August ISM PMI- Highest Reading Since January 2004

September 5, 2018

The ISM PMI was reported at 61.3, the highest reading since January 2004, when it was 60.8.

Prior to that the ISM PMI has not been at this level since 1984, when it was 61.3 in February,  in 1987 it made it to 61.0 in December.

It has been a long time since the ISM PMI was at today’s levels!

Here is the ISM’s Announcement:

“The August PMI® registered 61.3 percent, an increase of 3.2 percentage points from the July reading of 58.1 percent. The New Orders Index registered 65.1 percent, an increase of 4.9 percentage points from the July reading of 60.2 percent. The Production Index registered 63.3 percent, a 4.8-percentage point increase compared to the July reading of 58.5 percent. The Employment Index registered 58.5 percent, an increase of 2 percentage points from the July reading of 56.5 percent. The Supplier Deliveries Index registered 64.5 percent, a 2.4-percentage point increase from the July reading of 62.1 percent. The Inventories Index registered 55.4 percent, an increase of 2.1 percentage points from the July reading of 53.3 percent. The Prices Index registered 72.1 percent in August, a 1.1-percentage point decrease from the July reading of 73.2 percent, indicating higher raw materials prices for the 30th consecutive month.” ISM Timothy R. Fiore Press Release

Positive Takeaways:

  1. Manufacturing continues to expand. the 3.2 point jump from July to August was a substantial increase.
  2. The overall economy continues to expand- 112 consecutive months of economic expansion.
  3. The increases from July to August were especially robust for New Orders (up 4.9%); and Production (up 4.8%).
  4. Other indicators for employment, inventories, supplier deliveries  increased on the order of 2% or more.
  5. The Prices Index fell 1.1 percent in August from July, but still showed increasing costs for raw materials, for the 30th consecutive month.

Thoughts to consider: while past performance is no assurance of future performance, we note that the current level of the PMI has been of prior high water marks,  rather than sustainable levels. While “this time it’s different,” is a possible comment, our look at the graph above suggests that we may be nearing the top. Although the values for the 1964-1966 do provide another possible interpretation.

Bottom line: Manufacturing and the broad economy showed remarkable strength in August 2018. Prospects remain positive for sales and employment in manufacturing. The current strong level of performance convinces me that we must be thoughtfully reconsidering all aspects of our business at this time. This trend might have legs- it might also be nearing a top. PMPA’s Latest Business Trend Report was optimistic on Outlook for the next three months.

ISM August 2018

Graph courtesy Calculated Risk

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Performer Day- Its About Performance, Not Labor

September 3, 2018

I compile the annual wage survey for the precision machining industry, and my sample is a nice slice of industry shops.

We don’t have any labor jobs in our shop hourly wage survey.

None.

Nada.

Zip!

Zero!

On the other hand, the jobs that we do have are all jobs requiring high levels of process ownership and personal performance.

Think of all of the aspects of our jobs- the tools, the offsets, the relationships between datums, the materials, the gages, the chips and their control, the coolants, the controls, the software code- and suddenly being a machinist looks a lot like being a Performer:

Almost as much stuff to keep track of as we have as machinists!

So today, I’m going to cue up a Neil Peart video on Youtube as an appreciative salute to the music made  on our production machines under the watchful practice of our skilled performers.

I’m not celebrating Labor Day.

But I am certainly going to  use the time to appreciate the performers in our shops who make things that make a difference.

Happy Performers Day.

Photo credit 

More info about the Human Performance System Approach to understanding our shops

Neil Peart photo


Why Precision Machining Matters- Lothar Horn

August 31, 2018

I am always pleased when I encounter a quote that neatly communicates an Idea that I firmly believe, but is expressed more clearly than I could.

Imagine my delight when I received a placard containing one of my favorite industry quotes today!

So happy to get this visual reminder of the importance of precision machining, and the tools that we use!

Read the Card!”

“Read the card!”

“What’s it say?

NO CAR RUNS, NO AIRCRAFT FLIES AND NO HIP REPLACEMENT IS FITTED BY A DOCTOR WITHOUT PRECISION TOOLS HAVING PREVIOUSLY BEEN IN USE.”

As precision machinist’s, we’re the people that make things.

Things that make a difference in everyone’s quality of life.

And who is is it that makes the tools that help us make that difference?

Why, precision toolmakers, of course.

A big thank you to Horn USA for sharing the placard with my favorite quote.

See you all at IMTS!

 


New REACH Status for Lead- PMPA Members Know How to Respond

August 29, 2018

 

On June 21, 2018, the ECHA added Lead to the Candidate List for Substances of Very High Concern under REACH.

Not banned in every application…

While this regulation arguably covers only manufacturers and importers in the EU, the fact of the matter is that  our shops here in North America are producing components (articles) which are incorporated into products in the EU.

Our customers, who specify the use of leaded materials because of the economics of product provision (Leaded materials machine at much higher efficiency rates, lower costs , and seldom need post fabrication operations) are now asking their suppliers for a statement of compliance for the materials that THEY specify us to make THEIR components from. Leaded Steels, Brasses and Aluminums.

Our shops find themselves placed right in the center of a paradox-  how can they certify that the material that their customer told them to use is compliant with this new REACH development?

PMPA has analyzed this and provided our members with a guidance document that

  • Recites the applicable facts and regulatory obligations
  • Describes where and where not the REACH and other EU regulations apply / might not aply;
  • Analyzes the duties to our customers
  • Describes ways to meet our obligations
  • Provides references for understanding this new development

The world of Precision Machining is characterized by Volatility (this regulation just Arrived), Uncertainty (does this apply to me, I’m an North American, not European manufacturer?) Complexity ( So I need to read the ECHA announcement, The ECHA Substance Support Document, the Annex that covers Lead,  and then two more annexes that tell me what I need to do) before I can figure out what I need to do, and Ambiguity (Actually the annexes do not expressly state what the exact deliverable  required is).

This VUCA world is made manageable by  PMPA regulatory sensemaking  to help our shops  first recognize, then intelligently understand and manage their risk.

  • Who is helping you and your team recognize new regulatory risks?
  • Who is helping you to understand those risks?
  • Who is providing answers so that you can concentrate on making those critical parts that the world needs, instead of spending three or four man-Days trying to figure it out? (Presuming that you know the issue even exists!)

PMPA members know who.

PMPA!

PMPA Members Only Guidance Document


Precision Machining Sales Take a Breather – at a Record Level- in July

August 23, 2018

First the good news:

The 2018 July index of 128 is 14.3% higher than July 2017’s 112 value.   Our year to date average is 135, up 10 points or 8.0% over 2017’s year-end average of 125. We are at 107% year to date.

Jul;y 2018 Business Trends Index- Highest July EVER!

And the not so good news?

Well actually it is just that  to get to that record high Sales for July, the Index actually dropped 10 points or about 7.3%. from 138 in May & June to 128 in July.

I’m calling it a breather from the feverish year we’ve had so far.

Hours of first shift scheduled dropped by half an hour, a welcome break for the folks in the shop.

Why we’re not concerned about the decline of Sales in July:

The forward looking sentiment for Sales for the next three months actually climbed in July. while all other indicators remained steady.

We’re just taking a bit of a breather.

A much needed break for our shops.

Enjoy!

Photocredit: Skynews


Steel Tariffs- HIGHER PRICES!

July 30, 2018

Prices for Hot Roll Steel Band in the US U.S. are $465 higher than in China (compared to $471 in the last report two weeks ago), and $358 higher than in the EU (compared to $372 in the last report).

$465 higher than China; $358 higher than EU.

Steel in the US is 76% more expensive than in China.

Steel in the US is 49% more expensive than in the EU.

How’s steel profits?

Steel Dynamics Joins Nucor – Doubling Profits.

The next time somebody says “National Security” I am seriously gonna lose my cool!

Section 232 tariffs are for national security.Yeah right.

 

Price information courtesy Steel Benchmarker.


Precision Machining Shops in High Gear in June 2018

July 25, 2018

“With 84 companies responding, the PMPA Business Trends Index for June 2018 held steady at 138, highest June on
record and tied with May 2018. The calendar year average remains 136. The 2018 June index of 138 is 2.2% higher
than June 2017’s 135 value. This is our Index’s highest value recorded for June, and is our second highest value ever
recorded (March 2018’s 143 was the highest ever).”- PMPA Business Trends Report- June 2018

2018 continues to set a blistering pace for the performance and sentiment indicators that we
track. June 2018 is now our second highest sales Index ever- tied with May 2018- while March 2018 was our all-time
high. Our forward- looking indicators remain strongly positive even as they reflect some softening from our current record
levels of performance. Our industry continues to outperform 5-year averages by a wide margin- ~10.4% for June!

See the full report here: https://www.pmpa.org/news/latest-news/2018/07/24/pmpa-business-trends-june-2018

 

Employment prospects are 98% positive In precision machining shops!

P.S- Employment Sentiment: Prospects for employment are positive and strengthening with ninety-eight percent (98%)
expecting level or increased opportunities for employment!

photo credit: Life of Dad blog