Review is Your Best ‘Assurance’ Policy
PMPA shares important precision machining information you may have missed while you were making essential parts.
August 11, 2023
Manufactured Durable Goods
New orders for manufactured durable goods in June, up four consecutive months, increased $13.2 billion or 4.6 percent to $302.1 billion.
Shipments of manufactured durable goods in June, up three of the last four months, increased $0.5 billion or 0.2 percent to $284.0 billion.
Unfilled orders for manufactured durable goods in June, up six of the last seven months, increased $23.1 billion or 1.8 percent to $1,325.1 billion.
Inventories of manufactured durable goods in June, up six of the last seven months, increased $0.7 billion or 0.1 percent to $523.4 billion.
Our take: Manufacturing is thriving despite what ever the folks on the nightly news are saying. It is great to be working in manufacturing.
Link: https://www.census.gov/economic-indicators/ click on Manufacturers’ Goods
AI and Cybersecurity
Intel has developed a real-time deepfake detection system. This system has the capability to analyze the underlying parts of a video and determine if it is real. This all happens in milliseconds with 96% accuracy. Our take, security tools like this are being developed to help us combat the proliferation of deepfakes online. This will also allow white hat hackers to develop AI tools to combat the criminal misuse of AI for attacks.
Recruiting
How can you make Lean Principles coincide with your current and future employees? By providing ongoing training, involving employees in process improvement, and recognizing their contributions. When hiring, seek candidates with adaptable skills, a problem-solving mindset, and a willingness to embrace change. This alignment ensures a cohesive and efficient workforce dedicated to continuous improvement in manufacturing. When you are interviewing potential employees, what are you looking for?
Workforce
Manufacturing- An Economic Scorecard
Employment: plateaued at 12,985,000 (July employment declined 2000; up 11,000 employees YTD)
Manufacturing Job openings 582,000- down from January 2021 but higher than pre-pandemic levels
Our take: Our shops need to continue their serious work on process consolidation and automation, for every 100 job openings there are only 62.2 unemployed workers. Automate and train to improve the performance of your existing talent.
Links: https://www.bls.gov/news.release/pdf/empsit.pdf
https://www.bls.gov/news.release/pdf/jolts.pdf
PODCAST – 2023 Mastery Program Cincinnati Tour Experience
PODCAST – Producing Parts at the Speed of Demand (Speaking of Suppliers)
ARTICLE – Carbon. Carbon. Carbon. — The Secret to Understanding Steel
PMPA shares important precision machining information you may have missed while you were making essential parts.
August 4, 2023
Labor
Dallas Fed Manufacturing business index contracted at -20.0 much lower than the expected -26.3. The index also contracted less than the reading in June of -23.2. Participants reported most were trying to hire and lack of applicants was a top problem firms faced. Our take, this is a good sign that activity is moving in the right direction. New orders and production contracting less than expected is a high point in this report. Labor is going to continue to be a leading problem for all manufacturing.
https://www.dallasfed.org/news/releases/2023/nr230731tmos
JOLTs Job Openings in June came in at 9.582 million just under the estimate of 9.610 million. Openings were slightly lower than the May number of 9.616 million. Our Take, while job openings have been on a slight downward trend from 2022 we are still well above the pre pandemic levels of around 6-7 million. A growth in open positions is a trend that has continued to grow since 2010. It is time you review your marketing campaign for employees. What makes you appealing to them?
https://www.bls.gov/news.release/jolts.htm
Recruting
Company culture is vital as it defines the shared values, attitudes, and behaviors within the workplace. When employees align with the culture, they experience higher job satisfaction and a sense of belonging and purpose, leading to increased retention rates. The importance of culture was apparent when visiting shops on the PMPA’s first Mastery Program tour. Each stop shared their company culture and the enthusiasm of the employees as they explained what they do was contagious. When employees love what they do it becomes apparent in actions. If you want to see this in action, there are a few seats left and you can join us for the second Mastery Tour of 2023 in New England, September 13-15. Find more information on PMPA.org.
ISM PMI
The media is reporting the ISM Manufacturing PMI came in at 46.4 just under the expected 46.8. This number was slightly higher than the June reading of 46.0. The index saw New Orders portion rise by 1.7 percent and Inventory’s component rise by 2.1 percent from the previous reading. The Employment and Export components falling by 3.7 percent and 1.1 percent respectively. Our take, after the indexes highs in 2022 manufacturing PMI has moved in a downward trend. The index is still indicating contraction, but we are starting to see a bottom form with the last several readings sitting around 46-47%.
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/july/
Crude Steel
World crude steel production was 158.8 million metric tons in June 2023, a 0.1% decrease compared to June 2022. China saw a .4% increase in production with the United States production increasing by .5%. India increased production by 12.9%. China remains the overall largest producer of steel. Our take, The steel market still remains strong. Total production year to date remains just under equivalent 2022 numbers. The total increase in demand is slowing easing of supply chains and overall cost.
https://worldsteel.org/media-centre/press-releases/2023/june-2023-crude-steel-production/
Battery Tech
Nasa research at Glenn Research Center may have just made a giant leap forward in battery technology. Creating a new solid state battery that takes us beyond lithium-ion. “Not only does this design eliminate 30 to 40 percent of the battery’s weight, it also allows us to double or even triple the energy it can store, far exceeding the capabilities of lithium-ion batteries that are considered to be the state of the art,” Viggiano said. Our Take, passing the limitations of slow discharge rates of solid state technology has advanced this technology much closer to application. Solving energy storage problem is the key to an electrified future.
https://www.nasa.gov/sites/default/files/atoms/files/sabers_cas_fact_sheet_508.pdf
PODCAST – Shop Safety: A Dozen Indicators to Score Your Shop
CRIBSHEET – No. 117: A Little Dab to Prevent Machine Downtime
PMPA shares important precision machining information you may have missed while you were making essential parts.
July 28, 2023
Manufactured Durable Goods
New Orders
New orders for manufactured durable goods in June, up four consecutive months, increased $13.6 billion or 4.7 percent to $302.5 billion, the U.S. Census Bureau announced today. This followed a 2.0 percent May increase. Transportation equipment, also up four consecutive months, led the increase, $12.4 billion or 12.1 percent to $115.3 billion.
Shipments
Shipments of manufactured durable goods in June, up three of the last four months, increased $0.8 billion or 0.3 percent to $284.2 billion. This followed a 2.0 percent May increase. Fabricated metal products, up four of the last five months, led the increase, $0.4 billion or 1.2 percent to $35.8 billion.
Our take: as we shared in our latest PMPA Business Trends report, these are the good old days. 6.7 percent increase in orders for durable goods in the past two months while shipments were up 2.3 percent total in that same period means that we have a lot of work to do in the months ahead.
https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
GDP
Real gross domestic product (GDP) increased at an annual rate of 2.4 percent in the second quarter of 2023, according to the “advance” estimate from the U.S. bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent. The increase in the second quarter primarily reflected increases in consumer spending and business investment that were partly offset by a decrease in exports. Imports, which are a subtraction in the calculation of GDP, decreased.
Our take: The data shows much stronger economic performance than all of the media’s recession talk has been threatening. It is good to be in manufacturing.
Link: https://www.bea.gov/news/2023/gross-domestic-product-second-quarter-2023-advance-estimate
EEO-1/I-9
Forms, forms, and more forms. Once again the Equal Employment Opportunity form or EEO-1 has been postponed. This time to the Fall of 2023.No, precise date has been given. Also, the I-9 form has changed. Employers please do not use the old form (I-9, Revised 10/21/19) past 10/31/2023. The new form will be ready to download August 1, 2023. Do not subject yourself to fines. Remember to keep all forms up to date.
Solar & Wind Energy
Solar and wind energy set to produce one third of global electricity in the next seven years. Large investments by governments and the private sector have made large advancements in green energy over the last decade. Solar energy projects are reaching economies of scale and will be producing electricity at around $20/ Mega Watt Hour. Our take, energy demand is increasing dramatically with the electrification of everything. It is a problem that will have to be solved from many angles.
PODCAST – Taking Advantage of PMPA’s Updated ListServe Communities
CRIBSHEET – No. 117: A Little Dab to Prevent Machine Downtime
PMPA shares important precision machining information you may have missed while you were making essential parts.
July 14, 2023
Machine Tool Orders
US Machine Tool orders totaled $365.9 million in May 2023. Up 8.6% from April this year. The May number is down 16.7% from May 2022, which was a banner year. Numbers show metal forming an fabricating umbers are down but metal cutting is up 10%. The strongest increase was seen in the Northeast Region with a 37.9% increase month over month. Our take, even though we are off from 2022’s banner year we are still having a strong year for metal cutting machines.
Unemployment Rate
Last week new unemployment rates dropped to 237,000. That is a decrease of 12,000 from the prior week. It is important to retain your talent now more than ever. Since the weather is nice, show appreciation to your workforce. Some ideas could be cookouts for employees and their families or get active and build a team for baseball or kickball games. The options are endless and inexpensive. Get out and enjoy your team.
HCA Healthcare
HCA announced this week that it had a breach of 27 million records. Records contained personal information as well as some patient visit details. The hack affects patients in almost 24 states. HCA has claimed that no clinical information was breached. Our take, if you use HCA for business or personal it is time to check to see if you were affected by the breach. If so please take appropriate measures to mitigate damage.
https://www.cnbc.com/2023/07/10/hca-healthcare-patient-data-stolen-and-for-sale-by-hackers.html
PODCAST – Questions for Project Team Coaching
ARTICLE – Turned and Polished Steel Barstock: How It Is Manufactured, How It Impacts Your Shop
PMPA shares important precision machining information you may have missed while you were making essential parts.
July 7, 2023
GDP
Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2023, according to the “third” estimate released by the Bureau of Economic Analysis.
The increase in real GDP in the first quarter reflected increases in consumer spending, exports, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment.
Current-dollar GDP increased 6.1 percent at an annual rate, or $391.8 billion, in the first quarter to a level of $26.53 trillion, an upward revision of $43.5 billion from the previous estimate.
The price index for gross domestic purchases increased 3.8 percent in the first quarter, the same as the previous estimate.
Our take: Despite the fact that both Durable and Nondurable Goods Manufacturing were down -0.38 and -0.23 percent respectively in this report, Manufacturing value-added output increased to an all-time high of $2.905 trillion (annual rate) in the first quarter. Manufacturing accounts for almost 11% of US GDP. We remain optimistic for prospects for our industry.
Scrap Metal Scam
Beware of a Scrap Metal Scam Targeting our shops. Two men identifying as representing a Cherokee Nation tribe are going into shops claiming they are doing non- profit work for kids and ask for scrap metal aluminum or Brass. They show trinkets that they claim were made from scrap to sell to benefit the kids. They are looking for more than small quantities of bar ends and become quite agitated when asked to leave. They even attempt to enter shop when told not to. This happened to a member this week and has been documented in the news in other states. Now would be a great time to review your admittance, donation, and disposition of scrap policies and procedures with all personnel- including providing instructions on who to call If a question arises.
ISM PMI
According to the latest Production Managers Index (PMI) from the Institute for Supply Management (ISM), “Economic activity in the manufacturing sector contracted in June for the eighth consecutive month.” Among the areas showing contraction in June were “New Orders, Production, Employment and Backlogs Contracting.”
Our take: Against the continued gloom of the ISM PMI reports for manufacturing, we offer the following counter points: “Transportation Equipment registered growth in June<” (ISM) and PMPA’s own Business Trends Report for May (one month behind the ISM PMI report) shows the sales this year to be midway between the levels of calendar year 2021 and 2022. Our Sales Index is up 10 points or 7.5 percent over April, 2023. We are optimistic that our shops can sustain this level of performance for the balance of the year.
Link: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/june/
China’s Rare Earth Metals
China has limited its exports of more rare earth minerals. China accounts for 70% of the worlds rare earth mineral production. Rare earth minerals are relatively abundant but the capacity for refining them from there low concentration deposits generates toxic waste. Our take, it is important that the US develop technologies to safely refine rare earth minerals. It is important that we lobby for the development of these technologies to increase our energy independence.
Energy Storage
GM is prototyping a new energy storage system based on Ultium battery technology. The goal of this project is to reduce the logistical requirements of fossil fuel in remote locations. This system will anchor an intelligent microgrid for hydrogen powered generators and traditional fuel generators providing energy stability. This project has the potential to provide advancements in long-term energy stability and storage. Projects like this are critical to the change to more electric powered devices.
PODCAST – Cold Drawn Steel Bar Stock
PODCAST – The Origins of Swiss Machining in the US (Speaking of Suppliers)
CRIBSHEET – #105 – Yield Loss Due to Bar End Remnants
PMPA shares important precision machining information you may have missed while you were making essential parts.
June 30, 2023
Manufactured Durable GoodsNew Orders for manufactured durable goods in May, up three consecutive months, increased $4.9 billion or 1.7 percent to $288.2 billion, the U.S. Census Bureau announced today. This followed a 1.2 percent April increase. Transportation equipment, also up three consecutive months, led the increase, $3.9 billion or 3.9 percent to $102.6 billion.
Shipments of manufactured durable goods in May, up two of the last three months, increased $4.8 billion or 1.7 percent to $282.7 billion. This followed a 0.6 percent April decrease. Transportation equipment, also up two of the last three months, led the increase, $4.0 billion or 4.6 percent to $91.8 billion.
Inventories of manufactured durable goods in May, up five of the last six months, increased $1.2 billion or 0.2 percent to $522.9 billion. This followed a 1.0 percent April increase. Machinery, up thirty-one consecutive months, led the increase, $0.5 billion or 0.5 percent to $94.4 billion.
Capital Goods Nondefense new orders for capital goods in May increased $5.7 billion or 6.7 percent to $91.0 billion. Shipments increased $2.7 billion or 3.4 percent to $82.9 billion. Defense New Orders decreased $2.7 billion or 14.7 percent. We attribute the decline in Defense New Orders to the budget uncertainty before Congress at the time.
https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Our Take: The components made by PMPA members provide critical functionality to a wide range of durable and capital goods. Our Monthly Business Trends report confirms the importance of these markets to our shops.
AI Chips and ChinaAs AI is becoming synonymous with our daily vernacular, the US government is looking to regulate where US manufacturers of chips can sell them. In the ongoing trade war with China the US has prevented makings of specialized AI chips from selling to China or its allies. The emergence of generative AI as a strategic issue between the US and China is more than political. As the US seeks to deny access to China for high technology required to make chips needed for AI applications, our industries can expect to find China making access to rare earth magnets and other critical minerals difficult for US manufacturers. The global reality is that AI is cleaving the world into two technology camps. Our access to critical tools and materials may be collateral damage.
https://www.cnbc.com/2023/06/23/us-china-tech-war-why-generative-ai-could-be-the-next-battleground.html
UpskillingUpskilling your younger workforce using your more experienced workers could save you a lot of money. According to various sources, incentivizing your experienced workers with additional compensation or stipends, motivates them to mentor the younger workforce. Not only do you save money from outside training costs, but your younger workforce will understand best practices in your shop.
Cutting Tool Orders
US cutting tool orders totaled $190.0 million in April up 7.5% from a year ago. Although numbers were down from the march total of 225.6 million we are still up for the year showing a year to date total tool orders up 15.2%. Our take, shops are still buying cutting tools at an accelerated pace. The market for our precision parts is still strong.
Broadband Access
The White House announced plans to distribute $42 billion in funds to make broadband access universal by 2030. Recognizing how much of the US economy revolves around the internet the White House says QUOTE…internet access is just as important as electricity, water or other basic services UNQUOTE. The expansion of high speed internet to the areas where many of our precision machining shops are located, will empower our shops and facilitate our increased adoption data exchange technologies over the internet to improve our quality, productivity, and customer service.
htps://www.reuters.com/world/us/biden-detail-plans-42-billion-investment-us-internet-access-2023-06-26/
PODCAST – Efficiency vs Effectiveness
PODCAST – The Origins of Swiss Machining in the US (Speaking of Suppliers)
ARTICLE – Understanding Steel Material Specifications on New Jobs
PMPA shares important precision machining information you may have missed while you were making essential parts.
June 23, 2023
Jobless Claims
Initial jobless claims came in at 262,000 just slightly higher than the expected 250,000. This is just 5% higher than the expected number. Our Take, although a higher than expected number can be seen as a bearish signal we are at historically low unemployment numbers. When comparing this statistic with the longer term back to the 1980’s we are in a time of stable full employment.
https://www.dol.gov/ui/data.pdf
Retaining Employees
Are you thinking about ways to retain employees? Now more than ever it is important to keep your top talent. Not only are employees feeling the tightening of their paychecks but employers are also feeling the strain. It is time to get creative. There are low cost and effective ways to offer your employees valuable and usable benefits. According to indeed.com, offering additional benefits such as gym memberships, local store discounts, event tickets can keep company morale high. Having these in addition to your medical and dental offerings can help you stand out amongst the other employees looking for the same talent. Take some time to look into additional benefits you can offer.
Manufacturing Network
Siemens has announced that it is investing 2.2 billion dollars into expansion of the global manufacturing network. Siemens president and CEO Roland Busch says “The investments underpin our strategy of combining the real and the digital worlds” Our Take, as companies are incorporating the concept of a connected factory we will see more options from control manufactures to help us better integrate our technologies.
AI
AI is an existential threat! AI is a catastrophic change in our lives. As goes with the media cycle we often get hit with the extreme end of one tale with the headlines. Please ignore the doom and gloom and get to the meat of AI will do for us. AI is going to allow computers to pickup up slack on the clerical end of things. Think faster response times to our customers. Intelligent prediction of capacity needs. AI will amplify our performers capabilities.
https://www.technologyreview.com/2023/06/19/1075140/how-existential-risk-became-biggest-meme-in-ai/
PODCAST – Twist Drills for Success
ARTICLE – Understanding Steel Material Specifications on New Jobs
PMPA shares important precision machining information you may have missed while you were making essential parts.
June 16, 2023
CPI & PPI
CPI came in at 0.1 seasonally adjusted in May just slightly below expectations. Year over year CPI came in at 4.0% which is still high but is a sharp correction from our highs of 9.1% June of 2022. We are on a steady track to the long-term average CPI around 2-3%. A major victory in the CPI was continued reduction in energy prices with month over month drop of 3.6% and a 12 month drop of 11.7%. Our take, with CPI coming back in line we should start to see prices stabilize. Also interest rates should start to level off easing the increasing pain of our shop’s line of credit. Lower CPI should give the Fed less reason for continued rate hikes.
https://www.bls.gov/news.release/cpi.nr0.htm
PPI declined at .3% seasonally adjusted Month over Month in May beating expectations. PPI Year over Year came in at 1.1% well below expectations of 1.5%. Energy being a driving factor in the lower numbers being down 6.8% month over month. Our take, the PPI being the most relevant data to our shops headed to down to neutral territory is great news. This number shows that the inflation is coming under control in the areas where our shops spend money.
https://www.bls.gov/news.release/ppi.nr0.htm
FOMC – Interest Rates
The FOMC meeting this week came with good news the Fed deciding to maintain current interest rate targets. The committee restated its goals of maintaining maximum employment and a long-term inflation target of 2%. ( The so- called ‘dual mandate.) The Fed left the door open for continued rate hikes if the lag in monetary policy does not continue to bring inflation under control. Our take, with continued progress on inflation in both the CPI and PPI reports this week we are hopeful that the Fed is finished with continued rate hikes. The situation remains fluid .
Unemployment Rate
The Society for Human Research Management (SHRM) has reported that 262,000 “workers filed for new unemployment benefits the week ending June 10 marking the second week in a row of new highs this year for unemployment claims” and the highest for initial claims since November 2021. Looking at these numbers, it’s time to start finding ways to motivate your employees. One simple way is giving them the opportunity to display their strengths. Delegating tasks shows an employee that you have trust in their abilities and gives them a chance to showcase their skills. Working on things that aligns with their long-term career goals will help them see themselves with the company for the long term. Gaining that hands on experience will be exponential in their growth.
Industry 4.0 – MES
With all the talk of industry 4.0 we have now seen step in that direction with the adoption of Manufacturing Execution Systems. MES will be a critical resource to helping aerospace and defense companies move toward industry 4.0. MES coordinates inventory, production, and quality control activities to deliver efficient and compliant work execution by digitally tracking and documenting the end-to-end manufacturing process. Our take, it will be interesting to see the adoption of these technologies in the long run. There have been other attempts at standardizing industry 4.0 techniques that have seen little to no adoption.
PODCAST – Is Practice Considered Continuous Improvement?
ARTICLE – Cold Drawn Steel Bar Stock: Benefits to Your Shop
PMPA shares important precision machining information you may have missed while you were making essential parts.
June 9, 2023
EEO-1 Report
The United States requires private employers with 100 or more employees and federal contractors or first-tier subcontractors with 50 or more employees and a contract of $50,000 or more with the federal government to file an Equal Employment Opportunity-1 aka EEO-1 report. The report is typically due on March 31 but the schedule has been off since 2018. The portal is anticipated to open mid- July but no deadline filing date has been announced. It is never too early to start gathering your employees demographics. A voluntary poll of your employees can make filing this report much easier. Get ahead of the game and be prepared for this looming deadline.
The Employment Situation in May
Total nonfarm payroll employment increased by 339,000 in May, and the unemployment rate rose by 0.3 percentage point to 3.7 percent, the U.S. Bureau of Labor Statistics reported today.
Manufacturing employment decreased by 2,000 in May. While manufacturing has added approximately 10,000 workers this year, there are currently 12,984, 000 manufacturing employees in May, just 4000 shy of 12,988,000 high in November 2008. We believe that May was the 14th consecutive month that the payroll numbers have beaten the economists’ estimates. Our take: We believe that job numbers are more about population demographics than about the economy, a lesson that the Fed and the press seems to be ignoring.
Link: https://www.bls.gov/news.release/pdf/empsit.pdf
Job Openings in April
The number of job openings edged up to 10.1 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires changed little at 6.1 million. Total separations decreased to 5.7 million. In April, the number and rate of layoffs and discharges decreased to 1.6 million (-264,000) and 1.0 percent, respectively. Job Openings for manufacturing numbered 676,000, lowest level since February of 2021; down 26,000 from March 2023, and down 348,000 from April 2022. Hires in manufacturing increased 14,000 from March to April according to Table 2, Hires levels and rates, seasonally adjusted.
Our take: This is about the population, and workforce, not the economy. NAM’s Chief economist Chad Moutray recently shared that “For every 100 job openings in the U.S. economy, there were 56.0 unemployed workers in April.”
Link: https://www.bls.gov/news.release/pdf/jolts.pdf
ISM PMI continues to slide in May
The Institute for Supply Management’s Purchasing Manager’s Index fell from 47.1 in April to 46.9 for May. This was the seventh straight month of decline. The report highlighted stabilizing exports, and falling raw materials prices in contrast to the contracting new orders, that drove the report’s index downward for the month.
Our take, While PMPA’s Business Trends Index has shown volatility, we are still showing high levels of sales and year to date our index remains elevated and is just one point below the 2021 calendar year average.
Link: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/may
Apple Vision Pro
Apple has introduced there new Vision Pro mixed reality headset. Priced at $3500 it is a it is a feature packed device in the augmented reality world. Our take, as augmented reality technology gets cheaper and more feature packed it will be a great training aid in our shops. The ability to direct an individual from anywhere in the world giving them 100% relevant data with real time feedback will be a game changer.
https://www.cnbc.com/2023/06/06/apple-vision-pro-hands-on-first-impressions-from-wwdc-2023.html
Emerging Tech
Emerging technologies disrupt markets, for instance ChatGPT. Many other new technologies have done the same thing. They make us set back and analyze our positions. Where do we go next? What move should we make? You need to be a lifelong leaner. Try to learn something new every day. Continuously study and grow your capabilities. Make learning an active part of your own personal strategic plan.
https://www.amtonline.org/article/emerging-technologies-require-continuous-life-learning-and-more
PODCAST – Additive v. Subtractive Manufacturing
ARTICLE – The Battle For Performance: Efficiency Versus Effectiveness
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
June 6, 2023
Deepfakes
With all the talk of AI going around Deep Fakes have become a major topic. Many are worried about the possibility of Deep Fakes playing pivotal roles in future elections. Anyone with basic knowledge can create a deep fake an post it online. Posting political satire is one thing but the next step will be fraudulent information from customers. Our take, systems will have to be developed to identify fake content. Think vendor payment information, customer PO’s, shipment address changes, etc. Do you have a system to identify if information is legitimate?
https://gizmodo.com/chatgpt-ai-12-companies-deepfake-video-image-detectors-1850480813
New Material
If superconducting materials could work at ambient temperatures, almost all of our technologies would be totally reinvented to use even less energy. Think power grids with zero losses, possibly production of energy via nuclear fusion, transportation (levitating mass transit), and amazing developments in electronic memory, storage and computing, as well as improving medical imaging resolution and affordability.
An article just published in Nature describes a new material called N-doped lutetium hydride, is made of hydrogen, nitrogen, and a rare-earth metal called lutetium. It is a superconductor at a temperature of 21 C/69 F and a pressure of 1 gigapascal/10 000 bar/145 000 psi. (145,000 ksi is typical levels attained by Heat treated steels in tensile testing, to give you a reference point.
The properties required to make this new superconductor material functional are currently available.
We believe that this has the potential to revolutionize our world and technologies more so than the computer chip and the iPhone. Prepare for your Industrial parts to change as this material becomes commercialized.
https://www.nature.com/articles/s41586-023-05742-0
Data Retention
Lack of cloud permanence is something that is becoming a reality. We generally think of digital information as everlasting. Once it has become digitized it you no longer have to worry right? Google just announced that it will delete accounts after two years of inactivity. Other companies will most likely follow suite. Our take, we need to have a process to review where information is stored and what the data retention policies of that site are.
New Orders
- New orders for manufactured durable goods, rose for the second month in a row, up $3.1 billion or 1.1% to a record $283 billion in April. The March increase was 3.3 percent. Excluding transportation equipment, new durable goods orders slipped 0.2% for the month of April.
- Shipments of manufactured durable goods in April, down two of the last three months, decreased $2.0 billion or 0.7 percent to $277.7 billion. This followed a 0.7 percent March increase. Transportation equipment, down three of the last four months, led the decrease.
- Inventories of manufactured durable goods in April, up four of the last five months, increased $5.2 billion or 1.0 percent to $521.9 billion. This followed a 1.0 percent March decrease. Transportation equipment, up three of the last four months, led the increase, $5.0 billion or 3.2 percent to $164.1 billion.
Our take: Reports of the demise of manufacturing in the economy are not supported by current economic indicators.
ARTICLE – Twist Drills for Success
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
May 18, 2023
Producer Prices
Debt Ceiling- Facts to Keep in Mind
Despite increasing 0.2 percent in April, producer prices for final demand goods and services seem to be slowing. For the past 12 months, producer prices for final demand goods and services have risen 2.3%, the lowest level since January 2021. Core producer prices increased 3.4% year-over-year, the slowest pace in 25 months. Our take, while the slowing of increases is great news, nevertheless producer prices are still increasing. Stay on top of your costs! Link: https://www.bls.gov/news.release/pdf/ppi.pdf
Homebuilder Sentiment
Homebuilder sentiment pulls out of negative territory for the first time in nearly a year. Builders confidence rose to 50 in May which was 5 point increase. This is the 5th straight month of gains and the highest reading since July of 2022. Our take, a turn around in the housing market will be great news for our shops since so much industrial production is tied to new home sales. Construction equipment which had an uptick is a major buyer of machined parts.
https://www.cnbc.com/2023/05/16/homebuilder-sentiment-may-2023.html
Recruitment
Need new talent? The best recruiters are in your shop – your current employees. They understand the culture, brand, and nuances of the shop. They will know who in their circle would thrive. Incentivizing their efforts increases morale, engagement, and loyalty. Not only that but according to Zippa, a job search engine, “On average, referral hires have a retention rate of 46 percent, compared to only thirty-three% of job board hires.” Do you have an employee referral program?
New York Manufacturing Survey
Manufacturing activity declined significantly in New York State, according to the May survey, according to firms responding to the May 2023 Empire State Manufacturing Survey. The headline general business conditions index dropped forty-three points to -31.8. New orders and shipments plunged after rising significantly last month. Delivery times shortened somewhat, and inventories contracted. Both employment and hours worked edged lower for a fourth consecutive month. Prices increased at about the same pace as last month. The capital spending index fell to 0.9, its lowest level in three years.
Our take: We searched hard to find any signs of optimism. Here’s what we found: “New orders and shipments are expected to increase, and employment and the average workweek are expected to edge somewhat higher.” Link:https://www.newyorkfed.org/survey/empire/empiresurvey_overview
Aerospace
RyanAir has placed an order for as many as 300 new 737 Max jets. An order of $20 billion dollars plus. The 737 Max has continued to gain market share since its return to service. This is good news for producers of Boeing parts. A large number of orders in the pipeline will mean high demand for those parts into the years to come.
PODCAST – Our Transformational Industry
ARTICLE – Precision Ground Bar Stock
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
May 12, 2023
Manufacturing Positivity in the News
Debt Ceiling- Facts to Keep in Mind
There is a very narrow window for compromise on the federal debt ceiling. According to a note published by Joi Chevalier at Manning and Napier, only 7 days in May have the house of representatives and Senate Schedules aligned. May 9-12, and May 15-17. All parties to the talks remain far apart, and the political brinkmanship continues to escalate.
Our take: While the investment markets seem mostly unconcerned, likely consequences include higher future interest rates on Government debt, Higher taxes, and potential spending cuts that can negatively affect the economy. Odds of a recession increase the longer this remains unresolved.
Cybersecurity
Is your data secure? Cyber extortion is on the rise. Hackers are going after personal devices. They are gathering personal, corporate, and customer data then threatening to leak it online if not paid extortion amounts. A similar scheme to the ransomware attacks we have seen in past. Companies will spend over $219 billion this year on cybersecurity. It is time to ensure your performers’ devices that operate on your network are secure. What is your policy?
Upskilling
Are your employees feeling valued? Are you showing value by upskilling employees? You can use the 20 percent rule to scale an employees work – 80 percent of their time is devoted to their current skill and the other 20 percent is devoted to a new skill. Upskilling helps make employees feel more valued. A great way to aid in this could be sending your employees to the 2023 PMPA Mastery Program. This program helps them gain system knowledge to bring back to their shop. Check out pmpa.org for more information.
Employment
According to Chad Moutray, Chief economist at NAM, there were 12,991,000 manufacturing employees in the U.S. in April- the most since November 2008. Manufacturing employment rose by 11,000 in April, with 253,000 additional nonfarm payroll workers.
The unemployment rate dropped by a tenth of a percent to 3.4% from 3.5%. This matches the Januaruy 2023 rate, – both of which are the lowest since May 1969.
Our Take: “Can you spell full employment?:” The Fed is being taught that lesson as they try to fight Inflation.
Link: https://www.bls.gov/news.release/pdf/empsit.pdf
Machine Tool Orders
March Machine tool orders total $543 million. Orders were up 16.5% over February and just 2% below March of 2022, which was huge year. This marks one of the best March totals since 2008. Aerospace and vehicle transmission producers saw large increases. Our take, reading this report it shows strength in aerospace, construction, and automotive machine tool orders. This is a good sign for the near-term future of these industries.
PODCAST – Paint Your Edge to Gain an Edge!
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
April 28, 2023
Manufacturing Positivity in the News
Empire State Manufacturing Survey
Business activity increased in New York State for the first time in five months, according to firms responding to the April 2023 Empire State Manufacturing Survey. The headline general business conditions index shot up thirty-five points to 10.8. New orders and shipments surged. Delivery times held steady, and inventories moved higher. https://www.newyorkfed.org/survey/empire/empiresurvey_overview
Chicago Fed National Activity Index
The Chicago Fed National Activity Index (CFNAI) was unchanged at –0.19 in March. Three of the four broad categories of indicators used to construct the index made negative contributions in March, and two categories deteriorated from February. The index’s three-month moving average, CFNAI-MA3, increased to +0.01 in March from –0.09 in February. Manufacturing production decreased 0.5 percent in March after increasing 0.6 percent in February. The contribution of the sales, orders, and inventories category to the CFNAI moved up to –0.02 in March.
https://www.chicagofed.org/research/data/cfnai/current-data
Electric Bills
The average price of electricity for the whole US rose 12.24% in 2022. This is well above the already large increase of 4.41% in 2021. This marks the largest increase in electricity prices in at least the last 23 years of data. What are you doing to help alleviate the heavy burdens high electricity prices are doing to your bottom line? PMPA affinity partner APPI Energy can help you find data driven solutions to your power problems. They can provide services such as negotiating with power suppliers directly to taking advantage of renewable energy sources for your company. Give them a call to see what they can do for you.
https://www.statista.com/statistics/183700/us-average-retail-electricity-price-since-1990/
https://data.bls.gov/pdq/SurveyOutputServlet
https://beta.bls.gov/dataViewer/view/timeseries/APU000072610
Durable Goods
New Orders
New orders for manufactured durable goods in March, up following two consecutive monthly decreases, increased $8.6 billion or 3.2 percent to $276.4 billion, according to the U.S. Census Bureau. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $8.1 billion or 9.1 percent to $97.4 billion.
Shipments
Shipments of manufactured durable goods in March, up following two consecutive monthly decreases, increased $2.9 billion or 1.1 percent to $277.0 billion. Transportation equipment, also up following two consecutive monthly decreases, drove the increase, $3.3 billion or 3.7 percent to $93.3 billion.
Inventories
Inventories of manufactured durable goods in March, down two of the last three months, decreased $4.4 billion or 0.9 percent to $488.8 billion. Transportation equipment, also down two of the last three months, drove the decrease, $4.4 billion or 2.8 percent to $154.1 billion.
https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Steel Production
World steel production hit 165.1 metric tons the highest monthly total since May of 2022. Steel production was 1.7% increase over March of 2022 12 months prior. This the 2nd highest monthly total in at least the last 18 months. In 2022 world crude steel production hit 1832.4 metric tons just off the 2019 total of 1869.9 metric tons. Our take, after the pandemic demand for steel is still strong. Even though China has become the largest producer of steel globally we saw a bottom in Rest of the World production in November of 2022 and that has steadily risen ever since.
https://worldsteel.org/media-centre/press-releases/2023/march-2023-crude-steel-production/
PODCAST – Precision Ground Stock
Final Cut of the Week Videos from 2022
https://www.cnbc.com/2023/04/05/as-economy-weakens-inflations-inventory-gluts-are-here-to-stay.html
PMPA shares important precision machining information you may have missed while you were making essential parts.
April 14, 2023
Unemployment
Are you currently looking for employees? The Society for HR Management (SHRM) reported that 239,000 people filed for unemployment benefits. This is the highest number of claims since January 2022. Workers are looking for jobs, why not make them look at manufacturing. PMPA members have access to recruitment tools on PMPA.org.
Women in Manufacturing
According to the Bureau of Labor Statistics, the number of women working in manufacturing in March 2023 was up 2,000 from the prior month. The number of women working in manufacturing has grown 111,000 since March 2022. Women made up 29 percent of all manufacturing employees in March 2023. If only 6 percent more women were brought into the workforce, all of the positions in manufacturing would be filled. We need to take steps to increase outreach to continue to attract and grow our female workforce. To help with recruitment, go to productionmachining.com in the PMPA pages to find the Roles of Manufacturing Series where Carli Kistler-Miller features women working in different manufacturing positions and loving it.
Link: https://www.bls.gov/news.release/pdf/empsit.pdf
Supply Chain
According to CNBC Supply Chain Survey only about one third of supply chain managers think warehouse inventories will fall to normal levels sometime this year. Increased inventories will mean reduced earnings for retailers. Reduced earnings and stagnant inventories typically spell doom for the economy. Our take? Although the economy may be slowing in the near term, we see the demand for our parts continuing to expand. In addition, this is actually an opportunity for our shops who need consumer goods such as TV’s, computers, desks, etc to catch a great sale. As warehouses stay full retailers will be offering steep discounts to clear room. So if you need new computers for the office or TV’s for shop floor communications this may be a great opportunity to acquire these items at a steep discount.
https://www.cnbc.com/2023/04/05/as-economy-weakens-inflations-inventory-gluts-are-here-to-stay.html
New Orders
New Orders for Manufactured Goods, Shipments
New orders for manufactured goods in February, down three of the last four months, decreased $3.9 billion or 0.7 percent to $536.4 billion. New orders for manufactured durable goods in February, down three of the last four months, decreased $2.7 billion or 1.0 percent to $268.4 billion, unchanged from the previously published decrease. This followed a 5.0 percent January decrease. Transportation equipment, also down three of the last four months, led the decrease, $2.6 billion or 2.8 percent to $89.5 billion
Shipments of manufactured durable goods in February, down two consecutive months, decreased $1.6 billion or 0.6 percent to $274.7 billion, unchanged from the previously published decrease. This followed a 0.4 percent January decrease. Transportation equipment, also down two consecutive months, led the decrease, $1.3 billion or 1.4 percent to $90.2 billion.
Link: https://www.census.gov/economic-indicators/ click on Manufacturer’s goods, Press release
New Machine Orders
According to AMT new machine orders in February 2023 were up 50% above an average February. New orders were 33% ahead of January 2023 and only 1.6% behind February during the banner machine ordering year of 2022. PMPA Take, this is fantastic new showing that our industry is still running strong. After 2022, which was a huge year for machine tool orders, February 2023 was a near match. There is much talk of the economy slowing down but for now indicators are staying strong for our industry.
https://www.amtonline.org/article/february-2023-orders-nearly-50-above-average-orders-for-february
PODCAST – Adjustments for the Year Ahead
PODCAST – Interview with Derek Briggs of Tsugami America
WEEKLY TIP – Basic Steel Testing Terminology
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
April 7, 2023
GDP Q4 2022
Gross Domestic Product 4Q 2022
Tired of continuous talk of Recession? The data shows that Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2022, according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent. The increase in real GDP primarily reflected increases in private inventory investment, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending.
Link: https://www.bea.gov/sites/default/files/2023-03/gdp4q22_3rd.pdf
Manufacturing contribution to GDP 4Q 2022
Going deeper into the BEA report, we learn that Real Manufacturing GDP percent change from the prior period was up 4.5 percent. (Line 7 table 12) Durable goods was up 7.5 percent,. While non-durable goods was up only 0.8 percent. What was that output? According to Table 13, Manufacturing Value -added output was $2,894.5 Billion dollars in fourth quarter 2022., up $85.6 billion dollars fro m the third quarter. Durable goods led the way at $1,595 billion, a rise of $85.6 billion. Non-durable goods rose also, up $34.1 billion to $1299.4.
The Bad News- Price Indexes Up Substantially in Q4 2022!
BEA reports that the price indexes for GDP by Industry for Manufacturing were up 7.9 percent in Q4, (Table 15). Durable goods Price index was up 6.0 percent, while nondurable goods was reported up 10.3 percent. Pay attention to your Costs of goods sold!
Robots
MIT researchers have developed a 3d printed robotic hand that can detect objects in very similar ways to humans. It futures a rigid skeleton with softer external skin that has high resolutions sensors along its length. It allows for continuous touch sensing that feeds back to a machine learning model that helps identify the objects. The touch sensors along with GelSight sensors can recognize objects with a single grasps. It is currently achieving 85% accuracy in laboratory tests. PMPA take, if this technology could be replicated in an industrial environment it would revolutionize robotic grippers. For the machine to be able to tell object size, shape, weight, and orientation from feeling it like a human would be truly remarkable.
https://3dprinting.com/news/3d-printed-robotic-hand-can-identify-objects-by-grasping/
Robotic Hand
MIT researchers have developed a 3d printed robotic hand that can detect objects in very similar ways to humans. It futures a rigid skeleton with softer external skin that has high resolutions sensors along its length. It allows for continuous touch sensing that feeds back to a machine learning model that helps identify the objects. The touch sensors along with GelSight sensors can recognize objects with a single grasps. It is currently achieving 85% accuracy in laboratory tests. PMPA take, if this technology could be replicated in an industrial environment it would revolutionize robotic grippers. For the machine to be able to tell object size, shape, weight, and orientation from feeling it like a human would be truly remarkable.
https://3dprinting.com/news/3d-printed-robotic-hand-can-identify-objects-by-grasping/
ChatGPT
OpenAI CEO SAM Altman admits a bug allowed users to view messages from other users to the chatbot. Open AI temporarily disabled ChatGPT on Monday after the bug was discovered. The issue has been fixed and users can no longer have access to others chat logs. It was said that the issue was localized but the full extent of crossover is not known. As of January ChatGPT had amassed 100 million active users after only being live for two months. PMPA take, It’s a good time to review your cybersecurity policies. Just a question, how many of you used ChatGPT to write g-code for a test? What if that was a mission critical part for a customer? Be mindful out there using technology. Always be concerned for security especially on things that are brand new. None of this was malicious but still could have been used with malicious intent. Always be mindful of where you are storing and inputting data.
PODCAST – Workforce-Knowing our Markets
PODCAST – Interview with Derek Briggs of Tsugami America
WEEKLY TIP – Basic Steel Testing Terminology
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 31, 2023
Arduino Boards
All the makers out there should get excited. Arduino has announced a new model in the very popular Uno line. The Arduino Uno R4 will come standard with a new processer that is 3 times faster than its predecessor. The SRAM will be 16 times larger to 32 kb Plus, the onboard flash has increased 8 times larger to 256kb. The Wi-Fi___33 version comes with espressif S3 Wi-Fi module on board. Listening to customer feedback the new module features USB-C with a 24volt power supply. All of these new features while maintaining the current form factor and 5v onboard operating voltage. PMPA’s take, bring this scalable processing power with fast Wi-Fi will make creation of industrial 4.0 devices even faster. The possibilities are endless. Now you can hook up any device from the old and outdated to the brand-new to your interconnected shop.
https://store-usa.arduino.cc/pages/unor4?selectedStore=us
Durable Goods
New orders for manufactured durable goods down three of the last four months, decreased again in February, down $2.6 billion or 1.0 percent to $268.4 billion, according to the U.S. Census Bureau. This one percent decrease in February followed a 5.0 percent January decrease. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders decreased 0.5 percent. Transportation equipment, also down three of the last four months, drove the decrease, $2.6 billion or 2.8 percent to $89.4 billion.
Shipments of manufactured durable goods also declined, falling from $2.76 billion in January to $2.74 billion in February, a drop of 0.6 percent. Similar to New Orders, Excluding transportation, Shipments were virtually unchanged. Excluding defense, Shipments declined $1.3 billion or half a percent.
New orders for core capital goods were a bright spot, increasing $135 million or 0.2% to $75.16 Billion in February. Core Capital Goods orders are up 4.3 percent year- over- year.
Our take: While demand is softening, activity remains flat and at relatively elevated levels. Link: https://www.census.gov/manufacturing/m3/adv/current/index.html (Click link for Table 1 Shipments and New Orders)
chatGPT
Lucid Automation is using chatGPT to generate PLC code in structured text. Within a couple our hours learning to use chatGPT and training the chat bot on what they wanted Lucid created analog input control module and analog output control module. ChatGPT was not able to create these in perfect form but did most of the leg work and allowed the programmer to tweak the code in to working modules. PMPA’s take, although chatGPT won’t be programming our CNC’s anytime soon it might be worth looking into to for doing basic routines and coding. Let the computer do what it is good at, math. Pass it some numbers and let it calculated angles and diameters. Who knows in the future you might even could pass it a 3d solid as a parameter.
https://www.lucidautomationsecurity.com/2023/03/13/chatgpt-generated-plc-code/
Unemployment
The national unemployment rate edged up to 3.6 percent but was 0.2 percentage point lower than in February 2022, according to the US Bureau of Labor Statistics. Nonfarm payroll employment increased in 6 states and was essentially unchanged in 44 states and the District of Columbia in February 2023. Over the year, nonfarm payroll employment increased in 46 states and was essentially unchanged in 4 states and the District. Our take: There is no magic solution to the manufacturing workforce challenge. No apparent misplaced labor surpluses available to tap. Link: https://www.bls.gov/news.release/pdf/laus.pdf
PODCAST – Automation is the Amplification of Human Talent
PODCAST – Interview with Derek Briggs of Tsugami America
WEEKLY TIP – Finishing Surfaces
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 24, 2023
Industrial Production
Industrial production was unchanged in February, and manufacturing output edged up 0.1 percent. At 102.6 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Manufacturing output increased 0.1 percent in February but was 1.0 percent below its year-earlier level. In February, the indexes for durable manufacturing and nondurable manufacturing moved up 0.1 percent and 0.2 percent, respectively. Capacity utilization for manufacturing slipped 0.1 percentage point in February to 77.6 percent, a rate that is 0.6 percentage point below its long-run average.
Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf
Our take: Slowing growth but still stronger than expected for the global and economic realities we are all facing. Longer term expectations are for expansion in manufacturing in 2024.
Residential Housing
We hesitate to use residential housing as an indicator for our shops, as we are in fact led by Industrial sector. Nevertheless, Consumers are king in the broad economy, and in February new residential housing activity jumped 9.8% to 1,450,000 units from 1,321,000 units in January. This is a five month high. Growth in this indicator tend to foreshadow spending by builders and tradesmen on light trucks and vans as well as durable goods for the homes- HVAC units and appliances. Link: https://www.census.gov/economic-indicators/ click on New residential construction, Press Release
Our take: Both permits and starts were up over January but below the year earlier numbers. Completions were up over January 2023 as well as February 2022 numbers. While the press focuses on issues of affordability and economic uncertainty, the markets themselves are telling a much more positive story
Training with AR
We have done presentations at the tech conference in the past on applications using Microsoft’s HoloLens to do training and real time visual help. Now we have Transfr which is using holographic and augmented reality to train individuals in tasks. Transfr is already doing automotive, construction, and aviation maintenance. We are not far from seeing training in machine tools done with this technology. Augmented reality is the future of training performers to perform hands on tasks. Link to Transfr and this cool technology in the description.
3D Printing in Our Shops
The US military’s C-5M Super Galaxy needed to replace phenolic spacers that support the shape of the wing. 3-D Printed repair parts were made from Antero 800NA resin saving thousands of dollars in repair costs. Solutions like this can be spread across the fleet saving thousands of hours of maintenance hours. Now The air force is looking to place several contacts for parts using 3-D printing for their Rapid Sustainment Office. With the capabilities of our shops to provide both high precision machining adding additive capabilities can make us more competitive on delivery for those tight lead time projects.
https://3dprinting.com/news/c-5m-super-galaxy-gets-3d-printed-thermoplastic-part-overhaul/
https://3dprinting.com/news/usaf-awards-contract-to-identify-parts-for-am-replacement/
PODCAST – 2022 Was a Very Good Year
PODCAST – Interview with Derek Briggs of Tsugami America
WEEKLY TIP – Plating Problems on Steel Parts
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 17, 2023
Producer Price Index (PPI)
This is the indicator that matters for our precision machining shops, and in January 2023 (last month) producer Prices were up 6% year over year. Contrast that to the Fed’s target of 2% inflation, and we see challenges for policy makers ahead. On Wednesday, the Bureau of Labor Statistics reported that for February, the Producer Price index declined 0.1 percent. On an unadjusted Basis, the final demand index rose 4.6 percent for the 12 months ending February. The Core price index – less food, energy and supplier margins- rose 0.2 percent from January.
Our take: While the PPI moderated slightly in January, input prices for our shops continue to rise. This will continue to drive consumer inflation, and merit the full attention of the Fed. This creates a conundrum for the Federal Reserve. We have shared with PMPA members that we expect the economy to slow in 2023, and the continued inflation we are seeing and the FED’s expected response reaffirm our belief of a slowing 2023.
CPI
While PMPA shops are really led by Industrial production and durables goods sectors, the consumer is the basis of the broad economy. On Tuesday, the Bureau of labor statistics reported The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in February on a seasonally adjusted basis. Over the last 12 months ending February, the all items index increased 6.0 percent before seasonal adjustment, this was the smallest 12-month increase since the period ending September 2021. The all items less food and energy index rose 5.5 percent over the last 12 months, its smallest 12-month increase since December 2021.
Our take: While the CPI print was the smallest since 2021, it did not really show significant cooling, compared to the FED’s 2% target. Consumer liquidity is still strong, and we do not see any major changes in Fed inflation policy ahead. The banks impacted by the FED’s rate hikes have their full attention now.
Link: https://www.bls.gov/news.release/cpi.nr0.htm
Machine Tools & Cutting Tools
Orders for machine tools total $355 million in January 2023. Down from the banner year of 2022 but 17% above a typical January. Metal cutting machines were are smaller portion of the decrease as well as making up nearly 98% of machines ordered. Orders were only slightly down from December which is a month lots of shops purchase machines for tax benefits. Elevated January purchasing bodes well for our industry showing that sentiment is still strong.
Cutting Tool Orders Totaled $188.4 Million in December 2022, Bringing Year-Over-Year Total Up 14.6% From 2021. The long term Moving Average is trending up sharply from the lows in 2020. New orders for the last 12 months have been running above 2019 levels are an illustration of just how busy we are in our shops.
Microsoft AI
Microsoft has announced that AI will be coming to the next edition of Windows version 11. Generative AI is a tool that has been billed as a job killer. Creating content from online sources with little input from the user. In a world where we are struggling to find talented people to fill our positions we think that our shops will be able to utilize this technology to create content that will maximize our current employees potential.
NFIB Business Optimism Index
The NFIB Small Business Optimism Index in the United States increased to 90.9 in February of 2023, a three month high. The February Index, released on Tuesday, March 14, rose 0.6 from 90.3 in January, and up 1.1 from December’s 89.8 value. However, it remains well below the historic (49 year) average of the index at 98.
Our take: we appreciate the turn to the positive, and are not surprised that optimism is lower than historic averages. We are expecting 2023 to be a “breather” since our frantic economic recovery post covid, and this value fits our thinking quite well. We recommend that you take some time to look at the NFIB report at the link below:
Link: https://www.nfib.com/surveys/small-business-economic-trends/
PODCAST – Tech Conference Overview
PODCAST – Interview with Jack Horner of Wieland Chase
WEEKLY TIP – Factors Influencing Surface Finish in Our Shops
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 10, 2023
Productivity and Costs for Q4 2022
Productivity and Costs for Q4 2022
Nonfarm business sector labor productivity increased 1.7 percent in the fourth quarter of 2022, the
U.S. Bureau of Labor Statistics reported today, as output increased 3.1 percent and hours worked
increased 1.4 percent. (seasonally adjusted) This 1.7-percent increase in labor productivity for the fourth quarter of 2022 is 1.3 percentage points below the preliminary estimate of a 3.0-percent increase.
Nonfarm business sector unit labor costs increased 3.2 percent in the fourth quarter of 2022, reflecting a 4.9-percent increase in hourly compensation and a 1.7-percent increase in productivity. Unit labor costs increased 6.3 percent over the last four quarters. Our take: The increase in labor costs were largely responsible for the productivity downgrade reported. While the decline is undeniable, the productivity indicator remains positive and growing, though lower than expected. Link: https://www.bls.gov/news.release/prod2.nr0.htm
Imports/Exports
According to the U.S. Bureau of Economic Analysis, exports of goods increased 324 billion dollars in 2022. Of that, capital goods increased 51 billion dollars and automotive vehicles, parts and engines increased 14 billion dollars. Imports also increased in 2022 at 415 billion which includes a 104 billion dollar increase in capital goods and 52 billion dollar increase in automotive vehicles, parts and engines. Surpluses were seen with South and Central America, Netherlands, Hong Kong, Brazil, Singapore, Australia and the United Kingdom. The top five deficits were seen with China, the EU, Mexico, Vietnam and Canada.
https://www.bea.gov/news/2023/us-international-trade-goods-and-services-december-and-annual-2022#:~:text=For%202022%2C%20the%20goods%20and%20services%20deficit%20was%20%24948.1%20billion,up%20%24556.1%20billion%20from%202021.
National Technical Conference 2023
We have opened registration for our award-winning Mastery Program. This program is designed to expose our precision machining performers to their industry supply chain. It’s an unparalleled experience designed to develop a problem solving skills and empower precision machining teams with system knowledge. Our two bus tours will be held in the Cincinnati, Ohio area from July 21-22 and in the New England area from September 13-15th. Attendees will experience 5 PMPA member shops, 4 machine tool/equipment builders, 2 toolmakers, 1 steel mill, 1 bar grinder, 1 machine monitoring company, 1 CAD CAM company, 1 industry media company, 1 electroplater and 1 metalworking fluid compounder. Both PMPA manufacturing members and contract manufacturing non-members are welcome. Seats fill up quickly, so register today on PMPA.org.
PODCAST – Get to Know Your Podcast Team
PODCAST – Interview with Jack Horner of Wieland Chase
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 4, 2023
PMPA Business Trend Index – January
PMPA Business Trends Report for January- beating the broader benchmarks
The PMPA January Business Trends Index rebounded eighteen points or 13 percent to its highest January level ever- 155. This 155 reading:
-exceeded January2022’s 148 by seven points or 4.7 percent.
– surpassed the average of 154 for the last four months of 2022.
– exceeds the five-year average of January-138.6- by 16.4 points or 11.8- call it 12 percent.
And as you will see, seriously outperformed both January New Orders for Durable goods and The ISM PMI for January and February 2023. Our precision machined components are critical even as broader market indicators seem to decline.
New Orders
New orders for manufactured durable goods in January, down two of the last three months, decreased $13.0 billion or 4.5 percent to $272.3 billion, the U.S. Census Bureau announced today. This followed a 5.1 percent December increase. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders decreased 5.1 percent. Transportation equipment, also down two of the last three months, drove the decrease, $14.2 billion or 13.3 percent to $92.8 billion. Compare this to PMPA’s Business Trends Sales Index for January 2023, which was up 13 percent from its December reading. Link to Durable Goods: https://www.census.gov/manufacturing/m3/adv/current/index.html
ISM Purchasing Manager’s Index
According to the Institute for Supply Management’s Purchasing Manager’s Index, Manufacturing contracted in both January and February 2023. They reported that ““The February Manufacturing PMI® registered 47.7 percent, 0.3 percentage point higher than the 47.4 percent recorded in January. Regarding the overall economy, this figure indicates a third month of contraction after a 30-month period of expansion. In the last two months, the Manufacturing PMI® has been at its lowest levels since May 2020, when it registered 43.5 percent. “ While we are a month away from February PMPA Business Trends Sales Index numbers, Our January report showed sales up 13 percent over December 2022, and up 12 percent over the five year average for the month.
Link to ISM report: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/february/
PODCAST – Interview with Joe Martinez
PODCAST – Interview with Jeff Reinart from Schutte
WEEKLY TIP – Quality Function as Value Add
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
February 17, 2023
CPI
Consumer Price Index- Inflation Lower in January
… But higher than expected. The U.S. Bureau of labor Statistics reported Wednesday on the Consumer Price Index (CPI)for January 2023. “The all items index increased 6.4 percent for the 12 months ending January; this was the smallest 12-month increase since the period ending October 2021. The all items less food and energy index (Core Index- Preferred By the Fed in it’s deliberations– mkf)rose 5.6 percent over the last 12 months, its smallest 12-month increase since December 2021.”
This 0.5 percent rise over December, was nevertheless higher than expected. Shelter cost was the single largest factor- it accounts for 30 percent of the CPI index, 40 percent of the Core indicator preferred by the FED. Shelter was up 0.7 percent in January, and up 7.9 percent over the last year. The major contributors to the ongoing inflation were energy (up 8.7 percent for the 12 months ending January, and Food, up 10.1 percent for the same period.
With 7 meetings left this year I think we can expect the Fed Funds Rate to be increases several more times. Potentially looking at a year end rate of around 6 – 6.5%. This is going to push prime to 9-9.5~%. Then with increased borrowing risk at higher interest rates we will see our shops revolving lines moving to Prime +3 or higher where typically we see Prime +1.5-2 now. That means by year end revolving lines could be in the 12-13% range. I think it is time to start building cash and reducing revolving lines. Make sure all loans are fixes rate and not adjustable or periodically adjustable.
Our take: While inflation is unarguably down from its peak, it is stickier than policymakers had hoped, and is likely going to keep the FED in Tightening mode. No premature declarations of victory over inflation expected anytime soon.
Expect gloom and doom from the media and markets based on this positive but higher than expected report).
Link: https://www.bls.gov/news.release/cpi.nr0.htm
PPI
Producer Price Index- Still Increasing
The Producer Price Index for final demand increased 0.7 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. On an unadjusted basis, the index for final demand rose 6.0 percent for the 12 months ended January 2023.
The index for final demand goods moved up 1.2 percent in January, the largest increase since rising 2.1 percent in June 2022. Most of the January advance is attributable to a 5.0-percent jump in prices for final demand energy.
Our Take: Reports that Inflation is being beaten are being disproven by the facts. January’s “largest increase in PPI since March 22” tells us that the pain will continue. Conserve cash. Improve processes and training to try to shore up margins.
https://www.bls.gov/news.release/ppi.nr0.htm
Mastery Program 2023
PMPA’s award-winning Mastery Program is back! This year we will be visiting the Cincinnati, Ohio area and the New England area. Attendees will tour 5 PMPA member shops, 4 machine tool builders, 2 tool makers, one steel mill, one bar grinder, one machine monitoring company, one CAD CAM company, one industry media company, one electroplater and one metalworking fluid compounder. These unparalleled experiences are designed to develop problem-solving teams in your shop. Registration is open for PMPA members on PMPA.org.
Mastery Program Info & Registration
PODCAST – Starting a Quality System from Scratch
WEEKLY TIP – Distortion in Heat Treatment
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
February 10, 2023
Business Trends Report
The PMPA Business Trends Report is a monthly survey and report that captures sales and hours of first shift scheduled data for our shops. The sales Index and Hours of first shift scheduled provide a benchmark for you to compare to your peers on a monthly basis. You also receive a personalized index of your shop’s performance, to compare to the aggregate.
Our four sentiment indicators ask about prospects for sales, Lead times, Employment and profitability for the next three months, helping you to understand the pulse of the industry.
Most surprising fact- The first four month average of our index has an amazing correlation to the calendar year average of sales for the index- and can give you confidence in your decision to invest or not invest. Last year, the April report forecast that we would finish the year up 12.8 percent. We came in up 13.5 percent.
Imagine having the confidence in the early part of the year to know what to expect for sales over the course of the full year!
To take advantage of our Business Trends Sensemaking for your shop, please contact Veronica Durden. Of course, your company data will be coded and held in strictest confidence.
Recruitment
Here’s an inspirational idea for workforce recruitment. While driving back from a work errand, Miles Free noticed a powerful advertisement for workforce outside a steel company. It had a picture of a young man, with his first name and the sign said that he went from new hire to supervisor in six years. The sign probably said more, but that was the takeaway. This is a quick and impactful way to tell a story and it’s a concept that could be fashioned to work for your shop recruitment efforts.
National Technical Conference
The National Technical Conference is being held in Cleveland this April 16-18th at the Huntington Cleveland Convention Center. Networking, knowledge and “ah-ha” moments are abundant at our annual Tech Conference. Interactive speaker sessions cover relevant and dynamic topics all about precision machining. Topics range from hands-on shop floor issues through management discussions, training topics, best practices, and much more. Just as beneficial is the chance to meet and network with peers and suppliers, exchange war stories and forge new relationships during breaks, meals and receptions. Registration is open for PMPA members on PMPA.org.
PODCAST – Contrarian View on Secondary Opps
WEEKLY TIP – Drilling Checklist
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
February 3, 2023
Positive Outlook in Surgical Orthopedics
“We expect continued positive sales momentum in 2023 and for adjusted earnings to gradually improve over the course of the year.” Said their CEO, Kevin Lobo, on the latest earnings call Tuesday. Sales were up 10.7% in the fourth quarter. The company’s MedSurg and Neurotechnology sales in Q4 were $3.1 billion, up 15.6% year over year. Orthopaedics and Spine sales were $2.2 billion, up 4.3%.
Top concerns: “alleviating supply chain disruptions, inflationary risks and currency fluctuations.”
Our Take: PMPA precision machining shops are perfectly positioned to help deal with both the supply chain disruptions- and eliminating currency issues. Buy from us!
Durable Goods
“New Orders for Manufactured Durable Goods in December, up four of the last five months, increased $15.3 billion or 5.6 percent to $286.9 billion, the U.S. Census Bureau announced today. This followed a 1.7 percent November decrease. Excluding transportation, new orders decreased 0.1 percent.”
Shipments of Manufactured Durable goods in December, up nineteen of the last twenty months, increased $1.4 billion or 0.5 percent to $277.7 billion. This followed a 0.4 percent November increase. Transportation equipment, up fourteen of the last fifteen months, drove the increase, $1.5 billion or 1.7 percent to $93.8 billion.
Our take: Durable Goods Orders in 2022 were up 11.9% while PMPA Business Trends Calendar Year Sales were up 13.5%. Interestingly, the transportation connection mentioned in the official release also resonated with our Business trends activity. Total Light Vehicles assembled also increased 8.7% over year 2022.
Download the press release of the Advance Report of Durable goods from this link : https://www.census.gov/economic-indicators/
Consumer Optimism
The University of Michigan and Thomson Reuters reported that their Index of consumer Sentiment rose to 64.9 in January. This is a nine month high, though lower than desired. According to the report: “The current conditions index soared 15% above December, with improving assessments of both personal finances and buying conditions for durables, supported by strong incomes and easing price pressures.” This is a strong contrast to all of the expected economic malaise (recession, inflation, car loan delinquencies.
Our take: Interesting to see this consumer optimism report spell out “improving conditions for buying durables,” our preceding story. Link: http://www.sca.isr.umich.edu/
PODCAST – What’s on Miles’ Agenda?
WEEKLY TIP – Quality Documentation
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
January 27, 2023
New York Fed Manufacturing Index
Year-End Slump – Fed Industrial Production and Capacity Utilization
According to their latest release, “Industrial production decreased 0.7 percent in December and 1.7 percent at an annual rate in the fourth quarter. In December, manufacturing output fell 1.3 percent amid widespread declines across the sector. At 103.4 percent of its 2017 average, total industrial production in December was 1.6 percent above its year-earlier level. Capacity utilization dropped 0.6 percentage point in December to 78.8 percent, a rate that is 0.8 percentage point below its long-run (1972–2021) average.”
Manufacturing Output
“Manufacturing output fell 1.3 percent in December and moved down 2.5 percent at an annual rate in the fourth quarter. In December, the indexes for durable and nondurable manufacturing dropped 1.1 percent and 1.5 percent, respectively.”
Capacity Utilization
“Capacity utilization for manufacturing decreased 1.0 percentage point in December to 77.5 percent, a rate that is 0.7 percentage point below its long-run average.”
Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf
Our Take: We believe that these declines are not unexpected given both the typical seasonal ordering pattern of our customers and the elevated production levels that we have enjoyed all year. We consider this a normal seasonal respite, not an omen of gloom.
PPI
The Bureau of Labor Statistics just released their December PPI report. “The Producer Price Index for final demand declined 0.5 percent in December, seasonally adjusted., Final demand prices advanced 0.2 percent in November and 0.4 percent in October. On an unadjusted basis, the index for final demand increased 6.2 percent in 2022 after rising 10.0 percent in 2021.”
Link: https://www.bls.gov/news.release/pdf/ppi.pdf
Our Take: We welcome the decrease in the last two months, but the market reality is that we are paying at least 6.2 percent more for our shop essentials in aggregate according to this report.
Management Update
Today is the deadline to make hotel reservations for Management Update! Our Management Update conference in Louisville, Kentucky is February 23-26th and you don’t want to miss it. We will be at the Omni Louisville Hotel, and our special room rate is only $209, so be sure to take advantage of that low rate. This year’s Management Update conference is packed with up-to-date information and networking opportunities – including a speed networking session. Be sure to go to PMPA.org to get your hotel room and to register.
PODCAST – Training is More Than a Skills Upgrade
WEEKLY TIP – 5 Buyer Decisions
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
January 20, 2023
New York Fed Manufacturing Index
Business activity contracted sharply in New York State, according to firms responding to the January 2023 Empire State Manufacturing Survey. The headline general business conditions index fell twenty-two points to -32.9. New orders and shipments declined substantially. Delivery times held steady, and inventories edged higher. Employment growth stalled, and the average workweek shortened.
Our Take: This is the lowest Index since May of 2020 (at the start of the Covid-19 crisis.) and well below expected. The NY Fed says that firms expect little improvement in business conditions over the next six months. Good time to start to cross train your performers.
https://www.newyorkfed.org/survey/empire/empiresurvey_overview
New Book for a New Year: Reinventing the Supply Chain: A 21st Century Covenant with America by Jack Buffington
The pandemic’s shock to the supply chain should be a wake-up call…there’s been so much disruption in materials and consumer demand related to labor and inflation and geopolitics… the model is broken in comparison to what the demands are for today. The complexities related to a globalized supply chain, human systems aren’t capable of handling it. Covid wasn’t the cause of the problems with the supply chain, it was a trigger to show how bad it was.”
Why we recommend this: In his book, Buffington proposes a transformation of the global supply chain system into a community based value chain– one where our shops can take a lead as members of their value chain community, just like we did during the Covid-19 crisis.
Buy it here: https://www.barnesandnoble.com/w/reinventing-the-supply-chain-jack-buffington/1141465968
We discovered it through : https://www.cnn.com/2023/01/16/economy/supply-chain-outlook-2023/index.html
PMTS
The biggest U.S. show for precision machining is happening in Cleveland this spring. The Precision Machining Technology Show – also known as PMTS – will be held in the Cleveland Convention Center from April 18-20. The halls will be filled with the new technology solutions and attendees can learn about process innovations – everything you need to take back and immediately put to use in your own shop. Registration is open on PMTS.com.
WEEKLY TIP – Dimensional Contraction of 17-4 PH Stainless Steel
Final Cut of the Week Videos from 2022
PMPA shares important precision machining information you may have missed while you were making essential parts.
January 13, 2023
NFIB
NFIB Small Business Optimism Index
The National Federation of Independent Business reported Wednesday that its Small Business Optimism Index “declined 2.1 points in December to 89.8, marking the 12th consecutive month below the 49-year average of 98.”
Owners surveyed expected business conditions to worsen – dropping to a net negative of 51%. Inflation, not workforce, was cited as the single most important problem they face.
Workforce prospects remain elevated, according to NFIB, as 55% of owners reported hiring or trying to hire in December.
Employment & Job Openings
Manufacturing Employment in Manufacturing increased in December – non farm employment up 233,000, as the unemployment rate (U-3) edged down to 3.5 percent, according to the Bureau of Labor Statistics (BLS). Over the month, employment in manufacturing changed little (+8,000), as job gains in durable goods (+24,000) were partially offset by losses in nondurable goods (-16,000). In 2022, manufacturing added an average of 32,000 jobs per month, little different than the average of 30,000 jobs per month in 2021. https://www.bls.gov/news.release/pdf/empsit.pdf
Manufacturing Job Openings There were 779,000 manufacturing job openings in November, averaging nearly 837,000 over the past 12 months and remaining well above pre-pandemic levels. Seasonally adjusted, the rate (openings on the last business day of the month divided by total employment plus job openings) was up 0.4 percent at 5.7 percent. Total hires came in at 402,000 while separations logged 393,000.
For those interested, Durable goods manufacturing openings were 498,000, non-durable goods openings 281,222.
Employment opportunities, as measured by job openings remain well above pre-pandemic levels. https://www.bls.gov/news.release/pdf/jolts.pdf
Manufacturing New Orders
Manufacturing New Orders for manufactured durable goods in November decreased $5.8 billion or 2.1 percent to $270.6 billion, the U.S. Census Bureau announced today. This was a change from the three consecutive monthly increases, (it followed a 0.7 percent October increase.) Excluding transportation, new orders increased 0.2 percent. Excluding defense, new orders decreased 2.6 percent. Transportation equipment, down following three consecutive monthly increases, drove the decrease, $6.1 billion or 6.3 percent to $91.3 billion. https://www.census.gov/manufacturing/m3/adv/current/index.html
PODCAST – Management Update Primer
WEEKLY TIP – Training is More Than A Skills Upgrade
PMPA shares important precision machining information you may have missed while you were making essential parts.
January 6, 2023
Manufacturing Rebound in Q3
According to Chad Moutray at NAM,“…the U.S. economy rebounded in the third quarter, expanding 3.2% at the annual rate. Manufacturing contributed $2.81 Trillion to the US in the 3rd quarter. Despite the improvement in activity in the third quarter, significant downside risks remained in the economic outlook, with the risk of a recession elevated.”
Moutray added that the current forecast “is for real GDP to increase 2.0% in 2022 on an annual basis, with 1.1% growth in 2023.”
– source Chad Moutray, Monday Economic Report
Link to BEA GDP Third Estimate: https://www.bea.gov/sites/default/files/2022-12/gdp3q22_3rd.pdf
Durable Goods
New orders for manufactured durable goods in November, down following three consecutive monthly increases, decreased $5.8 billion or 2.1 percent to $270.6 billion in November. But excluding transportation equipment, new durable goods orders actually increased 0.2% from $179.0 billion to $179.3 billion.
Link: https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Our take: Despite the negative press, the manufacturing economy is continuing to be productive. Despite all the wringing of hands about a forthcoming recession, and the softening of demand in transportation, the experts look for over 2% growth in US GDP in 2022, and over 1% for 2023. It could be MUCH worse!
PODCAST – Manufacturing Positivity
WEEKLY TIP – State of Manufacturing