Metals & MFG Outlook May 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!

Metals & MFG Outlook – May 2016





It seems we are cycling from cautious optimism to mild disappointment and back again month by month as 2016, now in its 5th month, creeps forward. It is not a boom and it is not a bust – just a rather humdrum, day-by-day drone of ameliorated ups and downs.

This may be the new normal, where 3%+ GDP isn’t on any radar. Capital investment continues to be on short ROI technology to squeeze efficiencies out of existing plants rather than new brick and mortar assembly lines in manufacturing. And the plants under construction are being designed with more technological efficiency and less human requirements on the shop floor, as heard during a recent discussion with Stephen Gray of Gray Construction in the design/build industry.

This is consistent with what we have been hearing in the industrial Internet of things and tepid new hiring numbers. It is fast becoming an automated, technology-driven manufacturing world where 2025 began a decade sooner than expected. Even with consumer confidence and spending fairly strong, no forecast calls for any U.S. GDP beginning with a 3, which isn’t all bad. The U.S. economy has a tendency to become overheated at times, driven by investment bubbles.

Perhaps an unheard of economic expansion from July of 2009 through 2020 of modest GDP wouldn’t be such a bad thing. In fact, if you look at average GPD growth since 1945, it has been steadily falling from 5.4 in the immediate post-war years to under 2.0 from November of 2001 to December of 2007 just before the bottom fell out.

Consistent with that is growth in business, which tends to mirror GDP or a small multiple thereof over the last several decades in manufacturing. There has been some big and flashy stuff in tech and some colossal busts, but manufacturing has been a good long-term bet for many decades, and has been the lead sector coming out of every recession since the 1950’s.

We are beginning to see some recovery in Europe and Japan, and some stabilization in China, so the world economies are looking better, which will help to weaken the dollar and strengthen exports. Consequently, as much as we all like the thrill ride up a booming economy, we can all do without the screaming descent into the trough of the next recession presently not forecast for awhile except by some prognosticators of doom.

Thus, the Metals and Manufacturing Outlook newsletter this month is a fairly unalarming read this month, with little need for excess blood pressure medication. .

Best Regards,
Lewis A. Weiss


us steel industryIn spite of all the newsprint recently allotted to the woes of the global steel industry, heavy price increases have been the order of the day, and week, since February this year. Steel prices may never aspire again to those dizzying heights of July 2008, when hot-rolled coil was going for $1091/short ton, or $1203/tonne, nor even to the prices hot-rolled coil was going for in 2011. The fact is that prices are on the up in the U.S. and Canada, China and the rest of Asia, and in Europe, with prices on hot-rolled coil and cold-rolled coil in both the U.S. and Canada up around 25 percent from early February. Further, it seems that mills won’t give a price for July delivery. The price of scrap, as normally happens, is following that of steel on its upward course. One thing that isn’t following the upward trend, at least to the same extent, is end-user demand.

Chinese steel production reached its highest ever tonnage in the month of March at 70.65Mt. Major price increases have been noted, with the domestic Chinese price up 45 percent this year, and Shanghai rebar futures up 30 percent. The Chinese economy is said to have stabilized and there has been a rebound in property prices. Billet and slab prices are also on an upward course.

Most observers still expect China’s steel production and demand to drop this year as policy makers ‘move away from heavy industry.’ Chinese output for this year will fall to 781Mt from 2015’s 806Mt, according to a projection from Australia, the world’s largest shipper of iron ore. We haven’t heard the end of this latest steel story, and analysts are having a field day.

Along with this we see drops in PMI values for most countries, and the news that (only) 156,000 jobs were added to the U.S. economy in April, with a loss of around 11,000 in manufacturing, due in large part to a continuing slowdown in the oil and gas sector and lackluster global demand. Manufacturing employment has fallen now for five consecutive months, but April’s drop was at a slower pace than March’s. New orders, Production and Inventories were all down in April from March.

Meanwhile Australia and Brazil, the world’s two largest iron ore producers, say that by 2021 they will account for 90 percent of global trade in the commodity. Australia is forecasting a rise in the price of iron ore through 2021.

U.S. Steel is to cut 25 percent of its non-union workforce.

Tesla now has apparently 400,000 orders for its model 3, due to start delivery in late 2017. That’s an awful lot of bated breath.

The world is falling in love with solar energy, from the deserts of Jordan and Morocco, through South Africa, Germany – yes Germany, India, Brazil, Mexico, and of course China and the U.S. King Abdullah of Jordan has bought Teslas for his senior ministers. Meanwhile Old King Coal is going through a very rough time, with several large bankruptcies recently announced.

tata steelTata Steel, the owner of most of the steelmaking capacity in the UK, is selling large parts of it to a company called Greybull Capital LLP, for a ‘nominal fee.’ Greybull – which is talking of an investment and financing package of $570 million – will take over plants in Scunthorpe, Teesside and northern France, representing a total of 4800 jobs.

Additive Manufacturing or 3D Printing is rarely out of manufacturing news these days. It is forecast that the worldwide market for 3D Printers and associated materials and services will reach $20.2 billion by 2019. For an update on 3DP see Manufacturing Scene.

The PMI figure from the Institute of Supply Management moved down from March’s 51.8 percent to 50.8 percent in April, representing growth in manufacturing for the second consecutive month. There was growth in the overall economy for the 83rd consecutive month.




The Markit PMI for the U.S. manufacturing sector moved down to 50.8 percent in April from March’s 51.5 figure. Markit states that the PMI points to the weakest performance since September 2009, with production volumes and employment numbers rising only fractionally and new orders expanding at the slowest pace so far in 2016. What this all means is the slowest improvement in overall business conditions for just over 6 and 1/2 years.

Export orders are dropping at the fastest pace for 17 months. Markit state ‘There is no end in sight to the current downturn in manufacturing activity.’ And that ‘ Factory output is dropping at an annualized rate of approximately 3 percent, and that factory headcounts are being culled at a rate of around 10,000 per month.’

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 ‘advance’ estimate for the annual rate of Real GDP growth in the first quarter of 2016, putting it at 0.5 percent. The second estimate will be published on May 27. GALLUP’s U.S. Economic Confidence Index was hovering around -14 in          late April. The job creation index was at +30 in late April.

china oilWorld crude steel production for the 66 reporting countries for the month of March 2016 was 137Mt, down 0.5 percent y-o-y. For the first quarter it was 385.7Mt, down by 3.6 percent from the same period in 2015. Capacity utilization for March 2016 was at 70.5 percent, down 1.3 percent on March 2015, but up 3.9 percent on February 2016. This is fairly low capacity utilization overall. U.S. crude steel production, for March 2016 was 6.75Mt, up 4.9 percent y-o-y.

Primary Global Aluminum Production in March 2016 was reported at 4.856 million tonnes, of which 2.62 million tonnes, 54 percent, were produced in China. The Gulf Corporation Council (GCC) produced 442,000 tonnes, North America 329,000 tonnes, Western Europe 339,000 tonnes and Eastern and Central Europe 337,000 tonnes.

Here are the latest figures for US new car and light truck sales for ‘the Big Eight’ for April 2016.

The ‘Big Eight’ April ’16 April ’15 YTD % change
General Motors 259557 269056 -3.5
Ford 229739 221652 3.6
Toyota 211125 203329 3.8
FCA 196526 185233 6.1
Honda 148829 130068 14.4
Nissan 123861 109848 12.8
Hyundai/Kia 118721 121291 -2.1
VW 27112 30009 -9.7
Total new cars and light trucks 1506977 1,454,951  3.6 

                        CARS                  LIGHT TRUCKS  TOTAL

APR 2015        665,924                789,027                         1,454,951

APR 2016        629,836                877,141                         1,506,977

                        -5.4%                  +11.2%                        + 3.6%

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) -2.0 (Mar) +0.9 (Mar) 5.0 (Mar)
Canada +0.8 (qtr) +0.6 (Jan) +1.3 (Mar) 7.1 (Mar)
China +4.5 (qtr) +6.8 (Mar) +2.3 (Mar) 4.0 (Qtr 1)
Japan -1.1 (qtr) +0.1 (Mar) nil (Mar) 3.2 (Mar)
Britain +1.6 (qtr) -0.5 (Feb) +0.5 (Mar) 5.1 (Jan)
Euro Area +1.3 (qtr) +0.8 (Feb) nil   (Mar) 10.3 (Feb)
France +1.3 (qtr) +0.6 (Feb) – 0.1 (Mar) 10.2 (Feb)
Germany +1.1 (qtr) +1.2 (Feb) +0.3 (Mar) 6.2 (Mar)
Spain +3.3 (qtr) +5.9 (Feb) -0.8 (Mar) 20.4 (Feb)
India + 4.4 (qtr) +2.0 (Feb) +4.8 (Mar) 4.9 (2013)
Brazil – 5.7 (qtr) -9.8 (Feb) +9.4 (Mar) 10.2 (Feb)
Taiwan + 2.2 (qtr) – 3.6 (Mar) + 2.0 (Mar) 3.9 (Mar)
Mexico +2.2 (qtr) +2.6 (Feb) +2.6 (Mar) 4.2 (Mar)  

 FF Journal Magazine

by Royce Lowe


by Royce Lowe

north america






The Institute of Supply Management PMI figure registered 50.8 percent in April, down one percentage point from March’s 51.8 reading, representing growth in manufacturing for the second consecutive month, but at a slower pace than in March, and growth in the overall economy for the 83rd consecutive month. Of the 18 manufacturing industries, eleven industries are reporting growth in April, in order: Wood Products; Printing & Related Support Activities; Paper Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Chemical Products; Machinery; Computer & Electronic Products; Non-metallic Mineral Products; and Food, Beverage & Tobacco Products. The four industries reporting contraction in April are: Petroleum & Coal Products; Transportation Equipment; Miscellaneous Manufacturing; and Furniture & Related Products.

Following are comments from the industry:

Fabricated Metal Products personnel say that steel prices are increasing but that this is supply-side driven. The general economy is plugging along with no big changes and is kind of lackluster. Chemical Products respondents say business is remaining a bit sluggish overall, though certain areas are showing signs of pickup. Computer & Electronic Product respondents say that while oil prices have recovered slightly, the industry as a whole is in a struggle. Transportation Equipment personnel say that sales are firming at the reduced levels seen this year and the feeling is that a bottom has been reached. Miscellaneous Manufacturing personnel say that business is stable, and that sales and production rates are steady to improving. Printing & Related Support Activities say that activity is increasing on the eve of the busy season. Machinery reports that the auto industry is still going strong. Food, Beverage & Tobacco Products respondents say that they are still running at capacity and awaiting new capacity coming online.

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 April, at 8 percent, was down 2.5 percent on March’s figure of 58.3 percent., representing growth in new orders for the fourth consecutive month. The fifteen industries reporting growth in new orders in April, listed in order, are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Paper Products; Wood Products; Plastics & Rubber Products; Chemical Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Machinery; Furniture & Related Products; Primary Metals; Computer & Electronic Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Transportation Equipment. The only industry reporting a decrease in new orders during April is Textile Mills.
  2. The ISM Production Index for April is at 54.2 percent, down1 percentage points from March’s 55.3 percent reading, representing growth in production for the fourth consecutive month. Fifteen industries reported growth in production during the month of April, namely, listed in order, Paper Products; Wood Products; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; Printing & Related Support Activities; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Miscellaneous Manufacturing; Non-metallic Mineral Products; Machinery; Furniture & Related Products; Transportation Equipment; and Food, Beverage & Tobacco Products. The two industries reporting a decrease in production during April are: Petroleum & Coal Products; and Textile Mills.
  3. The ISM Employment Index for April registered a reading of 2 percent, an increase of 1.1 percentage points on March’s 48.1 reading, representing a fifth consecutive month of contraction in the Employment Index, but at a slower pace than in March. Eleven of the 18 manufacturing industries reported employment growth in April, in order, Wood Products; Textile Mills; Printing & Related Support Activities; Paper Products; Primary Metals; Machinery; Furniture & Related Products; Non-metallic Mineral Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. The five industries reporting a decrease in employment in April are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Transportation Equipment.
  4. The ISM Supplier Deliveries Index indicates that the delivery performance of suppliers to manufacturing organizations was faster in April than in March, as the Supplier Deliveries Index registered 49.1 percent, 1.1 percentage points below March’s 50.2 reading. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries. The five industries reporting slower supplier deliveries in April, listed in order, are: Fabricated Metal Products; Plastics & Rubber Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical Products. The five industries reporting faster supplier deliveries during April are: Paper Products; Non-metallic Mineral Products; Machinery; Transportation Equipment; and Primary Metals. Eight industries reported no change in supplier deliveries in April compared to March.
  5. The ISM Inventories Index, is at 45.5 percent for April, 1.5 percentage points below March’s 47.0 percent reading, indicating a contraction of raw materials inventories in April for the tenth consecutive month at a faster rate than in March. Three industries reported higher inventories in April, namely: Plastics & Rubber Products; Fabricated Metal Products; and Primary Metals. The 10 industries reporting lower inventories in April, listed in order, are: Furniture & Related Products; Textile Mills; Miscellaneous Manufacturing; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Machinery; and Printing & Related Support Activities.

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 46.0 percent in April, 3.0 percentage points below March’s reading of 49.0 percent, meaning that customers’ inventories are considered to be too low in April for the third consecutive month. The four manufacturing industries reporting customers’ inventories as being too high during the month of April are: Non-metallic Mineral Products; Furniture & Related Products; Fabricated Metal Products; and Chemical Products. The seven industries reporting customers’ inventories as too low during April, listed in order, are: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Machinery; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Computer & Electronic Products; and Transportation Equipment.
  2. The ISM Prices Index registered 59.0 percent in April, which is 7.5 percentage points higher than March’s 51.5 percent reading, indicating an increase in raw material prices for the second consecutive month and only the second time since October 2014. In April 28 percent of respondents reported paying higher prices, 10 percent lower and 62 percent the same prices as in March.

Of the 18 manufacturing industries, twelve reported paying increased prices for their raw materials in April, namely, in order: Apparel, Leather & Allied Products; Primary Metals; Fabricated Metal Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Non-metallic Mineral Products; Machinery; Transportation Equipment; Chemical Products; and Paper Products. The four industries reporting paying lower prices during the month of April are: Textile Mills; Furniture & Related Products; Miscellaneous Manufacturing; and Petroleum & Coal Products.

Up in Price in April were: Aluminum (3); Aluminum Products; #1 Bundled Scrap; Carbon Steel Coil; Copper* (2); Diesel; Ethylene; HDPE Resin; Oil; Palm Oil; Plastic Resins; Polypropylene (3); Propylene; Scrap Steel; Stainless Steel; Steel (4); Steel — Cold Rolled; Steel — Hot Rolled (3); and Titanium Dioxide.

Down in Price in April were: Copper *

In Short Supply in April: None

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 50.5 percent in April, 0.5 percentage points down on the March reading of 51.0 percent, representing growth in order backlogs for the second consecutive month. Of the 87 percent of respondents who measure their backlogs, 24 percent reported greater backlogs, 23 percent smaller backlogs and 53 percent no change from March. Seven industries reported an increase in order backlogs in April, namely, in order: Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Chemical Products; Machinery; and Paper Products. The eight industries reporting a decrease in order backlogs during April, listed in order, are: Textile Mills; Non-metallic Mineral Products; Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Furniture & Related Products; Computer & Electronic Products; and Transportation Equipment.
  2. The ISM New Export Orders Index was at 52.5 percent for April, 0.5 percentage points above March’s 52.0 reading. This represents growth in new export orders for the second consecutive month. Eight industries reported growth in new export orders in April, namely, listed in order: Wood Products; Printing & Related Support Activities; Chemical Products; Fabricated Metal Products; Transportation Equipment; Paper Products; Miscellaneous Manufacturing; and Plastics & Rubber Products. The four industries reporting a decrease in new export orders during April are: Non-metallic Mineral Products; Primary Metals; Machinery; and Food, Beverage & Tobacco Products.
  3. The ISM Imports Index, is at 50.0 percent in April, or 0.5 percentage points higher than March’s 49.5 reading, representing imports in April as unchanged from those in March. Four industries reported growth in imports in the month of April, namely, listed in order: Non-metallic Mineral Products; Chemical Products; Fabricated Metal Products; and Paper Products. The six industries reporting a decrease in imports during April, listed in order, are: Textile Mills; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Computer & Electronic Products; and Food, Beverage & Tobacco Products. Seven industries reported no change in imports in April compared to March.

In U.S. automotive industry news, Ford has committed to investing $9 billion in its U.S. manufacturing facilities. This will include $1.6 billion to upgrade plants in Michigan and Ohio, $1.4 billion in its Livonia Transmission Plant to build 10-speed transmissions for the F-150 Raptor and other F-150 models, and $200 million in Ohio to build a super-duty chassis cab.

Ford recently paid over $210,000 fpr Tesla’s 64th Model X. GM and Toyota also bought one. Hope they find what they’re looking for. The company is joining GM and Tesla in the electric car ‘race’ and will invest $4.5 billion in electrified vehicles, aiming to add 13 electric cars and hybrids to its stable by 2020.

In U.S. Aerospace news, Alcoa has been called upon by Airbus for a supply deal on the strength of its 3D Printing capabilities, involving the production of 3D-printed titanium fuselage and engine pylon parts. Airbus looked to Alcoa for its portfolio of materials design, various production capabilities and aerospace product experience. Alcoa’s expertise also runs to powder production and hot isostatic pressing.

boeinBoeing Commercial Airplanes has given a contract to India’s Bharat Forge Ltd. (BFL) for the supply of four titanium closed-die forgings for the forthcoming 777X, a redesigned version of the 777 long-range, wide-body jet that is the world’s largest twin-engine aircraft. Boeing has 320 orders for the plane and first deliveries are scheduled for 2020. The application of the new products was not revealed, but BFL are scheduled to begin shipping two of the new forgings to Boeing in late 2016, with two more deliveries for early 2017.Contract terms were not detailed, but BFL emphasized its significance to Boeing’s global supply chain, and that it is the only Indian supplier of globally-approved titanium forgings.

Earlier this year BFL began delivery of closed-die forgings for Boeing’s 737-Next Generation narrow-body jets in a supply program that will carry on through Boeing’s transition to the new 737 MAX.

geGE, never long out of the news, whose recent $1.9 billion profit result beat analysts’ estimates, is moving its headquarters from Fairfield, Ct to Boston, where it feels it will improve its chances of recruiting the best software engineers for its digital division.

In the not-everything’s-perfect zone, GE’s Genx-1BPIP2 engines have been plagued by icing issues and the company has been ordered by the FAA to repair them.

GE will upgrade a power plant with its newest gas turbine, the Winnebago-sized 660-ton HA, together with equipment from the Alstom energy business it acquired late last year.

PSE&G Power boosts the order book of GE’s HA turbine to 35: it includes the Alstom-designed steam generator. The turbine won recent orders in Pakistan and South Korea.

Under the latest agreement, GE will expand the Bridgeport Harbor Generating Station in Connecticut, boosting its capacity to a level sufficient to supply enough energy to power 500,000 homes when commercial operation begins in early 2019.

Allegheny Technologies Incorporated, (ATI), a one-time stalwart of the U.S. stainless steel industry, and now one of the more important specialty metals supplier to the aerospace, defense and medical industries, is restructuring its flat-rolled operations and will cut 250 jobs, over a third of its workforce, by this summer, with annual savings of $30 million. Stainless steel and grain oriented electrical steels are no longer profitable, and ATI is looking to a ‘smaller, more agile, streamlined, cohesive and efficient flat-rolled products operation that will lead into products and markets with significant technical barriers to entry.’ 

Non-fossil fuel energy generation is in the news a lot these days, and deserves to be there. It’s bringing out what could be considered to be the best in a number of companies who are working hard to improve present technology and to come up with new methods of harnessing Mr. Sun and Mrs. Sea.

oscalaA quick calculation told somebody there are 332,519,000 cubic miles of water on the planet, which equates to 352,670-and-15-zeros gallons. That’s a lot of water sloshing around out there, which means a lot of waves. Another quick calculation told somebody we could get a third of the U.S.’s electricity from the ocean’s waves. Oscilla Power of Seattle, working with researchers at the University of Maine, are moving towards a significant modification of ‘normal’ methods of getting energy from waves. All the moving parts in present equipment have a tendency to break down, in large part due to corrosion from sea water. The new idea, presently being tested in a large tank at the U of M, involves applying all this kinetic energy to a solid piece of metal, instead of using it to turn the blades of an impeller, thus creating an alternating magnetic polarity in the metal that can be converted into electrical current. The company and the university are looking to have a working ‘piece’ by 2020.

First Solar Inc. of Tempe Arizona, a manufacturer of solar panels and a provider of utility-scale Photovoltaic power plants and services, has for the first time in three years been making panels for less than China’s biggest producer, justifying the more than $3 billion in loan guarantees from the U.S. government. With $775 million invested, the company made panels for as little as 40 cents per watt, 15 percent less than China’s Trina Solar Ltd.

The U.S. will see its first ‘University Technology Partnership’ when Rolls Royce renews and expands a technology partnership with Purdue University to conduct research into new aircraft propulsion systems. Rolls Royce will put $33 million into the project, which will involve two research centers, one for thermal management systems and one for advanced compressor systems. 

Google is scaling up its digital skills teaching project to include a million Africans in the next year, aiming to deal with high unemployment on the continent. This will provide free digital training to 300,000 people in South Africa, where unemployment amongst 15-34 year olds is 35 percent, 400,000 in Nigeria, 200,000 in Kenya and 100,000 in other sub-Saharan countries. Google recently stated it had trained a million Europeans and had committed to training another million by the end of 2017.

Recent figures from the U.S. show that 34.1 percent of employees are engaged in their work – meaning they are involved in, enthusiastic about and committed to their work. This is the highest level since tracking began in January 2011. The global engagement level is around 13 percent.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI rose to 52.2 in April from March’s 51.5 on the back of the strongest improvement in manufacturing conditions since December 2014. Production, new orders and employment all took off from the previous month.

All monitored regions except Alberta and British Columbia showed upturns in manufacturing performance, with Québec recording a significant rebound with new orders up at the fastest pace since August 2012. Ontario continued to perform very well in April, but growth momentum slowed somewhat from March. Both domestic and export orders showed ongoing improvement.

Canada produced 1.14 Mt of crude steel in March, up 7.9 percent y-o-y.

Canadians bought 200,327 light vehicles in April, up 6.0 percent y-o-y, a record for any month of the year and the first time light vehicle sales have surpassed 200,000 vehicles. FCA sales were up 10 percent y-o-y, Ford up 11 percent and GM down 9 percent.

Bombardier Inc. rejected an initial investment offer from the Federal Government to help with its ongoing financial problems stemming from production of its C series jet aircraft. According to ‘people in the know’ the two sides have failed to come to terms regarding ‘corporate governance’ and other issues. The Federal Government is being tougher with the company than is the Government of Quebec.

Meanwhile Delta has ordered 75 of the aircraft with options on 50 more. Air Canada has given a letter of intent for 45 with options on another 30, but this has not as yet been translated into a firm order.

In April, MEXICO saw a weakening in manufacturing growth, coincident with the slowest upturn in new orders for six months The manufacturing PMI fell from March’s 53.2 to 52.4 in April.

Although production increased at the slowest rate since January, job creation strengthened and new order growth moderated.

All in all, the manufacturing sector in Mexico remains upbeat about its industry. Mexico produced 1.54 Mt of crude steel in March, down 1.5 percent y-o-y.


by Royce Lowe


Ajax-Ceco, a U.S.-based press manufacturer, will supply a press frame that will be part of an expansion to Southwest Steel Processing’s forging plant in Newport, Arkansas. The press will be cast by Sheffield Forgemaster’s International (SFIL) in the UK, under a $1.4 million contract. This will involve the casting of 550 tons of liquid steel, to cast a frame almost 13 meters long, 3.5 meters wide and 3.2 meters deep. Once cast, the frame will take several weeks to cool, and completion, including heat treatment and machining, is scheduled for early 2017. 

In a surprising and unfortunate piece of news, Columbus Steel Castings in Columbus, Ohio, filed for Chapter 11 bankruptcy protection along with three other U.S. manufacturers of metal products that plan to continue operating during the case: Zero Manufacturing Inc., Jorgenson Forge Corp. and the operator of Commercial Metal Forming. Comments from Zero Manufacturing and Jorgenson Forge indicate that customer orders begin to fall in 2014 as the U.S. defense sector cut back spending. It remains to be seen when or how Jorgenson will emerge from the bankruptcy filing, but there are encouraging options on the table.  At the moment, Jorgenson Forge continues to operate, although the open die forging market has been very weak for many months. Other large open die forging companies have seen their revenues drop by precipitous percentages, approaching 50% in some cases, with the larger forge companies taking the biggest hits.  The industry is in a slump due to downturns in oil and gas exploration, and defense spending.



by Tim Grady

Manufacturing Talk Radio will be tackling thornier subjects in manufacturing, particularly those where the federal government is hindering manufacturing growth.

An upcoming show will discuss the federal government’s use of inmates to directly compete with U.S. manufacturers with prison labor rates from $0.16 to just over $1.00 per hour. While the government effort is noble, it is training inmates in early 20th century skill sets of piecework instead of educating them to transition into 21st Century tech-savvy STEM jobs. Thus, after serving their time, they will be relegated to looking for the few low-paying jobs that still exist in the U.S. in garment work, non-automated sheet metal cutting and other declining industries. But, while incarcerated, they form a labor force to directly compete with American manufacturers. Hear from manufacturers who have been directly hurt by competing with government manufacturing in prisons.

Another show will discuss the myths of the $15 per hour minimum wage, why it may put more workers out of work and accelerate the move towards automation and robotics in both the manufacturing and the service sectors. It is entirely likely that more employees will be hurt rather than helped by laws forcing businesses to pay wages they cannot, and will not sustain when more economical and efficient solutions are just a iPad or touchscreen tablet away.


by Royce Lowe

erozone mfg

Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for April, at 51.7, was very slightly up from March’s 51.6 reading. The rates of expansion slipped back for both production and new orders, but employment was up. The fastest growth was seen in Italy and Spain, with moderate expansion seen in the Netherlands and Austria. In France, new orders and production fell at the fastest rates since February 2015 and April 2015 respectively.

The trend in new export business improved slightly, with Germany, Italy and Spain showing the stronger gains on new export business.

  PMI High/low
Italy 53.9 (53.5) 4-month high
Spain 53.5 (53.4) 2-month high
Ireland 52.9 (54.9) 1-month low
Netherlands 52.6 (53.6) 2-month low)
Austria 52.0 (52.8) 2-month low
Germany 51.8 (50.7) 3-month high
Greece 49.7 (49.0) 3-month high
France 48.0 (49.6) 12-month low   

In April, new passenger car sales were up 8.4 percent in Germany, 6.4 percent in France, 12 percent in Italy and 21 percent in Spain.

Crude steel production in Germany in March was at 3.81Mt, down 1.6 percent y-o-y; in Italy 2.02Mt, down 3.5 percent y-o-y; in France 1.13Mt, down 21.4 percent y-o-y and in Spain 1.16Mt, down 17.2 percent y-o-y.

Russia’s crude steel production for March was at 6.01Mt, down 2.0 percent y-o-y; Ukraine’s was 2.17Mt, up 28.1 percent y-o-y.

musMustangmania seems to have hit Germany. 780 of the U.S. sporty job were snapped up in March, compared to 752 Porsche 911s and 708 Audi TTs. Mustangs sold 1, 823 units in Germany in the first quarter of 2016.

The UK manufacturing sector did not have a good month of April. The PMI for April plunged into contraction territory, at 49.2, on the back of near-stagnant trends in production and new orders, and a decrease in employment – with job cuts for the fourth consecutive month.

Declines in production and new orders were noted in the consumer and investment goods sectors, with the intermediate goods sector sustaining some growth in new orders and production but at weaker rates than in March. Export orders were down for the fourth consecutive month.

The bottom line is the steepest decline in the manufacturing PMI for three years and the sharpest overall decline in employment for over three years.

The UK produced 0.675Mt of crude steel in March, down 39.5 percent y-o-y.

A UK organization called BRAKE is making lots of noise about diesel vehicles, after an industry-wide investigation conducted by the Ministry of      Transport found that none of the 37 cars tested met the EU’s NOx limit in real-world testing as opposed to laboratory testing.

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) – eased back in April to 50.1, its second-lowest level in the past 40 months. Global manufacturing remained in slow growth during April, with both developed and emerging markets showing weakness and lackluster growth, and production, new orders and export business down for the third straight month.

There was a sharp drop in the PMI finished goods inventory index, which once put into balance with sales should lead to faster gains in production.


by Royce Lowe

asiaCHINA produced 70.65Mt of crude steel in March, up 2.9 percent y-o-y; Japan 8.65Mt down 6.8 percent y-o-y; India 8.06Mt, up 3.4 percent y-o-y and South Korea 5.43Mt, down 8.4 percent y-o-y. Taiwan produced 1.77Mt in March, down 14.7 percent y-o-y.

The Caixin China manufacturing PMI for April eased to 49.4 percent from March’s 49.7 percent reading. This is a continuing, but marginal deterioration. Operating conditions have now worsened in each of the past fourteen months, with production mostly unchanged and a further reduction in staff numbers.

China is in a very much wait-and-see mode, with the powers that be obviously keeping a very sharp eye on the manufacturing economy, but perhaps not quite sure which way to turn (it) at the moment.

China sold 5.67 million passenger vehicles and 0.86 million commercial vehicles in the first three months of 2016. Total vehicle sales in March 2016 increased to around 2.4 million units, from February’s 1.6 million units. Total sales for 2015 were 24.6 million units.

foxconnFuture Mobility Corp., a merger of Tencent Holdings Ltd., Asia’s biggest Internet company, and Foxconn Technology Group, a key assembler of iPhones, Pads and other Apple products, have been poaching key personnel from BMW’s i sub-brand, according to ‘people familiar with the matter.’ They seem in fact to have got the former project manager for BMW’s i8 plug-in sports car. Everyone is declining to comment, but BMW say they’ll carry on regardless.

JAPAN’s manufacturing sector witnessed a sharp decline in both production and new orders in April, with export orders down at the fastest rate in 39 months. Production was down at the fastest rate since April 2014 and new orders dropped at the fastest rate in over three years. The PMI for April was down from March’s 49.1 reading to 48.2 – its lowest reading since January 2013. But employment grew for the seventh consecutive month.

It is probable that the recent earthquake had an adverse effect on production, witness Toyota’s problems with their supply chains. There is of course reduced trade with Taiwan and China.

Toyota in fact lost significant production because of the recent earthquakes, knocking its first quarter deliveries down 2.3 percent to 2.46 million units, while Volkswagen, coping with its worst crisis in company history, saw deliveries rise 0.8 percent to 2.50 million units.

Japanese car sales, for April 2016 are reported as up 7.2 percent y-o-y, at 212,713 units. Minicars, with a 660 cc max engine, sold 112,035 units, down 7.5 percent and the 16th consecutive month of decline.

Production growth eased in the INDIAN manufacturing sector in April, on the back of a little-changed new orders situation, although an upturn in export orders was sustained. The Nikkei PMI reading fell back from March’s 52.4 to 50.5 in April.

Employment is effectively unchanged and the consumer goods sector is outperforming the intermediate and investment goods sectors where both production and new orders are down.


by Royce Lowe


Brazil’s manufacturing job cuts rate was the sharpest in over ten years of the survey’s history. There was the sharpest reduction in production since November 2015, and new orders fell at the second-fastest rate since the global financial crisis, and for the fifteenth straight month.

The PMI fell from March’s 46.0 to 42.6 in April. To go along with all this, Brazil’s manufacturing sector saw its strongest rise in export business in the survey’s history. This would seem to be due to the weak real – which also increases the cost of Brazil’s raw materials.

Brazil’s crude steel production for the month of March was 2.51Mt, a 9.5 percent y-o-y decrease.

Embraer, the Brazilian jet builder, took an order for 30 new E175 regional jets from Horizon Air, an Alaska Air Subsidiary. The contract includes options for 33 more of this same model, on which delivery will start in the second quarter of 2017.


by Norbert Ore

global mfgThe global economy continued to advance in April as 13 of the 18 (down from 14 in March) surveys we follow are growing and combine for an average reading of 50.7. Of the select group of surveys, Taiwan (54.6, -0.3) had the highest PMI in April as it continued to receive a post Chinese New Year bounce from February.

Growth in the Eurozone PMI (51.7, +0.1) is now in its 34th consecutive month as manufacturing continues a respectable trend. Germany (51.8, +1.1) continued its positive trend and posted its 17th consecutive month of growth. The remaining seven Eurozone countries average 51.8 percent and were led by Spain (53.5, +0.1), while France (48.0, -1.6) and Greece (49.7, +0.7) failed to grow.

The UK (49.2, -1.8) registered the end of 36 months of expansion as it fell below the 50 mark. Weakness in new orders and production drove the PMI lower.

China’s Official Report, the CFLP PMI (50.1, -0.1) stayed precariously above the 50 mark for the second consecutive month, and appears at best a marginal improvement in the economy. The Caixin China General Manufacturing PMI (49.4, -0.3) has now been below the mid-point for 14 consecutive months.

As for North America, Canada (52.2, +0.7) reported above 50 for the second month following a seven-month trend of contraction. Mexico (52.4, -0.8) expanded at a pace slightly below its six-month average of 52.7 percent.


by Royce Lowe


If you have a yen for straight, shiny teeth, and have had dental maintenance, you may have in your mouth some of the first products of a new industrial revolution. Tens of millions of dental crowns, bridges and orthodontic braces have now been produced with the help of additive manufacturing, popularly referred to as 3D printing.

3D printers, which can cost up to $1 million, are changing the way we manufacture things. Take dentures for example. For the metal bits in false teeth, dentists have for a long time relied upon ‘investment casting’, where an individual model of a patient’s tooth is created, often in wax, enclosing it in a ceramic casing, melting out the wax and then pouring molten metal into the cavity left behind. When the cast is split open, the new metal tooth is removed. The method is fiddly and labor-intensive, not always accurate and 5,000 years old.

3d teethRenishaw, a British engineering company, does things somewhat differently at a plant near Cardiff. The plant is equipped with three 3D printers, to which more will soon be added, with each machine producing a batch of more than 200 dental crowns and bridges from digital scans of patients’ teeth. The machines use a laser to steadily melt successive layers of a cobalt-chromium alloy powder into required shapes. The process can take 8 to 10 hours, but it is unattended and each individual tooth is made to a design unique to a patient. Completed parts are shipped to dental laboratories all over Europe, where craftsmen add a layer of porcelain. 3D printing of the porcelain itself is the subject of ongoing research.

The process, of course, goes beyond the mouth. Figures dug out by consultancies show that over 60 million custom-shaped hearing-aid shells and ear molds have been 3D-printed since 2000. Hundreds of thousands of people have been fitted with orthopaedic implants, from hip-replacement joints to titanium jawbones, plus various prosthetics. Knee replacements number about 100,000 per year.

Machines for 3D-printed joints and other parts run on computer-aided design (CAD) software, which tells a printer to build up objects from successive layers: a medical scan effectively functions as an individual’s CAD file. Software is, of course, faster and cheaper to change than are tools used in a ‘traditional’ factory designed to produce identical products.

Compared to the $70 billion machine-tool market, additive manufacturing is still ‘small potatoes’ but it is rapidly expanding and going (way) beyond health care. It is estimated that 3D-printed products and services grew by 26 percent in 2015 to $5.2 billion, and McKinsey, a management consulting firm, foresees that in terms of better products, lower prices and improved health, 3D printing could have an economic impact of up to $550 billion by 2025. This technology will continue to develop, maybe even to astound.

Airbus is now using the machines to print internal cabin fittings for its new A350 XWB aircraft: the printers use a resin that meets aircraft safety standards. 3D printing saves on re-tooling and allows multiple components to be consolidated into a single part, thus reducing assembly costs.

The technology has proved its worth sufficiently to be used in products that must withstand high stresses. GE has spent $50 million installing a 3D-printing facility at a plant in Auburn, Alabama, to print up to 40,000 fuel nozzles a year for the new LEAP jet engine it is building in partnership with France’s Snecma. The nozzles will be printed in one shot, instead of being assembled from 20 different parts. They are made from a powdered cobalt-chromium-molybdenum alloy. The finished item will be 25 percent lighter and five times more durable than a fuel nozzle made by conventional methods.

Alcoa will supply Airbus with printed titanium fuselage parts and wing pylons. Alcoa is spending $60 million expanding its R & D center in Pennsylvania. Large 3D printers are being developed to make bigger things. Oak Ridge National Laboratory in Tennessee is working with Local Motors to print much of the structure of cars, using a blend of plastic and carbon fiber.

China is in there too. LITE-ON, has just installed a set of printers in Guangzhou that makes millions of smart phones and other portable consumer electronics. The printers, made by Optomec, an Albuquerque company, use a process called Aerosol jet to focus a mist of microdroplets into a tightly controlled beam which can print features as small as 10 microns (millionths of a meter.)

apple logoAPPLE’s U.S. Patent number 20160067766A1 proposes a method for forming a mold by 3D printing, filling it with a molten amorphous alloy, quenching the metal and removing the part – a housing for an electronic device. And GE is opening a $39 million Additive Manufacturing Development Center along the theme of Technology meets manufacturing. This Center for Additive Manufacturing Advancement (CATA) will be located in Findley Township, Pa, and will employ 50 engineers with disciplines from mechanical and electrical design to systems and engineering software.

3D printing is a technology that no company in manufacturing can afford to ignore. The process has already proved what can be done, and although it will never completely replace ‘traditional’ manufacturing, it will grow in its applications to an extent which we may not even understand at the present time. And along with this will be an ongoing demand for technologists at many levels to work in the industry.


by Royce Lowe

Another decline in the ISM PMI index after last month’s comeback takes us back into confusion territory. People are, for the moment at least, buying cars like there’s no tomorrow, but the overall manufacturing scene seems devoid of any real ongoing energy, with jobs being shed in the U.S. sector and economic confidence down from the past few months. The media speaks of a lack of global demand and ongoing   gloom in the U.S. energy sector, but exports were up last month for the second consecutive month, in spite of all.

New technology is making significant inroads, as witnessed by advances in Additive Manufacturing and Alternative Energy generation. And the global steel industry is playing its part in adding to the confusion.

Meanwhile Tesla’s CEO, Elon Musk, is reportedly spending his nights in a sleeping bag next to his production line to make sure his production forecasts are exceeded.

No wonder we’re confused. Next month is a new month, a new episode.



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