No spec, no quality. Know Spec, know quality.
Know the specification!
No spec, no quality. Know Spec, know quality.
Know the specification!
PMPA Business Trends Report reclaims all-time record high of 143 in August. March 2018 was the first time that our sales index recorded such strong sales.
Eighty percent (80%) of our respondents reported sales increases, 51 percent of shops reporting reported sales increases in the double digits.
Sentiment indicators remain strong.
Our markets and businesses have changed- have we as managers kept up?
How are you managing differently for success rather than survival?
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.
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
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.
Graph courtesy Calculated Risk
On June 21, 2018, the ECHA added Lead to the Candidate List for Substances of Very High Concern under REACH.
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
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.
PMPA members know who.
“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
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
In case you were wondering how well the US Department of Commerce is taking care of the exclusion requests by American Metalworking companies, here’s some data.
Requests for exclusions for both steel and aluminum have less than a half of a percent chance of being approved- 0.35% for steel and 0.47% for aluminum.
Where else but government is this level of performance tolerated?
We will update this from time to time.
PMPA Business Trends Sales Index for May climbed to its second highest value ever as forward looking indicators for Sales, Lead Time, Employment and Profitability softened but remained positive.
Our year to date average is 136, up 11 points or 8.8% over 2017’s year-end average of 125.
We are at 106% of where we were a year ago in May.
The FED reported that Industrial Production (IP) Industrial Production edged down 0.1 percent in May after rising
0.9 percent in April. Manufacturing production fell 0.7 percent in May, largely because truck assemblies were disrupted by
a major fire at a parts supplier. Excluding motor vehicles and parts, factory output moved down 0.2 percent.”
Our industry is clearly outperforming IP- they cannot make it until we produce the precision components needed.
The sentiment indicators while lower, still remain in positive territory, and are likely based on the realization that the summer is typically less demanding than the first quarter.
Full report available HERE