Metals & MFG Outlook April 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 Submit below.


Subscribe to Metals & MFG Outlook for the latest metals industry news!

I. Cover Story: CORNER TURNED?




For several months we have been reporting on economic conditions that were tepid at best with March as the possible turning point, at least in manufacturing. Generally, the indicators tend to move in a direction for several months rather than up one, down one, up one, down two.

The U.S. has been looking for a softening of the dollar which has been slight over the last 30 days as European economies begin to recover with the exception of France and Greece. Europe is in its 33 month of a weak expansion, the U.K. at 36 months, Canada at 1 month, U.S. non-manufacturing at 75 months and U.S. manufacturing at 82 months. Both Canada and the U.S. manufacturing sectors have broken through a soft patch at the moment with cautious optimism that the trend may continue.

So, what does the future hold? U.S. GDP growth is forecast at 2.2% for 2016, 2.1% for 2017 and 2.0% for 2018. Manufacturing production is forecast to grow 2.6% in 2016, 3.0% in 2017, and 2.8% in 2018. Manufacturing growth is expected to slow to 2.6% in 2019 and 2.0% in 2020. What is interesting about these projections is that few forecast a downturn in the next 3 years, giving the U.S. an economic expansion of 115 months at the end of 2018 – a near 10-year run not experienced in decades. If it continues into 2019 and even 2020, it will be a record-breaking albeit slow growth expansion, which might be better than previous boom-bust cycles, ignoring for this discussion the advertorials you might see for “the end is near” investment strategies.

So, what is holding back an active boom cycle? The banks and federal tax policy. The banks are flush with cash into the trillions but they aren’t lending in traditional areas as a hedge against the possible shale oil bankruptcies and the auto loan bubble, even though auto lending continues aggressively. The government wants to heavily tax repatriated funds now parked offshore in the trillions of dollars by Corporate America which is depressing capital investment across the U.S. corporate landscape. Why onshore trillions of dollars for R&D and plant investment when 35% will evaporate into the government coffers with little or no impact on deficit spending? That just fuels the tax more, spend more mentality of Washington D.C. Apparently, fiscal conservatism left Washington years and administrations ago.

Consumer spending and consumer confidence continues to be favorable but cautious with a greater emphasis on reducing debt and increasing savings than the profligate spending of past expansions that were fueled by credit card debt or home equity lines of credit. So, quite possibly, slower growth is healthier growth – and the new normal.

We’ll test all these assumptions as 2016 rolls out, but for the moment the recent upturn is a welcome relief, just like warmer weather this spring – whenever that decides to arrive.

Best Regards,
Lewis A. Weiss


by Royce Lowe

a bright future in manufacturing

It was noted, at the end of the month of March, that ‘the U.S. manufacturing recession may be over’ and Goldman Sachs was quick to announce ‘near-term optimism’ on U.S. manufacturing, citing regional surveys in factories in Philadelphia, New York, Richmond, Kansas City and Dallas Federal reserve districts that all showed marked improvement in March. This prompted Goldman Sachs to speak of corners being turned and to predict the ISM PMI index to break through the 50 barrier – which came to pass. The whole prediction was supported by railcar volumes, trucking activity and seaborne container traffic.

We had confidence in U.S. Manufacturing, even when it was down where it had been for the past several months. We saw in February that a breakthrough was coming in the month of March. Thus it did.

Already, of course, there are prophets of doom who are saying it’s all likely to be fragile, because no way can we carry on with the low oil price and the high dollar, and in any event how much longer will people continue to buy all those cars?

In what will be one of the world’s greatest displays of delayed gratification, it looks like around a quarter of a million people put down $1,000 as a deposit on Tesla’s Model 3, a (basic) $35,000 car that is scheduled to start production some time in late 2017. This all follows an impressive unveiling of the vehicle, and loud lauding following a Wall Street visit to the factory.

Europe’s two biggest economies, Germany and France are plodding along at the moment, while the overall eurozone performance is holding its own thanks to those of the smaller economies, particularly Ireland.

The UK , on the eve of a referendum to decide its continuing membership of the EU, or not, finds what is left of its steel industry in the greatest of jeopardy. India’s Tata Steel, who owns most of it, is on the verge of pulling the plug on the biggest pieces of what is left of a once-proud industry. This could cause widespread union protest and an in-your-face to David Cameron, a prime minister who (apparently) wants to stay in the EU. A space to watch.

Asia, meanwhile, is not in too comfortable a spot, but China’s latest PMI figures do show some improvement. Japan may be termed the latest casualty, and some of its woes may be attributed to much reduced imports by China.

IHS and Markit, two market and data providers, will merge in a transaction valued at $13 billion. IHS, Colorado – based, will move to London to take advantage of a considerable corporate-tax rate reduction, adding to other ‘tax inversion’ deals that are politically controversial in the U.S. It is understood that IHS has 57 percent of the merger, Markit the balance. It will be several months before we see published data from this new company.

There has been a recent upward blip in the global iron ore and steel business. Its magnitude will not be stated here but if it is still in effect next month further details will be given.

The PMI figure from the Institute of Supply Management moved up from February’s 49.5 percent to 51.8 percent in March, representing growth in manufacturing following five months of contraction. There was growth in the overall economy for the 82nd consecutive month.

The Markit PMI for the U.S. manufacturing sector moved to 51.5 percent in March from February’s 51.3 figure. Markit are still less than enthusiastic about the U.S. economy, and state that ‘U.S. manufacturing remains subdued in March’ with production growth the same as February’s 28-month low. They state there was a moderate upturn in new orders. So a faster increase in new orders and a sustained growth of employment numbers were what was positive in March. Markit goes on to say that manufacturers noted that generally improving global conditions had helped to offset some of the negative influence of the strong U.S. dollar on export sales.

Order backlogs are reported to have fallen again in March, extending the current period of decline to four of the past five months.

Overall growth in the U.S. in the first quarter slowed to its lowest since late 2012.

The five ISM components are equally weighted at 20 percent each. The Markit components are weighted: 30 percent New Orders, 25 percent Production, 20 percent Employment, 15 percent Supplier Deliveries and 10 percent Raw Materials Inventories.

The Bureau of Economic Analysis came out with its ‘third’ estimate, based on more complete source data, for the annual rate of Real GDP growth in the fourth quarter of 2015, placing it at 1.4 percent. The second estimate had placed it at 1.0 percent. The figure for the third quarter of 2015 was 2.0 percent. The Real GDP is the value of goods and services produced by the nation’s economy, less the value of the goods and services used in production, adjusted for price changes.

Dun and Bradstreet’s figures are unusually not available at time of writing.

GALLUP’s U.S. Economic Confidence Index was hovering around -10 in          late March. The job creation index was back up to +32 in late March/early April.

 World crude steel production for the 66 reporting countries for the month of  February 2016 was 120.41Mt, down 3.3 percent y-o-y. Capacity utilization for February 2016 was at 66.2 percent, slightly up from January’s 65.3 figure, but down from February 2015’s figure of 71.9 percent.

U.S. crude steel production, for February 2016 was 6.37Mt, up 2.9 percent      y-o-y.

Primary Global Aluminum Production in February 2016 was reported at 2.117 million tonnes. No data were available from China, probably because of    the New year celebrations. Of this total, the Gulf Corporation Council (GCC)        produced 413,000   tonnes, North America 344,000 tonnes, Western Europe 299,000 tonnes and Eastern and Central Europe 317,000 tonnes.

Here are the latest figures for US new car and light truck sales for ‘the big   eight’ for March 2016.

The ‘Big Eight’ March ’16 March ’15 YTD % change
General Motors 252128 249875 0.9
Ford 253064 234786 7.8
Toyota 219842 225959 -2.7
FCA 209712 192694 8.8
Honda 138221 126293 9.4
Nissan 163559  145085 12.7
Hyundai/Kia 133589 133790 No change
VW 26914 30025 -10.4
Total new   cars and light trucks 1595484 1545802  3.2 

                        CARS                  LIGHT TRUCKS  TOTAL

MAR   2015      730,723                815,079                         1,545,802


MAR   2016      687,460                908,024                         1,595,484


                        -5.9%                  +11.4%                        + 3.2%


North American light vehicle production was up 12.6 percent y-o-y in February, to 1,518,014 units, a 15-year high for the month. Light vehicle production in the U.S., at 1,048,481 units, was up 16.4 percent, while Canada was up 20.2 percent to 198,985 units. Mexico was down 3.9 percent to 270,548 units, due to production drops by GM and FCA. U.S. light truck output was up 20.4 percent y-o-y to 697,238 units, and overall, North American car production was up 4.5 percent to 588,772 units, with luxury cars up 29.8 percent and large cars down 8.4 percent.

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 +1.4 (qtr) -1.0 (Feb) +1.0 (Feb) 4.9 (Feb)
Canada +0.8 (qtr) – 2.2 (Dec) +1.4 (Feb) 7.3 (Feb)
China +6.6 (qtr) +5.4 (Feb) +2.3 (Feb) 4.1 (Qtr 4)
Japan -1.1 (qtr) -1.5 (Feb) +0.3 (Feb) 3.3 (Feb)
Britain +1.9 (qtr) +0.2 (Jan)  +0.3 (Feb) 5.1 (Dec)
Euro Area +1.3 (qtr) +2.8 (Jan) – 0.2 (Feb) 10.3 (Jan)
France +1.3 (qtr) +2.0 (Jan) – 0.2 (Feb) 10.2 (Jan)
Germany +1.1 (qtr) +2.3 (Jan) +0.4 (Mar) 6.2 (Feb)
Spain +3.3 (qtr) +0.6 (Jan) -0.8 (Feb) 20.5 (Jan)
India + 4.4 (qtr) – 1.5 (Jan) +5.2 (Feb) 4.9 (2013)
Brazil – 5.7 (qtr) -13.8 (Jan) +10.4 (Feb) 8.2 (Feb)
Taiwan + 2.2 (qtr) – 3.6 (Feb) + 2.4 (Feb) 3.9 (Feb)
Mexico +2.2 (qtr) +1.1 (Jan) +2.9 (Feb)  4.3 (Feb)

FF Journal Magazine

Please visit our sponsor


by Royce Lowe

The Institute of Supply Management PMI figure registered 51.8 percent in March, a healthy increase from February’s 49.5 reading, representing growth in manufacturing for the first time since August 2015, when the PMI registered 51.0 percent, and growth in the overall economy for the 82nd consecutive month. Of the 18 manufacturing industries, twelve industries are reporting growth in March, in order: Printing & Related Support Activities; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; Paper Products; Primary Metals; and Computer & Electronic Products. The five industries reporting contraction in March are: Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; and Petroleum & Coal Products.

Following are comments from the industry:

Fabricated Metal Products personnel say that capital equipment sales are steady. Chemical Products respondents say business in telecom is booming and that the fiber plant is at capacity. Computer & Electronic Product respondents say that current trends remain steady and that there are no issues with delivery or costs. Transportation Equipment personnel say that the government is spending again and that they have received delivery orders. Miscellaneous Manufacturing personnel say that business is stable, noting little change from last month.   Furniture & Related Products report that incoming sales are improving. Printing & Related Support Activities are seeing a seasonal pick up in activity.Machinery reports strong requests for new equipment proposals. Primary Metals reports strong continuing business and Plastics & Rubber Products say that unemployment is low in certain areas, making it difficult to find workers, with an attendant understaffing and a need for lots of overtime.

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 ISM New Orders Index for March, at 3 percent, was up 6.8 percent on February’s figure of 51.5 percent., representing growth in new orders for the third consecutive month. The thirteen industries reporting growth in new orders in March, listed in order, are: Furniture & Related Products; Textile Mills; Miscellaneous Manufacturing; Non-metallic Mineral Products; Chemical Products; Printing & Related Support Activities; Machinery; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Paper Products; and Fabricated Metal Products. The three industries reporting a decrease in new orders during March are: Apparel, Leather & Allied Products; Computer & Electronic Products; and Transportation Equipment.
  2. The ISM Production Index for March is at 55.3 percent, up 2.5 percentage points from February’s 52.8 percent reading, representing growth in production for the third consecutive month. Twelve industries reported growth in production during the month of March, namely, listed in order, Furniture & Related Products; Primary Metals; Non-metallic Mineral Products; Machinery; Printing & Related Support Activities; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Chemical Products; Food, Beverage & Tobacco Products; Paper Products; and Fabricated Metal Products. The two industries reporting a decrease in production during March are: Apparel, Leather & Allied Products; and Transportation Equipment.
  3. The ISM Employment Index for March registered a reading of 1 percent, a decrease of 0.4 percentage points on February’s 48.5 reading, representing a fourth consecutive month of contraction in the Employment Index, and at a faster pace than in February. Six of the 18 manufacturing industries reported employment growth in March, in order, Printing & Related Support Activities; Non-metallic Mineral Products; Furniture & Related Products; Machinery; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The nine industries reporting a decrease in employment in March, listed in order, are: Petroleum & Coal Products; Paper Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Primary Metals; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products.
  4. The ISM Supplier Deliveries Index indicates that the delivery performance of suppliers to manufacturing organizations was slower in March than in February, as the Supplier Deliveries Index registered 50.2 percent, 0.5 percentage points higher than February’s 49.7 reading. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries. The six industries reporting slower supplier deliveries in March, listed in order, are: Paper Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; and Transportation Equipment. The four industries reporting faster supplier deliveries during March are: Primary Metals; Machinery; Plastics & Rubber Products; and Chemical Products. Eight industries reported no change in supplier deliveries in March compared to February.
  5. The ISM Inventories Index is at 47.0 percent for March, 2.0 percentage points higher than February’s 45.0 percent reading, indicating a contraction of raw materials inventories in March for the ninth consecutive month at a slower rate than February. Four industries reported higher inventories in March, namely: Printing & Related Support Activities; Paper Products; Plastics & Rubber Products; and Computer & Electronic Products. The 12 industries reporting lower inventories in March, listed in order, are: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Furniture & Related Products; Electrical Equipment, Appliances & Components; Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Miscellaneous Manufacturing.

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 49.0 percent in March, 2.0 percentage points above February’s reading of 47.0 percent, meaning that customers’ inventories are considered to be too low in March for the second consecutive month. The five manufacturing industries reporting customers’ inventories as being too high during the month of March are: Fabricated Metal Products; Furniture & Related Products; Paper Products; Computer & Electronic Products; and Transportation Equipment. The eight industries reporting customers’ inventories as too low during March, listed in order are: Textile Mills; Non-metallic Mineral Products; Primary Metals; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; Chemical Products; and Plastics & Rubber Products.
  2. The ISM Prices Index registered 51.5 percent in March, which is 13 percentage points higher than February’s 38.5 percent reading, indicating an increase in raw material prices for the first time since October 2014. In March 16 percent of respondents reported paying higher prices, 13 percent lower and 71 percent the same prices as in February. Of the 18 manufacturing industries, ten reported paying increased prices for their raw materials in March, namely, in order: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Fabricated Metal Products; Paper Products; Petroleum & Coal Products; Non-metallic Mineral Products; Primary Metals; Transportation Equipment; Machinery; and Computer & Electronic Products. The seven industries reporting paying lower prices during the month of March, listed in order, are: Wood Products; Textile Mills; Furniture & Related Products; Chemical Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Plastics & Rubber Products.

Up in Price in March were: Aluminum (2); Busheling Scrap; Copper; Crude Oil; Iron; Polypropylene (2); Steel (3) * and Steel – Hot Rolled (2)

Down in Price in March were: Corrugate; Diesel (4); Plastic Resin; Polyethylene Resin; and Steel * (9) Steel – Hot Rolled (5); and Steel Products.

In Short Supply in March: Carbon Dioxide

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

  1. The ISM Backlog of Orders Index was at 51.0 percent in March, 2.5 percentage points up on the February reading of 48.5 percent, representing growth in order backlogs for the first time since May 2015. Of the 86 percent of respondents who measure their backlogs, 21 percent reported greater backlogs, 19 percent smaller backlogs and 60 percent no change from February. Seven industries reported an increase in order backlogs in March, namely: Furniture & Related Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; and Fabricated Metal Products. The seven industries reporting a decrease in order backlogs during March, listed in order, are: Apparel, Leather & Allied Products; Transportation Equipment; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Machinery; Plastics & Rubber Products; and Paper Products.
  2. The ISM New Export Orders Index was at 52.0 percent for March, 5.5 percentage points above February’s 46.5 reading. This represents growth in new export orders and is the highest reading since December 2014, when the reading also stood at 52.0 percent. Seven industries reported growth in new export orders in March, namely, listed in order: Wood Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Chemical Products; Fabricated Metal Products; Primary Metals; and Machinery. The 10 industries reporting a decrease in new export orders during March, listed in order, are: Textile Mills; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Plastics & Rubber Products; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Non-metallic Mineral Products.
  3. The ISM Imports Index, is at 49.5 percent in March, or 0.5 percentage points higher than February’s 49.0 reading, representing contraction in imports for the second consecutive month. Five industries reported growth in imports in the month of March, namely, listed in order: Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; Machinery; and Miscellaneous Manufacturing. The eight industries reporting a decrease in imports during March, listed in order, are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Paper Products; Primary Metals; Non-metallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; and Fabricated Metal Products.

Andy Grove, a Hungarian-born refugee, and sometime mentor to Steve Jobs and Bill Gates, built Intel into the household name it is. He got us all talking and looking at one another at the flick of a switch or a mouse. He recently passed away, aged 79.

Boeing is to cut 4,000 jobs, 40 percent voluntary, 60 percent either vacant or through attrition. They are going through reorganization at their aircraft assembly operations. Airbus, meanwhile, just saw its first U.S.-built aircraft take off.

VW’s top U.S. executive, Michael Horn leaves, by mutual agreement, some six months after the emissions scandal.

The Harvard Business Review has come out on 3D Printing, stating that 30 percent of the top 300 largest global brands are either using or evaluating this additive manufacturing process., either to prototype new products, to conduct other innovation projects or for actual production. The HBR says no company can afford to ignore this technology.

The global 3D Printing industry was up by 25.9 percent in 2015 to just over $5 billion. Not much to get excited about for the moment, but watch this space. Some 278,000 desktop 3D printers were sold in 2015, compared to 160,000 in 2014; 80,000 in 2013; and 30,000 in 2012. Sounds like another Moore’s law.

A little bit of 3D Printing was recently used to reply to a publicized challenge by GE Aviation, to reduce the weight of an aircraft bracket while maintaining the strength to primarily support the weight of a cowling with the engine in service. The project was taken up by software developer Frustum and by 3D Systems on-demand parts service, Quickparts.

GE’s original design was modified by Frustum so that all design criteria were met, and together with Quickparts’ 3D Printing skills and the use of a titanium alloy, the part was ready for service with a 70 percent weight loss. Small weight losses on a number of parts add up to large economic gains in aviation.

In U.S. automotive industry news, Ford is to spend $1.6 billion to build a new small-car plant in Mexico. Construction will start this summer and 2,800 jobs will be generated by 2020. Ford has plants in the U.S, China and Germany, with Mexico in fourth place: Mexico serves customers in the U.S, Canada, China and many countries in Latin America, plus South Korea.

In the past five years Ford has invested $10.2 billion in the U.S., $2.7 billion in Spain, $2.4 billion in Germany and, with Chinese partners, $4.8 billion in China.

FCA is to cut a shift and indefinitely lay off 1,300 workers at its Sterling Heights plant that produces the Chrysler 200. The model has seen sales drop of late in favor of pickups and SUVs. The changes are scheduled for early July. 

GM’s Chevy Bolt EV, according to GM engineers, will exceed the original stated 200 mile range. The $35,000 car will go on sale later this year, about a year before Tesla’s Model 3, claims for which are that it will have a range of 215 miles. But don’t be surprised if that 215 figure goes up. 

GE is plotting a strategy for its oil and gas business in Iran as the U.S. eases sanctions. The company wants to take part in the bonanza that is Iran’s untapped 157.8 billion barrels of oil, more than four times the U.S. endowment. Iran also has large natural gas reserves.

On a non-fossil-fuel front U.S. solar growth will more than double in 2016. Solar Energy Industries Association predicts that sunlight will generate up to 3.5 percent of the country’s energy within four years, up from one percent today. Solar will add 16 gigawatts of panels in the U.S. in 2016, up from 7.3 gigawatts inn 2015.

Alcoa renames. The company’s upstream operations, the mining of bauxite, refining of alumina and smelting of aluminum will retain the Alcoa name. The downstream operations, the manufacture of car and aircraft parts and other high-performance products, will be renamed Arconic.

Both Boeing and Airbus see a tripling of the Latin American demand for passenger jets by 2035.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI went into growth territory in March, following a long period in contraction. This was a positive end to the first quarter, with production and new orders returning to growth positions. The PMI rose to 51.5 in March from February’s 49.4 reading.

There was a stronger export demand, with new export orders increasing at the joint-fastest rate since November 2014. It is expected that the weak Canadian dollar and a good U.S. economy will contribute to further export growth. Ontario is still Canada’s major driving force, but March saw improvements everywhere except in B.C. and Alberta.

Metropolitan Toronto has been named as the sixth area globally in tech start-ups and the second in North America behind Silicon Valley. The University of Waterloo has been named the Stanford of the North.

Canada produced 1.07 Mt of crude steel in February, up 17.3 percent y-o-y. Canadians bought 175,142 vehicles in March, up 9.3 percent y-o-y and a record for the month. The total included 113,413 light trucks. Ford sales were up 23.7 percent, GM up 16.5 percent and FCA up 3.2 percent.

In March, MEXICO saw its fastest rise in new orders for twelve months. The manufacturing PMI rose slightly to 53.2, its highest since May 2015. There were stronger rates of production and new order growth, with employment up, though at a slower rate than in February. Mexico produced 1.33 Mt of crude steel in February, down 10.3 percent y-o-y.


by Royce Lowe

ampco logo

Ampco-Pittsburgh Corp., a manufacturer of forged and cast engineered products, completed its acquisition of Åkers AB (excluding its operations in France and Belgium) and certain of its affiliated companies (Åkers Group). This transaction means the forged and cast roll businesses of Union Electric Steel Corp., a wholly owned operating subsidiary of Ampco, and Åkers Group will now do business under the brand name Union Electric Åkers. The deal, first reported by FORGE in December 2015, sees Ampco acquire Åkers Sweden AB of Sweden; National Roll Co. of Avonmore, Pa.; Shanxi Åkers TISCO Roll Co. Ltd. of Taiyuan, Shanxi, China (of which Åkers Group is a 60% joint-venture partner); Åkers Valji Ravne of Slovenia; and Vertical Seal Co. of Pleasantville, Pa.

McInnes Rolled Rings completed an $8 million, 25,000-square-foot expansion to its manufacturing facility in Erie, Pa. The addition expands its heat-treat size capabilities by providing the ability to quench and temper forgings up to 144 inches in diameter. With separate high-agitation water and polymer quench tanks, the new state-of-the-art bay will significantly expand the company’s daily tonnage capacity and ensure fast delivery times. McInnes contracted with Can-Eng Furnaces International to design and install the most advanced technology to process a large-diameter product.

Alcoa has been awarded a five-year contract from the U.S. Army worth up to $50 million for R&D projects focused on developing innovative, light weight solutions for ground combat vehicles. The company’s first project funded under the contract is an initiative to advance Alcoa-developed aluminum weld-wire alloys, which have been proven to increase the strength of welded joints as well as improve corrosion resistance of those welded joints on combat vehicles. Other R&D efforts will address various technologies associated with light weight such as aluminum forming technology, fastening and joining, modeling and simulation, material development and fabrication, energy conservation, and coating and corrosion technology.


by Tim Grady

Presented live each Tuesday at 1:00 p.m. ET at and stored as a podcast that listeners can hear or download at their convenience, show hosts Tim Grady and Lew Weiss present the latest trends, breaking news, economic conditions and new technology in manufacturing.

On Tuesday, April 5, Brad Holcomb, committee chair is the ISM’s Manufacturing Report on Business® reviewed the March report in depth, followed by Dr. Chris Kuehl, noted economist for FMA took us on a trip around the global economies.

On Tuesday, April 12, America’s Money Answer’s Man and author of 14 books joined the show to discuss ways that manufacturers, and individuals, can put money to work for them in passive income strategies, as well as other secrets to financial matters in manufacturing. This is an excellent show for C-suite haunts.

Coming up are shows on America’s hidden slave labor pool operating quietly under the radar that steals jobs from small and midsize enterprises, and the $15 an hour minimum wage that will turn into lots of jobs – for robotics!

While $15 an hour sounds good in politics and on the nightly news, it’s a disaster in the real world where technology will displace many low wage workers in repetitive tasks without taking a vacation, any kind of leave, and work 24/7/365 with only occasional maintenance and a programming tweak here and there. Need a little more ketchup or an extra pickle on that burger? Order in advance on your phone and head to the pick-up counter where a robot has completed and delivered your order. Welcome to 2016 – and don’t miss this show!


by Royce Lowe

erozone mfg

Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for March, at 51.6, was slightly up from February’s 51.2 reading, for the second-weakest increase in over a year. Manufacturing grew by just 0.2 percent in the first quarter. Both Germany and France are in stagnation, with France slipping below the 50 mark for the first time since August 2015.

On the brighter side, Ireland (particularly), Spain, Italy, The Netherlands and Austria showed good growth.

PMI High/low
Ireland 54.9 (54.3) 8-month high
Netherlands 53.6 (51.7) 5-month high
Italy 53.5 (52.2) 3-month high
Spain 53.4 (55.4) 3-month low)
Austria 52.8 (51.9) 5-month high
Germany 50.7 (50.5) 2-month high
France 49.6 (50.2) 7-month low
Greece 49.0 (48.4) 2-month high

Siemens will cut 2,500 jobs in its industrial division, but will create 25,000 jobs worldwide ‘in each of the coming years’ as it focuses on becoming a ‘digital industrial company.’ What will it need? Workers with a STEM education in high school and a degree in at least a two-year college. Same is becoming true all around the world.

Daimler, the world’s largest truck maker, has designed a long-haul truck for China with its joint-venture partner Beiqi Foton Motor Co. The plan is confidential but the truck will go on sale ‘in a few years.’ This is part of Daimler’s plan to increase its global truck sales by 40 percent by the end of the decade.

bmw 760iMeanwhile, in the ‘how fast do you really want to go?’ category, BMW rolled out a new model M760i at the recent N.Y. International Auto Show, complete with a modified 6.6 liter V-12 engine from a Rolls Royce Wraith. The car will move from zero to 62 m.p.h. in 3.7 seconds and has a top speed of 155 mph. All complete with an aluminum block, iron-coated aluminum pistons and forged connecting rods and crankshaft.

Mercedes, never much out of the news, announced its highest ever monthly sales with passenger car deliveries up 8.4 percent in March, thanks to a 26.6 percent increase in sales in China – to offset a 6 percent drop in the U.S. Mercedes sold 198,921 cars in March and 483,487 vehicles in the first quarter. SUV sales were up 44.4 percent.

In March, new passenger car sales were flat in Germany, with sales of 323,000 vehicles; up 7.5 percent in France with sales of 211,264 units; up 17.6 percent in Italy with sales of 191,156 units and down 0.8 percent in Spain with sales of 111, 450 units.

Crude steel production in Germany in February was at 3.36Mt, down 4.3 percent y-o-y; in Italy 1.93Mt, down 2.1 percent y-o-y; in France 1.32Mt, up 2.6 percent y-o-y and in Spain 1.09Mt, down 8.9 percent y-o-y.

Russia’s crude steel production for February was at 5.67Mt, down 2.7 percent y-o-y, Ukraine’s was 1.97Mt, up 24.1 percent y-o-y.

The UK manufacturing sector did not have a very good first quarter, and is not expected to make a significant contribution to the country’s GDP figures.

The PMI for March was very slightly up, at 51.0, from February’s 50.8 reading. Production rose at a pace unchanged from February’s 7-month low, and there were job losses for the third consecutive month. There were poor levels of new orders, both domestic and export, and backlogs fell for the 25th month.

tata motorsMeanwhile there is a very large question concerning the survival of Britain’s steel industry, which is mostly owned by India’s Tata. There have been job losses and mothballings of late, but no major decision has been taken as yet regarding the future status of the various plants around the UK. The biggest problem is at Port Talbot in Wales, where over 4,000 jobs are in jeopardy.

The UK produced 0.60Mt of crude steel in February, down 37.9 percent y-o-y.

The JP Morgan Global Manufacturing PMI – a composite index produced by JPMorgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – crept back up to 50.5 from February’s 50.0 reading. Manufacturing growth was near a three-year low in the first quarter, with only mild growth at best.

Having said all this, the production index went from 50.3 to 51.2, the new orders from 50.4 to 51.2, new exports from 49.4 to 49.6 and employment was steady at 49.5. These upward moves point to possible improvements going into the second quarter.

There were job losses in China, Germany, the UK, France, South Korea, Brazil, Russia and Vietnam.

The global machine tool business is forecast to undergo a 5.5 percent annual growth through 2019, driven particularly by increasing demand in China and other developing nations. The total market is estimated at $181 billion.


by Royce Lowe

china oil

CHINA produced 58.52Mt of crude steel in February, down 4.0 percent   y-o-y; Japan 8.36Mt down 1.0 percent y-o-y; India 6.94Mt, down 3.6 percent y-o-y and South Korea 5.30Mt, up 5.0 percent y-o-y. Taiwan produced 1.50Mt in February, down 15.6 percent y-o-y. 

The Caixin China manufacturing PMI for March rose to 49.7 percent from February’s 48.0 percent reading, a 13-month high. Operating conditions deteriorated at their slowest pace in 13 months. There was an expansion of the new order books and the first production increase in a year, but employment was stagnant. New export business fell for the fourth consecutive month, but overall production and new orders were over the 50 mark.

Wuhan Iron and Steel, one of China’s largest steelmakers, plans to cut its workforce from 80,000 to 30,000. And the Chinese government has a goal to cut the country’s steel capacity by up to 150,000 tonnes within five years.

China sold 1.38 million cars – sedans, SUVs and minivans in February – down 1.5 percent y-o-y. Ford and GM were both down 9 percent, Honda down 7.8 percent and Toyota up 6.3 percent in the month. China’s combined passenger and commercial vehicle sales surpassed 4 million units for January-February combined, up 4.6 percent y-o-y.

Operating conditions in JAPAN’s manufacturing sector deteriorated in March at the fastest rate in over three years. Production declined for the first time since April 2015 and new orders fell at the sharpest rate in over two years. International demand fell at the quickest rate since January 2013. The PMI for March was down from February’s 50.1 reading to 49.1 – its lowest reading in over three years, after falling from 52.3 to 50.1 between January and February.

Japanese car, truck and bus sales, for March 2016 are reported as off 3.2 percent y-o-y, at 404,813 units. Minicars, with a 660 cc max engine, sold 231,088 units, off 16.7 percent y-o-y.

The INDIAN manufacturing sector continued to show strength in March, with production up at a faster rate and new order growth at an eight-month high . The Nikkei PMI reading went from February’s 51.1 reading to 52.4, an eight-month high.

There is good demand on both the domestic and export fronts.


by Royce Lowe

brazil oil

Brazil’s crude steel production for the month of February was 2.43Mt, an 8.7 percent y-o-y decrease. Brazil’s manufacturing performance looked slightly less ‘drastic’ in March, as contraction in production eased, thanks to more export orders, in fact the strongest expansion in new export orders in 6.1/2 years.

Production fell at the weakest pace since February 2015 and the downturn in new orders softened. Domestic demand continues to be weak. Employment decreased at one of its fastest rates in the history of this survey.

Brazil olympic siteOne bright spot for Brazil is that work on the Olympic site is 95 percent complete and is mostly staying within budget. A potential problem however is (a lack of) ticket sales



by Norbert Ore

The global economy continued to grow in March as 14 of the 18 (up from 9 in February) surveys we follow are advancing. The 14 growing combine for an average PMI of 53.0. This resurgence was led by Australia’s PMI at 58.1, its highest reading since April 2004, and its ninth month in the current cycle, signalling improvement in the global demand for raw materials.

Growth in the Eurozone PMI (51.6, +0.4) is now in its 33rd consecutive month as manufacturing continues its growth trend. Germany (50.7, +0.2) continued marginally positive and posted its 16th consecutive month of growth. The remaining seven Eurozone countries average 52.4 percent and were led by Ireland (54.9, +2.0) while France (49.6, -0.6) and Greece (49.0, +0.6) failed to grow. The UK (51.0, +0.2) registered its 36th consecutive month above the 50 mark. While employment is down for the third consecutive month, there is apparent strength in intermediate goods and a continuation of growth in the segment should help improve the picture for jobs.

China’s Official Report, the CFLP PMI (50.2, +1.2) provides an insight to marginal improvement with its best performance since June 2015 when it registered 50.2. The Caixin China General Manufacturing PMI (49.7, +1.7) and has now been below the midpoint for 12 consecutive months. As for North America, Canada (51.5, +2.1) reversed a seven-month trend of contraction and Mexico (53.2, +0.1) expanded at a pace above its six-month average of 52.8 percent.



by Norbert Ore

US Manufacturing

The U.S. manufacturing sector has been through rather rough times of late. New orders were down, so were production and employment. In the midst of all this there was talk of a ‘manufacturing recession’ which has since died off. Reshoring efforts weren’t bearing fruit the way they were supposed to, and from some quarters we heard that robots were going to take over the manufacturing business, and in pretty short order at that. And companies were quitting the U.S. to go to the UK or Ireland or some other place where they’d pay less corporate tax. The ISM PMI indices were under the fifty mark for a number of months, which is always good for a dose of pessimism.

reshoringThe bottom line is that the U.S. manufacturing sector is the world’s most competitive, with output per worker higher than in any other major manufacturing country. The labor costs per unit of output are lower than in Brazil, Canada and Germany and only slightly higher than in China. The industry has low energy costs, a flexible labor market and a stable regulatory framework. It lost jobs galore for years to China, and continues to lose them to this day, though at a markedly reduced rate, for example 150,000 jobs offshored in 2003, 50,000 in 2014. In 1980 there were 19 million manufacturing jobs in the U.S., in 2000 there were still just over 17 million. That’s when China really got its manufacturing business going; that’s when world steel production took off, again China driven. It is estimated that between 2000 and 2007, some 220,000 jobs per year were lost to offshoring.

The U.S came out of the great recession with 11.5 million manufacturing jobs in 2010, and since that time has replaced about 900,000 of them. The Reshoring Initiative says there are still some 3 to 4 million manufacturing jobs offshore. In the grand scheme of things, some jobs will stay offshore as the world becomes more and more of a global marketplace, and as consumer consumption in developing countries justifies keep some production close to the end user.

According to other sources there are myriad jobs in the U.S. that need filling, and in many cases no people to fill them. Skilled people are retiring and a lot of young people are shying away from manufacturing because they still think it’s a dark, dirty, dangerous and declining business. This is of course no longer the case, and the fact is exemplified by the case of Pratt and Whitney’s plant in North Berwick, Maine, where in April 2013 an apprenticeship program got underway whereby personnel were put through three plant areas such as machining, coatings and assembly, attending school during this time, and when the first class graduates in 2017 they will be certified in machine trades by the state of Maine and will have an associate degree from York County Community College. The plant was opened to counselors from local grade schools in the area, and they saw a high-tech, clean, modern facility that they were able to describe in full to future potential participants in the apprenticeship program.

A recent survey in the manufacturing sector asked which were the most difficult manufacturing jobs to fill. The answers, in decreasing order of difficulty to fill, are: Industrial Maintenance, Quality Specialist, Sales, CNC Operator/Machinist, Welder, Toolmaker, Manufacturing Engineer, Production Worker and Production Manager. In a further survey, 67 percent of respondents said they’d struggled to fill a position in the past year due to a lack of skilled candidates, and 78 percent said they were concerned about their aging workforce.

According to the Chinese American Chamber of Commerce, more U.S. companies are leaving China, with 25 percent either moved or planning to move capacity out of China. Half of these are moving to ‘developing Asia,’ where labor costs are significantly lower than in China, and 40 percent moving to the U.S., Canada or Mexico. 77 percent of 496 respondents to the survey said they felt ‘less welcome’ in China in 2015, versus 47 percent in 2014. The main issues seem to be labor costs, regulatory challenges and the threat of IP theft.

In 2015, the combined reshoring and Foreign Direct Investment added 67,000 domestic manufacturing jobs. Overall this trend was down 6 percent from 2014, due to the strong U.S. dollar, low oil prices and shipping rates and weaker economies in competitor manufacturing countries. Problems from offshore sources include lower quality, supply interruptions, high freight costs and delivery. Delivery is not at all helped of course by such mostly unforeseen occurrences as the 2014 west coast port labor disruptions.

The U.S., it is said, will overtake China as the global manufacturing powerhouse by the year 2020.

Having said all this, having sung the praises of the manufacturing sector of the world’s largest economy, there is still a major problem finding the men and women who are qualified to work in an industry that is more than unrecognizable from the one their parents worked in. Apprenticeship programs, as described above, are underway in many areas of the U.S., but even though the results of these programs are largely very positive, there just aren’t enough of them. Manufacturing companies just need to go the extra mile and get more eager people to work in this industry we call manufacturing. We used to always talk about machines being ‘manned’ but what about the fairer sex? Women who have been working in ‘middle-skill’ jobs such as packaging, cooking etc., could, with minimal training, move up into jobs such as machining and welding. This could lift many households out of poverty – women are the sole or primary earner in 40 percent of U.S. households.

The manufacturing wheel continues to turn but it requires constant lubrication


by Royce Lowe

For the most part, things look better.

road aheadGE’s foray into the Iranian ‘oil bonanza’ will be offset over the next few years by electric vehicles with a reasonable range and solar panels that will light up small cities.

We may see, by giving them some gentle academic nurturing, large numbers of young men and women deciding upon a career in manufacturing

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