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?
Tag: PMPA Business Trends Report
The recovery of the precision machined products industry is obvious in our latest PMPA Business Trends Report.
We have been calling our new level of sales “The New Normal.” While we have lost a decade in terms of sales volume, we are at sustainable levels of sales because of the lessons and adjustments that we made over the decade. The 16+ point gap between the 3 month moving average (97.3) and 12 month moving average (81) for sales makes a case for cautious optimism.
(OK, perhaps I am understating this a bit!)
Sales Index: down just 5 points to 100 from March 2010 value of 105.
Average Length of First Shift: 42.5 hours for April, compared to 38.1 for CY 2009. only 3 % of respondents report less than 40 hours.
Sentiment for the next three months:
Sales: 88% of respondents say Same or better.
Lead Times: 93% of respondents say same or longer. Shops are getting busy.
Employment: 99% of those reporting expect employment in their shop to remain the same or increase.
Profitability: 88% expect profitability to remain the same or improve over the next three months.
You can read the full report here: PMPA APRIL DATA.
The PMPA Business Trends Index of Sales for March 2010 reached the 100 mark.
This is auspicious because that 100 value means that our sales level in March 2010 is essentially the same as our average sales for the year 2000, which is the base year (2000=100) for our index calculation.
We have lost a decade!
Hooray!
Hooray- because we are up 36 points from the low of May 2009 at 64.
Hooray- because we are achieving those year 2000 sales numbers with the lessons we learned during the lost decade: lean operations, lean setups, cellular operations. Working smarter. Maximizing use of our equipment’s capability. Tapping the ingenuity of our savvy employees.
Here is our narrative from the March Business Trends Report
Now, about that Lost Decade:
During the lost decade, we learned which jobs we could do where we added sufficient value to be the manufacturer. And which jobs were of so little value added that they would inevitably be made in low cost economies.
During the lost decade, I think we also learned the lesson that some customers are bullies and not profitable- more difficulties than they are worth.
And as we continue our lunge to profitability, I am seeing many signs that our industry knows what to do with those customers.
Plank:
ISM’s report of manufacturing’s expansion for the fourth , and economic expansion for seventh month in a row, combined with PMPA’s Business Trends Index improvement for 5 consecutive months, confirm that we are in a recovery phase, rather than the free fall we just survived.
What should we be doing differently in the recovery phase, compared to what we needed to do while we were free falling?
The latest Institute for Supply Management Manufacturing Report for November showed that Manufacturing expanded for the fourth month in a row. While the Purchasing Manager’s Index decreased from 55.7 in October to 53.6 in November, the fact that the November value is above 50 indicates that mnufacturing activity continues to expand.
The Precision Machined Products Association’s Business Trends Index of Sales for October was up for the fifth month in a row, to 85, its highest value for the year. Almost three quarters of PMPA Business Trends respondents expect industry sales to remain at current levels or increase.
This reinforces the signal from ISM’s New Orders measure, which climbed to 60.3 in November from October ‘s 58.5. (The tie-in for precision machined components and manufactured goods should need little explanation- our products are the enablers of multiple technologies in automotive, appliances, aerospace, electrical/electronic, heavy truck, off road, and medical products to name a few.
These are not the halcyon days of “ship it, ship it, ship it.,” that seem like distant, almost forgotten memories. But ISM’s report of manufacturing’s expansion for the fourth , and economic expansion for seventh month in a row, combined with PMPA’s Business Trends Index improvement for 5 consecutive months, confirm that we are in a recovery phase, rather than the free fall we just survived.
What are your doing differently now? What lessons have you learned? What is your new top priority every day?
PMPA’s Index of Sales of Precision Machined Products rose to 85, the highest value for the year. This is an increase of 30.8% in the Sales index compared to the 2009 low of 65 in May for the 96 companies reporting this month. Our industry sales continue to recover.
Reason for optimism: October marks the fifth month in a row of increasing sales in the precision machining industry. The three month moving average crossed the 12 month moving average. For our industry, this data shows that recovery is underway. Thirty-four percent (34%) of participating shops reported double digit sales increases in October.
Sales Outlook: The percentage of respondents who felt that sales would decline over the next three months was almost equal to the percentage that thought sales would be up, (25% vs. 26%) with 48% expecting sales to remain about the same. The outlook for sales in the short term has stabilized.
Our report for October 2009 confirms that the sales of the precision machining industry are recovering. The percentage of respondents showing positive sales growth, the three month moving average for sales crossing the 12 month moving average for sales, five consecutive months of improved sales, and the rise of the sales index by 30.8% over the year’s low in May are strong and positive indicators of sales recovery.
How can we help you?
For the Precision Machining Industry, a strong case can be made that our sales are recovering.
PMPA’s Index of Sales of Precision Machined Products rose to 82, just one point below January’s high of 83.
This is an 11 percent rise in the sales index compared to August, and documents the 95 reporting companies in aggregate are showing a 26% recovery in sales compared to the 2009 year low of 65 in May, 2009.
Fifty-two percent (52%) of our particpants reported double digit sales increases in September.
The outlook for sales in the short term has stabilized, with only 19% of respondents expecting a decline in sales overthe next three months.
For almost a year, Tom Brady sat on the sidelines, working on his recovery. In the sixth week of this new season, he set an NFL record for touchdown passes in one quarter. What a comeback!
The Precision Machining Industry is still on the field despite being hamstrung last fall by the economic meltdown. Our performance continues to be 100% on time and zero ppm. We just need more time on the field. Comeback in progress!
See the full report.
We have open time on our machines. How can we help you?
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!
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/
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.
Benchmarking is not a comparison of numbers or indicators. Benchmarking is an ACTIVITY or PROCESS to determine Best Practice, and your relationship to that Best Practice.
Benchmarking is an activity that employs a systematic and continuous effort to identify important measureables (benchmarks). It employs a defined process to compare your organization’s status to that of a best-in-class company or companies. Benchmarking is a tool that helps you identify, improve and implement the practices or methods that will enable you to become the new ‘best-in-class.’
Two rules for effective Benchmarking are:
- If Benchmarking does not lead to a specific action, it is a waste of your company’s resources;
- If you aren’t Benchmarking to the best, your Benchmarking will be under effective.
Competitive analysis can tell you what the differences are between you and another company, but it does not give you any insight into how that difference exists. Benchmarking focuses on best practices and methods, resulting in process changes and improvements that will achieve improved customer satisfaction.
Site visits in my experience result in some limited information sharing and collection of novel ideas, but after the visit, these are recognized to be a smorgasbord of unfocused facts. While these facts may be interesting, they may or may not be applicable to your firm or what you are trying to accomplish. This is especially true if the facility that you are visiting is not a best in class peer.
PMPA members have a Benchmarking ‘tool they can use’ to measure their company’s performance against their peers in manufacturing.
Called PMPA iLumen Benchmarking Service, this safe, secure online tool allows participating members to compare their company’s financial and operating performance against that of their peers or other manufacturing companies. Seeing the difference between their firm’s and other firms’ performance in key areas gives the PMPA members a focus for their company’s improvement activities.
In the April Issue of PMPA’s Business Trends Report, almost half of the companies that reported double digit sales increases over the prior month were PMPA iLumen Benchmark participants.These companies have used the intelligence of the PMPA iLumen Benchmarking data to show them where to address improvements in their organization.
Participation in PMPA iLumen Benchmarking is no extra charge for PMPA members- it is a member benefit.
Numbers may be the language of Benchmarking, but they are merely raw material that drives the real activity- continuous improvement and transformation of your people, processes, and systems. These improvements will result in higher quality, lower costs, and ultimately, improvement of your company’s products and services. PMPA’s iLumen Benchmarking Service can provide you too, with “tools you can use” to drive improvements in your companies processes and performance.
How do they know?
In comments to reporters accompanying the issuance of July 23’s Monetary Policy Report Bank Governor Mark Carney declared the recession over in Canada.
“We believe the economy will grow this quarter. The rate of growth will pick up to the end of the year and into 2010.”
The bank is forecasting economic growth of about 1.3% in the current quarter through September. Three percent (3%) through next year.
Ford’s $2.8 billion earnings surprise just might be evidence to that effect, and a sign to our industry that better days are, to use Bank Governor Carney’s terminology, ‘nascent.’
PMPA’s June Business Trends Report- available to members here – showed sales up a mere three points to 68 from May’s 65. However, of the 102 shops reporting, 42 % reported double digit sales increases in June compared to May. The average increase of those shops was 32.9%.
This is one time that we certainly won’t mind if this Canadian Economic Weather makes it down to us South of the border.