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

Advertisements

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.


November ISM-PMI Report Down Half a Point- We Think It Is Remarkable!

December 4, 2017

The Institute for Supply Management last week reported that “The November PMI® registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. “ This value means that “Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 102nd consecutive month.”

We’d like to provide a wee bit of sensemaking to this report- as normally  people would think that a decline in the index is  not a positive thing.

  • The decline is just 0.5 point- which means that this November reading is higher than every other monthly reading this year except for October and September.  Can you say “unseasonably high?”
  • That decline is also higher than 45 of the last 50 readings, going back to October 2013. Do you agree with us that the data indicates that “the process has shifted.”
  • The absolute values of the index  are consistent with Economic activity in the manufacturing sector expanding as well as growth in the overall economy.

Here’s the chart, courtesy of Calculated Risk Blog

November value remains above most historical values since the end of the great recession, despite seasonality.

We took the liberty of running the ISM PMI averages for January through November for 2014, 2015, 2016- they came in at 55.84, 51.67, 51.22; together, they average 52.91.

The 2017 January-November average for the ISM PMI is 57.38.

We believe that the data is clear that the process has shifted, in a positive direction. Up 4.47 points  98.4%) over the average for the same period for the last three years.

Manufacturing in the United States is performing substantially better than it has over the past three years, and we believe that is is not an anomaly.

ISM PMI November Announcement


OSHA Injury and illness Electronic Reporting Rule Deadline Now Dec 15, 2017

November 22, 2017

OSHA has issued a final rule to delay the electronic reporting compliance date of the Improve Tracking of Workplace Injuries and Illnesses rule from July 1, 2017 (actually it was December 1, 2017) to December 15, 2017. The reason given is to provide employers the same four month window for submitting data that the original rule would have provided.

Department of Labor OSHA Headquarters in Washington D.C.

The actual deadline had been December 1, 2017 to report 2016 OSHA 300A data for employers in manufacturing industries with 20-250 employees in most states. Employers in state plan states- California, Maryland, Minnesota, South Carolina, Utah, Washington, and Wyoming were not required to comply

Here is the link to today’s OSHA News Release.

According to the agency “OSHA is currently reviewing the other provisions of its final rule to Improve Tracking of Workplace Injuries and Illnesses, and intends to publish a notice of proposed rulemaking to reconsider, revise, or remove portions of that rule in 2018.

We have been following this rule since we testified against it back in 2014.

We have posted on this from time to time

OSHA Mandatory Reporting Delayed

OSHA Clarifies Reporting Rule 

Department of Shaming?

PMPA gave our members a step by step guide to how to report earlier this week.

The final rule will be published in the Federal Register on Friday, November 24, 2017. Here is the public inspection version

 


Foaming- Why Base Oil Differences Matter In Your Shop.

November 6, 2017

You don’t need a degree in Organic Chemistry to understand the differences in your shops’ metalcutting fluid base oils and what they mean to you.

Synthetic base oils clearly are less prone to foaming than mineral oil base stocks.

A recent discussion on PMPA’s member’s only Technical Listserve centered around the issue of foaming in our machines and its relation to the type of cutting oil selected for use in our CNC and Swiss machines.

John Wiley, Business Development Manager for PMPA Technical Member Qualichem, Inc. contributed a nice piece of sensemaking regarding the role that the selection of base oil plays in the foaming we encounter on the machine.

“In this picture you can clearly see the differences in a base oil’s tendency to foam.  These are pure base oils, nothing added.  Poly Alpha Olefin (PAO) and Gas To Liquid (GTL) synthetics are  identical, while the two mineral oils foam considerably more than the synthetic stocks.  If you are a shop that has yet to experiment with new cutting oil technology, now is the time.  The benefits are firmly within your budgets. If you are doing medical work, the GTL oils are ideal.  If you are running lights out operations, the GTL are ideal.  If you want a cleaner shop, cleaner machines and cleaner parts, GTL is ideal.”

John went on to describe the scenarios where PAO’s and GTL’s would be expected to be the best choice for certain operations (like high pressure pumps) and applications, as well as compared the economics of  PAO’s and GTL’s. Our members got actionable insight as to the effects of the base oil in their metalcutting fluids in terms of both performance and economics.

You may not know a lot about Organic Chemistry, but the photo above is worth a semester in class (as well as a thousand words!) to show us why now is the time to consider Synthetic base oils in our CNC and High Pressure coolant metalcutting operations.

Qualichem,Inc.


7 Industry Trends to Think About- New Technology Isn’t One of Them

November 2, 2017

You may be surprised that Technology as a stand alone item is not one of them.

Our future is not about shinier flying saucers.

We will master  and implement whatever technologies are developed.

But our future is being impacted by these 7 items  today:

  1. Loss of experienced workers taking tribal and craftsman knowledge out of our shops.
  2. Lower average wages as experienced workers with seniority leave and younger workers start at trainee wages, making it difficult to attract talent with facts about “increasing wages”- even though they are.
  3. Training growing in percent of spend as many shops are unable to purchase new technology to quote new work because they do not have trained workforce.
  4. More and more jobs being quoted out of more challenging, non free machining materials;
  5. A bit of relief from new regulations, but more uncertainty as Washington turns to trade issues which can impact availability and cost of imported materials, and tooling,  as well as impact the exports of finished goods that contain our parts.
  6. Increasing demands for certification of production to a wide variety of customer demanded requirements regardless of legal obligations- Conflict Minerals, REACH, RoHS, Animal- Free; Ca. Prop 65. Etc.
  7. Possibility of an “Association Healthcare Insurance solution” in 2019 or beyond.

 

What do you see as the trends shaping our company and industry future?

Please don’t say technology- as Humans, we’ve been successfully implementing new technologies for quite some time.

Flying cars

Todd Rundgren Future

Fire