January Sales Record for Precision Machining

February 22, 2018

The PMPA Business Trends Index for January 2018 jumped to 135, up 25% over December 2017, and up 5% over January 2017. This is up 8.9% over the five year average for January Sales, and is our highest January on record.

January Sales Index up 25% over December, up 8.9% over 5-year January Average

Change your thinking to thrive to this new market.

Cheap inputs that cost your shop capacity are no bargain, when there are no shops scheduling less than 40 hours and 71% of shops are scheduling overtime.  It is all about UPTIME in this current market. There are no bargains worth having that cost you uptime.  And that means training your people is essential as well.

What we are hearing “falling behind…exceeded forecast by 10%…Can’t get it out quick enough…Picking which jobs to run…” Almost three quarters of shops reporting (74.3%) reported sales increases up by ten percent or more in January.

 The Fed reported that Industrial Production (IP) “edged down 0.1 percent in January following four consecutive monthly increases. Manufacturing production was unchanged in January.” Our industry is clearly a leading indicator for IP- they cannot make it until we produce the precision components needed.

Last January we said that “…the animal spirits have escaped confinement and are driving the manufacturing economy to performance not seen in years.” Last month we reported that industry sales “were up 6.8% for the year, a multiple of GDP growth. 

This report for January 2018 shows that our responding shops are outperforming the five-year shipments average for the month of January by almost 9%.

Our Lead Time indicator suggests that some shops are starting to think about capacity constraints.  Strong sentiment for profitability tells me that no one is “buying” business by cutting margins. Our Employment indicator recognizes that to continue production at these levels, we need to add talent.  Our performance and sentiment indicators this month justify our optimism about the markets and employment prospects for our precision machining industry in this New Year.

It is all about UPTIME in this current market. Cheap inputs that cost your shop capacity are no bargain. Change your thinking to thrive to this new market.

PMPA January 2018 Business Trends Report

Fed  January 2018 Industrial Production Report


A New Era Began Today

February 6, 2018

Autonomy in our technology is real! (Photo courtesy Joshua Andrade- Heinlein Forum on Facebook)

I was privileged to be able to witness the live cast of the Falcon Heavy Lift vehicle today. The photo above shows two booster engine modules simultaneously and autonomously landing. This was just a small part of the technology displayed today by the Falcon Heavy launch.

But here is why I say that a new era starts today:

  1. This is proof that Autonomy in our technology is real. It’s no longer about listening to a reporter somewhere talking about autonomous cars on test tracks. We got to see it ourselves today. It works. Now, it’s just a matter of scaling and networking the technology. We’ll be seeing this in our customers products sooner than we expected.
  2. Private enterprise for the win. NASA’s Bill Gerstenmaier, Associate Administrator for Human Exploration and Operations said that “the NASA SLS (Space Launch System) heavy rocket would cost about $1 billion per launch.” The Falcon Heavy cost is about $90 million per Launch. That’s about $910,000,000 in unneeded taxes per launch.
  3. Today’s launch has proven that the existential joy of engineering is alive and well and making cost effective technology in private enterprise. Space is no longer limited to staid, bureaucratic, rationalizations that it is for research for the common good missions. Today, it is about the human spirit and what we can achieve.
  4. This was not cobbled together by the lowest bidder with a bunch of imported parts. Although the label on a circuit board proudly proclaims “*Made on Earth by humans” this is validation of the capability of US private enterprise, engineering, and the entrepreneurial equivalent of  the gold record on Voyager.
  5. This is the defining event of the new renaissance of Engineering, Entrpreneurialism, and Manufacturing to further mankind’s material progress.  Through our own capable efforts.

Made on Earth by humans (Photo courtesy Joshua Andrade)

I am glad to be a witness to this milestone in the renaissance of manufacturing, engineering, and entrepreneurial accomplishment here in America today.  An electric car, is on its way to Mars. I watched two booster engines land themselves simultaneously. I watched the joy of the engineers as their work accomplished its demonstration of the power of our technology. This is the current generation’s SPUTNIK moment.

Baby boomers can just barely remember what Sputnik did  to transform for our culture, but many of us chose science and engineering and technology careers.  Today, we all had the chance to see a similar watershed for technology, manufacturing, and entrepreneurial spirit, and that it is cool again.

Existential Joy of Engineering- Why shouldn’t we love what we do?

The existential joy of engineering is alive and well, and it has just sent a red car hurtling towards a rendezvous with the red planet.

Red car to rendezvous with a red planet


…to be continued

Link to video Space X Falcon Heavy Launch– start at 4:14:24 to start with the launch

Photocredits: for Landing and Circuit board: Joshua Andrade (J Meauho Andrade on Facebook)

January ISM PMI Growth in Manufacturing Moderates as it Continues

February 1, 2018

Positive indicators for our precision machining shops from ISM and PMPA.

According to today’s release of the January 2018 Institute for Supply Management -Purchasing Manager’s Index,  economic activity in the manufacturing sector expanded in January, although at a slower rate than in December 2017. The  January PMI came in at 59.1%, down 0.2% from 59.3% in December. 

Continued strength in Manufacturing according to the nation’s Purchasing Managers at the Institute for Supply Management.


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

While the ISM-PMI report highlighted slight declines in the following indicators for our manufacturing businesses, they still bode well for manufacturing’s strength:

  • The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent.
  • The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent.
  • The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent.

Other comments from this report that convey positivity for our sector including “expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January.” These all signal that manufacturing continues to be very busy up and down the supply chain. The “Customer’s inventories  being too low,”  comment tells me that there will continue to be strength in  demand for manufactured goods in the coming months.

PMPA’s own Business Trends Report for December 2017 and year end summary reported that our companies’ sales were up 6.8% over calendar year 2016’s levels. This  January ISM PMI report continues the positive outlook for manufacturing. PMPA Year End Summary Blog Post

ISM Press Release

Calculated Risk Chart of January 2018 ISM PMI





Precision Machining Industry Sales Up 6.8% in 2017

January 25, 2018

Our December PMPA Business Trends Report for December 2017 finished at 125 for the year, up 6.8% over last year’s 117. 

It has been a great year for our precision machining shops, and “Busy” is the watchword.

Our industry sales increased over twice the US GDP growth reported by BEA for 2017!

Our sentiment indicators for the year ahead were positive as well.

PMPA members can read the full report here 

By the way, we predicted in May that our year end sales level would be 126.25- an error of just 1.25% from the actual value of 125!

Press representatives desiring a copy of the report please contact mkirchenbauer@pmpa.org  to get a copy of the full report or to arrange an interview.

We are confident that 2018 will be a similarly strong year  for our industry- starting in 1st quarter where our indicators are all strongly positive.-Net Sales, Lead Times, Employment and Profitability.

Photo credit

December ISM PMI Increased In December!

January 3, 2018

A very strong report for Manufacturing in December according to the ISM PMI.

“The December PMI® registered 59.7 percent, an increase of 1.5 percentage points from the November reading of 58.2 percent. The New Orders Index registered 69.4 percent, an increase of 5.4 percentage points from the November reading of 64 percent. The Production Index registered 65.8 percent, a 1.9 percentage point increase compared to the November reading of 63.9 percent. The Employment Index registered 57 percent, a decrease of 2.7 percentage points from the November reading of 59.7 percent. The Supplier Deliveries Index registered 57.9 percent, a 1.4 percentage point increase from the November reading of 56.5 percent. The Inventories Index registered 48.5 percent, an increase of 1.5 percentage points from the November reading of 47 percent. The Prices Index registered 69 percent in December, a 3.5 percentage point increase from the November reading of 65.5 percent, indicating higher raw materials prices for the 22nd consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production leading gains...”- Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

So much for Seasonality! So much for Q4 Slowdown!

A very strong showing for December!

The December 2017 value is up 5 points or 10% from last December’s reported value.

We continue to find multiple positive indicators for manufacturing strength.

If you are sitting on the sidelines in today’s economy, we respectfully suggest that you bring your talent to manufacturing.

PMPA’s latest Business Trends Report showed that sentiment in our shops for Employment was quite positive and strong:

Employment: Ninety-seven percent of respondents expect employment prospects to remain the same or
increase in our industry over the next three months-despite seasonal factors! Our industry continues to hold
very positive prospects for employment.”

Chart courtesy Calculated Risk Blog

Institute for Supply Management PMI December 2017 Press Release

How Do I Select Good Quality Stainless Steel?

December 28, 2017



There are a number of issues to be resolved before the bars get to your machines for production.


Suitable for End-Use

First, the material that you select must be suitable for the end use, so determining the appropriate chemical resistance needed for the application is your first ‘screen.’ I like to use the Corrosion Resistance Tables provided by Carpenter to make sure that I get this right.

Required Mechanical Properties

Next, in addition to the appropriate chemical resistance for the application, the material that you select must have the mechanical properties necessary for the application. High temperatures, low temperatures, thermal cycling, impact or tensile loads, magnetic response or electrical properties ( think solenoid applications) -what are the mechanical properties required?

Ability to be Fabricated

Now we need to look at your list of candidate grades to determine their ability to be fabricated into the geometry needed for your part. Is machinability going to be an issue here? How about cold work, or work-hardening? Which grade will assure that the parts produced will have necessary features, fit, and finish, without requiring additional (expen$ive) processing.

Determine Commercial Availability

Now from the much shorter list of candidate materials, it is time to determine if the grade you want is ‘commercially available.’ While the grade you prefer may indeed be listed in somebody’s catalog, the fact is that there may be a minimum order quantity, lead time, or freight expense that makes your choice commercially impossible. Not to mention that the grade you select may be available only in a different form- like flat roll rather than bar stock. In this case, you consider the second best choice, then the third, until you get to material that is actually commercially and practically available.

Consider Costs- and Benefits

Finally, you can look at the cost per pound/kilo to rank the grades available. Here is where you need to be very careful, as savings in cost per pound can be easily lost if the grade you choose is too expensive to fabricate due to lower speeds and feeds required to get features and finish compared to alternatives that may be slightly more expensive per pound. Or your lower cost material may require an additional thermal processing step that the others do not. Perhaps you need special straightness or a special end treatment,  that is a benefit that might justify the additional expense, and that is only available in certain grades from certain suppliers- we’ll address that next.

Final Criteria, Supplier and Agency Acceptability

Lastly, now that you are ready to place the order, it is time for one last contract review to assure that the material supplier is accredited and on your customer’s approved supplier, approved process, certified quality system lists, as well as an acceptable country of origin.  Also that they are agency approved if there are agency requirements  cited in the specification. And that if the grade you chose has ‘conflict minerals’ in it, that your customer signs off on that, or is willing to pay whatever up-charge you may find necessary to cover your costs of conflict mineral compliance and reporting. If you or your customer is sensitive to preferred suppliers- often the case due to their special means of provisioning- special straightness, packaging, end geometries available, tighter tolerances, etc. etc.,  now is the time to consider that as well.

That’s the way I do it. Order of operations is a hierarchy of suitabilities.

If you follow my methodology of suitability- in order-chemical compatibility for end-use, properties, then processing availability, costs and supplier status- you will avoid a lot of extra work and wasted time.

Have and follow a process.

What Could be on Santa’s List for Your Shop?

December 13, 2017

We spoke with the Jolly Old Elf earlier this year to try to learn what he had in store for us…

While Santa didn’t give us any clues as to what he had in his bag for our shops, I have consulted with some of his  economists -uhh- favorite elves-  to try to get a sneak peek, as well as some sensemaking from our own Business Trends Report. Our Business Trends Report has been reporting an 8% or more higher level of sales and shipments for our industry all year- we and our favorite economists see that continuing in 2018 first half for sure…

Here’s what I think Santa has in his bag for you going into 2018:

New Technology – Yes, we know that you can’t find the additional people that you need to run new machines. THAT IS ALL THE REASON YOU NEED  to try to automate everything that you already have, so that you can free up the talent that you already have to move up to their highest and best use. That highest and best use will be on the newer equipment you will need to stay competitive in the strong markets ahead. Also, reconsider your approaches to tooling and accessories for what you have now. Cheapest cost per tool makes economic sense (maybe) in a slow market and hunker down economy. When your shop is so busy that you are routinely scheduling overtime and are at the limits of your capacity, tooling and accessories that reduce set up time, operate longer between adjustments, and provide additional benefits such as tighter tolerance capability are  an investment that leads to maximizing income from the capacity that you have available. Talk to PMPA’s Tech members to see how their tools, accessories, software, specialty materials and metalworking fluids can help you wring more production out of your current capacity in less time.

Training, Training, Training – The talent already on your team is your strongest asset. Training them to perform at their highest and best use creates a win win for them and for your shop. The best people that will be in your workforce in five years are probably the people that are already on your team today. Whatever you can do to improve their skills will pay dividends all the way around. PMPA has created an online training program called PMPA MFG to help you upgrade the knowledge and competencies of your new hires as well as existing performers. Check it out here: PMPA MFG Workforce Training or give Sterling Gill, III a call at PMPA HQ to get a personal demonstration.

Increa$ed Working Capital – If you really intend to take advantage of the strong demand for manufactured products in the next year, you will need to look at your working capital and adjust accordingly. The economists  – uhh- Santa’s Helpers-  that we follow have walked back their “recession in 2019” forecast and are now talking about a much more likely “soft landing.” Continuing strength for our shops through the first half for 2018 and a slight slowing in Q3 and Q4. The capital needs of a business  in a strong and growing market are much different than those needed when we were all in “hunker down mode”in a barely tepid economy. Our Business trends shows that the market for our products has shifted to a new higher level, and we see that strength continuing in our immediate and actionable future. Plan for success. Talk to your banker.

Fewer Regulatory Surprises – Regulatory surprises have been the basis for my personal economy and full employment  since the 2008 election. The current administration’s noticeably different approach has allowed me to focus my attentions to other areas of compliance, improvement, and member service. However, we are now on the lookout for  Trade and Tariff storms which could suddenly disrupt the markets and demand for our components (By forcing Santa’s sleigh to pull over until they pass.) On the regulatory side, as shop owners we need to continue to be diligent, train, document, and audit our systems for safety and compliance. If we do this we will both intelligently manage our risk, and also allay any fears of finding a stocking full of coal…

That’s what I caught a sneak peek of when I met with Santa. I hope that you consider these points and take appropriate action. It is up to us to respond appropriately to the strength in demand and markets. PMPA members looking for further details are welcome to contact me at PMPA.