Manufacturing Activity Up in September- ISM PMI Report

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“Economic activity in the manufacturing sector expanded in September following one month of contraction in August, and the overall economy grew for the 88th consecutive month” according to the latest Institute for Supply Management Purchasing Manager’s Index Report. September ISM PMI

Up 2.1 percent points and indicates economic growth for Manufacturing sector at 51.5

Our look this month at the ISM PMI release for September is positive for our precision machining shops, for manufacturing, and for the broader US Economy.

The ISM’s New Order Index increase of 6 percentage points bodes well for our shops going forward.
The increase in the PMI back to expansion for manufacturing is a positive,
This is the 88th consecutive month of expansion in the broader economy according to this report.

According to Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee:
“The September PMI^® registered 51.5 percent, an increase of 2.1 percentage points from the August reading of 49.4 percent. The New Orders Index registered 55.1 percent, an increase of 6 percentage points from the August reading of 49.1 percent. The Production Index registered 52.8 percent, 3.2 percentage points higher than the August reading of 49.6 percent. The Employment Index registered 49.7 percent, an increase of 1.4 percentage points from the August reading of 48.3 percent. “
The increase of 2.1 percentage points in the ISM PMI over August beat analyst’s expectations of 50.3 and shows manufacturing back in expansion mode. In a Wall Street Journal poll, published prior to the ISM release, economists estimated that the ISM reading would increase to 49.7 from 49.4 the month before- showing manufacturing still in contraction mode.
We’re glad the data beat the estimates!
Our shops have been seeing extreme volatility in sales as reported in our PMPA Business Trends Report for August. this September report is positive for precision machining.

Chart courtesy Calculated Risk Blog

PMPA Business Trends Index Recovers 10 Points in August

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With 83 companies responding, the PMPA Business Trends Index in August 2016 recovered 10 points from July’s 108, to 118, the same value that we had in August 2014 and 2015.
Our index for the year to date has recovered to 120, the same value as 2014, and one point lower than last year’s 121. Over one eighth of this month’s respondents reported sales increases greater than 50%- we checked with all of them to confirm. Our takeaway-a lot of slow pay-no pay customers in July caught up in August. Our report asks for sales dollars, not parts shipped.

The August 2016 PMPA Business Trends Report shows that our responding shops returned to trend in August, mirroring sales performance of the same month in both 2015 and 2014. With one eighth of our respondents logging sales increases at 50% or more, our calls to confirm uncovered that perhaps the July numbers were down because customers of our shops had not paid their bills, rather than the weak numbers representing poor shipments performance. With the 3 month moving average remaining below the 12 month moving average, there is room to improve and reason to be cautious (particularly about our accounts receivable!). However, we are within a point of last year’s calendar year average, and at 120 YTD, we are even with the performance of our shops in CY 2014. The recovery to 118, typical August performance, is a good sign that despite the volatility, our shops are managing well.
Best news: Employment Sentiment!
“Prospects for employment are positive with NINETY-SIX PERCENT expecting level or increased opportunities for employment.”

Documenting the Impact of Federal Regulations- NAM

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A new study commissioned by the National Association of Manufacturers (NAM) reveals the true cost of this administration’s Labor regulations.

$81.6 billion in compliance costs over the next 10 years
155,700 lost jobs
411 million hours of paperwork

No argument from us about the hours to complete paperwork!

Obviously, management time spent on regulatory compliance that is overly cumbersome and redundant is time that management is not adding value to help companies become more competitive, sustainable, and add higher value.
Keep in mind, this is just Dept. of Labor costs.
Full Study here: NAM Report

Precision Machined Parts Sales Plummet in July

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The Witch of November came early to the Precision Machined Products industry as our Business Trends Sales Index dropped 21 points from June to July. the July figure of 108 is the Average for November for the past 4 years, hence the Gordon Lightfoot lyric.

Second largest monthly drop since the recovery began... — Second largest monthly drop we can recall…

With 82 companies responding, the PMPA Business Trends Index in July 2016 dropped 21 points from 129 to 108, the second largest drop we can recall. (It fell from 131 to 109 a drop of 22 points from October to November 2014.) That 108 value just happens to be the Average Index Value for November for the past four years, and is far below any of the past four years’ July values, which averaged ten points higher at 118. Over sixty percent of this month’s respondents reported double-digit sales declines from June to July.
We are reminded of Gordon Lightfoot’s verses about “the witch of November coming early,” as the “sales bell rang ‘21 times’” – once for each lost point of sales index lost compared to June. Last month’s report showed pessimistic outlook for sales, and with this July report that came to pass. While this level of volatility is striking, our shops continue to manage this well.
Silver Lining Department: Outlook for Employment prospects in July remained level with 64 respondents (79%) expecting prospects to remain level; seven (9%) expecting them to decline, and ten (12%) expecting an increase. The fact is that 91% of shops expect employment prospects to remain the same or increase in our shops.

Ten Points Worth Sharing- Cleveland Area OSHA Director Howie Eberts

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We attended a presentation at WIRE-Net by Cleveland OSHA Area Director Howie Eberts. Howie did a great job of giving attendees a thoughtful, human view of how and why OSHA does what it does in his district.
Informative slides were the foundation of his talk, but the takeaways revealed some interesting insights into our joint (Companies and OSHA) efforts toward employee safety.

We all have shared responsibility for safety.

1)      Safety is important- not just for ourselves, but also for our families that are counting on us.
2)      On the job fatalities have declined substantially from 1974 to the present- but there are still too many.
3)      Most OSHA inspections are conducted without notice.
4)      In Cleveland region, 85% of inspections are a result of employee complaints.
5)      Be very careful posting photos on your websites or literature- If someone is obviously in the shop without wearing their required PPE…
6)      It‘s your company-

Why wouldn’t you want to have a prepared written plan for how your company will respond to a serious injury or fatality?
It’s not unreasonable to assert your rights
You DESERVE to be treated with respect
So do our Field Agents
How you treat our officers is on you

7) OSHA does have the right to interview your employees privately
8) To prove employee misconduct you need to prove all four:

You have a work rule
The rule is communicated to all employees
You monitor compliance
You issue discipline for noncompliance

9) If the agent tries to expand the scope and you don’t understand why, ask them to clarify why, if you still don’t understand, ask to speak with Howie
10) The facts show that the most dangerous thing that any of us do involves a motor vehicle; roadway incidents alone accounted for nearly one out of every four fatal work injuries.
We took a number of specific actionable tips and insights away from his presentation that we’ll be sharing exclusively with our PMPA members.
Photo credit: http://www.medinacountysafetycouncil.com/
Wire-Net: https://www.wire-net.org/

Attending IMTS-Think Differently!

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About this time of year the advice starts rolling out – have a plan so you don’t miss anything. Make a checklist of key contacts. Map your show. Make sure to stop at So and So’s booth for the free give-aways. Etc. Etc. Etc.
This year, I’ll not exhort you to go to IMTS with a plan of exhibitors to visit. I’ll not ask you to make a list of the key people that you need to connect with. And will you really have room in you bag for whatever it is that So and So is giving away this time?
Instead, I’d like to issue you a challenge. I’m asking you to think up a theme for your visit, an idea that you would like to discover the means of achieving while at IMTS.
Several IMTS’s ago, I had just such a theme in mind. My theme was, “What can I find here at IMTS that will help us keep manufacturing jobs here in the U.S.? That will help our talent operate at their ‘Highest and Best Use?’
At that show, I found the PAWS Workholding System, and relearned the importance of knowing my multiplication tables.
Why hold (and machine) just one part, when I can hold and machine say, 16 at once?

They never told me about this when I was learning my times tables... — They never told me about this when I was learning my times tables…

Why indeed?

60% increase in parts per shift
50% reduction in Operator Load and Unload Time
50% reduction in Operator Tasks/ shift
Reduced impact on operator of repetitive motion operations (Seriously, 10 hours a day of hand clamping?)

By using an automatic clamping system and multiple part holding fixtures, the operator is able to work on higher value added tasks while the machine runs multiple parts. And because the clamping and pressure is more consistent, so is your process. This also frees up your higher skilled individuals to work on other things, allowing a lower skilled individual to load and unload the operation, while increasing consistency of workholding accuracy and force applied.
Now, you might not need a reminder about how the times tables can work in your favor by loading 16 parts at once, I get that.
And maybe your equipment only does machine one piece at a time.
But, my challenge to you remains-

Don’t go to IMTS looking for what you already know.
Don’t go just to speak with the people that you already know.
Go to find something that will make a marked difference in your quality, productivity, or ability to use your talent more effectively.

Instead, ahead of time, ask yourself what would be a delightful thing to discover that could really move the needle in your shop operations and quality. While at IMTS keep your eyes open, and ask EVERYBODY if they have seen what it is that you are hoping to discover.
Yes, of course you need to see your stalwart suppliers.
But I ask you, are they the ones that will give you that unexpected new insight to reduce your operations time or tasks by 50-90%?
(I’m guessing that they have already given you their best advice and counsel.)
Or will it be something new, unexpected, and unanticipated?
By all means, make your plans of what booths to visit and who to talk to.
That’s why most folks go to shows like IMTS.
But the REALLY BIG PAYOFF will come if you find that unanticipated, as yet undiscovered technology that will yield incredible benefits for your operations.
Success at a show like IMTS is not about making a plan- that’s a given. In my mind, it is about discovering your next surprising insight into doing what you do better- with fewer inputs and more consistently.
Think differently this trip. Discovery mode rather than checklist mode. Prepare by asking yourself “What can I find here that will…?”
And if you must have a checklist, well, try this checklist for checklists from Projectcheck.org
You can see the PAWS workholding system at this year’s IMTS at Booth W-2138

Great Info on Advanced Manufacturing at Industry Week

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Mark Muro is the author of the Brookings Institution’s latest report on advanced manufacturing which we blogged about here. He is also Industry Week’s Manufacturing Leader of the Week and we are urging you to read his interview over at Industry Week.

Convincing, factual, insights about advanced manufacturing.

Here are a couple of excerpts from his Industry Week Interview to convince you to read the full interview;

“The advanced (manufacturing) sector is where we can see the promise of the U.S. economy. The virtues of the advanced sector are what we want more of for our economy.”
“They are the single most important source of innovation.
“These industries dominate the private sector expenditure on R&D.
“They provide 60% to 70% of exports.
“These are the most highly productive industries we have at a time when there is a lot of concern about drifting productivity in the country.
“And because of this, they also pay well. There is a wage premium for people of all education levels. Half the people in the advanced industries don’t have a college degree, yet they are enjoying those wage premiums too…

“Advanced manufacturing is innovative, it’s productive, it exports, it pays well and it is inclusive.”
“Your report mentions an inclusive benefit to advanced manufacturing. Why that conclusion rather than manufacturing will become the realm of a technical elite?
“Upskilling is happening in the advanced manufacturing sector. It is not sufficient to just show up at the plant and do the same thing all day for 250 days a year. It is a more collaborative, more creative and more technical set of activities. That doesn’t mean that one has to have a college degree. Employees will require a modicum of digital skill. So much of this is about automation, computerization, CNC operation and so on. But remember that we have a lot of people retiring. There is going to be demand for workers to staff what are going to be highly productive and hopefully growing industries.”
There is much much more to this interview about workforce development, policies, and local impacts. Go to Industry Week Interview to get the complete story about advanced Manufacturing impacts.
Thanks Industry Week for this insightful, make-a-difference coverage.

July 2016 ISM PMI- Down from June but Fifth Month of Expansion for Manufacturing

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“The July PMI^® registered 52.6 percent, a decrease of 0.6 percentage point from the June reading of 53.2 percent. Economic activity in the manufacturing sector expanded in July for the fifth consecutive month, while the overall economy grew for the 86th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM^® Report On Business^®.”
“Of the 18 manufacturing industries, 11 are reporting growth in July in the following order: Textile Mills; Printing & Related Support Activities; Miscellaneous Manufacturing; Wood Products; Furniture & Related Products; Chemical Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Nonmetallic Mineral Products; Petroleum & Coal Products; and Computer & Electronic Products.”- Institute for Supply Management

PMPA’s Business Trends Report for June 2016 showed surprising resilience in our respondents’ sales growth, and out-performed the FED’s IP indicator. With profitability level and sales at fifth highest monthly level on our record, we think that when Industrial Production (IP) recovers in the broad economy, our shops will have plenty of work.
The decline in the ISM PMI from June to July suggest that the growth in Manufacturing slowed month to month.
Chart courtesy Calculated Risk Blog.

OSHA's Top Ten Most Frequently Cited Standards- FY 2015

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OSHA Penalties increased 78% August 1, 2016.

Think of your efforts here as an investment in "Penalty Prevention." — Think of your efforts here as an investment in “Penalty Prevention.”

The following is a list of the top 10 most frequently cited standards following inspections of worksites by federal OSHA for Fiscal Year 2015.

Note, the standards that are numbered 1926.XXX – Numbers 1. Fall protection, 3. Scaffolding, and 7. Ladders, are Construction industry, rather than General Industry. Nevertheless, Fall Protection and Ladders are relevant in our manufacturing shops as well. Source: Top Ten Standards 2015
In our work with shops involved in OSHA inspections, we have learned that failure to have documented training and evidence is the more likely to be the root cause of the citation. You must train and you must be able to provide documentary evidence of the training.
A savvy management will take steps in their shops to find and fix recognized hazards addressed in these and other standards before OSHA shows up.

Action Steps:

Electrical-On your next walk around the shop, look for outlets and power boxes that are not in good condition and schedule their repair ASAP. If you can see wiring or damage- that is likely a violation.
Machine Guarding– This is a particular area of OSHA emphasis. Are all provided guards in place, or are they being removed or defeated? Each instance would be a violation.
Lockout/Tagout– This too is an OSHA emphasis and on their regulatory agenda for review. Now would be a good time to review that all affected employees have been trained. That evidence exists of that training. And that you have audited to assure performance. (If I went into your shop and saw a machine undergoing a major changeover, would I find it locked out?)

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Prepare Now to Avoid OSHA Penalty Increases August 1, 2016

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“In November 2015, Congress enacted legislation requiring federal agencies to adjust their civil penalties to account for inflation. The Department of Labor is adjusting penalties for its agencies, including the Occupational Safety and Health Administration (OSHA).
OSHA’s maximum penalties, which were last adjusted in 1990, will increase by 78%. Going forward, the agency will continue to adjust its penalties for inflation each year based on the Consumer Price Index.
The new penalties will take effect after August 1, 2016. Any citations issued by OSHA after that date will be subject to the new penalties if the related violations occurred after November 2, 2015.” –OSHA News Release

OSHA Penalties to increase August 1, 2016. 78% increase for maximum penalties.

Here is a schedule of the penalties from the OSHA announcement:

What can you do to minimize the impact of these new penalties:

Audit your program.
Audit your training.
Audit your records.

PMPA members that may not be aware of all of the training that is mandated by OSHA for our shops can download our January “Safety-Employer Musts Table” Here
Here is a link to our original post on the increase from last year