“The October PMI® registered 58.7 percent, a decrease of 2.1 percentage points from the September reading of 60.8 percent. Indicators showing expansion included new orders, production, employment, order backlogs and export orders all continuing to grow in October, supplier deliveries continuing to slow (improving) and inventories contracting during the period.”- Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee
The industries that our precision machining shops serve or rely on for supplies were up in October, including: Machinery; Transportation Equipment; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Primary Metals.
While other commentators will focus on the 2.1 point drop in the PMI from September to October, we believe that this is still a very positive report that shows the ongoing strength of the manufacturing sector.
ISM Report for October
Calculated Risk Blog
Glass Half Full
Author: Miles Free
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?
Deputy Director of OSHA’s Directorate of Enforcement Programs Patrick Kapust presented the agency’s preliminary list at the National Safety Congress and Expo on September 26.
Here are the Top Ten, along with the number of citations.
- Fall Protection – General Requirements (1926.501) – 6,072
- Hazard Communication (1910.1200) – 4,176
- Scaffolding (1926.451) – 3,288
- Respirator Protection (1910.134) – 3,097
- Lockout/Tagout (1910.147) – 2,877
- Ladders (1926.1053) – 2,241
- Powered Industrial Trucks (1910.178) – 2,162
- Machine Guarding (1910.212) – 1,933
- Fall Protection – Training Requirements (1926.503) – 1,523
- Electrical – Wiring Methods (1910.305) – 1,405
If you are just now reviewing your OSHA training performance, these standards would be a great place to start.
The items numbered 1910 are General Industry, those numbered 1926 are Construction.
Photo courtesy Staffing Talk
“Economic activity in the manufacturing sector expanded in September, and the overall economy grew for the 100th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.”- ISM PMI
Low inventories, growth in orders and strong production levels drove the PMI to 60.8 from last month’s 58.8. That 2 point increase is the largest monthly increase since May 2004, before the Great Recession
“The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent. The New Orders Index registered 64.6 percent, an increase of 4.3 percentage points from the August reading of 60.3 percent. The Production Index registered 62.2 percent, a 1.2 percentage point increase compared to the August reading of 61 percent. The Employment Index registered 60.3 percent, an increase of 0.4 percentage point from the August reading of 59.9 percent. The Supplier Deliveries Index registered 64.4 percent, a 7.3 percentage point increase from the August reading of 57.1 percent. The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent. “- ISM release
The data is why we continue to be optimistic– despite the imminence of the 4th Quarter and its seasonal low demand- LOW INVENTORIES will drive continued demand for our machined products!
Read that last line in the quote above: “The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent.”
Those low inventories mean that demand will need to be met by new orders from our shops.
According to Industry Week: “Orders will probably remain strong in coming months as a gauge of customer inventories held close to a six-year low. What’s more, the ISM’s order backlogs index crept up to the highest level since April 2011, helping explain why more factories are stepping up hiring.”
We’ve been saying that right along in our monthly PMPA Business Trends Reporting. Anecdotal evidence from our shops indicates that lead time issues are causing some shops to off load business with others with open capacity.
We continue to believe that 2017 will be a strong year for shipments of precision machined products.
Chart courtesy of Calculated Risk Blog.
With 80 companies responding, the PMPA Business Trends Index for August jumped 19 points (17%) from July’s 112 reported last month. August’s 131 value was the highest for an August Ever, and among the top months recorded since the Great Recession. While 131 is a great (very high!) value, we think that the real story is the month to month variation in Demand that our shop owners have been successfully managing since the election last November. Just look at the graph.
Sentiment for the next three months remains positive for Sales, Lead Time, Profitability, and Employment even as the seasonality of the 4th Quarter are considered.
The Federal Reserve Board’s Industrial Production Indicator fell 0.9 of a percent in August- 3/4 of which they attributed to Hurricane Harvey.
We suspect that rebuilding activity could increase demand for the capital goods sectors that use our components.
PMPA members can get the full report here August 2017 Business Trends Report
The Department Of Labor’s Bureau of Labor Statistics JOLTS release yesterday showed that job openings posted by US employers reached an all time high in July.
The overall JOLTS Job Openings number was reported to be 6.2 million, up 0.9 percent from June.
Manufacturing
Here is the graph of Job Openings posted for the manufacturing sector since the beginning of the JOLTS tracking.
Here is the graph for Hires in Manufacturing since the beginning of JOLTS tracking.
What does this mean for you?
- If you are unemployed- There is no reason to be. There are a record number of job openings all across the economy, and as can be seen in the chart above, especially in well paying manufacturing career areas such as machining, welding, and other skilled trades.
- If you are employed already- Now is the time to increase your skills. The sheer number of openings means that opportunities for you to land a higher skilled job- promotion- with your current employer- have never been higher. (And this is not counting the wave of baby boomer retirements yet to come.)
- If you are an employer- Training, Training, Training. The JOLTS numbers and chart above show that it is a very competitive market to try to find new hires. It is likely that the best employees that you will have in five years are employees that you already have on your payroll. Train them to grow their capability and your shop’s competitiveness. PMPA member companies can use our online training to start training the talented performers that you already have. And to aptitude test candidates. PMPA MFG-TRAINING
Every week we get a drumbeat of economic releases. There are so many that sometimes it is easy to just nod and go on with what ever urgent thing is on our plate at the moment.
This JOLTS report is different. It is a sentinel call to us that the jobs market has changed, and how we think about talent and skills in our shops needs to change as well.
If you are a PMPA member, our new Online Training Program might just be the perfect tool to help you deal with the jobs and skills dilemma that you face.
If you are not a PMPA member, contact us to find out how you can become a member and gain access to our members only online training program for your employees.
And if you are unemployed, and would like to find out what a job in precision machining might be like, check out our Game Changer Video.
Here are 5 facts to convince you that prospects for employment in Manufacturing are strongly bullish and worthy of consideration for your own career or the career of someone that you love.
Facts courtesy of BLS:
- The 36,000 jobs manufacturers added in August 2017 were the fastest monthly gain in five years;
- The number also increased for the third consecutive month;
- June and July hires were revised upwards by 19,000 jobs from original estimates;
- Manufacturing employment has risen by 155,000 over the last 9 months- 17,000 average;
- Total manufacturing employment rose to 12.48 million, up 1.03 million since the Great Recession;
- Bonus! Total manufacturing employment is highest it has been since January 2009;
Our PMPA Business Trends Report continues to show strongly positive Employment sentiment- 90% (or more) of shops expecting employment prospects for the next three months to remain the same or increase- since last November. Last month it was 96%.
Manufacturing employment is on the increase. Great careers, not “labor jobs.” Interesting work. Our precision machining companies are looking for people to bring their talents.
And that’s no bull!
Now is the perfect time to consider a Game Changing Career in Precision Manufacturing.
Bureau of Labor Statistics
Chart and Analysis Courtesy Chad Moutray at NAM.
I have had some interesting conversations with a couple of shop owners after they read our article Technology or People in the July issue of Production Machining.
The point that I had hoped to convey was that while the contributions of technology to our shops’ bottom lines is undeniable, it is up to us to get our people in position to take maximum advantage of the technology- to lead the technology.
Technology As Enabler
One correspondent pointed out that they purchased technology so that they could still get production with the available manpower in their area. They thought that getting people who could use the technology that they had was chore enough. They were buying technology with canned cycles so that they could produce with out a lot of engineering and programming, which was not a strength of theirs based on their workforce.
Technology As Equalizer
Another person called to discuss the article and said that to them, they thought that technology was in fact a “great equalizer” or “homogenizer.” That shops with the same technologies would likely quote similar parts to similar times and costs based on using the technology in similar ways based on how it was equipped from the factory. So they saw technology not as a way to differentiate shops, as much as a way for multiple shops to get to a common and competitive level of performance.
Technology as Empowerment
The third caller raised the point that I had tried to make, but in much richer detail. “If you use the machine just out of the box, you’re no different from anyone else. If you use the machine’s built in roughing cycles, for example, you’ll get the exact same result as everyone else with that same machine. The profits are made when you go out past the “built in” capability and create greater value by customizing your process. On a complicated part, using the machine “normally” might require you to use 12 tools, and require a very expensive machine because of the relationship of certain features to each other. But what if I build several of those interdependent features into a special tool, whether OD form, or ID step drill, for example? Now I don’t need so many consecutive tool’s stacked up to do the cutting and adding up time for each part. Because the features are built into the tool, I don’t need so much precision out of my machine. And now I don’t need all of those expensive stations… ”
They had quite a bit more to say about how the canned cycles are conservative and wasteful and in some cases a compromise that might not be best for the particular job. But when I thought about what he had said, it raised a question in my mind- “Since we don’t need so many tools and so much precision because of the “novel way” that was determined that would work- “Doesn’t that mean we don’t need that original expensive high tech machine tool?”
Not So Fast, Vigo!
The third caller shared how they were able to make parts using a sub $100,000 mill in their shop- while their Customer could not get the parts correct on their million dollar plus technology.
Was he saying that the little guy and the cheap equipment will always beat the big guy and their expensive technology? Not at all.
What he was saying is that it is up to all of us to assure that our people and our technology are operating at their highest and best use. Not just their nameplate or nominal capacity.
He was saying that technology is the tool that can best help us achieve our vision and fully realize our abilities. Technology is the best means available to us to deliver the best that we can think of. It is our thinking therefore, that leads our technology.
Final Questions
What is the purpose of technology in our shops?
Is it to substitute for knowledgeable people and still get acceptable parts to ship?
Is it to ensure that our shops are competitive in the market?
Is technology merely a means to an end, and best driven by deliberate intention to give the engineer the ability to make the parts the best way that they know how? Without the need for an unnecessary investment?
Or is technology the tool that empowers our people to deliver the best that that they can imagine?
What Is The Purpose of Technology In YOUR Shop?
Thanks to the folks that gave me a shout to discuss the article. We learn so much from our conversations.
The August 2017 ISM PMI report was issued this morning, reporting that “Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 99th consecutive month…”
“Manufacturing expanded in August as the August PMI® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent. This indicates growth in manufacturing for the 12th consecutive month and is the highest reading since April 2011, when the index registered 59.1 percent.“
Let us repeat: Growth in manufacturing for the 12th consecutive month- and highest reading since April 2011, when the index registered 59.1 percent.
This is Great News!
“The New Orders Index registered 60.3 percent, a decrease of 0.1 percentage point from the July reading of 60.4 percent. The Production Index registered 61 percent, a 0.4 percentage point increase compared to the July reading of 60.6 percent. The Employment Index registered 59.9 percent, an increase of 4.7 percentage points from the July reading of 55.2 percent…”– Timothye R. Fiore, ISM PMI August 2017 Report,
These are strong, positive indicators for manufacturing.
Markets that our companies serve that went up in August from July included Machinery; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; and Food, Beverage & Tobacco Products. (Our shops make nozzles and fittings for beverage delivery systems as well as other components for food and beverage manufacturing, preparation, packaging, and delivery.)
It is difficult to be pessimistic in the short term about the prospects for manufacturing. This report beat expectations (56.6) by 2.2 percentage points. Coming in at 58.8 tells us that manufacturing expanded in August at a stronger rate than in July. And that it beat the ‘experts’ consensus.
We look forward to seeing what our August Business Trends Report tells us about our piece of this manufacturing optimism when it comes out later in September.
ISM PMI
Calculated Risk Blog
Photo Credit
With 82 companies responding, the PMPA Business Trends Index for July 2017 plummeted dramatically from June’s near record 135 to the lowest reading all year of 112. The sky is not falling however, as the July 112 value is down just 3 points from July’s five-year average of 115- and up 4 points from July 2016.
Sentiment was level for Employment and strongly positive for Net Sales, Lead Time, and Profitability for the next three months. Despite the slope of the line on our graph, we remain optimistic for precision machining.
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