“How many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?”- Paul Krugman
http://www.nytimes.com/2010/08/27/opinion/27krugman.html?src=tp
Author: Miles Free
Our July 2010 Business Trends Report provides hard data that the precision machining industry is maintaining “A New Normal.”
The three month outlook for sales, lead time, employment and profitability are all quite positive as our industry passes the fourteenth month above the May 2009 low.
We are encouraged that our index did not drop further in July, a seasonally weak month for our industry.
Average length of first shift is up to 43.1 hours, more than 5 hours above the 2009 average.
94 percent of participating shops expect profitablity to remain the same or improve.
Those expecting sales to remain the same or increase made up 90% of our respondents.
The last shop owner I spoke with said that he was “Busier than heck and can’t ship parts fast enough.”
We suspect that part of his problem is getting the raw materials and tooling that he might need when he needs it…
How about you? Are you busier than heck? Are you still in the range we are calling the New Normal?
When you have been in manufacturing long enough, you begin to recognize a few common themes. Four buckets, if you will, for the problems to collect in.
When it comes to Engineering Changes or Process Changes, here are the 4 buckets that come to my mind.
Bucket Number 1– Claiming savings that don’t really exist. I also call this Green Belt Fantasy #1, and Boss Delusion # 1. Typically the savings or “improved performance” aren’t sustained if they show up at all. The academic name for this bucket is the Hawthorne Effect, or the “Observers Paradox.”
Bucket Number 2– Ignoring labor fringe benefits (and overhead.) This can easily be 20% or more per labor dollar and just because the accountants claim they have it figured in doesn’t mean they do. Overhead is a dumpster itself of hidden problems, buried corpses -err, costs- that always has its own persistent odor.
The fraternal twin of this is failing to account for unanticipated maintenance costs. I call this bucket the Iceberg Bucket because you only see a tiny part of the real problem.
Bucket Number 3– Using production time estimates that reflect substantially different rates of work. The best example of this that I can recall was in a movie where the producer had a time study of how a chair was being painted (by brush) so he could low ball the quote. (He needed a bunch of chairs for his production.) After the producer got his lowball price accepted, the painting contractor picked up his signed copy of the contract and hollered to his crew “SPRAY EM!” In our industry we wouldn’t dream of using setup time estimates for a cam machine on a CNC machine, but…
I call this Bucket Number 3 the Apples to Oranges Bucket.
Bucket Number 4 is the most trying of all. We all like to think that we make decisions on the basis of cold hard facts and rational decision making. But research with people whose brains have been injured have shown that their purely cold hard rational decisions with no emotional inputs almost always tend to be poor ones. Our mental processes have a lot more adrenalin and other “chemical inputs” than we will admit. If we really want to make a project happen, we somehow manage to ignore, under weigh, or fail to consider unquantifiable critieria, especially relating to human performance issues of those affected. Employee fatigue, effort required, distractions effect on performance, and job disatisfaction. I call this bucket The Invisible Bucket because it holds the costs of change that you cannot see and cannot measure- disruption, resistance to change, adjustment time, learning curve issues etc… All of these are invisible at the time when you most need to see them.
Worker acceptance of change is difficult to predict. It is even more difficult to manage.
But the key in my experience to eliminating all of these buckets is to get the employees that have to do the work a contributing role on the team to implement the change.
“Become the change you wish to see” and “The easiest way to deal with change is to help create it” are 2 truisms that can help your people get involved and so avoid dealing with the 4 ugly buckets described above.
How do you avoid tripping over these buckets in your operations?
4 Buckets
Iceberg
Apples to Oranges
Invisible bucket (I did the photoshop)
The newswires were all abuzz that China had slipped past Japan to become the number 2 global economy.
Oh what they were saying!
Here are a couple of facts to help you get some perspective on this China Economic Growth ‘Miracle.’
1) There are over 65 million VACANT housing units in China. Sounds like a bubble to me.
2) The price of land went up almost 9 fold in Beijing since 2003, just 7 years. Here’s the graph:
3) While the Chinese stimulus actually built things, many of those things sit empty.
I happened to pull these facts from a blog called Market Oracle, written by James Quinn. He is citing work from Casey Research, which is documented as to original source on each slide. But I have been watching this “magic act” since I visited China in 2003. Almost half the world’s high rise cranes were said to be there at that time. And yet right behind our hotel was a three year old building, brand new, just like the South China Mall picture above, and also completely empty…
If the last U.S. financial crisis was a bubble made from the thin film of debt financing- WHAT WILL THE BURSTING OF THE CHINA BUBBLE LOOK LIKE GIVEN THESE FACTS?
If what I remember from my economics classes is even half right, WAIT TILL YOU SEE WHAT THE CHINESE CURRENCY EXCHANGE RATE LOOKS LIKE WHEN THIS BUBBLE BURSTS…
And about those ever skyrocketing raw materials prices based on Chinese demand to build vacant buildings, what will happen to prices for those materials when they stop building???
I am impressed at how the Chinese authorities have applied some of the best aspects of a capitalist society to achieve remarkable growth.
And yet, I can’t help but wonder if they haven’t also applied some particularly bad ideas about managing an economy, ideas that could create the mother of all bubbles.
Graphs and intelligence from Casey Research accessed through Market Oracle.
Bubble gum photo credit.
By retarding transformation rates, moly improves the hardenability of its alloy steel grades.
Molybdenum is an essential micronutrient, but large doses can be highly toxic. Fortunately, we don’t eat our alloy steels.
Molybdenum (“moly”) is added to constructional steels to
- Improve hardenability by slowing the transformation (moving the nose of the curve to the right);
- Reduce embrittlement during tempering
- Enhance the creep strength of low alloy steel grades at higher temperature,
- Add resistance to corrosion.
Moly does this in very low quantities, and so it is truly a “synergistic” alloying element. Typical moly additions in constructional steels are around 0.10-0.60% by weight. Moly analysis typically runs 0.20-0.30 in the low hardening 40XX grades; 0.15-0.25 in the 41XX series of alloy steels; and 0.20-0.30 in the deeper hardening 43XX and 48XX steels.
Moly has been reported in Japanese swords as far back as the 14th Century, but its first major military use was for tank armor in World War I. The French firm Schneider & Company made moly armor plate which at 25 mm was able to stop a direct hit from a shell. The prior manganese armor plate at 75mm thick was not so impervious and the reduction of steel mass by about 2/3 made the tanks with moly armor much more mobile (speed and manuverable) in combat. Today moly is an indispensable part of many aerospace and high temperature applications including rocket nozzles.
While Moly can be the only alloying element added (40XX steels) it is also used in combination with Chrome (41XX) Nickel (46XX and 48Xx, or in a triple alloy combination with Chrome and Nickel (43XX or 86XX) as well as other grades (87XX, 88XX, and grade 9310 come to mind).
But where we see moly in our shops is in our M- series tool steels. That M prefix stands for Molybdenum, which gives these tools steels their characteristic high hot hardness. Moly content in M series tool steels ranges from 4.50% up to 9.50% by weight. It is the ability of these steels to resist softening at high temperatures that makes them so useful in our shops at production speeds and feeds.
The moly tool steels also have a tendency to decarburize so careful grinding and attention to details in heat treatment is critical in toolmaking and sharpening.
For more info on Molybdenum, Click on the Mindmap for Molybdenum.
Photo of moly metal.
Trivia: the first commercial heatof Moly High Speed Steel was by Universal Cyclops in 1931. Grade AISI M1. They called it Motung for, you guessed it, MOly TUNGsten.
Tonight, August 12, 2010 is the peak of the Perseid Meteor Shower.
For a great photo of a Perseid meteor from my friend George Gajdos, click here.
The Perseids are named for the constellation Perseus, from which they appear to radiate, though more correctly they are remnant debris left over from the comet Swift-Tuttle.Frequencies of up to 45 sightings per hour are possible for us in the northern hemisphere. There are some great facts about this meteor shower HERE.
Tomorrow night, August 13th will also be a great night for viewing if it is clear.
So what do meteors have to do with precision machining?
Ultimately machining relies on tools and tooling, and meteoric iron was an early “tool” material.
What we take for granted today, (Steel) is a commodity, abundant and worthy of fighting in a court of law over regarding “dumping and trade cases” was not so very long ago, precious, rare, and literally the best material on earth which fell out of the sky…Truly a material of heavenly origin.
Here is the story of the Jahangir Dagger from the Smithsonian as quoted from Wareham Forge blog:
“At dawn a tremendous noise arose in the east. It was so terrifying that it nearly frightened the inhabitants out of their skins. Then, in the midst of tumultuous noise, something bright fell to the earth from above….”
From the Jahangirnama (1605-24)
Thus did Emperor Jahangir describe a meteor that landed within his kingdom in April 1621. His fascination with unusual natural events—and his power to harness their aura—is revealed by this dagger’s blade, forged from the glittering meteorite. Jahangir further noted that the blade “cut beautifully, as well as the very best swords.”
So if the skies are clear in your part of the world tonight, and you get to see some streaks of the meteors from the comet Swift Tuttle lighting up the sky, I hope they remind you of a time where the steels and irons and alloys that we take for granted were at one time precious, rare, and “sky magic” of the very best kind. Good viewing and good machining to you as you use your tools to best purpose.
China Trade Surplus Hits An 18 Month High
The U.S. Customs bureau reported this week that China’s trade surplus hit an 18-month high in July as exports rose and import gains slowed, which added pressure on Chinese officials to allow faster appreciation of the yuan. According to a survey of 29 economists by Bloomberg News, the trade gap surged 170% from a year earlier to $28.7 billion. Exports advanced 38.1% to $145.5 billion, while imports increased only 22.7% to $116.8 billion.
July Chinese Imports into the US Still at High Levels. Hitting a 14-month high, Chinese steel imports into the US in July grew 21% from June (based on licenses), following June’s 35% increase, continuing to outpace overall imports into the country.
Wake up Washington. Its the China Currency and balance of trade. St*pid.
Comments from Peter Morici, various press reports, and our favorite Steel Analyst, Michelle Applebaum.
Because the steel grain structure is cold forged, rather than cut, rolled threads are up to 30% stronger…
While the strength of a thread is a function of section thickness, a thread rolled rather than cut thread is usually superior in mechanical properties, all other things being equal- here are 6 reasons why:
- The flow of the material by cold work during rolling reinforces the shape.
- The cold working strain increases mechanical properties, Surface Hardness,Tensile Strength, Yield Strength, and the Yield Strength / Tensile Strength ratio.
- The surface finish of the thread flanks is usually smoother due to the burnishing action of the rolls.Smoother finish means better fatigue life and fewer opportunities for stress risers.
- There is more material (section thickness). This results in material savings*, since the diameter of the blank will be between the major and minor diameter of the thread, rather than greater than the major diameter for a cut thread.
- The compressive stresses on the threads resulting from rolling improves the fatigue life.
- The root of the thread has a smoother radius, improving fatigue life.
Pictures courtesy PMPA member Ray Industries
Click here for a video of the thread rolling process in action from PMPA member Rolled Threads Unlimited LLC.
*I got my first “learnin” on rolled threads at my customer Keystone Threaded Products back when my hair was not silver and B.K. (Before Kids): “Why do you always buy funny sizes Jim?” I asked. That was a great first lesson on how engineering can add savings:
Our colleague Ryan over at Change the Perception wrote a wonderful piece the other day, and it was just so powerful I wanted to help him share his thinking. Here is his statement of faith about Manufacturing:
WOW! This is some thoughtful and passionate thinking.
Ryan had one more point, and it was aimed at the politicos who go up to Washington D.C. to represent OUR interests but then succumb to the “agency problem”- that is, they do only what helps them stay in power. Here is Ryan’s last tip for elected officials who really care about a strong U.S. manufacturing capability:
“I understand that I may have to make decisions that could be perceived as politically damaging to myself or my party, and threatening to my own reelection; but if my decisions help American manufacturer’s, I’m going to do it anyways.”
Ryan, I would call that “statesmanship.” Something we haven’t seen for a long, long time.
If you were running, Ryan, you’d have my vote!
To see Ryan’s full post click here.
Warning, this piece is loaded with facts, not our opinions!
We have written at great length here, here, here, and here, about OSHA’s plans to enforce safety regulations and fine violators. The “new sheriff in town” is on a mission.
So imagine what we felt when we found this report detailing 6,300 safety hazards just in Capital Hill Buildings.
- 1058 fire hazards
- 1742 electrical problems
- 102 storage shelving violations
- 70 machine guarding violations (In the last fiscal year, the machining industry had just 56 violations. See the link here. Capital Hill machine guarding violations alone are equal to about 125% of the entire machining industry’s violations for the entire country in 2009)
- 25% of hazards continue to be high risk to employees and visitors.
6300 violations compared to 56 for the machining industry, thats 11,250% more violations than our machining industry.
Library of Congress- 530 violations- not quite 10 times the violations of the entire machining industry..
“Congress has one standard for itself and another for everyone else.“- Melanie Sloan, committee for Responsibility and Ethics in Washington.
In other words “Do as we say, not as we do.”
We could go on, but whats the point? You can read the report at this link.
Here’s a wrap up quote from Senator Joseph Lieberman:
“We are talking about the safety of real people…Congress’s failure to meet OSHA workplace safety standards means that it is putting the health- and possibly the lives- of its workers at risk…This state of affairs is not just bad public relations, it is bad government.“ (Page 16)
So when you hear all that stuff about how the government is somehow more concerned about safety today- well, now you can see that they don’t practice what they enforce. That the push is for revenue not real safety.
If it was really about safety, wouldn’t you think they’d make it safe to work for the government?
That “new sheriff in town” and this administration is merely trying to enhance revenue collection from private manufacturers – shops like ours.
If it was about safety, well, why wouldn’t they start on Capital Hill? Thats where 11250% of the violations are, compared to machining.
