Manufacturing Growth Not Just A Wish

December 8, 2009

ISM’s report of manufacturing’s expansion for the fourth , and economic expansion for seventh month in a row,  combined with PMPA’s  Business Trends Index improvement for 5 consecutive months,  confirm that we are in a recovery phase, rather than the free fall we just survived.

What should we be doing differently in the recovery phase, compared to what we  needed to do while we were free falling?

ISM values over 50 indicate expansion of manufacturing.

The latest Institute for Supply Management Manufacturing Report for November showed that Manufacturing expanded for the fourth month in a row. While the Purchasing Manager’s Index decreased from 55.7 in October to 53.6 in November, the fact that the November value is above 50 indicates that mnufacturing activity continues to expand.

The Precision Machined Products Association’s Business Trends Index of Sales  for October was up for the fifth month in a row, to 85, its highest value for the year.  Almost three quarters of PMPA Business Trends respondents expect industry sales to remain at current levels or increase.

This reinforces the signal from ISM’s New Orders measure, which climbed to 60.3 in November from October ‘s 58.5. (The tie-in for precision machined components and manufactured goods  should need little explanation- our products are the enablers of multiple technologies in automotive, appliances, aerospace, electrical/electronic, heavy truck, off road, and medical  products to name a few.

These are not the halcyon days of  “ship it, ship it, ship it.,” that seem like distant, almost forgotten memories. But ISM’s report of manufacturing’s expansion for the fourth , and economic expansion for seventh month in a row,  combined with PMPA’s  Business Trends Index improvement for 5 consecutive months,  confirm that we are in a recovery phase, rather than the free fall we just survived.

What are your doing differently now? What lessons have you learned? What is your new top priority every day?


6 Reasons To Make A New List

October 22, 2009

Now that manufacturing is two months into expansion, September 2009 ISM Report , our short list of long delayed purchases will once again be under serious consideration. Here are 6 reasons to throw out your old list and start a new one.

  1. It’s not the old economy. It’s no longer business as Mayberry RFD anymore. 
    This is your grandfather's economy.

    This is your grandfather's economy.

    What you were looking at before the recession was what you needed for a prerecession economy. That’s not today.

  2. Your suppliers have been busy. Making improvements, reducing costs, increasing capabilities of their products. Machines, tools,  and software especially. What may have been a “lock” 6 months ago may in fact be a dog compared to currently available offerings.
  3. Your customers have changed. Some have gone away, and some have lost your trust. Do you really want to buy something that is single purpose for an account that you can’t trust?
  4. Your market focus has changed. The lessons your team learned in this downturn are what your customers will continue to buy from you and what they didn’t (won’t). Maybe what you were planning on buying was to produce something for the stuff that hasn’t been selling these days…
  5. Your needs are really, really different today. When you first made that shopping list, your planning assumptions included readily available bank credit, solvent customers, 16 million plus auto sales in US and full employment in your shops. Today availability of credit is iffy, customers that remain are slow to pay, and auto sales are not likely to top 12 million. The headcount in your enterprise has been drastically reduced. What you wanted then is NOT necessarily what you need today.
  6. It won’t be appropriate in your new structure. How will what you wanted back in the good ol’ days be appropriate in your shop today with half your staff on layoff and  the remaining staff working OT?

Is now the time to be faithful to a dusty old procurement plan based on a vanished Mayberry RFD economy? 

This is your current economy.

This is your current economy.

We have just survived the Terminator economy. Tell me again why  you want to buy Andy of Mayberry’s fishing pole?

Which items on your list remain viable, and what new ones will you be adding?

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