USMCA- Updated NAFTA Finally Signed!

December 11, 2019

“While we expect some changes in the automotive supply chain, some to the benefit of the U.S. and some to the benefit of Mexico, overall this is a positive outcome for manufacturers.”

On December 10, 2019, the U.S., Mexico, and Canada formally signed an updated NAFTA following months of negotiations between the White House and Democrats in the U.S. House of Representatives led by Speaker Nancy Pelosi. This marks a major victory for President Trump, Congressional Democrats, and most importantly, manufacturers who have sought some stability after several years of uncertainty over trade with Canada and Mexico. PMPA is part of several coalitions who have pushed for an update to the 25 year old NAFTA and believes the new agreement will expedite commerce across all borders. While we expect some changes in the automotive supply chain, some to the benefit of the U.S. and some to the benefit of Mexico, overall this is a positive outcome for manufacturers.

The changes agreed to by Speaker Pelosi, labor leaders, the White House, and Mexico do not significantly alter provisions impacting autos on Regional or Labor Value content levels except one last minute provision requested by the White House that all steel for autos be “melted and poured” in North America (delayed for seven years, Mexico refused the same terms for aluminum).

Sources in Washington indicate the U.S. House of Representatives could vote to approve the new NAFTA on December 19, one day prior to departing for the Christmas break, and one day after voting to impeach President Trump. Senate Majority Leader McConnell indicated he will not schedule a vote until after the Senate concludes the impeachment trial, which many believe could begin around January 7, 2020 and last at least two weeks (President Bill Clinton’s Senate impeachment trial began on January 7, 1999…). This puts Entry Into Force (when the new agreement officially takes effect) still a few months away.

Major changes in the White House-U.S. House Democrats-Labor-Mexico update include:

  • Creating rules of evidence for labor and environmental enforcement;
  • New labor enforcement applies to all goods and services in Mexico and can apply penalties on goods with labor violations;
  • A party cannot block dispute settlement panel from being formed;
  • Creates an interagency committee to monitory Mexico’s labor practices;
  • Unions may have attaches on the ground in Mexico but unclear if U.S. official or American labor representative may inspect Mexican facilities;
  • Adds Multilateral Environmental Agreement language for all parties;
  • New Customs verification system for fauna, flora coming from
  • Mexico to ensure properly harvested;
  • Removes requirement to provide at least 10 years of patent exclusivity for biologics;
  • Content liability protections for internet companies maintained;
  • Requires steel to be “melted and poured” in North America to meet standards for use in auto production (delayed seven years).

 

Photo credit


C-1200 Series Steels- Not Recommended for Applications Requiring Mechanical Properties

December 10, 2019

Question: Why don’t the Certs for C12L14 and C1215 cold drawn steel bars have mechanical properties routinely reported?

Answer: Because these steels ARE NOT recommended for applications requiring mechanical properties, alternating stress applications, cold metal movement and can also be notch sensitive.

Don't do it!

Don’t use these steels for critical applications!

Here are some details from the application notes provided to me when I started as Plant Metallurgist at Bliss & Laughlin Steel in 1985:

  • The 1200 series steels (1215 and 12L14) are not generally sold for applications requiring high standards of strength, hardness, or other related properties
  • These steels are particularly adapted to automatic screw machine production of small repetitive parts. The ideal application is one where bulk and shape, as dictated by the design, are the chief requirements.
  • They may be used for parts which require only nominal strength values providing the factor of safety as in accordance with established practice. This is especially true where the stresses involved are static tension, compression, or shear. Vibratory, torsional, or alternating stress applications approaching the static limits are not recommended; thus these steels should not be used for line shafting.
  • When cold drawn, the C-1200 steels are notch sensitive and while polished fatigue specimens will show expected endurance limit values, poor finish and processing of parts, or faulty design may cause low or erratic results for finished parts under dynamic or alternating stresses of relatively small intensity.
  • These steels are not recommended for applications involving cold metal movement, such as crimping, forming or bending. Operations such as knurling and character rolling can be done satisfactorily.
  • Because of the smaller amount of hot work in rolling, the large size cold drawn C-1200 bars increase in relative brittleness.  The large sizes may also be expected to reveal stringer sulfide inclusions on polished surfaces. Further removal will likely reveal more inclusions as they are distributed throughout the bar cross-section.
  • A cold drawn surface will not plate to the highest quality finish; a turned or ground surface may prove necessary for critical applications

Your customer wants inexpensive parts, and machining them from 12L14 and 1215 minimizes the cost of machining to the desired geometry. But if the parts are not likely to fulfill the properties expected, that is false economy at best.

Don’t do it Image

Little Charlie and the Night Cats If you Dig It, Don’t Do it.


November ISM PMI, Consistent with Seasonal Expectations

December 3, 2019

“Economic activity in the manufacturing sector contracted in November, and the overall economy grew for the 127th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The decrease in the ISM PMI index of 0.2 percentage point from the October reading of 48.3 percent is modest and not unexpected for this time of year- it dropped 0.5 point in 2017, and three of the last five November ISM PMI’s were negative (2017, 2015, 2014.)

Considering ongoing issues with production at Boeing (737 MAX) and residual slack as a result of the just settled UAW strike against GM, and this 0.2 percent decline is modest.

Is manufacturing in a recession? If we use the definition of “a period of temporary economic decline during which industrial activity is reduced, for two successive quarters,” the answer is not yet. four consecutive months of contraction have been logged, but following 35 straight months of growth in the manufacturing sector, we are not yet ready to throw in the towel.

What are we watching?

We are beginning to pay attention to automobile loan delinquencies which have climbed to 4.7% of the total automotive loans and leases. This is just 0.56% off from the peak of auto loan delinquencies back in 2010 (5.27%). Automotive is our industry’s single largest market served, and if automotive loans continue to go south, our shops may be in for diminished production for a longer period than anyone is expecting.

Link to  November 2019 ISM PMI Report. 

Link to Calculated Risk November 2019 ISM PMI Chart


Dealing with Broken Links- A Process

September 24, 2019

Actually I am amazed at how few broken links I encounter in all of my online research.

But occasionally, we do encounter  the challenge of broken links.

A broken link- but what can we do to get the material that was supposed to be there?

I use the following process to meet the challenge of a broken link:

Deconstruct the broken link into a “likely domain” and the “deliverable Sought.” (In this case a .pdf file.)

So in this case the likely domain was “Nuclear Regulatory Commission,” and the deliverable sought was “BR0470 .pdf”

I searched for “Nuclear Regulatory Commission BR0470.pdf “

      1. And Google gave me this :

That top link looks like it!

So I followed the top result that Google provided.

    1. Which took me to the page that has a link to the file that I wanted:

This is the page that the google search found. the link we want is the third bullet (look for the pdf icon)

I then selected the pdf link  on that page which was in fact the deliverable that I was seeking.

    1. Which then delivered this:

NRC Primer on Lean Six Sigma .pdf

 

Which is the deliverable that I was seeking, and a very good reference on Lean Six Sigma!

That’s my process for dealing with the challenge of broken links keeping me from the information that I want.

What’s yours?

 


August ISM PMI -After 35 Months, a No-Grow Month for Manufacturing

September 3, 2019

 

After 35 consecutive months of growth, the Institute for Supply Management’s Purchasing Manager’s Index (PMI) contracted in August 2019, coming in at 49.1% (Readings above 50% indicate growth or expansion in the sector.) Last month, it was at 51.2

 

After 35 consecutive months of expansion, manufacturing has a no- growth month.

According to the ISM report: 

Comments from the panel reflect a notable decrease in business confidence. August saw the end of the PMI® expansion that spanned 35 months, with steady expansion softening over the last four months. Demand contracted, with the New Orders Index contracting, the Customers’ Inventories Index recovering slightly from prior months and the Backlog of Orders Index contracting for the fourth straight month. The New Export Orders Index contracted strongly and experienced the biggest loss among the subindexes.”

“Respondents expressed slightly more concern about U.S.-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders. Respondents continued to note supply chain adjustments as a result of moving manufacturing from China. Overall, sentiment this month declined and reached its lowest level in 2019,” says The Institute’s Timothy R. Fiore.

 

PMPA analysis

This was below expectations which still had the index above 51%. While proclamations of “recession” are unavoidable in the media these days, we would urge caution about this single data point being a trend. IT HAS BEEN 35 MONTHS SINCE WE HAVE HAD A POINT BELOW 50!

Our latest PMPA Business Trends Report for July  showed a slowing of growth in shipments by our shops (3MMA fell below the 12MMA) but the index itself recovered higher and all forward looking three month sentiment indicators turned strongly positive.

Mixed Signals

Industries reporting contraction to ISM  include several of our markets most heavily served : Fabricated Metal Products; Transportation Equipment; Primary Metals;  and Electrical Equipment, Appliances & Components.

Here you go.

Our bottom line: The shock should be that we have enjoyed 35 consecutive months of growth, not that we finally had one month of no-growth out of 36!

What do you think?

Chart courtesy of Calculated Risk blog


Most Valuable College Majors- Bankrate

August 29, 2019

Here in one tidy place you can find a current list of the most Valuable College Majors.

Many of them will lead to a valuable career in our precision machining shops.

The most valuable college majors include naval architecture marine and nuclear engineering and pharmaceutical sciences. We were pleased to see Mechanical Engineering, Transportation Sciences, and miscellaneous Engineering technologies all included in the top spots.

STEM careers add value!

STEM Careers add Value!

The top 10 most valued college majors are:

  1. Naval Architecture And Marine Engineering (Median income: $90,000; Unemployment rate: 1.6 percent, Percent with an advanced degree: 29 percent)
  2. Nuclear Engineering (Median income: $98,100; Unemployment rate: 1.8 percent, Percent with an advanced degree: 56 percent)
  3. Pharmacy Pharmaceutical Sciences And Administration (Median income: $100,000; Unemployment rate: 2.2 percent, Percent with an advanced degree: 58 percent)
  4. Genetics (Median income: $85,000; Unemployment rate: 1.2 percent, Percent with an advanced degree: 76 percent)
  5. Electrical Engineering (Median income: $99,000; Unemployment rate: 2.7 percent, Percent with an advanced degree: 46 percent)
  6. Architectural Engineering (Median income: $74,000; Unemployment rate: 1.5 percent, Percent with an advanced degree: 29 percent)
  7. Aerospace Engineering (Median income: $90,000; Unemployment rate: 2.3 percent, Percent with an advanced degree: 49 percent)
  8. Computer Engineering (Median income: $92,000; Unemployment rate: 2.8 percent, Percent with an advanced degree: 40 percent)
  9. Electrical Engineering Technology (Median income: $76,000; Unemployment rate: 1.8 percent, Percent with an advanced degree: 30 percent)
  10. Materials Science (Median income: $90,000; Unemployment rate: 2 percent, Percent with an advanced degree: 66 percent)
  11. Engineering and Industrial Management (Median Income $72,600; Unemployment rate 1.3%; Percent with an advanced degree: 34%)
  12. General Engineering (Median Income $80,000; Unemployment rate 2.4%; Percent with an advanced degree: 37%)
  13. Applied Mathematics (Median Income $78,200; Unemployment rate 1.8%; Percent with an advanced degree: 49%)
  14. Construction Services  (Median Income $70,000; Unemployment rate 1.9%; Percent with an advanced degree: 11%)
  15. Transportation Sciences and Technologies (Median Income $72,000; Unemployment rate 2.2%; Percent with an advanced degree: 20%)
  16. Mechanical Engineering (Median Income $88,000; Unemployment rate 3.0%; Percent with an advanced degree: 39%)

Cut to #22:

22. Miscellaneous Engineering Technologies (Median Income $70,000; Unemployment rate 2.1%; Percent with an advanced degree: 21%))

Our precision machining shops have career opportunities for those who are STEM minded. 

As the Bankrate study reports:

STEM majors are the most valuable.

 

Bankrate Study: Most Valuable College Majors

 


Reversion to the Mean in June- PMPA Business Trends.

July 24, 2019

2019 has been a very strong year for Sales.  PMPA’s June Business Trends Sales index  11 point “reversion to the mean” could be considered a substantial drop, but we believe the data suggests otherwise- the Sales Sentiment indicator recovery in June suggests that this is just a ‘moment’ and not a trend.

Yes it is an 11 point or 7.8% drop. That arrives at exactly the 5 year average for June 2014-2018. 129

Get more details on why we are unconvinced that this is bad news for our shops at June 2019 PMPA Business Trends