The latest Institute for Supply Management Purchasing Manager’s Index (ISM PMI) for June 2016 increased 1.9 percent from May 2016, the fourth consecutive increase in the index and the 85th consecutive month of increase in the overall economy.
This performance is stronger than our shops are seeing, and so we hope it bodes well for contract machining orders to pick up in the near future…
“The June PMI® registered 53.2 percent, an increase of 1.9 percentage points from the May reading of 51.3 percent. The New Orders Index registered 57 percent, an increase of 1.3 percentage points from the May reading of 55.7 percent. The Production Index registered 54.7 percent, 2.1 percentage points higher than the May reading of 52.6 percent. The Employment Index registered 50.4 percent, an increase of 1.2 percentage points from the May reading of 49.2 percent. Inventories of raw materials registered 48.5 percent, an increase of 3.5 percentage points from the May reading of 45 percent. The Prices Index registered 60.5 percent, a decrease of 3 percentage points from the May reading of 63.5 percent, indicating higher raw materials prices for the fourth consecutive month. Manufacturing registered growth in June for the fourth consecutive month, as 12 of our 18 industries reported an increase in new orders in June (down from 14 in May), and 12 of our 18 industries reported an increase in production in June (same as in May).”
“Of the 18 manufacturing industries, 13 are reporting growth in June in the following order: Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Primary Metals; Machinery; and Nonmetallic Mineral Products. The three industries reporting contraction in June are: Electrical Equipment, Appliances & Components; Transportation Equipment; and Plastics & Rubber Products.”
Is the ISM PMI a leading indicator for our precision machining shops shipments in the short term? In May 2016, the PMPA Business Trends Index declined 8 points or 6.6% to 114, its lowest value for the month since May 2011. A majority of respondents reported sales declines in May. We certainly hope that this ISM PMI is a leading indicator for our shops!
ISM PMI News release June 2016 PMI
ISM PMI graph courtesy Calculated Risk Blog
Author: Miles Free
The Team at Keystone Threaded Products shows us that “Precision” doesn’t necessarily mean “Tiny” as they thread the ends of some 20 foot long, 10 inch stainless steel bars for a Metalworking press. The thread is a 10-1/4″ : 4 UNJ RH applied to each end of the 3 and a half ton bar.
At Keystone, they roll the thread form onto the material which makes for a stronger thread. Alignment and following the process is critical to assure a good thread.
Multiple passes are needed to build the thread up to the proper dimensions.
Obviously it takes knowledge, skills, and experience to apply half million pounds to produce precision work.
Here’s another look at a finished bar. Precision does not necessarily mean tiny!
Thanks to Betsy Minnick and the Team at PMPA member Keystone Threaded Products for showing us that “Precision” is not a synonym for “Tiny.”
“The May PMI® registered 51.3 percent, an increase of 0.5 percentage point from the April reading of 50.8 percent. The New Orders Index registered 55.7 percent, a decrease of 0.1 percentage point from the April reading of 55.8 percent. The Production Index registered 52.6 percent, 1.6 percentage points lower than the April reading of 54.2 percent. The Employment Index registered 49.2 percent, the same reading as in April. “-Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
“Manufacturing registered growth in May for the third consecutive month, as 14 of our 18 industries reported an increase in new orders in May (down from 15 in April), and 12 of our 18 industries reported an increase in production in May (down from 15 in April).
ISM reports that of 18 manufacturing industries, 12 reported growth in May; the following are the ‘Growing Markets” served by our precision machining shops: Fabricated Metal Products; Plastics & Rubber Products; Computer & Electronic Products; Miscellaneous Manufacturing; Electrical Equipment,Appliances & Components; Machinery; and Primary Metals. Markets that we serve that did not grow include: Petroleum & Coal Products; Transportation Equipment; Chemical Products; Furniture Manufacturing.
PMPA remains optimistic for a pick up in the second half of 2016, which is supported by this positive ISM PMI report.
Chart Link
ISM May 2016 Report Link
While manufacturing growth remains essentially level, certain sectors served by the precision machining industry grew nicely in the year ending in April 2016.
Dr. Chad Moutray, Chief Economist at National Association of Manufacturers, has compiled and shared the data for the past year in Manufacturing.
The sector in which Precision Machining is classified – Fabricated metal- shows a minus 3% growth for the period of April 2015- April 2016, the fact is that our shops also provide engineered components for Motor Vehicles and Parts (up 4.3%) Miscellaneous Durable Goods (up 5.2%) and Computer and Electronic Products (up 2.9%)
While the actual Year-Over-Year Growth for Manufacturing eked out a 0.5% growth rate, there were clearly winning and losing sectors as the chart above shows.
Here is a recap of the markets typically served by our precision machining shops: Machinery, Fabricated Metal, Aerospace and Miscellaneous Transportation Equipment, and Electrical Equipment and Appliances were down, while Miscellaneous Durable Goods, Motor Vehicles and Parts, Computer and Electronic Products showed gains ranging from 2.9%- 5.2%.
According to Dr. Moutray, manufacturing rebounded somewhat in April, as manufacturing production grew 0.3 percent, just offsetting the 0.3 percent decline in March. In April, renewed strength in the Machinery sector (up 2.4%) and Motor Vehicles and Parts sectors (up 1.3%) were positive signs.
According to the FED, April Industrial Production moved upward by 0.7 percent, after two months of decline.
The PMPA Business Trends Index of Sales for April 2016 declined from the year’s March high 0f 131 to April’s 122. That 122 reading is up one point from the 2015 calendar year average.
While the economic news is not bubbling with enthusiastic reports of growth, we think that the industry operating even or just above last year’s average is a positive story.
It sure beats the alternative…
If college was your first plan, but now it’s not, you need an alternative plan. The difference between low wages and a good paying career is having a plan.
“People who get the best options, the best money, the best jobs- have a plan. What’s your plan, if the college plan doesn’t come through?”
- Hundreds of jobs in your hometown that employers want to see filled with local talent.
- The best possible job for you should match your skills and your interests
- Careers with a future
- Let you grow you pay quickly based on your performance
[youtube https://www.youtube.com/watch?v=fjKKUXlwvw4&w=560&h=315]
Here are 3 career planning options that give you “Home Field Advantage” discussed in the video.
Alternate Career Plan #1 Direct to Work
Alternate Career Plan #2 Apprenticeship
Alternate Career Plan #3 Military Service
Thanks to PMPA Member Company Vanamatic Company and Ohio Means Jobs for the video and wise career counsel.
If you have an intermittent or periodic problem, start counting frequency of occurrence, and then figure out what the order of magnitude is compared to your process.
To solve periodic or intermittent problems in our shops, the first step after identifying the problem is collecting data about “When” and “How often” it occurs. Then, comparing it to the orders of magnitude that occur naturally in your shop can help you narrow down the likely causes.
Relative frequency can be a big help, when you figure out that the frequency has some relationship or equivalence to some aspect of your process. For example, if the frequency is about equal to two occurrences per bar, than it becomes relevant to look at bar ends first, With two ends per bar, or the fact that you might get just two parts out of the first bar end, this tying of frequency to an order of magnitude denominator saves a lot of thrashing about to try to identify root cause.
What are some orders of magnitude that occur in your shop that you should consider for your problemsolving efforts on intermittent or periodic problems?
Material Order of Magnitude
- Per Piece
- Per Bar
- Per Bundle
- Per Lot
- Per Order
- Per Heat
- Per Supplier
Your shop processes have orders of magnitude too.
Per Machining Operation
- Per Spindle
- Per Stock Up
- Per Machine
- Per Shift
- Per Release
- Per Batch
- Per Lot
- Per Production Order
How does this work? In a prior life I had an intermittent customer complaint for a twisted square bar product. The customer was counting bad pieces cut from bars in bundles.The frequency was extremely low, it was not at one per bar or one per ten bars, nor one per twenty bars. It turned out to be approximately, slightly less than “one piece per bundle.” Knowing that the frequency was that low, we were able to eliminate most of our upstream of bundle process steps. They would have generated much higher frequencies – more on the order of multiple occurrences per bar.
Based on our frequency being an approximate order of magnitude of one per bundle, we focused our investigation on the product and process at and after the bundle stage. Which was where our problem occurred-when a single bar end was being twisted by the movement of the last strapping and clip installation as it was tightened for packaging. the balance of the bar was held securely by the prior installed starps, but the tensioning unit grabbed one corner of a bar as it secured the final band around the bars, creating a twist in the end of the bar held under the tension of the clip that locked in that last strap.
Without comparing frequency of occurrence to orders of magnitude in our process, we would probably still be trying to figure out where in our process we could twist just one 14″ segment out of 3,260 feet of bars. We’d be in denial, and eventually lose the customer.
If you have an intermittent or periodic problem with your products, start counting frequency of occurrence, and then figure out what the order of magnitude is compared to your process.
Image credit
Where is the oversight?
We teach our children that online shaming and bullying are not acceptable. Sadly, our congress fails to require similar standards of decency from the executive branch regulatory agencies.
On May 11, 2016, Occupational Safety and Health Administration (OSHA) released the final Injury and Illness Recordkeeping and Reporting Rule.
We testified against several provisions of this rule on January 10, 2014.
We are over 4 hours invested into our trying to get through the 273 pages of the federal register notice regarding the change of rule. On page 239, OSHA handily dismisses our time estimate of 4 hours of professional time to understand the rule as “inflated.”
Here is what NAM’s Vice President for Policy, Rosario Palmeri had to say about this rule:
“Today, this administration put a target on nearly every company and manufacturer in the United States. Manufacturers are supportive of regulations aimed at increasing transparency, and we pride ourselves on creating safe workplaces for the men and women who make things in America. However, this regulation will lead to the unfair and unnecessary public shaming of these businesses. This is a misguided attempt at transparency that sacrifices employee and employer privacy, allows for distribution of proprietary information and creates burdens for all manufacturers. We will look at all options to protect manufacturers from this certain threat to the modern shop floor.”
Imagine if we had a regulatory climate where good policy and collaboration, rather than bullying and shaming of employers were the real work product.
Sadly, manufacturers continue to be the target for regulatory bullying and shaming, increasing the adversarial and punitive nature of workplace safety.
When the focus is strictly on compliance because of enforcement risk, the employer’s focus becomes defense, not on establishing best practices and innovatioon. Management of regulatory risk becomes paramount. Resources are diverted to documentation and duplicative efforts to assure inspections are passed, rather than nurturing a holistic culture of safety.
Shaming as public policy and regulatory protocol? How can these possibly improve safety outcomes?
What can employers expect next, stocks in the public square? When did shaming become acceptable government policy?
Ashamed dog photo Link
“Manufacturing registered growth in April for the second consecutive month, as 15 of our 18 industries reported an increase in new orders in April (up from 13 in March), and 15 of our 18 industries reported an increase in production in April (up from 12 in March). The April PMI® registered 50.8 percent, a decrease of 1 percentage point from the March reading of 51.8 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. “- Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
The ISM report also highlighted that respondents in fabricated metal indicated growth in April, and reported increases in prices for steel, stainless steel, and aluminum.
Why we are optimistic for your business going forward: The ISM PMI report’s “Manufacturing at a Glance” table showed that New Orders and Production were growing; Supplier Deliveries were faster, Inventories were contracting and Customer Inventories were too low. These are all positive signs for our Precision Component making shops.
ISM PMI Chart courtesy Calculated Risk Blog
ISM PMI April 2016 News Release
With 80 companies responding, the PMPA Business Trends Index in March 2016 climbed 14 points or twelve per cent to 131, only the third time the index has been above 130 in its history.
This is surprising given that the FED’s Industrial Production (IP) index fell 0.6 percent in March. (The manufacturing component-ex mining and utilities- dropped 0.3 percent). The FED also reported manufacturing capacity utilization was lower, down from 75.4 percent to 75.1 percent, its lowest level in nearly two years.
PMPA members that participate in our monthly Business Trends Reporting also weigh in on 4 indicators of future sentiment- Outlook for the next three months for Sales, Lead Times, Employment, and Profitability.
Opinions for the next three months compared to today:
- Net Sales: The outlook for sales of precision machined products has declined to seventy-six percent (76%) of respondents expecting the level of sales to remain the same or increase over the next three months.
- Lead Times: Ninety-four percent (94%) of respondents expect Lead Times to remain the same or decrease.
- Employment: Eighty-seven percent of respondents expect employment prospects to increase or remain the same for the next three months, a positive assessment. Sentiment is unchanged from last month.
- Profitability: Prospects for profitability have moved to the positive, after a level three months.
The March 2016 PMPA Business Trends Report shows that our precision machining industry sales have turned positive. Lead Time sentiment shows we have the capacity to further grow sales which is supported by the fact that our hours of first shift scheduled are below last year’s calendar year average.