August Shipments Headline; Month to Month Change is the Real Story

September 22, 2017

With 80 companies responding, the PMPA Business Trends Index for August jumped 19 points (17%) from July’s 112 reported last month. August’s 131 value was the highest for an August Ever, and among the top months recorded since the Great Recession. While 131 is a great (very high!) value, we think that the real story is the month to month variation in Demand that our shop owners have been successfully managing since the election last November. Just look at the graph.

 

Double digit month to month changes  in 2017 unlike those experienced in last half of 2016

 

Sentiment for the next three months remains positive for Sales, Lead Time, Profitability, and Employment even as the seasonality of the 4th Quarter are considered.

The Federal Reserve Board’s Industrial Production Indicator fell 0.9 of a percent in August- 3/4 of which they attributed to Hurricane Harvey.

We suspect that rebuilding activity could increase demand for the capital goods sectors that use our components.

PMPA members can get the full report here August 2017 Business Trends Report

 

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Job Openings Hit Record in July- BLS

September 14, 2017

The Department Of Labor’s Bureau of Labor Statistics JOLTS release yesterday showed that job openings posted by US employers reached an all time high in July.

The overall JOLTS Job Openings number was reported to be 6.2 million, up 0.9 percent from June.

Manufacturing

Here is the graph of Job Openings posted for the manufacturing sector since the beginning of the JOLTS tracking.

Manufacturing  currently reports 394,000 openings – about 3.1% of manufacturing employment.

 

Here is the graph for Hires in Manufacturing since the beginning of JOLTS tracking.

The upward slope of the line on this chart is really compelling!

What does this mean for you?

  • If you are unemployed- There is no reason to be. There are a record number of job openings all across the economy, and as can be seen in the chart above, especially in well paying manufacturing career areas such as machining, welding, and other skilled trades.
  • If you are employed already- Now is the time to increase your skills. The sheer number of openings  means that opportunities for you to land a higher skilled job- promotion- with your current employer- have never been higher. (And this is not counting the wave of baby boomer retirements yet to come.)
  • If you are an employer- Training, Training, Training. The JOLTS numbers and chart above show that it is a very competitive market to try to find new hires. It is likely that the best employees that you will have in five years are employees that you already have on your payroll.  Train them to grow their capability and your shop’s competitiveness. PMPA member companies can use our online training to start training the talented performers that you already have. And to aptitude test candidates. PMPA MFG-TRAINING

Every week we get  a drumbeat of economic releases.  There are so many that sometimes it is easy to just nod and go on with what ever urgent thing is on our plate at the moment.

This JOLTS report is different. It is a sentinel call to us that the jobs market has changed, and how we think about talent and skills in our shops needs to change as well.

If you are a PMPA member, our new Online Training Program might just be the perfect tool to help you deal with the jobs and skills dilemma that you face.

If you are not a PMPA member, contact us to find out how you can become a member and gain access to our members only online training program for your employees.

And if you are unemployed, and would like to find out what a job in precision machining might be like, check out our Game Changer Video.


5 Bullish Facts About Manufacturing Employment -and Your Career!

September 5, 2017

Here are 5 facts to convince you that prospects for employment in Manufacturing are strongly bullish and worthy of consideration for your own career or the career of someone that you love.

Career prospects are looking UP in Manufacturing!

Facts courtesy of BLS:

  1. The 36,000 jobs manufacturers added in August 2017 were the fastest monthly gain in five years;
  2. The number also increased for the third consecutive month;
  3. June and July hires were revised upwards by 19,000 jobs from original estimates;
  4. Manufacturing employment has risen by 155,000 over the last 9 months- 17,000 average;
  5. Total manufacturing employment rose to 12.48 million, up 1.03 million since the Great Recession;
  6.  Bonus! Total manufacturing employment is highest it has been since January 2009;

Our PMPA Business Trends Report continues to show strongly positive Employment sentiment- 90% (or more) of shops expecting employment prospects for the next three months to remain the same or increase- since last November. Last month it was 96%.

Manufacturing employment is on the increase. Great careers, not “labor jobs.” Interesting work. Our precision machining companies are looking for people to bring their talents.

And that’s no bull!

Well, it is a bull for manufacturing employment, and that’s no bull!

Now is the perfect time to consider a Game Changing Career in Precision Manufacturing.

Bureau of Labor Statistics

Chart and Analysis Courtesy Chad Moutray at NAM.


Technology- Profit Differentiator or Limiter?

September 5, 2017

I have had some interesting conversations with a couple of shop owners after they read our article Technology or People in the July issue of Production Machining.

The point that I had hoped to convey was that while the contributions of technology to our shops’ bottom lines is undeniable, it is up to us to get our people in position to take maximum advantage of the technology- to lead the technology.

Technology As Enabler

One correspondent pointed out that they purchased technology so that they could still get production with the available manpower in their area. They thought that getting people who could use the technology that they had was chore enough. They were buying technology with canned cycles so that they could produce with out a lot of engineering and programming, which was not a strength of theirs based on their workforce.

Technology As Equalizer

Another person called to discuss the article and said that to them, they thought that technology was in fact a “great equalizer” or “homogenizer.” That shops with the same technologies would likely quote similar parts to similar times and costs based on using the technology in similar ways based on how it was equipped from the factory. So they saw technology not as a way to differentiate  shops, as much as a way for multiple shops to get to a common and competitive level of performance.

Technology as Empowerment

The third caller raised the point that I had tried to make, but in much richer detail. “If you use the machine just out of the box, you’re no different from anyone else. If you use the machine’s built in roughing cycles,  for example, you’ll get the exact same result as everyone else with that same machine. The profits are made when you go out past the “built in” capability and create greater value by customizing your process.  On a complicated part, using the machine “normally” might require you to use 12 tools, and require a very expensive machine because of the relationship of certain features to each other. But what if I build several of those interdependent features into a special tool, whether OD form, or ID step drill, for example? Now I don’t need so many consecutive tool’s stacked up to do the cutting and adding up time for each part. Because the features are built into the tool, I don’t need so much precision out of my machine. And now I don’t need all of those expensive stations… ”

They had quite a bit more to say about how the canned cycles are conservative and wasteful and in some cases a compromise that  might not be best for the particular job. But when I thought about what he had said, it raised a question in my mind- “Since we don’t need so many tools and so much precision because of the “novel way” that was determined that would work- “Doesn’t that mean we don’t need that original expensive high tech machine tool?”

Not So Fast, Vigo!

The third caller shared how they were able to make parts using a sub $100,000 mill in their shop- while their Customer could not get the parts correct on their million dollar plus technology.

Was he saying that the little guy and the cheap equipment will always beat the big guy and their expensive technology? Not at all.

What he was saying is that it is up to all of us to assure that our people and our technology are operating at their highest and best use. Not just their nameplate or nominal capacity.

He was saying that technology is the tool that can best help us achieve our vision and fully realize our abilities. Technology is the best means available to us to deliver the best that we can think of. It is our thinking therefore, that leads our technology.

Final Questions

What is the purpose of technology in our shops?

Is it to substitute for knowledgeable people and still get acceptable parts to ship?

Is it to ensure that our shops are competitive in the market?

Is technology merely a means to an end, and best driven by deliberate intention to give the engineer the ability to make the parts the best way that they know how? Without the need for an unnecessary investment?

Or is technology the tool that empowers our people to deliver the best that that they can imagine?

What Is The Purpose of Technology In YOUR Shop?

Thanks to the folks that gave me a shout to discuss the article. We learn so much from our conversations.


99 Consecutive Months of Economic Growth- ISM PMI

September 1, 2017

The August 2017 ISM PMI report was issued this morning, reporting that “Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 99th consecutive month…”

Yes, we were thinking that too…

“Manufacturing expanded in August as the August PMI® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent.  This indicates growth in manufacturing for the 12th consecutive month and is the highest reading since April 2011, when the index registered 59.1 percent.

Let us repeat: Growth in manufacturing for the 12th consecutive month- and highest reading since April 2011, when the index registered 59.1 percent.

This is Great News!

“The New Orders Index registered 60.3 percent, a decrease of 0.1 percentage point from the July reading of 60.4 percent. The Production Index registered 61 percent, a 0.4 percentage point increase compared to the July reading of 60.6 percent. The Employment Index registered 59.9 percent, an increase of 4.7 percentage points from the July reading of 55.2 percent…”– Timothye R. Fiore, ISM PMI August 2017 Report,

These are strong, positive indicators for manufacturing.

Markets that our companies serve that went up in August from July included Machinery; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; and Food, Beverage & Tobacco Products. (Our shops make nozzles and fittings for beverage delivery systems as well as other components for food and beverage manufacturing, preparation, packaging, and delivery.)

Calculated Risk Blog shares this long term Graph of the ISM PMI index each month.

It is difficult to be pessimistic in the short term about the prospects for manufacturing. This report beat expectations (56.6)  by 2.2 percentage points.  Coming in at 58.8 tells us that manufacturing expanded in August at a stronger rate than in July. And that it beat the ‘experts’ consensus.

We look forward to seeing what our August Business Trends Report tells us about our piece of this manufacturing optimism when it comes out later in September.

ISM PMI 

Calculated Risk Blog

Photo Credit


PMPA Business Trends-Shipments Take a Breather in July

August 29, 2017

With 82 companies responding, the PMPA Business Trends Index for July 2017 plummeted dramatically from June’s near record 135 to the lowest reading all year of 112. The sky is not falling however, as the July 112 value is down just 3 points from July’s five-year average of 115- and up 4 points from July 2016.

 

Sky is not falling- July’s 112 value is down just 3 points from July’s 5 year average of 115. And up 4 points from last July’s report!

Sentiment was level for Employment and strongly positive for Net Sales, Lead Time, and Profitability for the next three months. Despite the slope of the line on our graph, we remain optimistic for precision machining.

Link

 

 


Overall Equipment Efficiency and Your Precision Machining Shop

August 21, 2017

Overall Equipment Efficiency

“What are you going to work on in your shop today?”

Busy machines and production lines are good, but even better are busy machines and production lines that are making the right product- and the product right. This is one perspective on OEE- Overall Equipment Efficiency.

What is OEE?

Availability, Performance, and Quality. As a percentage of your equipment’s ideal values, each of these factors plays a role in determining your shop’s OEE. When I looked at OEE for my plant, I found that we were definitely not getting the productivity that our equipment was capable of achieving.  Here are three equations to help you determine your OEE:

Availability

Availability in my shop had two components: Running time (time the machines were actually producing product) and Scheduled Time. Availability (A) is the ratio of Running Time to Scheduled Time.

A= RT/ST

Compare this availability factor to total operating time, and identify the differences- idle time due to operator coffee, smoke, and meal breaks; Setups and changeovers; Breakdowns and mechanical issues; Delays waiting for first piece approval, gaging setups, or crane availability. Once these are identified, prioritize them for improvement. (Some practitioners simplify this to Scheduled time divided by the product of 365 days times 24 hours per day; while this is strictly speaking correct, it typically does not reflect the real world utilization for small contract manufacturing shops like ours.)

Break times affect Availability

Performance

Performance is the ratio of the time the machine is actually running and the theoretical time. The difference between theoretical and actual is the time lost due to tool changes, raking out chip bird’s nests, emptying the chips, loading new barstock, or slowing the machine down due to perceived technical issues. Performance is the ratio of Output Achieved divided by the Theoretical Output (TO).

P=OA/TO

This is often a factor that is more often identified when comparing two shifts or operators on the same process. Also can be affected by changes in tooling or methods from the initial quote. (Sometimes it is easier to figure this using parts produced  (OA) versus Theoretical parts produced using the quoted cycle time (TO))

Process performance affects output…and actual uptime.

Quality

Production foremen might think that machining is about making the production numbers, but shops that remain in business know that it is making  parts with the quality needed that keeps the parts shipped and the invoices paid. Quality was simply the ratio of Good Parts (GP) divided by the Total Parts (TP) produced.

Q=GP/TP

These are also a factor in your shop’s OEE.

Overall Equipment Efficiency

OEE is now determined by multiplying A, our availability term; P, our productivity term; and Q, our quality term. What if you are at 90% for each of these terms?

OEE= 0.90 X 0.90 X 0.90 = 0.729 or 73%

What does a 1% improvement in each of these do for you?

 OEE= 0.91 X 0.91 X 0.91 = .754 or 75.4 %

What does 100% Quality (Zero defects) get you with the other two factors at 0.90?

OEE= 0.90 X 0.90 X 1.00 = 0.81 or 81%

So what are you going to work on today in your shop?

 

Accountant photo: accountant.

Break photo courtesy Wikipedia commons

Reject tag photo courtesy Linton Labels