Category Archives: Metals MFG Outlook

Metal & MFG Outlook Newsletter April 2015

Presented by All Metals & Forge Group, the MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. Today, Metals & Manufacturing Outlook™ (formerly MetalsWatch!) has a global circulation of 85,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding, amongst many others. Feel free to read the most current issue below, or Click here to view the back issues in our Library at the bottom of the page. To Subscribe to Metals & Manufacturing Outlook™ and receive future issues, please enter your e-mail address and click on Subscribe.

I. Cover Story: WORLD RECOVERING FROM GLOBAL GLOOM
II. NORTH AMERICAN PERSPECTIVE
III. U.S. FORGING INDUSTRY
IV. MANUFACTURING TALK RADIO
V. EUROZONE
VI. ASIA OUTLOOK
VII. SOUTH AMERICA
VIII. THE MANUFACTURING SCENE
IX. THE FINAL WORD


Publisher’s Statement

The economies of several countries and regions around the world are on the up-tic with the U.S. leading the way despite per barrel oil prices in the 50’s and likely to stay below the 70’s for several more months – if it gets there.

The International Longshoreman and Warehouse Union delegates voted in favor of recommending the tentative five-year agreement with waterfront employees to the rank-and-file members. Acceptance of this agreement would be the first step in clearing up the chaos resulting from this long-term disruption but East coast ports continue to see increases in container volume as West coast ports lose volume, particularly ports in southern California.  However, importers and exporters who don’t have to ship through the West coast ports are weighing their options and shifting their cargo to the Gulf States and Eastern ports.  Next year when the Panama Canal opens to the large container vessels, additional cargo volumes may float into the Gulf while West coast volume follows its historical pattern of the last 10 years of losing business. And now there is a new brouhaha about port operators charging excessive and unsubstantiated fees in the face of the port slowdown, so it appears both sides may have been gold-digging in the self-created crisis.

The Consumer Confidence Index® which got a chill in February and warmed in March isn’t moving dramatically in either direction for the U.S. as some industries recover and others are sluggish. The most notable exception has been aerospace which has been on a steady growth curve for over a decade, with 40,000 commercial aircraft anticipated to be built over the next 20 years. Keep in mind that once built, an aircraft needs to be maintained and may fly for 20 to 40 years, so aircraft support services will be booming for decades as new planes come into service and older planes stay in service as long as fuel prices remain low.

Another key component of economic growth, the transition of the workforce from gray hairs to fair hairs, is driving dynamics new cooperation between education and industry, especially in engineering and machinery operations. In less than a decade, virtually every machine on factory floors will be Internet-connected, feeding data into corporate systems where it will be crunched and analyzed for process improvements and profitability tweaks. Hand-held devices are the new desktop computers with the advantage that they can be used within eyesight of the machines they control so a change on the hand-held will be immediately seen and measured.

All these topics are discussed on Manufacturing Talk Radio in its regular Tuesday show at 1:00 p.m. ET; more on that in Section IV of this newsletter.  Shows can also be heard at www.mfgtalkradio.com where our library of previous episodes also exists.

Enjoy this issue of Metals & Manufacturing Outlook.

Sincerely,
Lewis A Weiss
Publisher

 

I. COVER STORY:  WORLD RECOVERING FROM GLOBAL GLOOM

Global Economy

The US and the UK economies are still, to date, looking in good shape, but from some quarters we hear doubts as to how long they will stay that way.

Canada slipped further, but there is light at the end of this tunnel. Brazil is falling further into the proverbial quagmire. China and Japan both slipped a little, and there are some worries, short-term at least, for both economies.

India’s Prime Minister Modi has come out fighting, saying now that India has beaten the US in steel production he’s going after China. That’s quite a challenge he’s set himself and his country.

The news from Europe is a little more promising, but optimism may have to wait for a couple more months.

The PMI figure from the Institute of Supply Management was at 51.5 percent in March, down 1.4 percentage points from February’s 52.9 percent. This represents manufacturing expansion for the 27th  consecutive month and growth in the overall economy for the 70th consecutive month.

On the other hand, the Markit PMI for the US manufacturing sector was up to 55.3 percent in March, slightly higher than February’s 55.1figure. Markit cited the sharpest rise in production since September 2014 and new orders increasing at the fastest pace for five months. Manufacturing employment was up in March, whereas there was a slight fall in export orders. Input costs were down for the third consecutive month.

The Bureau of Economic Analysis came out with its ‘third’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2014, placing it at 2.2 percent, the same as its second estimate.

The Dun and Bradstreet Economic Health Index for March showed that 262,000 new non-farm jobs were added to US payrolls in the month, with the business services segment continuing to lead, but real estate services stagnant. Small business health showed a slight improvement of 0.1 percent.

The conclusion from D and B is a ” still stuttering economy, highlighted by key bright spots in specific segments.”

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI  was at 48.9 percent in March, virtually unchanged from February’s 48.7 reading. This represents the second consecutive month below the 50 reading, and the first back-to-back deterioration in overall business conditions in this survey’s 4.1/2 year history.  This further drop in business conditions in the Canadian manufacturing sector in March was somewhat tempered by the fact that the rate of contraction moderated somewhat from February’s record survey low. Production, New Orders and Employment all fell at slower rates than in February, while manufacturers lived through slimmer order books, forcing inventory reductions and concerns about future demand.

Canada’s crude steel output for February 2015 was 1.04 Mt, a 5.6 percent y-o-y increase.

Canada saw a further increase in light vehicle sales in March,     albeit at a more moderate pace than in the previous few months.  Sales were up 1.9 percent to 160,274 units, with increases for     FCA Canada, Volkswagen and Nissan, and decreases for Ford,  General Motors, Ford and Honda.

Mexico saw its manufacturing PMI ease a little from February’s  54.4 percent, to 53.8 percent in March. The manufacturing sector experienced the slowest improvement in business for five months, while production growth slowed for the second consecutive month in  March. Job creation was up for the eighth consecutive month, and in fact its rate increased to its second fastest since October 2012.

Mexico produced 1.465 Mt of crude steel in February 2015, an 8.1 percent y-o-y decrease.

World crude steel production for the 65 reporting countries for the month of February 2015 was 128Mt, up 0.6 percent from the February 2014 figure. The capacity utilization ratio, at 73.4 percent, was down 1.7 percent y-o-y, but up 3.8 percent on January 2015.

US crude steel production, for February 2015 was 6.9Mt, down 7.9 percent y-o-y.

Primary Global Aluminum Production in February 2015 was 4.204 million tonnes. Of this total, 2.203 million tonnes, or just over  52 percent, was produced in China. The second largest player on the global aluminum scene is the Gulf Cooperation Council, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). In February 2015 they produced 389,000 tonnes of primary aluminum, compared with the 350,000 tonnes produced in North America.

Here are the latest figures for US new car and light truck sales for ‘the big eight’ for March 2015. These figures, ex the Wall Steeet Journal, include sales of both domestic and import cars and light trucks. The SAAR figure is now running at  just over 17 million vehicles for the year 2015.

The ‘Big Eight’ March ’15 March ’14 YTD % change
General Motors 249875 256047 -2.4
Ford 234788 243417 -3.5
FCA US LLC 192694 189177 1.9
Toyota 225959 215348 4.9
Honda 126293 133318 -5.3
Nissan 145085 149136 -2.7
Hyundai/Kia 133790 121782 9.9
Volkswagen 30025 36717 -18.2
Total new cars and light trucks 1545802 1537288 0.6

II. NORTH AMERICAN PERSPECTIVE


North America USAThe Institute of Supply Management PMI figure registered 51.5 percent in March, 1.4 percentage points below February’s 52.9 percent reading, representing expansion in manufacturing for the 27th  consecutive month and growth in the overall economy for the 70th consecutive month. Ten of the eighteen industries reported growth in March, in order, Paper Products; Wood Products; Transportation Equipment; Fabricated Metal Products; Nonmetallic Mineral Products; Machinery; Chemical Products; Primary Metals; Food, Beverage & Tobacco Products; and Computer & Electronic Products. Seven industries reported contraction in March, namely Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; and Furniture & Related Products.

Comments on the month from the manufacturing sector are still stressing the effects of the west coast port strike, which has been joined by energy prices, the winter weather, and the strengthened  dollar.  The Fabricated Metal Products, Transportation Equipment and Food, Beverage & Tobacco products sectors come through as particularly bullish.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.

  1. The ISMNew Orders Index for March, at 51.8 perccnt, was down by 0.7 percentage points from February’s 52.5 percent reading, representing growth in new orders for the 28th consecutive month. Nine industries reported growth in new orders in March, including, in order, Wood Products; Paper Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Chemical Products. Eight  industries showed a decrease in March, including, in order, Petroleum & Coal Products; Miscellaneous Manufacturing; Electrical Equipment, Apppliances & Components, Primary Metals; and Plastics & Rubber Products.
  1. The ISM Production Index, at 53.8 percent in March, was effectively unchanged from February’s 53.7 percent reading. This represents growth in production for the 31st consecutive month. Growth was noted in nine industries, including, in order, Paper Products; Transportation Equipment; Fabricated Metal Products; Chemical Products; Primary Metals; and Machinery. Five industries reported a decrease in production in March, namely Printing & Related Support Activities;  Leather & Allied Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; and Plastics & Rubber Products.
  1. The ISM Employment Index for March, at 50.0 percent, is down 1.4 percentage points from February’s reading of 51.4 percent. This follows 21 consecutive months of increase in the employment index. Growth was reported in seven industries, namely, Printing & Related Support Activities; Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Machinery; and Plastics & Rubber Products. The seven industries reporting a decrease in employment in March are: Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.
  1. The ISMSupplier Deliveries Index – to manufacturing organizations – slowed in March at a slower rate as the Supplier Deliveries Index registered 50.5 percent, or 3.8 percentage points lower than February’s 54.3 percent reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Slower supplier deliveries were noted in 11 industries in March including, in order, Textile Mills; Wood Products; Plastics & Rubber Products;   Transportation Equipment; Machinery; Fabricated Metal Products; and Chemical Products. Faster supplier deliveries in March were noted in four industries namely Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; and Paper Products.
  2. The ISM Inventories Index, at 51.5 percent for March, is 1.0 percentage points lower than the 52.5 percent reading for February, indicating a growth in raw materials inventories for the third consecutive month. Eight industries reported higher inventories in March including, in order, Primary Metals; Machinery; Chemical Products; and Transportation Equipment. Five industries reported lower inventories in March, including Plastics & Rubber products; Textile Mills; and Paper Products.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

  1. The ISM Customers’ Inventories Index, registered 45.5 percent in March, 1.0 percentage points lower than February’s 46.5 reading, meaning that customers’ inventories are considered to be too low, and lower than February’s.Three manufacturing industries showed too high customers’ inventories in March, namely Electrical Equipment, Appliances & Components; Primary Metals; and Food, Beverage & Tobacco Products. Eight industries reported too low customers’ inventories in March, namely Transportation Equipment; Paper Products; Furniture & Related Products; Plastics & Rubber Products; Machinery; Chemical Products; Computer & Electronic Products; and Fabricated Metal Products.
  1. The ISM Prices Index registered 39 percent in March, 4.0 percentage points higher than in February, indicating a decrease in raw material prices for the fifth consecutive month. In March 10 percent of respondents reported paying higher prices, 32 percent reported paying lower prices and 58 percent reported paying the same prices as in February. Two  industries reported paying higher prices in March, namely Food, Beverage & Tobacco products; and Computer and Electronic products. Fourteen industries reported paying lower prices, namely  Paper Products; Petroleum & Coal Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Textile Mills; Fabricated Metal Products; Machinery; Furniture & Related Products; Plastics & Rubber Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; and Primary Metals.

Up in Price in March were:

Dairy; Gasoline; Polypropylene Resin; and Steel — Hot        Rolled*.

Down in Price in March were:

Aluminum (4); Carbon Steel (3); Copper (8); HDPE Resin (4); Nickel (3); Oil (4); PET Resin (5); Plastic Resin (4); Scrap Steel (4); Stainless Steel (5); Steel (4); Steel — Cold Rolled; and Steel — Hot Rolled (5)*.

In Short Supply in March:

The only commodity listed in short supply during March is Trucking Services.

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

  1. The ISM Backlog of Orders Index was at 49.5 percent in March, 2.0 percentage points lower than February’s 51.5 percent reading, representing a contraction in order backlogs after one month’s expansion. Of the 84 percent of respondents reporting, 18 percent reported greater backlogs, 19 percent reduced backlogs and 63 percent reported no change from February. Six industries reported increased order backlogs in March, namely, in order, Wood Products; Fabricated Metal Products; Machinery: Nonmetallic Mineral Products; Chemical Products; and Transportation Equipment. Nine industries reported reduced backlogs in March, namely, in order, Textile Mills; Plastics & Rubber Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Paper Products; Food, Beverage & Tobacco Products;  Furniture & Related Products; Computer & Electronic Products; and Primary Metals.

4 The ISM New Export Orders Index at 47.5 percent for March is 1.0 percentage points down on February’s 48.5 percent reading. The month’s reading represents three months of contraction in exports following 25 consecutive months of growth. Five industries reported an increase in New Export Orders in March, namely Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; and Miscellaneous Manufacturing.  Eight industries reported a decrease in New Export Orders in March, namely Textile Mills; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Transportation Equipment; Paper Products; and Chemical Products.

  1. The ISM Imports Index, at 52.5 percent in March, is 1.5 percentage point down on February’s 54.0 percent reading. This represents the 26th consecutive month of growth in imports. Eight industries reported an increase in imports in March, namely, in order, Textile Mills; Primary Metals; Machinery; Miscellaneous Manufacturing; Transport Equipment; Chemical Products; Computer & Electronic Products; and Furniture & Related Products. Five industries reported a decrease in imports in March, namely, Nonmetallic Mineral Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Food, Beverage & Tobacco Products.

 

III. US FORGING INDUSTRY


forged-shapes MSC Software, based in Newport Beach, California,whose ‘motto’ is Simulating Reality, Delivering Certainty, makes products that enable engineers to validate and optimize their designs using virtual prototypes. Customers in many sectors of manufacturing use their software to complement, and in some cases even replace, the physical prototype “build and test” process that has traditionally been used in product design. It is involved, among others, in the automotive, aerospace, shipbuilding and electronics industries. MS

C, founded in 1963, recently acquired Simufact Engineering, based in Hamburg, Germany, a global provider of metal forming and joining simulation software and related services to manufacturing industries. Simufact.forming and Simufact.welding are process simulation tools used by aerospace and automotive industries, their parts and materials suppliers, and OEMs to realize savings by cutting back on in-house trials of their manufacturing processes. Simufact has developed processes including hot forging, rolling, ring rolling, open-die forging and heat treatment.

 

IV.  MANUFACTURING TALK RADIO


mfgtalkradio1steelforgeAs more listeners tune in each Tuesday at 1:00 p.m. ET, Manufacturing Talk Radio broadcasts breaking news, industry trends and economic forecasts in lively panel discussions with experts from the shop floor to the top floor, association executives, analysts and pundits. Between the live broadcast and podcast downloads from the archive, the show is now attracting thousands of listeners each week.

On March 3rd, Dr. Chris Kuehl, noted economist who works closely with the Fabricators and Manufacturers Association International (FMA) joined ISM’d Brad Holcomb, committee chair of the well-respected Report on Business® to discuss what the economy looked like in manufacturing in February and how it might roll out for the balance of the year.  Each month, Mr. Holcomb joins co-hosts Lew Weiss and Tim Grady to dive into the detail of the ISM’s report, reflect on previous months, and touch on the ISM annual forecast.

Be sure to tune in on Tuesday, May 5th to hear Brad Holcomb’s update of the ISM’s 2015 Forecast that will be released that morning. You can also go to www.mfgtalkradio.com to see a schedule of guests who will be on the air with Lew Weiss and Tim Grady as they broadcast from the ISM’s 100th Anniversary show in Phoenix, AZ.

On March 10th, Lew and Tim interviewed three of the winners of the ’30 Under 30 Rising Supply Chain Stars’ program co-sponsored by ISM and ThomasNet.  Additional supply chain rising stars will be interviewed at the ISM’s 100th Anniversary show in Phoenix, AZ. Dates and times have not been set, so be sure to go Manufacturing Talk Radio’s website to find out when to tune it to catch the latest live show.

On March 17th, Lew and Tim dove into a discussion with Terry Wohlers, President of Wohlers Associates Inc. in a primer about 3D Printing and Advanced Manufacturing.  This is a fascinating old technology that has been around since the 1960’s but is blossoming now. It is already being used in many industries, especially for rapid prototyping and creation of obsolete parts, as well as replacement parts that were originally made by the thousands but where the need is now only a handful. Printers have come down so far in price that they are appearing in many schoolrooms at the high school level. This is the new ‘shop class’ of days gone by. Instead of woodworking or engine repair, students are designing prototype parts or printing gadgets for class projects. Commercial printers are using many mediums, including plastic, metal and glass. Listen to the show to learn more at http://mfgtalkradio.com/3d-printing-is-it-the-key-to-making-manufacturing-in-america-successful-again/

On March 24th, Manufacturing Talk Radio welcomed experts in exporting and importing talk about the incredible top-line and bottom-line potential for America’s manufacturers to export their goods to new customers around the world. Made in America still carries the credibility of quality globally, so manufacturers in the U.S. should seize that marketing advantage and begin the process of developing a new revenue stream for their business. The Department of Commerce’s Export Assistance Center is one place to start, as well as the Industry Resources section of mfgtalkradio.com.

On March 31st, the live show covered the aerospace industry in the Northeast, the first in a four-part series on aerospace across the country.  April and May will cover the Southeast, the Northwest and the West.  These in-depth panel discussions are full of information for aerospace and every conceivable supply to the industry.  Be sure to listen to the entire series if you have customers or potential customers in aerospace for your business.

Become one of the thousands of listeners each week who keep abreast of the manufacturing industry by listening to the live broadcast or podcasts at www.mfgtalkradio.com.

V. EUROZONE


euro-zoneMarkit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for March was up at 52.2 percent from February’s 51.0 reading, a 10-month high. Growth of Eurozone manufacturing was also at a 10-month high, and accompanies an increase in growth in Germany, Spain, Italy and the Netherlands. In March the Eurozone saw the fastest expansion in new orders since April 2014, and companies raised employment at the fastest pace for over 3-1/2 years. France, Greece and Austria continue to struggle, although France and Greece did see their respective contraction rates ease during the month of March. Export performance in the eurozone – undoubtedly helped by the weak euro – was at its best since April 2014. The ongoing job creation suggests optimism that the improvement noted in March will be maintained. Some country PMIs are shown in the table, with last month’s PMIs in parentheses.

PMI High/low
Ireland 56.8 (57.5) 2-month low
Spain 54.3 (54.2) 2-month high
Italy 53.3 (51.9) 11-month high
Germany 52.8 (51.1) 11-month high
Netherlands 52.5 (52.2) 2-month high
Greece 48.9 (48.4) 3-month high
France 48.8 (47.6) 2-month high
Austria 47.7 (48.7) 4-month low

 

Crude steel production in Germany in February 2015 was at 3.5Mt, down 1.6 percent y-o-y; in Italy 2.0Mt down 9.7 percent y-o-y; in France 1.3Mt, down 1.6 percent y-o-y and in Spain 1.1Mt, down 4.4 percent y-o-y.

Russia’s crude steel production for February, at 5.7Mt, was up 5.6 percent y-o-y while Ukraines’s was 1.6Mt, down 33.2 percent y-o-y.

Western European car sales continue to show good gains, with Germany’s sales up 9 percent last month to 323,029 units. France’s up 9.3 percent to 196,572 units, Italy’s up 19 percent to 161,303 units and Spain’s, still on a scrappage program, up 41 percent to 112,299 units. The four countries are optimistic about the automotive industry for the near future.

The UK saw its Markit PMI move up to 54.4 percent in March from February’s 54.1 figure. Things are ticking along nicely, with production and new orders showing nine-month highs. Demand is mostly for domestic consumer goods, but some improvement in exports was noted in March. It was noted that some suppliers are struggling to keep pace with production demands, adding weight to recent claims that productivity in the UK leaves something to be desired.

The JP Morgan Global Manufacturing PMI – a composite index produced by JP Morgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – was at 51.8 in March, very slightly down from February’s 52.0 figure, showing the Global manufacturing sector expanding for the 28th consecutive month.

VI ASIA OUTLOOK

china Crude steel production in Asia for February 2015 was at 87.3Mt, with China producing 65.9Mt, up 3.2 percent y-o-y; Japan 8.2Mt down 0.2 percent y-o-y; India 6.9Mt, up 5.6 percent y-o-y and  South Korea 5.10Mt, down 4.4 percent y-o-y. Taiwan produced 1.79MT in February, up 2.2 percent.

The HSBC China manufacturing PMI for March took a dip from February’s reading of  50.7 back to 49.6 percent. Operating conditions in the manufacturing sector took a backward turn as production growth eased and total new orders declined slightly. Employment layoffs intensify with company downsizing, and a job shedding rate at its highest since summer 2014.

Domestic and export demand remain subdued under weak market conditions.

In February 2015, 1.4 million passenger cars and 200,000 commercial vehicles were sold in China. This represents a 6.4 percent increase in sales over February 2014. For the two months, January and February 2015, 3.4 million cars and 480,000 commercial vehicles were sold. Chinese brand SUVs saw a 94.7 percent increase in February to 187,000 units, whereas Chinese brand sedans declined to 174,000 vehicles.

In Japan, the Markit manufacturing PMI is at 50.3 percent in March, down from February’s figure of 51.6 percent. The month saw production easing back following February’s significant improvement. Some respondents experienced a stronger export demand, but in general there was a slight decrease in total new orders.

India’s manufacturing (HSBC) PMI picked up from February’s  51.2 percent reading to 52.1 percent in March. The month saw significant growth in production and a stronger increase in new orders. Production rose for the 17th consecutive month.

The capacity of many manufacturers’ operations is a cause for concern, with unfinished work increasing for the 32nd consecutive month in March and at a faster pace than in February.

Employment has not changed for 14 months, but if new orders and work backlogs continue to increase – as they probably will  – there should be an upturn in employment in the coming months.

VI  SOUTH AMERICA

south-americaBrazil’s crude steel production for the month of February 2015 was 2.7Mt, a 2.3 percent y-o-y increase.

The  manufacturing PMI in Brazil dropped further from February’s  49.6 reading to 46.2. The month saw the most severe contraction in Brazilian manufacturing production for 3.1/2 years. The whole situation is aggravated by general economic conditions, a high inflation rate and a weak real, the latter leading to high import costs and an underlying inability to be globally competitve. Hence there is no increase in export orders, despite the weak real. There has been a sharp drop in new orders and the greatest drop in employment since July 2012.

The outlook for Brazilian manufacturing in the short term is not good.

VII  THE MANUFACTURING SCENE : WHO IN THE WORLD’S MAKING WHAT? or ”FACTORY ASIA”, THE WORLD’S WORKSHOP.

Asia OutlookA Rolls Royce factory in Indianapolis produces ”LiftFans”, gadgets that help fighter planes take off and land without needing much of a runway. The plant is not at all the hot, smelly, noisy place that people   associate with manufacturing. Workers wearing nice clean uniforms and goggles hand assemble the LiftFans-which sell for small fortunes, helped by state-of-the-art machinery. This is an example of a product coming out of one of the US’s most impressive manufacturing facilities.

In faraway Myanmar, in Southeast Asia, women sit at sewing machines stitching sweater arms to bodies and attaching labels. The facility is Chinese run and is just one case in many where manufacture has been transferred from China to other parts of Asia.

Asia started its impact on world trade back in the 1960s when Japan, followed by Taiwan and South Korea, started exporting electronics and consumer goods. By the 1980s Japanese firms were building plants across Southeast Asia. But it was China that had the biggest impact. Back in 1990, China produced, in value terms, almost 3 percent of global manufacturing output. Today it produces almost 25 percent. China produces about 80 percent of the world’s air-conditioners, 70 percent of its cell phones and 60 percent of its shoes. China’s preponderance on the manufacturing scene has been responsible for the setting up of supply chains that penetrate deep into Southeast Asia. This ”Factory Asia” now makes almost half the world’s goods.

China has excellent infrastructure that’s getting better. It plans to build ten new airports a year until 2020.

China’s economy is not as strong as it was, with an over-supplied property market, rising debt and a  government growth aim of only 7 percent this year, which would be its lowest for over two decades. This isn’t going to stop China being the manufacturing powerhouse it is. China built its position on cheap labor and a willingness to manufacture just about anything that could, at the time, be exported or become a part of some other product that could be exported. In 1990, Asia as a whole accounted for 26.5 percent of global manufacturing output, and by 2013 this was up to 46.5 percent. Today China accounts for half of Asia’s output. In the past it was primarily involved in assembly, with the more profitable design and marketing aspects of the operation being left in the West and Japan. As recently as 2010 a study found Chinese workers contributing just 3.6 percent to the cost of an Apple Iphone. China is presently having more of a say in design and early production, as witnessed, for example, by Xiaomi, its smartphone giant.

Wages have risen appreciably in China, by an average of 12 percent a year since 2001, but are still appreciably less than those in the richer parts of the world. Many companies pay their employees just above the minimum wage, or about $270 per month. And Chinese factories are more efficient than most in the developing world, with larger increases in productivity than seen in other parts of Asia. China is a huge market for robots, and bought 20 percent of all those made in 2013, but it still has just 30 robots per 10,000 workers, compared with over 300 in Japan. Hence the huge potential in the Chinese market for robot manufacturers, and for productivity improvements in China.

Firms are chasing lower wages deeper into China, away from the relatively expensive coastal areas. These decreased costs, together with a supply chain stretching across Southeast Asia, ensure a secure future for both China and Southeat Asia.

China is involved more and more in Advanced Manufacturing, (involving lots of science), and as such has let a lot of its ‘less technical’ work go to other parts of Southeat Asia, some of whose member countries, Vietnam, Thailand  and Indonesia for example, have taken up electronics work themselves.

No one country will replace China in the foreseeable future, and with a tight supply chain and increasing domestic consumption, China will continue in its role as the world’s number one manufacturer.

Meanwhile, back in the USA, things could be a lot better on the manufacturing front, and a hoped-for reform to the tax system, as suggested in the 2015 Economic Report of the President, would be a good starting point, as would more government money in research and development. No one doubts the US ability to provide high quality manufactured goods, as no one can deny the hit that the US manufacturing industry took from Chinese imports, starting in the nineties. The whole concept (of manufacturing) needs to trickle down to schools and colleges.

China is in the driver’s seat and it will take a lot of hard work on each and everyone’s part, to unseat it. Factory Asia is here to stay.

Thanks to The Economist for most of the facts and figures in this article.

Correction, to March Manufacturing Scene article: Line 1 states that Advanced Manufacturing is 3D printing: in fact  Additive Manufacturing is 3D Printing.

The first line of the penultimate paragraph states that North American Welding is Advanced manufacturing. It should of course state American Forging.  Apologies for these errors.

THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.  The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

DATA FOR TAIWAN HAVE BEEN SUBSTITUTED FOR THOSE FOR ARGENTINA.

 

GDP Indl Prodn Cons prices Unemployt
United States +2.2 (qtr) +3.5 (Feb) nil (Feb) 5.5 (Feb)
Canada +2.4 (qtr) +4.1 (Jan) +1.0 (Feb) 6.8 (Feb)
China +6.1 (qtr) +6.8 (Feb) +1.4 (Feb) 4.1 (Qtr 4)
Japan +1.5 (qtr) -2.6 (Feb) +2.2 (Feb) 3.5 (Feb)
Britain +2.5 (qtr) +1.2 (Jan) nil (Feb) 5.7 (Dec)
Euro Area +1.3 (qtr) +1.2 (Jan) -0.1 (Mar) 11.3 (Feb)
France +0.5 (qtr) + 0.6 (Jan) +0.3 (Feb) 10.6 (Feb)
Germany +2.8 (qtr) +0.8 (Jan) +0.3 (Mar) 6.4 (Mar)
Spain +2.7 (qtr) +2.0 (Jan) – 0.7 (Mar) 23.2 (Feb)
India + 4.0 (qtr) +2.6 (Jan) + 5.4(Feb) 8.8 (2013)
Brazil + 1.3 (qtr) – 5.2 (Jan) + 7.7 (Feb) 5.9 (Feb)
Taiwan +4.8 (qtr) +3.3 (Feb) – 0.2 (Feb) 3.7 (Feb)
Mexico + 2.7 (qtr) + 0.3 (Jan) + 3.0 (Feb) 4.5 (Feb)

 

VIII THE FINAL WORD


economicPic The US and the UK economies are still doing pretty well. The Chinese and Japanese economies are going through periods of correction, whereas India’s is presently on the up. Europe came out of the doldrums in March and a few months of forward progress seem to be in the cards.

  • It is hoped that the tentative agreement on the West Coast port situation will be accepted by the rank-and-file and that the job of clearing the port congestion will proceed in an orderly fashion.
  • GALLUP’s USEconomic Confidence Index averaged -4 forthe last full week of March, a reading similar to most weekly readings since late February, but below those from December to mid-February.  The Job Creation Index stayed at +29 in the month of March, where it has been for several months, albeit at the upper end recorded by Gallup since 2008.

Still optimistic, but a little caution might be creeping in.

[su_post field=”post_content” post_id=”6173″]

Metals and Manufacturing Outlook Newsletter March 2015

Presented by All Metals & Forge Group, the MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. Today, Metals & Manufacturing Outlook™ (formerly MetalsWatch!) has a global circulation of 85,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding, amongst many others. Feel free to read the most current issue below, or Click here to view the back issues in our Library at the bottom of the page. To Subscribe to Metals & Manufacturing Outlook™ and receive future issues, please enter your e-mail address and click on Subscribe.

 

I. Cover Story: CELTIC BOOM, GALLIC GLOOM
II. NORTH AMERICAN PERSPECTIVE
III. U.S. FORGING INDUSTRY
IV. MANUFACTURING TALK RADIO
V. EUROZONE
VI. ASIA OUTLOOK
VII. SOUTH AMERICA
VIII. THE MANUFACTURING SCENE
IX. THE FINAL WORD

Publisher’s Statement:

There is lots of good news across America as the economy continues to steam along.  The February jobs report of 295,000 hires is an eye-popping number as the ISM’s Purchasing Managers Index floats above 50 in economic growth territory month after month.

The rest of the world – not so good.  Russia’s economy is in recession and in real trouble.  The government built their revenues on crude oil at $100 a barrel; at $50 a barrel it is hemorrhaging cash reserves.  While Russia has lowered its key interest rate to 15% after reaching an all-time high of 17% in December 2014, China has lowered its interest rate to stimulate its economy.

There are pockets of progress in Europe but nothing is sweeping the EU.  The strong dollar has created some buying opportunities for U.S. manufacturers importing from Europe or Asia.

The Middle East continues to self-destruct economically with OPEC keeping production high, Iraq, Syria and Iran embroiled with the creep of ISIS, Libya still unstable after the fall of Gadhafi, the Ukraine in its was with Russia, the collapse of Yemen’s government and whatever conflict may arise tomorrow or next week in an area of the world that has not seen lasting socio-economic peace since the time of the pharaohs.  Fortunately, no single economy there has much impact on the global economy in dollars and cents, but the troubled land is always a concern for neighbors near and far.

So, we encourage you to focus on your business in America.  Look into exporting now so when the dollar weakens or other currencies strengthen, you will be ready to implement a new revenue stream for your company.  Don’t bank on U.S. consumers going on a spending spree; money they are saving on those lower gas prices is being used for savings or to reduce debts, not DIY projects or new appliances.  But spending is strong, production is strong, and there is an advantage to source quality raw materials from overseas to reduce costs here at home.

Sincerely,

Lewis A. Weiss
Publisher

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I. COVER STORY:  CELTIC BOOM, GALLIC GLOOM 

End of the RainbowThe US and the UK economies are looking in good shape. There is a tentative agreement in the west coast port strike. Canada is slipping, not helped by lower oil prices. China and Japan are doing pretty well, as is India – in spite of a slight downward blip in its PMI reading.

The news from Europe is anything but exciting, but the Irish PMI moved to a 15-year high, while France once again found its place at the foot of the major eight Eurozone economies’ table.

Nor is news good from Brazil, where the world’s seventh-biggest economy is undergoing a corruption scandal at Petrobras, the state-controlled giant oil company, which is dragging in a number of the country’s biggest construction firms. The country is in the 3rd month of recession.

The PMI figure from the Institute of Supply Management was at 52.9 percent in February, down slightly from January’s 53.5 percent. This represents manufacturing expansion for the 21st consecutive month and growth in the overall economy for the 69th consecutive month.

The Bureau of Economic Analysis came out with its ‘second’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2014, placing it at 2.2 percent, as compared to 2.6 percent for its first estimate.

The Markit PMI for the US manufacturing sector was up to 55.1 from January’s 53.9 figure, as manufacturing growth went to a four-month high. Production and New Orders both increased at faster rates than those at the start of the year.

World crude steel production for the 65 reporting countries for  the month of January 2015 was 133Mt, down 2.9 percent from the January 2014 figure. The capacity utilization ratio at 72.5 percent, was down 4.4 percent y-o-y and down 0.4 percent from December 2014.

IHS states its predictions for 2015, including a solid US growth in the region of 2.6 to 3.0 percent; a sluggish eurozone recovery and a robust UK recovery; a weak growth momentum in Japan’s economy; a slowing down in China’s growth rate that will still leave it stronger than most; struggle in some emerging markets such as Brazil and Russia but better performance in some North African, Emerging European and Middle Eastern countries; emerging markets will in general lift the global growth average; commodity prices will slide further; deflation will be a bigger worry than inflation; the Federal Reserve, the Bank of Canada and the Bank of England will probably raise interest rates, while most others will either hold or provide more stimulus; the US dollar will rise and the euro and the yen will fall; easing of spending restrictions by households and businesses, successful in the US and in the UK, will be implemented in Europe and Japan.

US crude steel production, for January 2015 was 7.4Mt, up 0.4 percent y-o-y.

Primary Global Aluminum Production in January 2015 was 4.612 million tonnes. Of this total, 2.419 million tonnes, or just over  52 percent, was produced in China.

Here are the latest figures for US new car and light truck sales for ‘the big eight’ for February 2015. The SAAR figure is now running at  around 16.2 million vehicles for the year 2015. February was a bitterly cold month and the car market suffered towards month end.

The ‘Big Eight’ January ’15 January ’14 YTD % change
General Motors 231378 222104 4.2
Ford 179673 183340 -2
Fiat 160250 151401 5.8
Toyota 189467 159284 13.3
Honda 105466 115360 5
Nissan 118436 90470 2.7
Hyundai/Kia 96535 90221 7
Volkswagen 25719 27112 -5.2
Total new cars and light trucks 1257619 1193872 5.3


II. NORTH AMERICAN PERSPECTIVE

North America USAThe Institute of Supply Management PMI figure registered 52.9 percent in February, 0.6 percentage points below January’s 53.5 percent reading, representing expansion in manufacturing for the 21st consecutive month. Twelve of the eighteen industries reported growth in February, in order, Paper Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; Transportation Equipment; Electrical Equipment, Appliances & Components; and Chemical Products. Three industries reported contraction in February, namely Textile Mills; Apparel, Leather & Allied Products; and Computer & Electronic Products.

Comments on the month from the manufacturing sector are increasingly stressing the effects of the west coast port strike on the US manufacturing business.  Even though comments are generally positive, the sheen of optimism has been a little tarnished by both the port situation and the decrease in the price of oil and natural gas.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. Brad Holcomb has the role as Chair of the Institute for Supply Management™ Manufacturing Business Survey Committee, I write the monthly ISM Manufacturing Report On Business® based on the survey results of approximately 350 supply management professionals across 18 different industry sectors. The Report On Business® is released on the first business day of each month, and features the PMI Index as its key measure.  A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.

  1. The ISM New Orders Index for February, at 52.5 percent, was down slightly by 0.4 percentage points from January’s 52.9 percent reading, representing growth in new orders for the 27th consecutive month. Ten industries reported growth in new orders in February, including, in order, Paper Products; Primary Metals; Food, Beverage & Tobacco Products; Transportation Equipment; Machinery; Fabricated Metal Products; and Chemical Products. Four  industries showed a decrease in February, namely Textile Mills; Leather & Allied Products; Plastics & Rubber Products; and Computer & Electronic Products.
  2. The ISM Production Index, at 53.7 percent in February, was down 2.8 percentage points from January’s 56.5 percent reading. This represents growth in production for the 30th consecutive month. Growth was noted in ten industries, including, in order, Paper Products; Primary Metals; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Chemical Products; and Machinery. Four industries reported a decrease in production in February, namely Textile Mills; Leather & Allied Products; Electrical Equipment, Appliances & Components; and Computer & Electronic Products.
  3. The ISM Employment Index for February, at 51.4 percent, is down 2.7 percentage points from January’s reading of 54.1 percent, representing an increase in employment for the 21st consecutive month. Growth was reported in ten industries including, in order, Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Machinery; and Paper Products. The four industries reporting a decrease in employment in February are: Textile Mills; Computer & Electronic Products; Transportation Equipment; and Chemical Products.
  4. The ISM Supplier Deliveries Index – to manufacturing organizations – slowed in February at a faster rate relative to January as the Supplier Deliveries Index registered 54.3 percent, or 1.4 percentage points higher than January’s 52.9 percent reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Slower supplier deliveries were noted in 11 industries in February including, in order, Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Machinery; Paper Products; and Primary Metals. Faster supplier deliveries in February were noted in Fabricated Metal Products only. Six industries reported no change in supplier deliveries in February.
  5. The ISM Inventories Index, at 52.5 percent for February, is 1.5 percentage points higher than the 51.0 percent reading for January, indicating a growth in raw materials inventories for the second consecutive month. Nine industries reported higher inventories in February including, in order, Textile Mills; Apparel, Leather & Allied Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. Four industries reported lower inventories in February, namely Electrical Equipment, Appliances & Components; Transportation Equipment; Chemical Products; and Computer & Electronic Products.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

  1. The ISM Customers’ Inventories Index, registered 46.5 percent in February, 4.0 percentage points higher than January’s 42.5 reading, meaning that customers’ inventories are considered to be too low but higher than January’s.Three manufacturing industries showed too high customers’ inventories in February, namely Fabricated Metal Products; Chemical Products; and Food, Beverage & Tobacco Products. Eight industries reported too low customers’ inventories in February, namely Miscellaneous Manufacturing; Plastics & Rubber Products; Machinery; Transportation Equipment; Furniture & Related Products; Primary Metals; Paper Products; and Computer & Electronic Products.

2. The ISM Prices Index registered 35 percent in February, the same reading as in January, indicating a decrease in raw material prices for the fourth consecutive month.  In February 8 percent of respondents reported paying higher prices, 38 percent reported paying lower prices and 54 percent reported paying the same prices as in January. No  industry reported paying higher prices in February. Fourteen industries reported paying lower prices, namely Wood Products; Textile Mills; Paper Products; Plastics & Rubber products; Furniture & Related Products, Fabricated Metal Products; Primary Metals; Machinery; Chemical Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Transportation Equipment; and Computer & Electronic Products.

Up in price in February were Butter, Electrical Components, Freight and Scrap Steel **

Down in price in January were Aluminum (3), Carbon Steel (2), Copper (7), Diesel (5), Fuel oil (2), Gasoline (5), HDPE Resin (3), LDPE Resin, Nickel (2), Oil (3), PET Resin (4), Plastic Resin (3), Polypropylene Resin (3), Scrap Steel (3), Stainless Steel (4) Steel (2), Steel, Cold-Rolled and Steel, Hot-Rolled (4).

In short supply in February were Electrical Equipment, Imported Items and Stainless Steel.

Scrap steel was reported both up and down in price.  The figures in parentheses represent the number of months listed.

3.The ISM Backlog of Orders Index was at 51.5 percent in February, 5.5 percentage points up on January’s 46.0 percent reading, representing an expansion in order backlogs after one month’s contraction. Of the 86 percent of respondents reporting, 23 percent reported greater backlogs, 20 percent reduced backlogs and 57 percent reported no change from January. Eight industries reported increased order backlogs in February, including, in order,  Primary Metals; Paper Products; Fabricated Metal Products; Machinery: and Transportation Equipment. Six industries reported reduced backlogs in February, including, in order, Textile Mills; Plastics & Rubber Products; Food, Beverage & Tobacco Products;  and Computer & Electronic Products.

4 The ISM New Export Orders Index at 48.5 percent for February is 1.0 percentage points down on January’s 49.5 percent reading. The month’s reading represents two months of contraction in exports following 25 consecutive months of growth. Three industries reported an increase in New Export Orders in February, namely Fabricated Metal Products; Food, Beverage & Tobacco Products; and  Computer & Electronic Products  Eight industries reported a decrease in New Export Orders in February, namely Wood Products; Furniture & Related Products; Primary Metals; Electrical Equipment, Appliances & Components; Paper Products; Transportation Equipment; Chemical Products; and Machinery. Seven industries reported no change from January.

5. The ISM Imports Index, at 54.0 percent in February, is 1.5 percentage point down on January’s 55.5 percent reading. This represents the 25th consecutive month of growth in imports. Seven industries reported an increase in imports in February, in order, Printing and Related Support Activities; Primary Metals; Furniture & Related Products; Machinery; Computers & Electronic Products; Chemical Products; and Fabricated Metal Products. Four industries reported a decrease in imports in February, namely, Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances and Components; and Transportation Equipment.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI took a further drop in February to 48.7, from January’s 51.0 reading. The month saw a moderate slump in overall business conditions throughout the manufacturing sector. Production, New Orders and Employment were all down in February, with the lower oil price adversely impacting demand in the oil and gas sector. Exports were also down.

Despite bitterly cold weather, a weaker dollar and a big drop in   crude oil prices, February light vehicle sales in Canada were up   3.3 percent y-o-y to 109,248 units across the country. Light      trucks, up 5.1 percent y-o-y, accounted for a record 63.3 percent   of the Canadian market.

Mexico saw its manufacturing PMI ease from January’s 56.6 percent to 54.4 percent in February. Manufacturers are still reporting further strong increases in Production and New Orders, but both fell back from January’s 25-month high. The good job creation rate is maintained.

Mexico produced 1.55 Mt of crude steel in January 2015, a 6.4 y-o-y decrease.


III. US FORGING INDUSTRY

Forging Press All Metals & Forge Group LLC announced that its forgings are Ultrasonic Tested (UT) tested per ASTM A388, ‘not just capable of’.  This is a commitment that the quality is in the part, not just on the paperwork, and the company provides written test results.   Forgings are also machined to a 250 RMS (rough machined surface) or better to reduce the amount of prep work required before a forging can be placed on a CNC machine.  This greatly diminishes the wear on machine tools encountering rough surfaces as parts are machined to final dimensions.  The company also protects forgings from rust by delivering oxidation sensitive alloys with an oil coating, further reducing surface preparation for finish machining.

The company also announced that it has capabilities to finish machine many parts to final print dimensions with the cost included in the price.  This can save manufacturers who either finish machine parts or send them out for finish machining trucking costs, labor costs, machining time, machine maintenance and other expenses.

Check our forging capabilities here.

IV. MANUFACTURING TALK RADIO

Manufacturing Talk Radio, heard at www.mfgtalkradio.com has increased its audience share rankings with live shows and podcasts covering topics that provide manufacturers with actual solutions and actionable information, not just talk radio chatter.

Shows for February included the latest ISM Report on Business® presented by committee chair Brad Holcomb, who covers the material in more depth than the sound bites of the nightly news. Following Brad was Linda Rigano, Media Director with ThomasNet.com and M.L. Peck, Senior Vice President with ISM announcing some of the winners of the 30 Under 30 Rising Supply Chain Stars who were selected from hundreds of entries. The bios of these individuals and their professional accomplishments can be found at www.thomasnet.com/30under30 and are worth the read.

The February 10th show included 5 guests along with co-hosts Tim Grady and Lew Weiss:  Mark Hirzel, President of Los Angeles Customs Brokers & Freight Forwarders Association, Peter Freidmann, Executive Director Agriculture Transport Coalition, discussing the LA Port issue.

Chad Moutray, Chief Economist of  NAM, Jonathan Gold, Vice President, Supply Chain and Customs Policy, National Retail Federation and Jason Brewer, Vice President of Communications and Advocacy at the Retail Industry Leaders Association.  The contract dispute between the PMA and ILWU and the crippling job actions by both parties caused losses for companies across the country, from mom and pop farms in the nation’s heartland to major retailers with hundreds of stores in America. Hear it at http://mfgtalkradio.com/category/radio-shows/

On February 17th, Congressman Rod Blum from the 1st District in Iowa joined the discussion about the ports, the impact on businesses in his district, and how Washington should respond to this, as well as tax relief for manufacturers and other topics.

February 24th was the first show and a primer in an upcoming series on 3D Printing.  We encourage readers to review this show and tune into upcoming broadcasts as 3D Printing gains an industrial foothold that will speed products to market but could displace workers in many manufacturing plants that create prototypes or prototype parts for R&D.  3D Printing is a 3.8 Billion Dollar industry projecting to be 8 billion by 2020.

March shows will include Brad Holcomb’s review of the ISM’s Report on Business® for March, a closer look at the 30 Under 30 winners from ThomasNet.com, new developments in 3D Printing as it rapidly evolves in rapid prototyping and even finished parts, a guide on how to export for any business in America presented by the Department of Commerce, and an update on Aerospace and the huge production run of replacement places for the aging fleet around the world.  Tune in at www.mfgtalkradio.com for the live show each Tuesday at 1:00 p.m. ET or listen to the previous show podcasts available on the site, on iTunes or Podbean.


V. EUROZONE

 eurozone Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for February was unchanged from January’s 51.0 reading. Overall Eurozone manufacturing showed modest growth in February, but France fell once again to the bottom of the table (47.6). Employment growth was led by Ireland, Italy and Spain with further cuts in France and Austria.  Ireland and Spain stood out in terms of growth performance, with Germany, the Netherlands and Italy showing only mediocre expansion and France, Greece and Austria bringing up the rear. Some country PMIs are shown in the table, with last month’s PMIs in parentheses.

PMI High/low
Ireland 57.5 (55.1) 182-month high
Spain 54.2 (54.7) 2-month low
Netherlands 52.2 (54.1) 5-month low
Italy 51.9 (52.1) 7-month high
Germany 51.1 (49.9) 2-month high
Austria 48.7 (48.5) 2-month high
Greece 48.4 (48.3) 2-month high
France 47.6 (49.2) 2-month low

Crude steel production in Germany in January 2015 was at 3.7Mt, up 0.5 percent y-o-y; in Italy 1.9Mt down 11.3 percent y-o-y; in France 1.3Mt, down 10.8 percent y-o-y and in Spain 1.3Mt, up 11.8 percent y-o-y.

A little further east, Russia’s crude steel production for January, at 6.1Mt, was up 6.0 percent y-o-y while Ukraines’s was 1.9Mt, down 25.2 percent y-o-y.

Western European car sales continue to show good gains, with Germany’s sales up 6.6 percent y-o-y to 223,254 new registrations, in February, France’s up 4.1 percent to 147,130, Italy up 13 percent to 134.697 and Spain, still on a scrappage program, up 26 percent to 86,717

The UK saw its Markit PMI move up to 54.1 percent in February. It is estimated that British manufacturing is growing at a quarterly rate of around 0.5 percent compared with a rate of 0.2 percent in the last quarter of 2014. The growth is, however, domestic driven and reflects increases in consumer goods production, rather than machinery and equipment, which would be a sign of increased business inverstment.

So far this year, UK car sales are up 8.3 percent on the same period a year earlier. There have now been 36 consecutive months of sales increases in the UK automotive industry..

The JP Morgan Global Manufacturing PMI – a composite index produced by JP Morgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – improved slightly to 52.0 from January’s 51.7 figure. This shows the Global manufacturing sector expanding for the 27th consecutive month, and the PMI at a six-month high.


VI. ASIA OUTLOOK

steelforge-rolled Crude steel production in Asia for January 2015 was at 89.4Mt, with China producing 65.5Mt, down 4.7 percent y-o-y; Japan 9.0Mt down 4.0 percent y-o-y; India 7.07Mt, up 0.3 percent y-o-y and  South Korea 5.78Mt, down 4.4 percent y-o-y. Taiwan produced 2.05MT in January.

The HSBC China manufacturing PMI for February went up from January’s reading of 49.7 percent to 50.7 percent. Operating conditions in the manufacturing sector improved for the first time in four months, following the slight deterioration at the beginning of 2015. Companies experienced the strongest expansion in production since last summer, with total new business also improving at a faster rate. There was, however, a fall in export orders, together with a slight decrease in employment.

In January 2015, 2,040,000 passenger cars and 280,000 commercial vehicles were sold in China.

In Japan, the Markit manufacturing PMI is at 51.6 percent in February, slightly down from January’s figure of 52.2 percent. The month saw Japan’s operating conditions continue to improve with production up at the fastest pace since before April 2014’s tax increase. New orders and employment show signs of improvement, and the yen devaluation has kicked off an increase in export orders not seen since December 2013.

Total new vehicle sales in Japan for the month of Febuary 2015, at 482,103 units, were down y-o-y by 14.7 percent from the 565,168 units registered in February 2014. At this point in 2014, people were still rushing to car dealers to beat the April 2014 sales tax increase.

India’s manufacturing (HSBC) PMI dropped from January’s 52.9 percent reading to 51.2 in February. Production and new orders expanded at a slower pace than that seen in the past four months, with an attendant drop in employment. There was however an increase in new export order intake which augers well for coming months.


VII.  SOUTH AMERICA

Brazil Brazil’s crude steel production for the month of January 2015 was 3.0Mt, a 7.7 percent y-o-y increase.  The manufacturing PMI in Brazil dropped from January’s 50.7 reading to 49.6. There were falls in both production and new orders alongside a softening in demand, and an attendant drop in employment. The weak real is putting up the cost of manufacturing input prices.

But those aren’t Brazil’s only problems. The newly elected president is under extreme pressure about government corruption, and oil production is falling like heads at Petrobras as the government’s oil conglomerate goes through a shake-up.  And the Olympics may be in deeper trouble as turmoil in establishing the Olympic villages, sports venues and pollution clean-up in so far behind schedule that the International Olympic Committee may have to move the games to a former site like London.  The 21 test events will be conducted in 2015 but even if some fail, it may be too late to move the games and the IOC will sport a black eye as the summer of 2016 approaches.

This past week millions of Brazilians have taken to the streets to protest the new President’s lack of activity, in trying to improve the economic dilemma in Brazil, now in it’s 4th month of economic recession.

Due to the corruption, bribery, claims of election fraud and much more, the citizens of San Paulo, 1 million strong, are calling for the presidents removal.  This is a wait and see issue, it will not resolve quickly for sure.


VIII.  THE MANUFACTURING SCENE : ADVANCED MANUFACTURING (3d Printing)

Teamwork of businesspeopleA recent eye-catching article in Forge Magazine is found worthy of sharing. The article asks the question as to whether North American Forging is Advanced Manufacturing, and in fact answers the question in a very positive way.

Some of us may think of forging in an almost nostalgic way, picturing the village blacksmith forging his iron, or ancient craftsmen working with their bronze. The truth is that the basic principles of the process haven’t really changed, in that the metal is heated to a certain temperature and hammered into a desired shape. The  grain flow and the accompanying improvement in mechanical properties were surely lost on the ‘smithy’ but he surely got to know a good bit of iron from a bad one.

Today we’ve moved on from wrought iron and bronze to steel, aluminum alloys, nickel alloys – many of which are called superalloys – and titanium alloys. The parts made from these alloys are asked to perform at times to near impossible limits, requiring very high strength and toughness properties. It’s difficult, for example, to imagine an aircraft or an automobile without some exotic form of forging in it. The mechanical properties of the forged parts involved here allow planes to touch down on landing gear that has been very carefully designed, heated, forged, cooled , heat treated and machined, all to very demanding parameters. Similarly with the automobile, where occasional forays onto very rough terrain would surely cause serious damage were it not for the toughness of certain forged parts.

Parts are forged on presses with tonnage capacities that would only have been dreamed of a generation ago, to tolerances that allow production of parts with a minimum of machining. Heating and reheat furnaces must be operated at strictly controlled temperatures to prevent overheating but to allow optimum solution of carbides and other additions. Temperature must be controlled throughout the forging process, and the finish forging temperature must be carefully monitored. All subsequent processes, heat treatment, machining and, where applicable, welding, must be performed using the best equipment under the strictest supervision.

Yes, North American Welding is Advanced Manufacturing, and as such it requires all the right people to watch over it, from the managers and designers through the skilled operators, who will ensure that the materials and equipment that are such an integral part of the forging process perform to their maximum.

The story of North American Forging is a long story, and we’ll come back to it from time to time over the coming months.

THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.  The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

GDP Indl Prodn Cons prices Unemployt
United States +2.6 (qtr) +4.8 (Jan) +0.8 (Dec) 5.7 (Jan)
Canada +2.8 (qtr) +2.1 (Nov) +1.5 (Dec) 6.6 (Jan)
China +6.1 (qtr) +7.9 (Dec) +0.8 (Jan) 4.1 (Qtr 4)
Japan +2.2 (qtr) +0.1 (Dec) +2.4 (Dec) 3.4 (Dec)
Britain +2.0 (qtr) +0.5 (Dec) +0.3 (Jan) 5.7 (Nov)
Euro Area +1.4 (qtr) -0.2 (Dec) -0.6 (Jan) 11.4 (Dec)
France +0.3 (qtr) – 0.1 (Dec) +0.4 (Jan) 10.3 (Dec)
Germany +2.8 (qtr) -0.4 (Dec) +0.4 (Jan) 6.5 (Jan)
Spain +2.8 (qtr) +2.2 (Dec) – 1.3 (Jan) 23.7 (Dec)
India + 4.0 (qtr) +1.7 (Dec) + 5.1 (Jan) 8.8 (2013)
Brazil + 0.3 (qtr) – 2.8 (Dec) + 7.1 (Jan) 4.3 (Dec)
Argentina – 2.1 (qtr) – 2.4 (Dec) 6.9 (Qtr 4)
Mexico + 2.7 (qtr) + 3.0 (Dec) + 3.1 (Jan) 4.4 (Dec)


IX. THE FINAL WORD

manufacturing The US and the UK economies are doing well. China, Japan and India are looking pretty healthy. Europe is, to say the least, mixed.

It is hoped that the tentative agreement on the west coast port situation will lead to settlement.

Something good and positive needs to happen in Brazil

GALLUP’s US Economic Confidence Index averaged +1 for the month of February, down 2 points from January, reflecting a significant downturn in the second half of the month. The Job Creation Index for the month of February was +29, a point up from January and just below the seven-year high seen in September 2014.

Still optimistic.

By Royce Lowe, Contributing Writer.

[su_post field=”post_content” post_id=”6173″]

Metals Manufacturing Newsletter Feb 2016

Metals & MFG Outlook Newsletter

Presented by All Metals & Forge Group, the MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. Today, Metals & Manufacturing Outlook™ (formerly MetalsWatch!) has a global circulation of 85,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding, amongst many others. Feel free to read the most current issue below, or Click here to view the back issues in our Library at the bottom of the page. To Subscribe to Metals & Manufacturing Outlook™ and receive future issues, please enter your e-mail address and click on Subscribe.

 

I. Cover Story: Beware of the Greeks
II. NORTH AMERICAN PERSPECTIVE
III. U.S. FORGING INDUSTRY
IV. MANUFACTURING TALK RADIO
V. EUROZONE
VI. ASIA OUTLOOK
VII. SOUTH AMERICA
VIII. THE MANUFACTURING SCENE
IX. THE FINAL WORD

Publisher’s Statement

America’s Headwinds

North America USA As America’s economic recovery continues stronger than any other global economy, it creates some of its own headwinds and faces others.

The first headwind created by our strong economy is our strong dollar, making our exports more expensive for consumers and businesses in other countries. In just a year, the ruble, the Euro, the Canadian dollar, the RMB and every other global currency have lost value against a strengthening dollar. This will affect more than 10% of the U.S. economy as overseas buyers lose their ability to purchase U.S. goods that could translate into lower manufacturing output, a softening jobs outlook, and then reduced purchasing by the U.S. of raw materials from overseas to make goods here for sale outside the U.S.

The second headwind is the result of economic weakness in virtually every other global economy. Russia has entered recession; Japan may pull out of the doldrums in 2015; Europe is teetering with German GDP up by 0.7%, France at 0.1%, Italy stagnant and Greece that could go either way; Brazil, South America’s largest economy, is struggling between recession and scandal; and China’s outlook remains cool. The absence of strong economies around the world make the strong dollar a bigger issue for U.S. exporters to overcome although it is great for buying parts and sub-assemblies from overseas.

Then there is the third headwind, the West Coast port chaos and negotiation brinkmanship. While the PMA and ILWU point fingers at each other in dueling press releases and more public comments, it is clear that productivity at the port has fallen to a fraction of the productivity at this time last year. Upwards of 40 container ships are either stuck at berth or bobbing at sea with incoming goods, and containers at the port are languishing for up to a month before they can be ‘found’ in the pile-up. Meanwhile, containers to be loaded for exports are idle and empty.

The mainstream press has given this problem little coverage. Until it is a strike, it doesn’t bleed enough to lead the nightly news or print, but the bleeding on this one is internal hemorrhaging that you won’t see until manufacturing’s blood pressure goes out of whack. Raw materials that manufacturers need for their production lines are several weeks late. Some holiday goods are just arriving are retail warehouses at a time when spring clothing and landscaping supplies should be at the loading docks of America’s distribution centers. Those spring goods are still in containers buried in the mountain of containers at West Coast ports, particularly Los Angeles and Long Beach, on ships at berth and not yet offloaded, or on ships that have not yet made port.

We are already seeing overtime knocked out at plants because they lack parts for assembly and outright layoffs may follow if the contract negotiations are not resolved before the ports reach gridlock, which is projected to hit within days.

And if there is a fourth headwind, it is that the Obama administration is applying its “strategic patience” (translation – do nothing; hope for the best). Well, hope is not a strategy, and America’s manufacturers, along with global customers have long since lost their patience waiting for leadership from somewhere – Washington, the PMA, the ILWU (neither of which wants to ‘give in’ and be seen as the capitulator) – California’s governor (aka Governor Moonbeam), to kick some backside before the economy goes from net positive to net negative.
Respectfully,

Tim Grady
Publisher

COVER STORY: BEWARE OF GREEKS?

economicPicThe US economy stays on an upward path, with all major indices  pointing confidently in the right direction. The cloud on the horizon is the West Coast port situation, and it’s sometimes difficult to understand how its effect is not being more seriously felt.

There is what may be termed encouraging news out of Europe this month, where we hear the term quantitative easing  (QE)     being used a lot. This means in effect that the European Central Bank (ECB) is to deliberately create new money     electronically to buy financial assets, such as government bonds, to the tune of 60 billion euros per month, until at least September 2016, in a bid     to spur growth and counter deflation. The euro’s gone down with     all this, which is good for exports.

QE had been tried some years before in the US, the UK and Japan, and had in fact been very successful in stimulating their respective economies. The news out of the ECB started a strong stockmarket rally in Europe. It also upset Ms Angela Merkel, German Chancellor and holder of the eurozone’s purse strings. It seems she hadn’t been consulted in advance, and in any case she’s all in favor of austerity. But QE will go ahead, and will almost certainly spur the eurozone economy.

Greece went to the polls and elected the far-left Syriza party led by Alexis Tsipras. He wants Greece’s huge debt reduced, a debt extended by Angela Merkel back in 2011-2012. But most of Greece’s debt is held  by other European countries, and they might have a word or two to say. The word austerity is a word Greece doesn’t want to hear.

As we all know, France was hit by a very nasty terrorist attack where the whole cartooning staff of Charlie Hebdo was wiped out.

The PMI figure from the Institute of Supply Management was at 53.5 percent in January, down from December’s seasonally adjusted 55.1 percent. This represents manufacturing expansion for the 20th consecutive month and growth in the overall economy for the 68th consecutive month.

The Bureau of Economic Analysis came out with its ‘first’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2014, placing it at 2.6 percent. Its ‘second’ estimate will be published in late February.

The Markit PMI for the US manufacturing sector was at 53.9 in January, unchanged from the December figure. Production levels rose at their strongest pace for three months, but new business growth moderated for the fourth time in the past five months.

Dun and Bradstreet’s US Business Health Index was up by  0.7 percent year-on-year in January. The Small Business Index was up 2.5 points.

D and B’s US Jobs Health, with 238,000 non-farm jobs added in January, shows increases in jobs in all sectors; Manufacturing, Construction, Retail, Business Services, Trade, Transportation and Utilities and Real Estate. were all up.

Delinquencies and risk of business failure fell for the month and US companies showed sustained financial strength.

World crude steel production for the 65 reporting countries for  2014 was 1,662Mt, a 1.2 percent year-on-year increase over 2013.

Steel Times International reports that apparent steel use grew by 2 percent to 1.56 billion tonnes in 2014 after a 3.8 percent increase in 2013. Apparent steel use in 2015 is forecast to increase a further 2 percent to 1.59 billion tonnes.

The Kiplinger Letter out of Washington D C reports that small business is on the up, and that many firms with less than 50 employees have plans to expand, move into new markets and hire new employees. Sales and profits are expected to be up this year following a strong finish to 2014. Sales gains of 8-9 percent are forecast, with net profits up by 6 percent. More than half of small firms are seeking workers. Businesses with 50 workers or less account for almost 30 percent of US employment. Many employers are expecting to find it difficult to fill openings due to a lack of skilled applicants.

US crude steel production, for 2014, was 88.3Mt, a 1.7 percent y-o-y increase over 2013.

Primary Global Aluminum Production in December 2014 was 4.659 million tonnes. Of this total, 2.481 million tonnes, or just over  53 percent, was produced in China.

Here are the latest figures for US new car and light truck sales for ‘the big eight’ for January 2015. This is reported as the best January since 2001. Note that the Chrysler name has been replaced by FCA US LLC.

The ‘Big Eight’ January ’15 January ’14 YTD % change
General Motors 202786 171486 18.3
Ford 177441 153494 15.6
FCA US LLC 145007 127183 14
Toyota 169194 146365 15.6
Honda 102184 91631 11.5
Nissan 104107 90470 15.1
Hyundai/Kia 82804 81016 2.2
Volkswagen 39141 36944 5.9
Total new cars and light trucks 1152480 1013426 13.7


II NORTH AMERICAN PERSPECTIVE

 welding robots The Institute of Supply Management PMI figure registered 53.5 percent in January, 1.6 percentage points below December’s seasonally adjusted 55.1 figure, representing expansion in manufacturing for the 20th  consecutive month.

Fourteen of the eighteen industries reported growth in January, in order, Primary Metals; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Paper Products; Transportation Equipment; Chemical Products; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products and Furniture & Related Products. Two industries reported contraction in January, namely Textile Mills and Nonmetallic Mineral Products.

Comments on the month from the manufacturing sector are generally  positive, with Primary Metals and Fabricated Metal Products sectors experiencing very good business. The concern regarding the West Coast port situation is increasing, with Wood Products, Chemical Products and Paper Products respondents complaining vehemently about materials being unavailable, and an inability to ship out export orders.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.

  • The ISM New Orders Index for January, at 52.9 perccnt, was down by 4.9 percentage points from December’s seasonally adjusted 57.8 percent, representing growth in new orders for the 20th consecutive month. Ten industries reported growth in new orders in January, including, in order, Paper Products; Primary Metals; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products and Chemical Products. Four  industries showed a decrease in January, including, in order, Textile Mills; Petroleum & Coal Products and Nonmetallic Mineral Products.
  • The ISM Production Index, at 56.5 percent in January, was down 1.2 percentage points from December’s seasonally adjusted 57.7 percent reading. This represents growth in production for the 11th consecutive month. Growth was noted in eight industries, including, in order, Printing & Related Support Activities; Primary Metals; Paper Products; Fabricated Metal Products; Computer & Electronic Products and Chemical Products. Three industries reported a decrease in production in January, Textile Mills; Nonmetallic Mineral Products and Food, Beverage & Tobacco Products. Seven industries reported no change when compared to December.
  • The ISM Employment Index for January, at 54.1 percent, is down 1.9 percentage points from December’s seasonally adjusted reading of 56.0 percent, representing an increase in employment for the 19th consecutive month. Growth in employment in January  was reported in nine industries, including, in order, Petroleum & Coal Products; Miscellaneous Manufacturing; Primary Metals; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products and Chemical Products. Four industries, Nonmetallic Mineral Products; Computer & Electronic Products; Transportation Equipment and Machinery showed a decrease in employment in January.
  • The ISM Supplier Deliveries Index to manufacturing organizations – slowed in January at a slower rate relative to December as the Supplier Deliveries Index registered 52.9 percent, or 5.7 percentage points below December’s seasonally adjusted 58.6 reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Slower supplier deliveries were noted in 10 industries in January including, in order, Primary Metals; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery and Chemical Products. Faster supplier deliveries in December were noted in Printing & Related Support Activities and Paper Products.
  • The ISM Inventories Index, at 51.0 percent for January, is 5.5 percentage points higher than the 45.5 percent reading for December, indicating a growth in raw materials inventories following one month of contraction. Six industries reported higher inventories in January, in order, Wood Products; Fabricated Metal Products; Machinery; Furniture & Related Products; Chemical Products and Primary Metals. Seven industries reported lower inventories in January, including Plastics & Rubber Products; Computer & Electronic Products; Paper Products and Food, Beverage & Tobacco Products.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

  • The ISM Customers’ Inventories Index, registered 42.5 percent in January, 2.0 percentage points lower than December’s 44.5 reading, meaning that customers’ inventories are considered to be too low.Two manufacturing industries showed too high customers’ inventories in January, namely Nonmetallic Mineral Products and Food, Beverage & Tobacco Products. Ten industries reported too low customers’ inventories in January, namely Textile Mills; Transportation Equipment; Apparel, Leather & Allied Products, Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Computer & Electronic Products and Miscellaneous Manufacturing.
  •  The ISM Prices Index registered 35.9 percent in January, a 3.5 percent decrease on the December reading of 38.5 percent. This represents a decrease in raw material prices for the third consecutive month, and a total price decrease of 18.5 percentage points over these three months.  In January 11 percent of respondents reported paying higher prices, 41 percent reported paying lower prices and 48 percent reported paying the same     prices as in December. Only one industry reported paying higher prices in January, namely Printing & Related Support activities. Fifteen industries reported paying lower prices, including Textile Mills; Plastics & Rubber Products; Petroleum & Coal Products; Paper Products; Fabricated Metal Products; Chemical Products; Machinery; Transportation Equipment and Primary Metals.

Up in price in January were corn-based products and electric components (2)

Down in price in January were Aluminum (2), Brass (2), carbon steel, copper (6), copper-based products, Diesel (4), Ethylene, Fuel oil, Gasoline (4), HDPE Resin (2), natural gas, nickel, oil, oil-based products (3), PET Resin (3), Plastic resin (2), Polypropylene Resin (2), scrap steel (2), stainless steel (3) steel (2), steel, cold-rolled and steel, hot-rolled (3).

    Nothing was reported in short supply in January

The figures in parentheses represent the number of months listed.

  •    The ISM Backlog of Orders Index was at 46.0 percent in January, a 6.5 percentage points decrease from December’s 52.5 percent reading. This represents a contraction in order             backlogs after three months of growth. Of the 87 percent of respondents reporting, 18 percent reported greater backlogs, 26 percent reduced backlogs and 56 percent reported no change from December. Three industries reported increased order backlogs in January, Wood products; Primary Metals and Fabricated Metal Products.  Eleven industries reported reduced backlogs in January, including in order, Textile Mills; Apparel, Leather & Allied Products; Transportation Equipment; Food, Beverage & Tobacco Products; Paper Products and Machinery.
  • The ISM New Export Orders Index at 49.5 percent for January is 2.5 percentage points down on December’s 52.0 percent reading. The month’s reading represents a month of contraction in exports following 25 consecutive months of growth. Five industries reported an increase in New Export Orders in January, namely Electrical Equipment, Appliances and Components; Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products and  Transportation Equipment.  Six industries reported a decrease in New Export Orders in January, namely Textile Mills; Paper Products; Primary Metals; Machinery; Chemical Products and Furniture & Related Products.
  • The ISM ImportsIndex, at 55.5 percent in January, is one half percentage point higher than December’s 55.0 percent reading. This represents the 24th consecutive month of growth in imports. Eight industries reported an increase in imports in January, in order, Printing and Related Support Activities; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products and Furniture & Related Products. Four industries reported a decrease in imports in January, namely, Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products and Primary Metals.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI is at 51.0 percent in January, 2.9 percentage points lower than December’s 53.9 reading. The month saw a sharp slowing in the Canadian Manufacturing Sector, with overall business conditions improving at the weakest pace since April 2013. Production and new business volumes grew but at a much slower rate than in December. Employment dropped for the first time since early 2014.

Light vehicle sales in Canada in January, at 99.051 units, were 3.4 percent up on a year ago. The peak sales month in 2014 was May, when just under 200,000 vehicles left the showrooms.

Mexico saw its manufacturing PMI go from December’s 55.3 percent to 56.6 percent in January, its highest level since December 2012. Manufacturers report good production performance and increases in new orders, with slight increases in export business. Job creation is at a 27-month high.

Mexico produced 1.50 Mt of crude steel in December 2014.


III US FORGING INDUSTRY

Forging anvil HHI Forging in Dearborn, Michigan, plans a $7.5 million investment in new forging equipment at its subsidiary Impact Forge Group’s facility in Columbus, Indiana. The first stage of new equipment was installed last year in the 138,000sq. ft. facility, with phase 2 scheduled for installation through 2015. Impact Forge supplies safety-related forged parts to the automotive industry. The new equipment will serve to increase production capacity of components used in eight- and nine-speed transmissions.

IV. Manufacturing Talk Radio

MANUFACTURING-TALK-RADIO-port-nyc Manufacturing Talk Radio continues to provide the best insights into the facts and figures behind America’s economic recovery. Brad Holcomb, committee chair of the ISM’s Report on Business(R) goes into this document in depth on the first show of each month. January’s PMI(R) number rolled up to 53.5 and while not as strong as some Q4 numbers in 2014, still in growth territory. Be sure to tune on March 3rd at 1:00 p.m. ET on www.mfgtalkradio.com to hear Mr. Holcomb drill down into the PMI(R) number for February.

And, if you wonder where manufacturers spend nearly a billion dollars each year, check out our show on Wacky Labels and Frivolous Lawsuits that aired on January 13th with Bob Dorigo Jones. Bob has appeared on dozens of national and international TV and radio programs, including NBC Nightly News, ABC News’ 20/20, BBC WorldNews, FOX News, and CNBC. We will have him back on Manufacturing Talk Radio to give manufacturers’ another heads up on CYA for their product warning labels.

We were also pleased to have Dr. Chris Kuehl on January 20th giving the manufacturing community of listeners his forecast for 2015. Dr. Kuehl has been the economist for the Fabricators and Manufacturers Association International for the past 8 years with a special presentation at FabTech, which will be held at McCormick Place in Chicago this year, November 9-12, 2015. Chris always brings a great sense of humor and wit to a subject that can be traditionally dry and dull. He will be back with us, likely in March, to tell us where the economy appears to be headed, unless…

Wrapping up January, we were pleased to have Mr. Cliff Waldman, Director of Economic Studies with the Manufacturers Alliance for Productivity and Innovation present his views on “Made in America?” – the baffling complexity of parts, sub-assemblies and supply chain sources from all over the world that make one question just how the American-made label applies these days. MAPI is always a great source of forward-looking information that questions the seemingly obvious and delves into many not-to-obvious subjects.

February has an equally exciting line-up of shows that can be heard live and later as a podcast on www.mfgtalkradio.com, iTunes, and PodBean – just search for Manufacturing Talk Radio!
Tune in at www.mfgtalkradio.com or download the podcast for later listening at the website or iTunes.


IV EUROZONE

eurozone-steelforge Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for January saw a slight improvement to 51.0 from December’s 50.6 reading. Improvements in business conditions were noted in Germany, Spain, The Netherlands and Ireland. Manufacturing downturns in France, italy. Austria and Greece continued at the start of the year, but the rate contractions in France and Italy eased off slightly, with steep downturns noted in Austria and Greece.  Some country PMIs are as follows:

PMI High/low
Ireland 55.1 8-month low
Spain 54.7 2-month high
Netherlands 54.1 2-month high
Germany 50.9 2-month low
Italy 49.9 4-month high
France 49.2 8-month high
Austria 48.5 2-month low
Greece 48.3 15-month low

Crude steel production in the eurozone in 2014 was at 169.2Mt, up 1.7 percent y-o-y. Germany produced 42.9Mt, up 1.7 percent y-o-y; Italy 23.7Mt, down 1.4 percent y-o-y; France 16.1Mt, up 2.9 percent y-o-y and Spain 14.2Mt, down 0.6 percent y-o-y.

Western European car sales showed an upturn at the beginning of the year. Germany’s sales were up 3 percent to 211,337 new registrations, in January, France up 6 percent to 132,824, Italy up 11 percent to 131,385 and Spain, still on a scrappage program, up 28 percent to 68,118 new registrations.

The UK saw its Markit PMI move up slightly to 53.0 percent in January. There was a slight improvement in production and new orders, with an improvement in new export orders, the first such improvement for five months.

UK car sales were up 6.7 percent y-o-y in January, making this the strongest january since 2007. New car registrations were at 164,856 units, representing 35 consecutive months of sales increases.

The JP Morgan Global Manufacturing PMI – a composite index produced by JP Morgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – improved slightly to 51.7 from December’s (corrected) 51.1 figure.


V ASIA OUTLOOK

 Asia Economy Crude steel production in Asia for 2014 was at 1132.3Mt, up 1.4 percent y-o-y, with China producing 822.7Mt, up 0.9 percent y-o-y; Japan 110.7Mt up 0.1 percent y-o-y; India 83.2Mt, up 2.3 percent y-o-y and South Korea 71.0Mt, up 7.5 percent y-o-y.

The HSBC China manufacturing PMI for January edged up very slightly from December’s 49.6 percent reading to 49.7. There was a slight deterioration in operating conditions at the beginning of 2015, as was also seen at the end of 2014. Output rose slightly and new orders stabilized, but employment was down for the 15th successive month. The first increase in production in three months was noted.

The final 2014 figures for 2014 Chinese auto sales show 3.79 million commercial vehicles and 19.71 million passenger cars.

In Japan, the Markit manufacturing PMI is at 52.2 percent in January, slightly up from December’s final figure of 52.0 percent. The month saw a solid improvement in operating conditions in the Japanese manufacturing sector. Production growth continued for the sixth consecutive month, with further increases in both new orders and employment.

Total new vehicle registrations in Japan for the month of January 2015, at 401,366 units, were down y-o-y by 19.1 percent from the 496,105 vehicles registered in January 2014.

India’s manufacturing (HSBC) PMI dropped from December’s 54.5 percent reading to 52.9 percent.  reading. Even though this is a 3-month low reading, the Indian manufacturing sector continued to grow solidly in January. There was consolidation, in spite of the rate of growth slipping to a 3-month low, and both domestic and export orders continued to grow, particularly in the consumer goods sector. The word presently coming out of India is SOLID.


VI SOUTH AMERICA

Brazil’s crude steel production for the year 2014 was 33.9Mt, a y-o-y decrease of 0.7 percent.

The seasonally adjusted HSBC and Markit Brazil PMI increased from 50.2 percent in December to 50.7 percent in January. Production and new orders were up for the first time in ten months and this was accompanied by a faster improvement in operating conditions. Employment, on the other hand, was stagnant.


VII  THE MANUFACTURING SCENE : INDIA’S NEW PM, GOOD FOR BUSINESS.

Forging India’s (relatively) new Prime Minister, Narendra Modi, has already made himself known on the diplomatic front by establishing ties with both China and Japan and by taking tea, while discussing business, with US president Barack Obama.

India is a country mired in bureaucracy and rules and regulations that do not particularly encourage people to invest in it, certainly not as a joint venture. This may be about to be eased and changed under Mr. Modi, who has recently coined a marketing slogan ”Make in India” that India will carry around the world when they display it at the World International Fair in Hannover, Germany, this coming April.

India has lots going against it as a manufacturing nation, but a lot going for it too. Its infrastructure and its power supplies leave, to say the least, much to be desired. There is further a lack of skilled labor in the manufacturing sector that time alone may alleviate. On the other hand labor costs are very low and there are lots of people who might both teach and learn the secrets of manufacturing.

Before Modi took over as Prime Minister, he was head of the  state government in Gujarat, and during his 13 years in power there he made the state an industrial leader. Manufacturing accounts for 28 percent of Gujarat’s economy, compared with 13 percent for the country as a whole, and only slightly less than the 30 percent figure for  China. Mr Modi is determined to make his country a major player in the global manufacturing game and to make sure that his country’s youth benefits accordingly. This he will do by building up its infrastructure and making it progressively more efficient, and by using the huge labor pool at his disposal to maximum effect. The hourly cost of labor in China is presently at $3.52; that in India is $0.92. There is no other country in the world with the human resources of China or India, hence no other country that could take China’s place, apart from India. Like China, India has a huge diaspora, hence people who would be willing to invest in an Indian manufacturing  scene more friendly to outside investment.

Japan has committed to investing $36 billion, China $20 billion, in India, funds that will be used to create a giant industrial corridor between Delhi and Mumbai, involving the construction of high- speed trains and superhighways, much as happened in Guangdong province in China.

Plans are underway to increase manufacturing’s share of GDP to 23 percent by 2022, and to create an additional 100 million manufacturing jobs by the same year, a significant number of which will be skilled jobs.

Mr. Modi and Barack Obama have spoken of the possibility of US cooperation in India’s nuclear energy program, an idea that wouldn’t have been considered prior to Mr. Modi’s coming to power.

(Thanks to Bloomberg for some of the information in this section)

    THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.  The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

GDP Indl Prodn Cons prices Unemployt
United States +5.0 (qtr) +4.9 (Dec) +0.8 (Dec) 5.6 (Dec)
Canada +2.8 (qtr) +3.4 (Oct) +1.5 (Dec) 6.7 (Dec)
China +6.1 (qtr) +7.9 (Dec) +1.5 (Dec) 4.1 (Qtr 4)
Japan -1.9 (qtr) – 3.7 (Nov) +2.4 (Nov) 3.5 (Nov)
Britain +2.0 (qtr) +1.1 (Nov) +0.5 (Dec) 5.8 (Oct)
Euro Area +0.6 (qtr) -0.4 (Nov) -0.2 (Dec) 11.5 (Nov)
France +1.0 (qtr) – 2.6 (Nov) +0.1 (Dec) 10.3 (Nov)
Germany +0.3 (qtr) -0.6 (Nov) +0.2 (Dec) 6.5 (Dec)
Spain +2.0 (qtr) -0.1 (Nov) – 1.0 (Dec) 23.9 (Nov)
India + 8.1 (qtr) +3.8 (Nov0 + 5.0 (Dec) 8.8 (2013)
Brazil + 0.3 (qtr) – 5.7 (Nov) + 6.4 (Dec) 4.8 (Nov)
Argentina – 2.1 (qtr) – 2.4 (Dec) 7.5 (Qtr 3)
Mexico + 2.0 (qtr) + 1.8 (Nov) + 4.1 (Dec) 4.4 (Dec)

VII THE FINAL WORD

Business agreement on energy trade The US economy is still doing well, but the West Coast port cloud is still in place. A little time will be required to measure the effectiveness of Europe’s financial manoeuvers, and their political ones.

GALLUP’s USEconomic Confidence Index averaged +3 forthe month of January, up 8 points from December. This is the first positive reading for an entire month since the recession. The job creation index for the month of January was +28, just below the seven-year high seen in September 2014

It’s still optimism.

[su_post field=”post_content” post_id=”6173″]

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June 1998
Sept 1998
Dec 1998

1997

Feb 1997
April-May 1997
Sep 1997

1996

Jan-Feb 1996
April-May 1996
July-Aug 1996
Dec 1996

1995

Jan 1995
June 1995
Oct-Nov 1995

1994

Dec 1994