I was asked this question on Quora. Thought that you might like my answer.
Spoiler alert- I blamed Moms…
Enjoy!
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Photo credit: http://forums.canadiancontent.net/showthread.php?t=117816
How can we help change their image of our High Tech Career opportunities?
Author: Miles Free
“The February PMI® registered 54.2 percent, an decrease of 2.4 percentage points from the January reading of 56.6 percent…Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 118th consecutive month.“- Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee
While the expectation was for 55 or more, and so many folks were disappointed at this slower rate of growwth in manufacturing, this point of view actually misses where exactly we are in the Manufacturing cycle.
What the disappointed people see: Eeyores view:
Here is a less myopic view:
Source: https://tradingeconomics.com/united-states/business-confidence
Yes the trend is declining.
Look at where we have been!
Now back to the ISM report:
““Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month. Demand expansion continued, with the New Orders Index reaching the mid-50s, the Customers’ Inventories Index scoring lower and remaining too low, and the Backlog of Orders returning to a low-50s expansion level. ” – No bad news to be found here!
We continue to see the positives in the ISM PMI indicator. Our shops are running full and sentiment on our internal reports remains strongly positive.
We’re definitely not having an Eeyore moment in Precision Machining!
Disney photocredit: https://winniethepooh.disney.com/eeyore
“The February PMI® registered 54.2 percent, an decrease of 2.4 percentage points from the January reading of 56.6 percent…Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 118th consecutive month.“- Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee
While the expectation was for 55 or more, and so many folks were disappointed at this slower rate of growwth in manufacturing, this point of view actually misses where exactly we are in the Manufacturing cycle.
What the disappointed people see: Eeyores view:
Here is a less myopic view:
Source: https://tradingeconomics.com/united-states/business-confidence
Yes the trend is declining.
Look at where we have been!
Now back to the ISM report:
““Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month. Demand expansion continued, with the New Orders Index reaching the mid-50s, the Customers’ Inventories Index scoring lower and remaining too low, and the Backlog of Orders returning to a low-50s expansion level. ” – No bad news to be found here!
We continue to see the positives in the ISM PMI indicator. Our shops are running full and sentiment on our internal reports remains strongly positive.
We’re definitely not having an Eeyore moment in Precision Machining!
Disney photocredit: https://winniethepooh.disney.com/eeyore
“Progress lies not in enhancing what is, but in advancing toward what will be.”-Khalil Gibran
The PMPA Executive board (with the full support of your PMPA staff) has been working on a new approach to ensure that we continue to provide our members with the technical support, information and networking deliverables that our team has consistently delivered.
“Your PMPA executive team has a vision that advances the interests and deliverables available for our members, through collaboration and progress with our long time partners, Gardner Business Media.”
The changes of the past year were unexpected, but despite them, our staff has continued to perform and provide deliverables that make us more competitive in our businesses and operations. Our executive team has come together, evaluated many options, and through a vigorous process of strategic planning, we have identified a way forward-not to merely stabilize PMPA, but actually enhance it and make it even more sustainable.
“Better Together” is the approach that we have identified to combine the strengths of PMPA and those of our long-term partner, Gardner Business Media. Together PMPA and Gardner have served the precision machining industry – each by its own strengths. Considering our history of successful and profitable collaboration on the PMTS show, and Production Machining magazine, the surprise to our executive team was “why hadn’t this been considered before?”
“Better Together” describes our proposal to work with our long time partners at Gardner to develop a Management Services Agreement (MSA). This MSA starts with a six-month initial exploratory phase (Phase 1) that will lead us towards a long-term proposal to combine our strengths and staff to enhance the value we provide to our members. This was approved at our Board meeting in Phoenix last week. In this phase, Gardner will assess PMPA organization and processes to identify opportunities to enhance performance- and create new and improved deliverables though our collaboration. “Better Together” is how we will collaborate- with both Gardner and PMPA staff bringing their unique strengths- to continue to deliver “Concierge Quality” services to our membership.
The synergies of collaborating, and sharing talent are exciting. We envision a future where our staff has more opportunity to work on advanced deliverables for our members- enhancing and extending the resources when combined with the Gardner/ Production Machining team. Gardner brings opportunities to expand our reach and better market PMPA in our industry, and beyond. PMPA can provide Gardner with a better understanding of our manufacturing niche, helping them advance the quality of their Top Shops Benchmarking- that in turn can help our members improve their own performance.
All parties will benefit as we advance the benefits of PMPA and Gardner continuing our work together. Deliberately building on our historic collaboration we believe, will allow us to enhance our performance and service to members.
We have a long history of success together. Our organizations have collaborated for many years to make Production Machining and PMTS successful, jointly produced brands. We think that now is the perfect time to re-focus our collaboration so that together we can deliver even greater value to PMPA members.
I can tell you that I am excited at the possibilities. Our PMPA staff- led by Miles and Renee- are equally excited at the continuous improvements that they think this can have for their work on behalf of you, our members. In addition, the Gardner team continues to advance the conversation- to assure that the PMPA continues to be a vital resource for our members and the industry.
We will have more details as this develops. However, I wanted you to know that your PMPA executive team has a vision that advances the interests and deliverables available for our members, through collaboration and progress with our long time partners, Gardner Business Media. I am excited to be able to announce this development. It will be under PMPA board oversight, and at the end of Phase 1, the PMPA board and Gardner will agree on a second phase to further execute our collaboration.
“Better Together” is our vision to build on our strengths with our trusted partners at Gardner. “Better Together”- to better serve us all. “Better Together” – that is our vision and means of “Effective Associating.”
–Mike Reader, President, Precision Machined Products Association
For further information contact
Miles Free
Interim Director
Precision Machined Products Association
6880 West Snowville Rd. Suite 200
Brecksville, Ohio 44141
440 526 0300
Melissa Kline-Skavlem
Chief Marketing Officer
Gardner Business Media
6915 Valley Avenue
Cincinnati, Ohio 45244-3019
513 527 8800
PMPAGDNREXT
“Progress lies not in enhancing what is, but in advancing toward what will be.”-Khalil Gibran
The PMPA Executive board (with the full support of your PMPA staff) has been working on a new approach to ensure that we continue to provide our members with the technical support, information and networking deliverables that our team has consistently delivered.
“Your PMPA executive team has a vision that advances the interests and deliverables available for our members, through collaboration and progress with our long time partners, Gardner Business Media.”
The changes of the past year were unexpected, but despite them, our staff has continued to perform and provide deliverables that make us more competitive in our businesses and operations. Our executive team has come together, evaluated many options, and through a vigorous process of strategic planning, we have identified a way forward-not to merely stabilize PMPA, but actually enhance it and make it even more sustainable.
“Better Together” is the approach that we have identified to combine the strengths of PMPA and those of our long-term partner, Gardner Business Media. Together PMPA and Gardner have served the precision machining industry – each by its own strengths. Considering our history of successful and profitable collaboration on the PMTS show, and Production Machining magazine, the surprise to our executive team was “why hadn’t this been considered before?”
“Better Together” describes our proposal to work with our long time partners at Gardner to develop a Management Services Agreement (MSA). This MSA starts with a six-month initial exploratory phase (Phase 1) that will lead us towards a long-term proposal to combine our strengths and staff to enhance the value we provide to our members. This was approved at our Board meeting in Phoenix last week. In this phase, Gardner will assess PMPA organization and processes to identify opportunities to enhance performance- and create new and improved deliverables though our collaboration. “Better Together” is how we will collaborate- with both Gardner and PMPA staff bringing their unique strengths- to continue to deliver “Concierge Quality” services to our membership.
The synergies of collaborating, and sharing talent are exciting. We envision a future where our staff has more opportunity to work on advanced deliverables for our members- enhancing and extending the resources when combined with the Gardner/ Production Machining team. Gardner brings opportunities to expand our reach and better market PMPA in our industry, and beyond. PMPA can provide Gardner with a better understanding of our manufacturing niche, helping them advance the quality of their Top Shops Benchmarking- that in turn can help our members improve their own performance.
All parties will benefit as we advance the benefits of PMPA and Gardner continuing our work together. Deliberately building on our historic collaboration we believe, will allow us to enhance our performance and service to members.
We have a long history of success together. Our organizations have collaborated for many years to make Production Machining and PMTS successful, jointly produced brands. We think that now is the perfect time to re-focus our collaboration so that together we can deliver even greater value to PMPA members.
I can tell you that I am excited at the possibilities. Our PMPA staff- led by Miles and Renee- are equally excited at the continuous improvements that they think this can have for their work on behalf of you, our members. In addition, the Gardner team continues to advance the conversation- to assure that the PMPA continues to be a vital resource for our members and the industry.
We will have more details as this develops. However, I wanted you to know that your PMPA executive team has a vision that advances the interests and deliverables available for our members, through collaboration and progress with our long time partners, Gardner Business Media. I am excited to be able to announce this development. It will be under PMPA board oversight, and at the end of Phase 1, the PMPA board and Gardner will agree on a second phase to further execute our collaboration.
“Better Together” is our vision to build on our strengths with our trusted partners at Gardner. “Better Together”- to better serve us all. “Better Together” – that is our vision and means of “Effective Associating.”
–Mike Reader, President, Precision Machined Products Association
For further information contact
Miles Free
Interim Director
Precision Machined Products Association
6880 West Snowville Rd. Suite 200
Brecksville, Ohio 44141
440 526 0300
Melissa Kline-Skavlem
Chief Marketing Officer
Gardner Business Media
6915 Valley Avenue
Cincinnati, Ohio 45244-3019
513 527 8800
PMPAGDNREXT
“2018 was a strong year for the precision machining industry. With sales up 7.2% our shops outperformed nearly every benchmark in terms of sales and performance including prior year and 5-year averages. Sentiment indicators bode well for the first three months of 2019.” PMPA Business Trends Report Year-end Summar
We remain optimistic regarding manufacturing outlook at our shops’ “component level.” However we acknowledge that the Manufacturing industry’s rate of growth is decelerating.
This difference between decelerating growth (which we believe we are seeing) and declining manufacturing (not what we are seeing) is important to keep in mind.
The level outlook for Lead Time tells me that we our shops are at their “practical” capacity. When they get busier in January , we expect to see this lead time indicator go up.
How to deal with this? Please see our article: Time to Change Your Thinking
“2018 was a strong year for the precision machining industry. With sales up 7.2% our shops outperformed nearly every benchmark in terms of sales and performance including prior year and 5-year averages. Sentiment indicators bode well for the first three months of 2019.” PMPA Business Trends Report Year-end Summar
We remain optimistic regarding manufacturing outlook at our shops’ “component level.” However we acknowledge that the Manufacturing industry’s rate of growth is decelerating.
This difference between decelerating growth (which we believe we are seeing) and declining manufacturing (not what we are seeing) is important to keep in mind.
The level outlook for Lead Time tells me that we our shops are at their “practical” capacity. When they get busier in January , we expect to see this lead time indicator go up.
How to deal with this? Please see our article: Time to Change Your Thinking
Contrary to the negative descriptions of many of the headline writers, the December ISM PMI index came in UP 0.6% from its 5-year average for December from 2013-2017, indicating growth in the Manufacturing sector in December, and in the broader economy.
How bad are those headlines? Sheeeesh!
How about
Bad ISM gives huge push in US T’s back
or :
US Factory Gauge Tumbles by Most Since 2008.
Nothing like calling up the ghost of recessions past. Recession must be imminent, right?
Now before analyzing these incredibly pessimistic headlines, let us state a couple of Facts.
Fact 1) The December 2018 ISM PMI was actually 54.1 and indicated continued economic expansion;
Fact 2) The average December ISM PMI for the five years of 2013-2017 was 53.4;Fact 3) The December 2018 ISM PMI came in actually 0.6 points ABOVE THE FIVE YEAR AVERAGE!
Fact 4) When the ISM PMI fell in September of 2008 to 38.9 in October of 2008, the index was already in negative territory-below 50.
Truth be told, the December 2018 ISM PMI continued to indicate “expansion in the manufacturing sector in December and in the general economy For the 116th consecutive month.“ ISM
How is that bad news?
While the numeric value of the drop was the “largest” since 2008- the fact that the index remained in positive economic expansion is ignored in the headline- leaving the reader to ponder the scary connection to the Great Recession of 2008.
Here’s my headline- December ISM PMI index at 54.1 remains solidly positive indicating continued expansion.
Economic expansion in the Manufacturing sector -just above the average for the past five December’s- and the 116th consecutive month of expansion in the broad economy. We see it as good news for the season! We think that you should too!
“With 80 companies responding, the PMPA Business Trends Index for November 2018 declined 11 points to 130,
which was (still) an all-time high for the month of November! Shops reporting sales declines outnumbered those reporting
gains by a ratio of 4:1- not at all unexpected considering the seasonality of shipments this time of year. The Business Trends
Sales Index remains on track to close the year up 8% over 2017.“- PMPA Business Trends Report for November 2018
Outlook for next three months:
- Net Sales: The sales outlook resumes positive expectations for the next three months despite seasonal
factors. - Lead Times: Eighty- six percent of respondents expect lead times to remain the same or increase in the
next three months. - Employment: Prospects for employment continue to be positive with ninety-seven percent (97%) expecting
level or increased opportunities for employment. - Profitability: Eighty-five percent of our respondents expect business and margins to remain strong for the
next three months, just a slight decline from the prior month.
In our April report we forecast that our index of sales would finish the year at 135, up 8% over calendar year 2017. As of this November report, we are at 135, up 8 percent over 2017 with just one month to go.
How is your shop’s performance compared to last year?
Our Take– Job gains beat consensus expectations, Unemployment is at its lowest level since I was a junior in High school, Participation rate matches its best level this year, and private non-farm wages have risen 3.1% this year according to this BLS jobs report.
Bottom line–the US economy is based on consumer spending. This report shows that consumers are growing their purchasing power a positive indicator for the economy going forward.
Key Points
- “Total non-farm payroll employment rose by 250,000 in October, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in manufacturing, in construction, and in transportation and warehousing.”
- “In October, employment in manufacturing increased by 32,000. Most of the increase occurred in durable goods manufacturing, with a gain in transportation equipment (+10,000). Manufacturing has added 296,000 jobs over the year, largely in durable goods industries…On average, 213,000 jobs have been added each month in 2018 YTD.”
- “The labor force participation rate increased by 0.2 percentage point to 62.9 percent in October but has shown little change over the year.
- “In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime was unchanged at 3.5 hours.“
- “In October, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $27.30. Over the year, average hourly earnings have increased by 83 cents, or 3.1 percent.“
- “The unemployment rate remains at it’s 48 year low, 3.7%- lowest rate since 1969. Interestingly, not a single industry was reported to have lost any jobs.”