Perhaps distance and perspective give them clarity.
We follow the ISM Manufacturing Index as an input for our sensemaking as to what is going on in Precision Machining. PMPA’s own Business Trends Report has shown sales in our industry to be recovering. So as we were considering the latest ISM Manufacturing Report, we came across this story from the Financial Post.
The U.S. manufacturing sector grew in October at its fastest pace since April 2006, according to the Institute for Supply Management. The ISM’s manufacturing index climbed to 55.7 from 52.6 in September. This is the third consecutive monthly reading above 50. BElow 50, the index indicates contraction in manufacturing, the line that divides expansion and retrenchment. Also unexpectedly, hiring plans in the beleaguered sector turned positive for the first time in more than a year.
Some economists say they were most encouraged by the signs of hiring in the sector. The employment index surged to 53.1 from 46.2. However PMPA’s survey of members showed that plans to add or recall workers were still nascent, and very dependent on further increases of orders.
According to PMPA’s respondents, “A further 50% increase in sales will result in in the majority of the precision machining industry’s laid off employees being recalled from layoff. A 25% increase is said to be likely to lead to the recall of about 39% of workers on layoff.”
The US, EU and Mexico have just (2 hours ago) jointly made a formal request to the WTO for a dispute-settlement panel to address China’s export restraints on a number of raw materials of interest to our precision machining industry. Bloomberg coverage here.
Raw materials such as
coke ( used in steel),
zinc (used in brass),
bauxite (aluminum ore),
fluorspar (steelmaking slag conditioner),
manganese (steelmaking ingredient),
silicon metal (steelmaking deoxidizer),
silicon carbide (desulfurizer)
These are among the materials listed in the filing. These are important (essential!) ingredients into the steel and metallic raw materials our industry consumes. We remember reading about this as an emerging concern in June in the Globe and Mail.
The economic issue is that this “resource hoarding” results in artificially lowered cost for these raw materials in China and in effect becomes a subsidy for those manufacturing operations that China deems “strategic.” While at the same time making these materials more difficult (and Expensive) to obtain for non Chinese companies.
“Peace” according to Ambrose Bierce, in The Devil’s Dictionary, “in international affairs is a period of cheating between two periods of fighting.” I think that this is a particularly useful perspective in this situation.
“Diplomacy,” according to my 8th grade History teacher, Mrs. Abernathy, “is war by other means.”
Our industry, the EU, Mexico, and the United States- all of us are certainly looking forward to some diplomatic success.
The panel is expected to be convened Nov. 19th.
Steel loading Photo via Globe and Mail originally Shanghai Reuters. Earth photo credit: NASA.