May Industrial Production FED Reports Gains

June 16, 2020

“Manufacturing output rose 3.8 percent in May, but it was still 16.9 percent below its pre-pandemic level in February. The index for durable manufacturing increased 5.8 percent in May; the most sizable gain among its components was for motor vehicles and parts, where output rose substantially but also remained more than 60 percent below its February level.”

Most sophisticated manufactured goods rely on precision machined parts in order to reliably function. This is great news.

Total industrial production increased 1.4 percent in May, as many factories resumed at least partial operations following suspensions related to COVID-19. Even so, total industrial production in May was 15.4 percent below its pre-pandemic level in February. Manufacturing output—which fell sharply in March and April—rose 3.8 percent in May; most major industries posted increases, with the largest gain registered by motor vehicles and parts.”

In Real Estate, they say the most important thing is  “Location, Location, Location.”

In Economics, I’d like to tell you that it is  “Direction, Direction, Direction.”

And while 1.4%  increase in industrial production may not seem like a lot (Better than most CD’s are paying, come to think of it) the direction is, as they say

“…a turn for the better.”

Industrial Production up 1.4% in May 2020

Markets showing strength 

The major market groups posted broad-based gains in their production indexes in May, but each remained well below its pre-pandemic level.

  • consumer goods rose 3.9 percent, led by a significant rebound for automotive products.[1]
  • production of business equipment rose 5.8 percent and was boosted by a substantial increase in transit equipment as most factories producing motor vehicles and civilian aircraft reopened.
  • The indexes for defense and space equipment, construction supplies, and business supplies also recorded gains.
  • The output of materials decreased 0.8 percent, as the production of energy materials was held down by declines related to oil extraction.

Industry Groups

Manufacturing output rose 3.8 percent in May, but it was still 16.9 percent below its pre-pandemic level in February.

  • The index for durable manufacturing increased 5.8 percent in May; the most sizable gain among its components was for motor vehicles and parts, where output rose substantially but also remained more than 60 percent below its February level.
  • Durable goods industries that recorded production increases between 8 percent and 10 percent include nonmetallic mineral products, aerospace and miscellaneous transportation equipment, and furniture and related products.
  • The index for nondurables rose 2.1 percent, with advances of around 10 percent or more for textile and product mills, for apparel and leather, for printing and support, and for plastics and rubber products. The output of other manufacturing (publishing and logging) moved up 2.5 percent.

Now the levels are not back to prior Pandemic readings. But we have certainly flattened the curve Virus wise!

Chart from Washington Post reported in AIER

“Direction, Direction, Direction.”  This is why we remain positive.

FED Reserve IP May 2020

What spike? AIER


May ISM-PMI Economy Expanding, Manufacturing Still Contracting

June 2, 2020

“Economic activity in the manufacturing sector contracted in May, and the overall economy returned to expansion after one month of contraction.  “The May PMI® registered 43.1 percent, up 1.6 percentage points from the April reading of 41.5 percent. This figure indicates expansion in the overall economy after April’s contraction, which ended a period of 131 consecutive months of growth.”– Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

 

That blue vertical line at the right edge of the chart- indicates recession.

 

The coronavirus pandemic impacted all manufacturing sectors for the third straight month. May appears to be a transition month, as many panelists and their suppliers returned to work late in the month. However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders. Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the only industry in expansion. Transportation Equipment; Petroleum & Coal Products; and Fabricated Metal Products continue to contract at strong levels,” says Fiore.

It has been our thinking that the economy itself is strong, but the exogenous shock- the impact of not just the corona virus but also the government ordered shutdowns- have caused the current weakness. We believe that the recovery will be positive  based on this underlying fundamental economic strength. Here is how ISM see’s this issue:

A PMI® above 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the May PMI® indicates the overall economy grew very slightly following contraction in April, which ended a 131-month period of growth. The manufacturing sector contracted for the third consecutive month. “The past relationship between the PMI® and the overall economy indicates that the PMI® for May (43.1 percent) corresponds to a 0.1-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.

May 2020 ISM PMI

Graph courtesy Calculated Risk Blog

 


Ventilator Parts PMPA Making a Difference

March 26, 2020

Our nation has an urgent need for Ventilators, and General Motors, one of the companies charged with retooling to make ventilators, asked a PMPA member if they could make all of the parts needed. Our member brought the prints for the ventilator parts to PMPA to leverage the capabilities of our entire association. The PMPA team submitted the prints to our membership and compiled the list of PMPA members who have the capability and the capacity to produce parts for ventilators.  The list has been submitted to GM, FEMA and The White House, and we have confirmed that at several parts have already been awarded to our members and are in production. As our members report additional capacity and capability we will submit an addendum.

 

Ventilator parts in production at PMPA member shop in Illinois #makingpartsthatmakeadifference

Manufacturing matters. And local manufacturing can make a local difference. The race to the bottom for the globally lowest price is not helping us in our hour of need. Local solutions can solve Global problems. American Manufacturers are stepping up. We need to keep that in mind after we get through this crisis.


3-S Your Shop- COVID-19

March 18, 2020

“The one thing that you can do is to stand down for ten minutes and 3-S your shop.”

Paul Akers,  the hands on Manufacturer who also wrote 2 Second Lean, was one of our Update conference’s most popular speakers. (Paul will tell you, as he told us, he’s not a speaker. He’s not a consultant. He’s a MANUFACTURING GUY.)

Paul Akers, manufacturing guy.

 

One of the ideas that he shared  is so appropriate right now, I feel that I have to share.

The one thing that you can do right now is to do a ten or fifteen minute stand-down and 3-S (Clean, sort, and organize) your premises

Have your team sanitize every surface that anyone touches.

Sweeping = sanitizing

Everyone gets to do their part!

The fellow on the ladder cleaning the sign- that the V.P. of Sales.

People get pretty excited when there is a threat- but there is nothing that they can do. Its called the fight or flight syndrome, and when people can’t do anything, they get stressed.

Look at 3-S’ing your premises as a great way to 1) take positive steps to prevent transmission of the virus or germs among your team, and 2) a positive step to de-stress because people are doing work to reduce everyone’s risk.

Do it everyday- even when this COVID-19 event is in our rear-view mirror.

Thank you Paul Akers for giving us a tool we can use to minimize our risk as we improve our workplace and culture.

That’s a lot of great takeaways  from just two slides, Paul. Maybe we should call it 2-slide lean. What do you think Paul?


Supply Chain- Ready to Help!

March 11, 2020

Throughout history, American manufacturers have answered the call to find solutions, support progress and step up in times of crisis. Our U.S. manufacturers and workers are ready to minimize operational disruptions and help produce a quality, reliable products ready to ship to any location. We’re here to help.

Volatility, Uncertainty, Complexity, and Ambiguity  (VUCA) are business as usual for the North American Manufacturing Industry.

We remain on the job ready, willing, and able to get you the critical components that you need for your critical quality and human safety applications.

Open letter to suppliers

Having supply chain / procurement issues? Our member shops are available to help. Check our websites for assistance in finding a shop:

http://www.amba.org          American Mold Builders Association
http://www.ntma.org           National Tooling and Machining Association
http://www.pmpa.org          Precision Machined Products Association
http://www.pma.org            Precision Metalforming Association
http://www.tmaillinois.org   Technology & Manufacturing Association

Throughout history, American manufacturers have answered the call to find solutions, support progress and step up in times of crisis. Our U.S. manufacturers and workers are ready to minimize operational disruptions and help produce quality, reliable products ready to ship to any location. 

It’s what we do.


Coronavirus- One Thing to Reduce Your Risk of Community Acquired Infections

March 3, 2020

The experts say “Wash your hands.

The experts say Don’t touch your face.”

Actually they sayAvoid touching your eyes, nose, and mouth with unwashed hands. Viruses that cause colds can enter your body this way and make you sick.” 

If only playing Simple Simon  with the experts calling the shots would keep us safe.

The experts say wash your hands- why don’t they suggest that you not touch contaminated surfaces in the first place?

In manufacturing, we have a thing called Root Cause Corrective Action. We try to prevent reccurrence by eliminating causes.

Basically we work on offense against causes. Not play defense against things that have already happened.

From a root cause preventive action point of view, what is one thing that you can do to reduce your risk of community acquired infections?

Use a stylus!

 

If you don’t touch the infectious contamination on the keys used by who knows how many people before you…

Do you know how many people touched those keys before you?

“Reviewing the literature on all available human and veterinary viruses within this family, encompassing 22 studies, researchers have found that the human pathogens can persist on surfaces and remain infectious at room temperature for up to nine days. “- Sciencealert corona virus on surfaces

If you knew that someone had a tissue in their hand when they used the keypad, would you not use the keypad? 

(Hint, I see that happening a lot)

Go ahead and touch. Ewww…

 

How many keypads and touchscreens do you get to touch in a day?

I count 4 or 5 in a typical day- grocery store, pharmacy, bank counter and ATM,  gas station pumps and counter, retail shops, department stores.

On non typical days, add Airline parking access gate touchscreen and airline check-in kiosk touch screens. Hundreds of people ahead of me at the airport…

Whose job is it to disinfect them?

When I asked, all I got was blank stares… though at my local Gas Station the Cashier has been doing a great job of wiping down touchscreens.

What if instead of touching all of these with your fingers and possibly acquiring infectious bacteria or viruses- what if we didn’t touch these contaminated surfaces? 

What if a stylus did the touching?

Wouldn’t that keep us safer, by reducing our exposure to infectious materials with our hands?

Washing hands is fine. We get it.

But not getting our hands contaminated with infectious contaminants in the first place?

We think that that is far better than playing only defense- getting contaminated, and then washing up.

We think that using a stylus instead of your fingers on touchscreens and keypads is the one thing that you can do that will positively reduce your chance of community acquired infection.

We’re not sure why the experts don’t suggest it.

Use a stylus!

I purchased a bunch from Staples to give to my colleagues at work.

Use a stylus not your finger…

You can order them on Amazon too.

 

We think that using a stylus instead of your fingers on touchscreens and keypads is the one thing that you can do that will positively reduce your chance of community acquired infection.

What do you think? More importantly,  what will you do?


February ISM PMI- Manufacturing Growing Despite Challenges

March 3, 2020

Manufacturing expanded in February, as the PMI® registered 50.1 percent, a 0.8-percentage point decrease from the January reading of 50.9 percent. “The PMI® expanded in February, but at a slower rate. Four of the big six industries expanded, at similar rates compared to January. Four of the PMI®’s 10 subindexes recorded expansion, down from six the previous month,” says Fiore.

A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI® indicates growth for the 130th consecutive month in the overall economy, and the second month of growth following five months of contraction in the manufacturing sector. “The past relationship between the PMI® and the overall economy indicates that the PMI® for February (50.1 percent) corresponds to a 2.1-percent increase in real gross domestic product (GDP) on an annualized basis,” -Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

Manufacturing grew in February, though rate down from January,

The industry is currently facing challenges from supply change disruption due to coronavirus outbreak and continued Boeing 737 Max delays.

The  low but still positive PMI in February  corresponds to a 2.1-percent  increase in GDP according to ISM.

This February PMI® indicates growth for the 130th consecutive month in the overall economy, and the second month of growth following five months of contraction in the manufacturing sector. 

Could certainly be worse!

Graph: Calculated Risk Blog


Precision Machining Sales January 2020- Success-ion, not Recession!

February 27, 2020

NO RECESSION IN PRECISION MACHINING! (only two consecutive months of declines.)

Success-ion not Recession

No recession here! Only two consecutive months of (expected) seasonal declines!

With 81 companies responding, the PMPA Business Trends Index for January 2020 rebounded to 139, up 26% over December 2019.

Down just 2% from January 2019’s record of 142, up 3% over January 2018, and up 7.8% over the five-year average for the January index.

This is a repeat of last January’s strong performance, and should help you understand that the sluggish performance in the last quarter of 2019 was due to seasonal factors, as well as to assignable causes in our largest markets served- the UAW strike at GM and the ongoing issues at Boeing.

(The Boeing story remains on the front page of the Wall Street Journal- Boeing Plans More Relief for Suppliers– February 24, 2020).

NO RECESSION IN PRECISION MACHINING! (only two consecutive months of declines.)

And by the way, we outperformed the Fed’s Industrial Production Manufacturing Index by a huge margin!

The Fed reported that Industrial Production (IP) “declined 0.3 percent in January, as unseasonably warm weather held down the output of utilities and as a major manufacturer significantly slowed production of civilian aircraft. The index for manufacturing edged down 0.1 percent in January; excluding the production of aircraft and parts, factory output advanced 0.3 percent.”

Recession? Not even.

Success-ion? Well, it depends on how you manage. The numbers show a very positive outlook. Be positive. The facts support you.


PMPA Business Trends December 2019 Review and Summary

January 31, 2020

2019 was a better year than you think, finishing essentially even with 2018. Responding shops have balanced expectations going into  1Q 2020.” -PMPA  Business Trends Review and Summary December 2019

Despite the drop in shipments in the last two months of the year, calendar year 2019 finished at 133, one point off last
year’s calendar year final of 134, and up nearly 10 points or 7.8 percent over the average of the last five years 2014-2018.
December came in at 110, up 3.4 points and 3.2 percent over the five- year average for the month of December.

Despite the softening of shipments in November and December, 2019 has been a very strong year
for Sales, and finished virtually even with 2018. Even with the lowest level of sales for the year this month, we are just one
point (less than ¾ of a percent!) off last year’s Sales for the year.

Forty-two percent of our shops were scheduling overtime in December! The almost even balance between sentiments to increase or decrease for all of our sentiment indicators likely
bode well for a level and stable start in 2020. We have no reason to complain about sales softness with both the December and year-end sales numbers coming in above 5-year averages.

The Fed INDPRO release for December reported “increases of 0.2 percent for manufacturing.”

After two years of strong sales growth (2017 was up 6.8% over 2016; 2018 was up 7.2% over 2017), 2019 finished
essentially even with 2018. 

December 2019 Business Trends Report

Accredited media please contact JJackson@pmpa.org for your copy.


OSHA Enforcement Priority Weighting System Revised

January 27, 2020

How does OSHA decide to inspect shops?

Prior to this latest change, OSHA followed its Enforcement Weighting System (EWS).

Late in 2019 OSHA revised its inspection priority weighting system.

OSHA LOGO

OSHA has identified two objectives for this revision to the Enforcement Weighting System
(EWS), now known as the OSHA Weighting System (OWS)
To continue to develop and support a management system to focus enforcement activities
on critical and strategic areas where the Agency’s efforts can have the most impact and
• To further promote the appropriate allocation of resources to support OSHA’s balanced
approach to promoting safe and healthy workplaces.

Here is the new Enforcement Priority Weighting Scheme

Enforcement Units

Enforcement cases will be assigned the following weight:

  1.  Group A: Includes the most time intensive, complex, and high-priority inspections. 7 EUs
    a. Criminal cases
    b. Significant cases
  2.  Group B: Includes inspections for high-priority hazards and those that are more complex
    than average and/or are of high lasting value. 5 EUs
    a. Inspections following fatalities and catastrophes
    b. Chemical plant NEP and Process Safety Management (PSM) Inspections
  3.  Group C: Includes programmed inspections following an established emphasis program
    (EP) for hazards that are among the leading causes of death in the workplace.3 EUs
    a. Caught-in hazards—e.g., trenching, equipment operations, oil & gas
    b. Electrical hazards—e.g., overhead power lines, electrical wiring methods
    c. Fall Hazards—e.g. scaffolds, elevated walking working surfaces
    d. Struck-by hazards—e.g., highway work zones, landscaping, material handling
  4.  Group D: Includes programmed inspections following an established EP for priority
    hazards that are somewhat time intensive and are a high priority. This category also
    includes inspections for novel hazards and programmed inspections undertaken in
    conjunction with an established enforcement policy addressing associated serious safety
    and health hazards. 2 EUs
    a. Amputation hazards
    b. Combustible dust
    c. Ergonomics
    d. Federal agency inspections
    e. Heat hazards
    f. Non-PEL overexposures
    g. Workplace violence hazards
    h. Permit required confined space hazards—e.g., grain storage or maritime or
    construction
    i. Personal sampling—e.g., air contaminants or noise
    j. Site specific targeting
  5.  Group E: Includes all other inspections not otherwise listed. 1 EU
  6.  Regions may submit other regional or local emphasis programs for approval and
    weighting if they are not already covered under items 1-4 and assign them two to three
    EUs.
  7. Link to OSHA White Paper on OWS

We urge all shops to look at this for guidance in prioritizing their risk evaluation and remediation and training programs to minimize the chances of these OSHA Priority Hazards occurring in their shops.