Perhaps distance and perspective give them clarity. It's the value of the dollar...
We follow the ISM Manufacturing Index as an input for our sensemaking as to what is going on in Precision Machining. PMPA’s own Business Trends Report has shown sales in our industry to be recovering. So as we were considering the latest ISM Manufacturing Report, we came across this story from the Financial Post.
The U.S. manufacturing sector grew in October at its fastest pace since April 2006, according to the Institute for Supply Management. The ISM’s manufacturing index climbed to 55.7 from 52.6 in September. This is the third consecutive monthly reading above 50. BElow 50, the index indicates contraction in manufacturing, the line that divides expansion and retrenchment. Also unexpectedly, hiring plans in the beleaguered sector turned positive for the first time in more than a year.
Some economists say they were most encouraged by the signs of hiring in the sector. The employment index surged to 53.1 from 46.2. However PMPA’s survey of members showed that plans to add or recall workers were still nascent, and very dependent on further increases of orders.
Still a way to go until callbacks happen.
According to PMPA’s respondents, “A further 50% increase in sales will result in in the majority of the precision machining industry’s laid off employees being recalled from layoff. A 25% increase is said to be likely to lead to the recall of about 39% of workers on layoff.”
Now that manufacturing is two months into expansion, September 2009 ISM Report , our short list of long delayed purchases will once again be under serious consideration. Here are 6 reasons to throw out your old list and start a new one.
It’s not the old economy. It’s no longer business as Mayberry RFD anymore. This is your grandfather's economy.
What you were looking at before the recession was what you needed for a prerecession economy. That’s not today.
Your suppliers have been busy. Making improvements, reducing costs, increasing capabilities of their products. Machines, tools, and software especially. What may have been a “lock” 6 months ago may in fact be a dog compared to currently available offerings.
Your customers have changed. Some have gone away, and some have lost your trust. Do you really want to buy something that is single purpose for an account that you can’t trust?
Your market focus has changed. The lessons your team learned in this downturn are what your customers will continue to buy from you and what they didn’t (won’t). Maybe what you were planning on buying was to produce something for the stuff that hasn’t been selling these days…
Your needs are really, really different today. When you first made that shopping list, your planning assumptions included readily available bank credit, solvent customers, 16 million plus auto sales in US and full employment in your shops. Today availability of credit is iffy, customers that remain are slow to pay, and auto sales are not likely to top 12 million. The headcount in your enterprise has been drastically reduced. What you wanted then is NOT necessarily what you need today.
It won’t be appropriate in your new structure. How will what you wanted back in the good ol’ days be appropriate in your shop today with half your staff on layoff and the remaining staff working OT?
Is now the time to be faithful to a dusty old procurement plan based on a vanished Mayberry RFD economy? This is your current economy.
We have just survived the Terminator economy. Tell me again why you want to buy Andy of Mayberry’s fishing pole?
Which items on your list remain viable, and what new ones will you be adding?
Of course prices have risen. Information tool you can use.
We finally are back to manufacturing expansion following 18 months of contraction in the manufacturing sector. Supply chain pretty much destocked. Low inventories. Domestic mills operating at 47% of capacity. Global influences on scrap and raw materials. You need a program to follow this game. We’re providing you one with this edition of PMPA’s Material Impacts Report.
The prices of the raw materials that we track have continued to rise with double digit percentage gains over January with one exception: China Coke. Year over year, all prices are still down significantly.
Aluminum: Up 18.65% from January
Copper: Up 86.67% from January.
Nickel: Up 27% from May, up 4.44 % since January.
Steel Busheling: Up 26.67% from January.
China Coke: Down 2.73% from January.
We have seen price increase announcements in addition to surcharge increases since our last report.
Details in PMPA’s Material Impacts Report.
