ISM PMI May 2018 at 58.7- Manufacturing Remains Solid

June 1, 2018

According to the just released Manufacturing ISM® Report On Business® “No industry reported a decrease in PMI® in May compared to April. Economic activity in the manufacturing sector expanded in May, and the overall economy grew for the 109th consecutive month; the May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent.” – Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. 

Here are the key points:

  • The May PMI® registered 58.7 percent, an increase of 1.4 percentage points from the April reading of 57.3 percent.
  • The New Orders Index registered 63.7 percent, an increase of 2.5 percentage points from the April reading of 61.2 percent.
  • The Production Index registered 61.5 percent, a 4.3 percentage point increase compared to the April reading of 57.2 percent.
  • The Employment Index registered 56.3 percent, an increase of 2.1 percentage points from the April reading of 54.2 percent. 
  • The Inventories Index registered 50.2 percent, a decrease of 2.7 percentage points from the April reading of 52.9 percent. 
  • Demand remains strong, with the New Orders Index at 60 or above for the 13th straight month, and the Customers’ Inventories Index remaining at very low levels.
  • The Backlog of Orders Index continued expanding, with its highest reading since April 2004, when it registered 66.5 percent.

Another solid month of manufacturing performance

Consumption, described as production and employment, continues to expand in the face of labor shortages,  skill shortages and both price and supply uncertainty on necessary material inputs, primarily driven by the Section 232 Tariffs.

Just as the national  anthem is a sign that the ball game is about to start, this ISM report is our signal that we need to start having price increase discussions with our customers.

The tariffs are here, and our inputs are all increasingly difficult to obtain and expensive.

 

Game on!

ISM PMI May 2018 

 

Calculated Risk Blog

Advertisements

In Like A Lion- March Business Trends Index Sets New Record

April 27, 2018

With 91 companies responding, the PMPA Business Trends Index for March 2018 increased 14 points or 10.8% over
February to 143, the highest value for the Business Trends Index EVER! At 143, the index is up 11.2 points or 8.5%
above the five-year average for the March sales index of 131.8. ”  – PMPA March 2018 Business Trends Report

All time high for Our Sales Index!

Sentiment indicators from our respondents remained high. PMPA members can get the full report here. Press can request a copy  – we’ll be happy to share.

Two of three months  in 2018 have set new records for sales. Our industry is outperforming five year averages by wide margins- up 8.5% for March.

Prospects for employment remain high in our shops, even as the national figures tout “full employment.”

If you know someone that is underemployed, or unemployed, the prospects for great careers in our precision manufacturing shops have really never looked better.

 

Lion

March 2018 PMPA Business Trends Report

Great Careers


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


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.


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


Craft Advice for Machinists- How Good Can You Get?

October 16, 2017

Gary Chynne  uses his skills with the longbow to explain and demonstrate the fundamentals of  mastery by having and following the process in “Guy Language.”

How good can you get?

At 3:10 into this video,  he summarizes his lesson: ” So how good can you get? If you know all your steps- you take your front step, your back step. Get your head, get your bow at 45 degrees, get it back to your anchor, relax your arm. If you can follow those steps and get bulls-eyes, THEN DO IT!

“Do not short draw. Do not overdraw. Do not draw to the right of your anchor. Do not draw to the left of your anchor. Don’t let your bow waver around. Don’t let it wiggle. If its supposed to be 45, make it 45. 

“That’s how you’re going to hit the target. So its just a matter- once you know how to shoot- how good can you get- at taking the steps to shoot properly?”

Probably the best advice you’ll ever get about machining as well. Follow the process. Be true to the process. Don’t take shortcuts or deviate from your known process.

His follow up is TRUTH as well

Anyhow, it’s kind of a blast, and its kind of a bit harder than you would wish, sometimes. Anyhow, when you do that stuff, you start to hit the target.”

Or, as one of the commenter’s posted:

Don’t just practice until you can get it right. Practice until you never get it wrong.

I think that this is probably some of the best machinist advice I’ve run across. What about you?