4 More Reasons The Precision Machining Industry Is Recovering

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The August 2009 PMPA Business Trends Report increased to 73 in August up 3 points from July, up 4 points from June, and up 8 points from the May 2009 low of 65. Three months in a row of upward movement!

"Only three months in a row of non negative sales growth"

Three consecutive months of improvement. Or as one of my more pessimistic colleagues puts it, ” three consecutive months of sales not getting any worse.”
We’ll prefer our positive optimism to living in his dreary outlook anyday.
Here are our latest reasons we believe that the precision machining industry has begun its recovery based on approximately 100 members participating in our monthly PMPA Business Trends Report.

Three consecutive months of sales increases.
Over half 52% of respondents reported sales increases, and one third reported double digit sales increases.
Average length of first shift climbed again to 38.2 hours.
63 % of responding companies reported 40 hour or more average length of first shift.

The shops reporting serve the Medical, Automotive, Aerospace, Heavy Machinery, Truck, Construction Equipment, Food Service Equipment, and Military Markets.
PMPA members can see the latest Business Trends Report here.
Bonus good news about the economy from the Fed Open Market Committee per an email from Dr. Ken Mayland, Clearview Economics:
“…economic activity has picked up…” versus last meeting on 8/12: “…economic activity is leveling out.” Yeah! The economy is now recovering (not recovered).
Picture credit : http://www.itsallabouteeyore.awoodman.net/

3 Reasons We Believe Precision Machining Industry Recovery Has Begun

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The July 2009 PMPA Business Trends Report remained level at 69 in July. We were pleased to see that this index did not further erode in July.
This is a departure from both the seasonal trend of low sales in July and a departure from the declines in sales all this year (only 1 month out of 7, March 2009, showed an uptick).
Here are three reasons we believe that the Precision Machining Industry’s recovery has begun.

Sales have leveled off and did not decline further in July.
Exactly half of all PMPA Business Trends Participants reported increases in sales for July. Almost one third reported double digit sales increases.
Average length of first shift indicator climbed by 1.2 hours in July, first such increase all year. (The length of first shift has declined each month since January 2009 until July)

The shops reporting included those serving markets in Medical, Automotive, Aerospace, Heavy Machinery, as well as Trucks, Construction Equipment, Food Service, and Military.
Are we out of the dark tunnel yet? No.

But the PMPA’s Monthly Business Trends Report data tells us that about half of us are seeing some light at the end of the tunnel.
PMPA members can see the PMPA Business Trends Report here.
Photo courtesy Blueridgecollargirl her August 8 2008 post gives perspective and is worth a read.

5 Reasons Why Precision Machining Companies Should Consider Medical Markets

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Precision machined titanium bone screws are used in orthopedics. Medical Instruments is one market area that offers the strongest prospects for value added growth over the next few years. MX: Business Strategies for Medical Technology Executives, in its May/June 2008 edition, estimates that the medical device market will reach sales of $336 billion in 2008.
Aging population and baby boomers’ demand for active lifestyles supports a strong market for precision medical components in the short and long term. Here are 5 reasons for your precision machining company to consider serving the medical market:
1) Demographic makeup of the U.S. population is promising for future growth in the biotech industry.
2) Private equity investment in biotech grew more than two fold during each year between 2003 and 2007. Investment trends will remain strong as medical devices companies continue to innovate and deliver safer and more advanced solutions.
3) Aging population, longer life expectancy, and an increase in chronic illnesses will help the biotechnology industry in the both the near and long term.
4) Healthcare products and supplies revenue will be generated heavily from orthopedics, cardiology, diagnostic imaging, pain management, and oncology in the near term.
5) The outlook for demand of high-tech medical products such as hospital beds, sterilization equipment, and blood analyzers is high because of the aging demographics.
The medical device market is about 50 percent of the world pharmaceutical market, and it is growing faster than the drug market. The medical devices market was $336 billion in 2008.
Value added (sales less cost of materials) is a strong determinant of growth for sales to the markets served by the precision machining industry. Value added is not expected to be positive in the near term for all industries. Value added is expected to remain high for medical market.
What has your shop identified as the most compelling reasons to enter the medical machining market?