Manufacturing Defined- Making Things!

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We were pleased to be quoted in the weekend edition of the Wall Street Journal in an article by Tim Aeppel titled Feds Try Redefining Manufacturing.
Our initial post on Factoryless Goods Producers was cited in the article.

It's like manufacturing, except without us actually making anything. — It’s like manufacturing, except without us actually making anything.

The issue is that federal agencies are trying to redefine “Manufacturing” to recognize “Factoryless Goods Producers” as Manufacturers.
If you don’t actually make something- how can you be considered a Manufacturer?
If you contract to have some company in a foreign country make your product, why should you be credited as manufacturer and why should US get balance of trade credit for being the manufacturer?
We think that definitions ought to be honest.
Manufacturing is actually making things. not designing them, ordering them, or buying them from another company.
We think that manufacturing ought to be credited where the making things actually happens. Apple designs and sells some really cool electronics- but the manufacturing is not done in the US.
Why would we want to let US companies claim to be manufacturers when in fact they don’t make the products in the first place, and often have them made overseas where the operations are not governed by US legal protections for labor rules, safety, environment?
Deceiving consumers and the voters with fraudulent numbers is what this about. It’s not about reacting to globalization. It is about counting the hollowing out of US Manufacturing as actually manufacturing.

Yet no new employees are hired.
No new assembly lines or factories are built.
No new payroll taxes are being paid.

Manufacturing is about making things.
If you don’t actually make it, you aren’t a manufacturer.
Sorry if that offends you.
You may be a great designer. Broker. Outsourcer. Wholesaler, Distributor. Whatever.
But you aren’t a manufacturer unless you actually make things.
Read Tim Aeppel’s WSJ Story
What is manufacturing?
He’s Lying Photo Credit

June ISM PMI Report-Resumption of Growth in Manufacturing

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Good news/ bad news: Manufacturing growth resumes, but Employment shrinks in Manufacturing for first time since September 2009…

“Manufacturing expanded in June as the PMI™ registered 50.9 percent, an increase of 1.9 percentage points when compared to May’s reading of 49 percent. June’s reading of 50.9 percent reflects the resumption of growth in the manufacturing sector for 2013, following the only month of contraction for the year in May.”- Bradley Holcomb, Chairman of the Institute for Supply Management Business Survey Committee.

Precision machined products are widely used key components used in a host of manufactured and durable goods. Precision machined products are a submarket of Fabricated Metals, which is tracked in this ISM Report on Manufacturing.

“A PMI™ in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI™ indicates growth for the 49th consecutive month in the overall economy, and indicates expansion in the manufacturing sector following one month of contraction. Holcomb stated, “The past relationship between the PMI™ and the overall economy indicates that the average PMI™ for January through June (51.5 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI™ for June (50.9 percent) is annualized, it corresponds to a 2.7 percent increase in real GDP annually.” (PMI™ stands for Purchasing Managers Index.)

ISM’s Production Index registered 53.4 percent in June, which is an increase of 4.8 percentage points when compared to the 48.6 percent reported in May.

How do your June shipments compare to this benchmark?

The ISM report showed 11 industries reporting growth in production during the month of June — listed in order — Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Wood Products; Fabricated Metal Products; Primary Metals; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products. The three industries reporting a decrease in production in June are: Chemical Products; Machinery; and Transportation Equipment.

We are glad to see manufacturing back in growth mode, however, we were not pleased with this month’s first sign of contraction in employment.

“ISM’s Employment Index registered 48.7 percent in June, which is 1.4 percentage points lower than the 50.1 percent reported in May. This month’s reading indicates contraction in employment for the first time since September 2009, when the index registered 47.8 percent. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.”

We are betting dollars to donuts (remember when there used to be a real difference between dollars and donuts?) that the slowdown in hiring is related to employers’ concerns over Affordable Care Act.

Dollars to Donuts

Calculated Risk

Society- Driving Technical Innovation in Precision Machining

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It is not just demographics of our workforce that drives our industry. It is also the demands of society that provides us with the opportunity to innovate.

I was on a panel at IMTS last year on workforce issues.

I shared the following information regarding our workforce demographics in 2020 according to BLS

You can read my post here Skilled Workforce Demographics 2020

I was interested to see a presentation from Paul Horn GmbH. entitled Society- Driver of Technical Innovation at HORN Technology Days last week. Their approach was workforce agnostic- it was based on a look at the demands from society, rather than focus on how industry will supply that demand.

My economics professor would be so proud.

in 2008-2009 we learned that it is Demand, and Not supply, that drives the economy. — in 2008-2009 we learned that it is Demand, and not Supply, that drives the economy.

So how does Horn see societal demand driving innovation in the precision machining space?

7 Megatrends to Impact our Industry

Mobility
Population Growth
Globalization
Communication
Health
Aging Society
Urbanization

Changes in each of these areas requires technical innovation in Production Technology, Materials, Processes, Electronics, and Software, to make new technologies economically adoptable “Just in Time.”

Interestingly, Precision Machining “owns” all five of the “columns” in this model as we grow into our future state.

Which of these are your particular “sweet spot?” What is your plan to gain competence in the others?

Who would argue that we are not facing new challenges in production technology, materials, processes, or increased use of electronics and software to make tomorrow’s more challenging parts?

We will revisit some of these megatrends in coming blogs.

Do you have a process for identifying “over the horizon” issues that will affect your shop?

Which megatrends are opportunities more so than challenges for your shop and team?

Thanks to PMPA Technical Member Horn USA for sharing the materials from Technology Days

Manufacturing Optimism- Roscoe Wallace With Kaiser Aluminum

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We caught up with Roscoe Wallace at PMTS and got his take on Manufacturing from his perspective as an Aluminum supplier.
[youtube http://www.youtube.com/watch?v=Oj_ROV9pQCU]

Positivity about

manufacturing,
productivity,
reshoring,
manufacturing as a career.

Concerns about

material integrity from off shore
right skill sets for job openings that their customers have in advanced manufacturing.

Thanks to Roscoe for his positive news from the aluminum side of precision machining.

And thank you to Kaiser Aluminum.

Where The Jobs Are- Mark Tomlinson in Huffington Post

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“The manufacturing industry is facing an employment crisis. The rate of technical advances has outpaced our ability to educate and train workers on new machines and applications, creating a “skills gap.”–Mark Tomlinson, CEO, Society of Manufacturing Engineers.

Skilled machinists positions continue to be open in our industry.

I thought it was interesting that even during the depths of the last recession, the classified ads in the major newspapers still showed opportunities for setup and machinists in our precision machining sector of advanced manufacturing. It’s still true today. We have visited local community colleges around the country that provide machining training and we hear the same story, after the first semester, “most of our students already have found a job or have one promised upon graduation.”

Here’s more from Mark-

“This is a great time to work in manufacturing. We’re applying once pie-in-the-sky technologies to real-world needs: creating strong yet flexible limb replacements for our wounded warriors, robots that crawl into the fuselage of an aircraft, mountain bikes for extreme enthusiasts, engineered for safety pushing the boundaries of men and machine. It’s stuff that captures the imagination.

“Yet students are not pursuing these jobs despite the cool factor. Some of it is institutional and some of it is perception. A major challenge is there is no academic infrastructure to administer STEM (science, technology, engineering and mathematics) curriculum on a national scale. That’s compounded by a lack interest in STEM by educators, parents and students who may be more inclined toward attending a four-year college.”

We need to help change the perception of manufacturing and skilled trades. In educators, parents, and students.

We need to help change the notion that going heavily into debt for a bachelors degree without a plan for return on investment (ROI)is the weay fofr our sons and daughters to get their start in life.

We need to show parents, students, counselors, teachers, our communities, the “existential joys of manufacturing”- the cool stuff we make, the high tech machines we use to make it, and the broad math, science, problemsolving intellectual skill set that we bring to our work.

That our skilled machinists are worthy of the highest respect.

Mark Tomlinson told the Huffington Post “We know where the jobs are.”

Indeed.

If you would like to investigate a career in advanced manufacturing / precision machining- we’ve prepared a a database to help you access training resources wherever you are. PMPA Career Info Database.

For more info you can also search on “Manufacturing,” “Skills,” or “Career” in this blog’s search box in the upper right corner.

Or go to PMPA website Careers section.

Photo

Pi Day 2013 and Student Engagement

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The uhh- “techie” part of us is celebrating Pi Day at 1:59 pm today

Today 3-14 at 1:59 I will be celebrqting Pi Day. 3.14159 is the value of pi to 5 decimals... — Today 3-14 at 1:59 I will be celebrating Pi Day. 3.14159 is the value of pi to 5 decimals…

So besides being the cause of much techie “irrational” exuberance, Pi Day is a great way to get some engagement with students.

Marymount High School has several activities, last year they had a design competition incorporating pi; the students then made and sold buttons of each design, proceeds going to the Red Cross.

Hmm- math subject matter, design, production, sales, accounting.

Sounds like what we do in manufacturing.

Maybe celebrating Pi Day is not so irrational as first thought.

Pi day, is not just about the Pi(e), as much as it can be about showing relevance of math and integrating their skills and engaging students differently.

How did you celebrate Pi Day? What are your plans for next year? For 2015?

p.s., mine was Peach…

Why Manufacturing Is Still Your Best Career Choice

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ITR Economist Brian Beaulieu gave a very informative economic outlook for the attendees at PMPA’s Manaement Update Conference in Glendale Arizona last week.
We saw lots of charts and correlations that helped our members make sense of all the conflicting ‘news’ and economic indicators that are our constant distraction.

But I can share with you the one graph that should give you the confidence to find your career in advanced manufacturing (like our precision machining industry) rather than go headlong into debt for a college degree that may not have a positive return on investment.

US Manufacturing as a percentage of GDP (Value Added) (3 Month Moving Average)

The trend for US manufacturing remains positive and significant.

This graph documents recent history, going forward we see manufacturing jobs returning to North America as energy prices for the rest of the world increase.

We see energy access and prices improving for U.S. Manufacturers as a result of the shale gas boom.

We know personally, despite the uncertainty in the market, that many shop owners are trying to add talent, so they can continue to sustain their levels of production and customer service.

If going deep into debt for a degree with no return on investment is something that you are determined to do, good luck with that.

If however, you could consider the idea of learning and earning as you go, I can heartily recommend getting a start in precision machining via a local community college.

It has been our experience that you will have a job before you complete a one year operator program, and the balance of your training and education will be sponsored in whole or part by your employer.

54% of recent college graduates are unemployed or underemployed.

Career info on Precision Machining.

PMPA Training and Education Database

When Did Manufacturing Become a Dirty Word?

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When Did Manufacturing Become a Dirty Word?

Guest post by Pamela Kan, President of Bishop Wisecarver

The word manufacturing has such negative connotations that it is avoided in marketing educational programs.
What has happened in our country to make our next generation so turned off by the word manufacturing?

Its Dirty.Too many kids and their parents still see manufacturing as a “dirty” job. This is far from true, especially in the state of California. Environmental, health and safety laws have created clean and safe work environments. Our facilities lead the world. The rise of lean and continuous improvement cultures have made many manufacturing facilities almost clean enough to eat off the floor (I say this with the five-second rule in mind).
It’s Dumb.Wrong! Manufacturing drives the majority of innovation and R&D investment in our country. Manufactures are leading the way in new technologies and the design and development of products that improve our daily lives and the welfare of people around the world. If you want to be on the cutting edge, then you want a job in manufacturing.
It’s Boring. Images of the Henry Ford assembly line still exist in many minds. We have come a long way, baby! In fact, manufacturers like myselfnow have trouble finding the skilled workforce needed to run the type of state-of-the-art technology machines we now have on our production floors. Making chips fly takes brains and skill.
It’s Cheap.Wrong again! Manufacturing jobs on average pay 20k higher than service sector jobs. Manufacturing jobs are the back bone of a strong middle class.
It’s Dead. Excuse me? When is the world going to stop consuming? Why do we think manufacturing is a thing of the past when we as a nation are the largest consumer of goods in the world? The face of manufacturing may be changing in the US but it is far from dead. Just look at the DYI craze and the rise of the Maker Faire phenomena. Just thinking about the impact that additive manufacturing will have over the next decade is mind blowing.

I am happy to see that both presidential candidates are at least uttering the “M” word. But in my book, neither has really given manufacturing the credit it deserves for the role it plays in a strong US economy.

PMPA certainly agrees that manufacturing is a great career opportunity and shares the concern about not enough people entering the precision machining field. Thanks to Pamela Kan at Bishop Wisecarver for the share.

You can see Pamela’s Original Post here

Industrial Production Index July 2012 Shows Manufacturing in Positive Light

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Industrial Production (IP) increased 0.6 percent in July after having risen 0.1 percent in both May and June.

INDPRO aug152012 — This explains manufacturing’s contribution to the U.S. Economy too.

In July, manufacturing output increased 0.5 percent and was 5.0 percent above its year-earlier level. The factory operating rate moved up 0.2 percentage point in July to 77.8 percent, a level 1.0 percentage point below its long-run average.

Capacity utilization for total industry moved up 0.4 percentage point to 79.3 percent, a rate 1.0 percentage point below its long-run (1972–2011) average.

Revisions to the rates of change for recent months left the level of the IP index in June little changed from its previous estimate. Manufacturing output rose 0.5 percent in July, the same rate of increase as was recorded for June.

At 98.0 percent of its 2007 average, total industrial production in July was 4.4 percent above its year-earlier level.

The production index for durable goods increased 0.8 percent in July.

Gains of more than 1 percent were recorded in

Primary metals,
Computer and electronic products,
Motor vehicles and parts,
Aerospace and miscellaneous transportation equipment,
Miscellaneous manufacturing.

Manufacturing is up 5 % from July 2011 to July 2012.

Manufacturing continues to be a strength of the U.S. Economy. The U.S. manufactures more than Brazil, Russia, India, and China combined. If U.S. Manufacturing was a country, it would be the sixth largest in the world.

Fred Graph

IP release

What is Manufacturing?

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There seems to be a lot of confusion these days about manufacturing. As a guy who has worked his entire life in manufacturing, I’d like to eliminate this confusion.

The word “Manufacture” is made up from two Latin Roots “manu” and “factura.”

“Manu” means “by hand”

“Factura” is a derivative of “facere” which meant “to perform” or “to do.” Factura means ” a working.”

Those Junior High Latin Classes sure made understanding big words pretty clear.

While the linguistic origins of ‘manufacturing’ were “a working, by hand,” the essence was the creation of something by work into something else. In modern terms, it is “the conversion of raw materials into finished goods by labor.”

Today, with our abundance of machines, and non-human provided energy, we define manufacturing as “the use of machines, tools and labor to convert raw materials into finished goods.”

In North America, (for now) Manufacturing is denoted officially by NAICS codes numbering from 31-33 according to BLS.

So what is the confusion about manufacturing?

There is a move afoot to count the foreign production of Factoryless Goods Producers (FGP’s) as ” U.S. Manufacturing.”

Federal Register see part VI

If you don’t actually make something, you aren’t really a manufacturer.

If you don’t make it here, how can you count it here?

-You may be a great designer. Great engineer. Great logistics company. Great sales company.

But if you don’t make what ever it is that you designed, engineer, or sell- it ain’t manufacturing.

So when someone tries to tell you that they are a “factoryless goods producer,” don’t flinch, don’t blink, don’t bat an eye.

And what ever you do don’t call them a liar. (It’s rude to call people liars, even when they are lying.)

Just tell them that they are mistaken, they are an outsourcer, not a manufacturer.

Manufacturers actually make things and often export their products.

Factoryless goods producers don’t make anything themselves.

In some cases however outsourcers EXPORT OUR JOBS.

Tomorrow: What Uncle Sam means when he says Factoryless Goods Producer.