Manufacturing Outlook February 2022 by Manufacturing Outlook

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Manufacturing Associations Expect Major Changes for 2022

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THREE GAME-CHANGING FACTORS FOR EXPANDING THE WORKFORCE PIPELINE IN 2022 PAGE 10

FEATURE STORY: MANUFACTURERS PIVOT TO FIND SOLUTIONS TO THE COMPUTER CHIP SHORTAGE PAGE 14

THE CASS TRANSPORTATION INDEX PAGE 18

CYBER SECURITY OUTLOOK

[

PAGE 48

JANUARY ISM PMI:

57.6%

Released February 1st -The Full Executive Summary Report On Business - Page 20

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Manufacturing Outlook / February 2022

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TABLE OF CONTENTS

Publisher LEWIS A WEISS Editor in Chief TIM GRADY Creative Director CRAIG ROVERE Contributing Writers ROYCE LOWE NORBERT ORE CHRIS KUEHL THOMAS R. CUTLER AMELIA ROY JEANNE-MARIE LOWRIE JOCELYN BRIGHT CHRIS ANDERSON LAWRENCE MAKAGON CHRISTINE CASATI KEN FANGER TINA ZWOLINSKI EMILY NEWTON Production Manager LINDA HOPLER Advertising ADVERTISE@MFGTALKRADIO.COM Editorial Office JACKET MEDIA CO. 75 LANE ROAD FAIRFIELD, NJ 07004 (973) 808-8300

PUBLISHER’S STATEMENT Not Quite Right - Yet

6 MANUFACTURING OUTLOOK Riding A Wave Of Manufacturing Expansion by Royce Lowe

MANUFACTURING TIDBITS

30 ASIA OUTLOOK The Belt And Road Initiative by Christine Casati

Insights from inside manufacturing in action

10 THREE GAME-CHANGING FACTORS FOR EXPANDING THE WORKFORCE PIPELINE IN 2022 Using games To Gain Employees by Tina Zwolinski

14 FEATURE STORY: MANUFACTURERS PIVOT TO FIND SOLUTIONS TO THE COMPUTER CHIP SHORTAGE Chip Solutions In The Works by Emily Newton

12 COVER STORY: MANUFACTURING ASSOCIATIONS EXPECT MAJOR CHANGES FOR 2022 The Power Of Manufacturing Associations by TR Cutler

18 CASS INDEX LOGISTICS REPORT Cass Transportation Systems

20 ISM MANUFACTURING REPORT ON BUSINESS The 20th Month Of Growth

24 NORTH AMERICA OUTLOOK © 2022 Jacket Media Co. No part of this publication may be reproduced or used in any form without the prior written permission of the publisher. Manufacturing Outlook is a registered trademark of Jacket Media Co.

GLOBAL PMI OUTLOOK Mostly Expansion Still by Norbert Ore

Mexico Struggles by Amelia Roy

26 EUROZONE OUTLOOK Tariffs Being Removed by Chris Anderson

34 METALS OUTLOOK

Steel’s Carbon Emission Problem by Royce Lowe

36 INNOVATION OUTLOOK Manufacturing The Future Of Biofabrication

38 AFRICA OUTLOOK A Perfect Strategic Partner by TR Cutler

42 AEROSPACE OUTLOOK Air Wars by Royce Lowe

44 ENERGY OUTLOOK Old King Coal... Still Kicking by Jocelyn Bright

46 AUTOMOTIVE OUTLOOK The Future Of Ford’s History by Lawrence Makagnon

48 CYBER SECURITY OUTLOOK The Crazy Cyber Security Terms by Ken Fanger

50 ISSUES OUTLOOK

Open call for...

Contributing Writers for new and existing content. Let’s start a conversation – Contact us at info@jacketmediaco.com or visit mfgtalkradio.com/writer for more information.

The Chip Dilemma by Royce Lowe

PUBLISHERS STATEMENT

Not Quite Right – Yet The world as we knew it went topsy-turvy when Covid hit. As we appear to be exiting the pandemic and are anxious for the normal we once knew, business and life in general still doesn’t feel quite right, despite a series of record-high Purchasing Managers Index numbers in both Manufacturing and Services. It seems that business is booming in most sectors, but the emotion of it is subdued – perhaps because we are waiting for the next variant, the next mandate, or the next disruption. Over the last 24 months, a lot has changed. Work-from-home is commonplace. Most companies expect 37% of their workforce to continue as work-from-home employees for the foreseeable future. The supply chain is a mess, largely due to absences because of Covid. It is an end-to-end problem, from the production of raw materials to shipping from supplier to a commercial customer, the system is struggling to recover from the absence of workers. The longer the supply chain, such as from Asia to the U.S., the more difficulties that are encountered. Yet, business is booming. U.S. GDP for 2019, before the pandemic, was $21.43 trillion. For 2020, it was $20.94 trillion. By 2021, it hit $22.99 trillion. That is 10% growth over the 2020 pandemic shutdown year and more than 7% growth over 2019. In other words, the U.S. economy is not only back on track, it is growing strongly. It appears that U.S. economic output has recovered. What hasn’t recovered are our individual psyches from the loss of over 900,000 people in the U.S. alone. What hasn’t recovered is our supply chain. What hasn’t recovered is our workforce. What hasn’t recovered is international relations. And a few industry sectors still struggle while most boom. Then look at technology, automation, and robotics. The response to the absence of workers is exactly what we expected it to be – use technology to automate processes and the movement of goods. Today, over 1,000 ships ply the world waterways with a skeleton crew. Warehouse and distribution centers are shifting to autonomously guided vehicles and digitally operated forklifts. Seaports around the world are shifting to automated loading and unloading of ships with some automated ports showing more than a 50% increase in throughput compared to manually operated loading and unloading. Kiosks at fast-food restaurants compile and provide the order, and collect payment, both in response to the shortage of workers and the rising hourly cost of mandated minimum wages. Technology, automation, and robotics will continue to sweep across business and industry. However, more people are employed in the U.S. today (157.54 million) than the entire population of the U.S. in 1950 (151.32 million), so jobs are changing, not evaporating. One area of job growth is self-employment. The Great Resignation is a direct result of people having the opportunity of working from home and deciding that the work-life balance it provided was more fulfilling than being kept in a cubicle cranking out ‘work’ or performing a repetitive, mundane job on an assembly line with a robot being installed on that very same line, and their employment future became obvious. Companies will have to reinvent jobs to make them more fulfilling, and management will have to become unlayered and more participatory. One fun example of this is Frequent Flyer programs that came out of one airline’s IT department in the early 1980’s when airline executives were thinking that nothing useful could come out of IT. In every business, there are unheard opportunities that may become the next big thing if management can get out of their headspace to listen. Otherwise, those great ideas may go out the door with the new batch of resignations and become the next great apps. To stay abreast of all these changes, read through the pages of Manufacturing Outlook as we explore what is coming, what is happening, and what it means to manufacturing. n

Lewis A. Weiss, Publisher Contact laweiss@mfgtalkradio.com for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast or any of our podcasts. FOLLOW US:

Manufacturing Outlook / February 2022

MANUFACTURING OUTLOOK

FEBRUARY 2022

MANUFACTURING OUTLOOK GLOBAL MANUFACTURING PMI SHOWS CONTINUED EXPANSION. SUPPLY CHAIN DISRUPTION EASING SLIGHTLY, RAW MATERIALS SCARCITY, AND SKILLED LABOR SHORTAGES ARE STILL ISSUES. DOWNTURN IN U.S. DEMAND FOR MANUFACTURED GOODS. CHIP SHORTAGE EASING SOMEWHAT. STEEL PRICES FALLING.

continued

Manufacturing Outlook / February 2022

MANUFACTURING OUTLOOK Riding A Wave Of Manufacturing Expansion by ROYCE LOWE January saw the creation of 467,000 nonfarm jobs, and the unemployment rate basically unchanged at 4.0 percent. There were notable job gains in leisure and hospitality (151,000), professional and business services (86,000), retail trade (64,000), and transportation and warehousing (54,000). There was little change in mining, construction, manufacturing, information, financial activities, and other service sectors. The Bureau of Economic Analysis says the U.S. Real Gross Domestic Product increased at an annual rate of 6.7 percent in the fourth quarter of 2021, according to the “advance” estimate. The GDP increase in the third quarter of 2021 was 2.3 percent.

to 55.5 in January compared to December’s 57.7. There was a relatively subdued improvement in operating conditions across the U.S. manufacturing sector, as witnessed by reduced production growth and a further softening in demand, with new orders rising at the slowest pace since September 2020. Hence only a slight increase in employment. Firms were, however, at their most upbeat regarding the outlook for production since November 2020.

The upturn was affected by the Omicron variant, raw material and labor shortages, and a reluctance among some clients to place orders amid selling price increases and longer lead times. The rise in production was the slowest in the recent 19-month expansion sequence. New export orders fell for the first time since October 2020. Employment growth was hindered by challenges retaining staff and labor shortages. Vendor performance was again seen to deteriorate rapidly.

IHS Markit’s remarks on U.S. manufacturing for January show the PMI figure rolling up above the expansion midpoint of 50

Manufacturing Outlook / February 2022

January PMI – What it says! Subindexes Grouping

MANUFACTURING AT A GLANCE January 2022 Series Index Jan

Series Index Dec

Manufacturing PMI®

57.6

58.8

-1.2

Growing

Slower

New Orders

57.9

-3.1

Growing

Slower

Inputs

Consumption

Demand

Index

Percentage Point Change

Direction

Rate of Change

New Export Orders

53.7

53.6

0.1

Growing

Faster

Backlog of Orders

56.4

62.8

-6.4

Growing

Slower

Customersʼ Inventories

33.0

31.7

1.3

Too Low

Slower

Production

57.8

59.4

-1.6

Growing

Slower

Employment

54.5

53.9

0.6

Growing

Faster

Supplier Deliveries

64.6

64.9

-0.3

Slowing

Slower

Inventories

53.2

54.6

-1.4

Growing

Slower

Prices

76.1

68.2

7.9

Increasing

Faster

55.1

53.8

1.3

Imports

Interpreting The Panel Comments

Trend* (Months)

Growing

Faster

OVERALL ECONOMY

Growing

Slower

Manufacturing Sector

Growing

Slower

• Demand driven expansion, supplier constraints continue • 7-1 positive to cautious sentiment up from 6-1. • 11% hire improvement comments, up from 6% • 44% of comments noting high levels of turnover • Consensus estimate 57.8, underperform

Manufacturing PMI® 2000 to 2022 China WTO

Post Great Recession

Sub-Prime

Silent Expansion

Current Expansion

Last Expansion

ISM® Manufacturing PMI®

30 2000

2001

2002

2003

2004

2005

2006

2007

 Typical expansion cycle length is 35 months.

Manufacturing Outlook / February 2022

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

are supply-chain disruptions and rising COVID-19 infections. Light vehicle sales in the U.S. slipped 9 percent year-over-year in January, with the Seasonally Adjusted Annual Rate at 15.2 million units.

The outlook for global manufacturing remained nonetheless positive overall

GLOBAL CRUDE STEEL PRODUCTION WAS DOWN BY 3.0 PERCENT YEAR-OVERYEAR IN THE MONTH OF DECEMBER for the 64 reporting countries – which represent 98 percent of world crude steel production – to 158.7 million tons (MT). U.S. crude steel production for December was 7.2 MT, up 11.9 percent year-over-year. In December: China produced 86.2 MT, down 6.8 % year-over-year; India 10.4 MT, up 0.9 %; Japan 7.9 MT, up 5.4%; Russia (estimated) 6.6MT, up 0.0%; South Korea 6.0 MT, up 1.1%; Germany 3.1 MT, up 0.1%, and Brazil 2.6 MT, down 11.4%. The EU (27) produced 11.1MT, down 1.4 percent. For the year 2021, China produced 1032.8 MT, down 3.0% year-overyear.; India 118.1 MT, up 17.8%; Japan 96.3 MT, up 14.9%; U.S. 86.0 MT, up 18.3%; Russia 76.0 MT, up 6.1%; South Korea 70.6 MT, up 5.2%; Germany 40.1 MT, up 12.3%; and Brazil 36.0 MT, up 14.7%. The EU (27) produced 152.5 MT, up 15.4 percent. The global crude steel production for the whole of 2021 was 1950.5 MT, up 3.7 percent yearover-year.

Primary Global Aluminum Production in December was reported at 5.622 million tons, with production in China at 3.192 million tons, representing 57 percent of the world total. Production was 517,000 tons in GCC; 390,000 tons in the rest of Asia; 278,000 tons in Western and Central Europe; 322,000 tons in North America and 351,000 tons in Russia and Eastern Europe. The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – reached 53.2 in January compared to December’s 54.2, with the January number being the closest to the expansion midpoint of 50 in 15 months. Production growth slipped across all three sub-sectors, and new export orders fell for the first time in 17 months. January saw the rate of expansion in global manufacturing production ease to its weakest pace during the current 19-month upturn. New orders were weaker, there were lower international trade volumes, there

The outlook for global manufacturing remained nonetheless positive overall at the start of 2022, with manufacturers expecting production to increase one year from now. These expectations, coupled with an ongoing catch-up on backlogs, also encouraged further job creation, with employment increasing for the 15th consecutive month. There appears to be a slight easing of pressure regarding the extent of the increase in delivery times. THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Consumer Prices, and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month. The figures for GDP represent the percent change on the previous quarter or annual rate. The consumer price increases represent year-over-year changes. The unemployment percentage is for the month as noted. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook. Manufacturing Outlook / February 2022

MANUFACTURING TIDBITS

continued Manufacturing Outlook / February 2022

MANUFACTURING TIDBITS

Three GameChanging Factors for Expanding the Workforce Pipeline in 2022 by Tina Zwolinski

Using Games To Gain Employees As expected, 2021 offered significant challenges for manufacturers: new variants, on-again, off-again vaccine mandates, significant supply shortages, logistics and transportation challenges, port blockages, changing regulations state to state, consumer shifts in traditional distribution channels, ransomware attacks, data losses, and other cyber-security issues -- it was “never a dull moment” for manufacturers. One of the most significant challenges was the massive labor shortage of 2021, which is likely to continue throughout 2022. Skilled worker shortages, a troubling and growing undercurrent of the past forty years, became a flood-stage torrent in response to the events of the past two years. Once again, the workforce was the manufacturing theme of the year and the main topic for meetings, webinars, and podcasts. Three trends in 2021 offer some potential for relief if manufacturers -and their allies in state governments, technical colleges, K-12 schools, and economic development agencies -take action. Increased Broadband Access Biden’s administration has put the

focus and funds behind expanding broadband access, especially in rural and under-resourced areas. Biden’s $65 billion broadband plan, recently approved by Congress, has been called the largest U.S. investment in broadband deployment ever by the Benton Institute for Broadband & Society. This increased access to broadband offers the promise of expanding the workforce conversation to more audiences and in different regions. By leveraging the reach of broadband, specifically on mobile phones, which, according to Pew Research, 95% of your next workforce generation has access to, we can create awareness around opportunities in manufacturing and provide direct access to those opportunities, particularly for the rural areas -- rural areas that are becoming increasingly attractive, too, for manufacturers due to decent infrastructure and larger, less costly tracts of available land. The spread into rural regions occurs on both sides of the talent need; manufacturers will be able to locate or expand into more rural areas, and the potential workforce in rural areas will gain training, recruitment, and certification access through broadband in their own homes.

With increased broadband, workforce pipeline expansion becomes less about reaching potential employees at micro-focused job fairs, on campuses, or through on-site visits, and more about how efforts can be scaled to reach as many prospects as possible in engaging ways, providing them direct access to opportunities unique to their skills and learning capabilities, on their time and their medium of choice. Educational Pathway Reset Students continue to experience some of the greatest challenges of any group from events of the past two years. Out-of-school learning, significant stresses, isolation -- all of those things have affected students. The traditional narrow path of the past into a four-year post-secondary investment in college education -though right for some students -- isn’t right for all students. Fortunately, the struggles of the past two years, recognition of the challenges of college debt, and the obvious excellent career opportunities for non-college-going students who have acquired good middle-skills have meant that more varied, broader education pathways are gaining a second look from students, parents, and school counselors. continued

Manufacturing Outlook / February 2022

MANUFACTURING TIDBITS facturers to quickly scale their efforts to reach tens of thousands of students, rather than the hundred or so through job fairs or on-site events. The new broadband plan to provide greater access means that reaching students will become more secure and dependable. Rural living or any other particularly hard-to-reach region won’t prevent recruitment or skills development.

Simply, training for a manufacturing career is more affordable, offers excellent salary potential, and gives students a real career path for the future -- all without requiring the pursuit of a four-year college degree. The average college graduation rate after 4 years is 33%; after 6 years it is 57% - often with substantial student loan debt whether the student graduates or not. A whole new “digital” generation is entering the workforce, more than 67 million in Generation Z. They are working their way through middle and high school and into the post-secondary pathways and then into the workforce right now. It is critical to manufacturing’s sustainability to pivot now to reach these students, in a virtual medium the students have grown accustomed to, and develop the workforce pipeline to target and reach this employee market. Reaching this audience for a skilled workforce will directly affect companies in manufacturing, providing them a competitive advan-

tage with a stable workforce flow that allows them to innovate and maintain or increase production levels. Mobile Gaming for Talent Recruitment and Skills Development Opportunities “Play is the highest form of research.” – Albert Einstein Students depended on career counselors or parents to encourage them to pursue manufacturing careers in the 20th Century. On-campus recruiting, job fairs, even online job sites were the sources to recruit students. But the workforce development pipeline can and should begin right where the middle and high schoolers are—on their phones. Of the 95% of 13 to 17-year-olds who have access to smartphones, Forbes states that 90% of those students classify themselves as playing mobile games. Mobile phones allow manu-

Focusing on gaming, there is an opportunity to reach and teach through a better workforce pipeline solution. Via smartphones, students can be reached at home, on the bus, or with their friends whether they lived in rural regions or inner cities. Mobile gaming engages them where they can see the career pathways available to them based on their interests and proficiencies, can help them develop skills, and connect them with other resources -- including manufacturing companies in their area -- to help them find jobs quickly and efficiently. In school, there is not sufficient time or resources for teachers or guidance counselors to customize guidance for students on what comes after and beyond their high school learning. Often career guidance can be a onesize-fits-all plan, and not all teachers, counselors, or parents have the specific knowledge to guide students to career pathways that best suit their gifts.

Career learning can be fun with skills development that is engagcontinued

Manufacturing Outlook / February 2022

MANUFACTURING TIDBITS ing. Through geolocation on mobile phones, players can connect to the industries and opportunities right around them. They can learn about the job options with industries like aerospace, automotive, cybersecurity, life sciences, agriculture, and the skilled trades, all through fun mobile games that incorporate soft skills and badging as they play. They can also start to learn about the pathways around them that lead into these careers, whether it be through a CTE class, apprenticeship program, 2-year or even 4-year program. Players level up their skills the more they play.

In a recent Talent Forward webinar with the US Chamber of Commerce Foundation, Barbara Humpton, President and CEO of Siemens Corporation, was asked how to get more students interested in STEM careers. She stated, “Encourage your kids to play video games!” Video gaming is the fastest-growing form of entertainment for youth today—more so than sports or music. And the type of skills in gaming cross over into similar technology used in advanced manufacturing in the workforce today. Unlike websites where you have to attract students and then hope they navigate through to a call to action, or a video which students may watch one time and then never engage further, mobile gaming allows them to engage and develop real-world skills. Manufacturers can provide up-to-theminute content updates in their game

geared toward the skills the manufacturer wants in their applicants. The fun for the manufacturer begins when the data on play begins to arrive. Manufacturers can analyze and improve the many variables with which students interact with the game, coaching and developing students, developing relationships, and ultimately recruiting more qualified individuals interested in the work at the game-sponsoring company. All of that means less turnover, a lower cost of recruitment, a more stable workforce pipeline, and a brighter future for all who play in a more innovative way to engage with manufacturing and a manufacturer. It’s not just the kids who need to play. Adults have to maintain the play instinct as well; it’s the way they can learn new things, and reach new skill levels. Every leader can agree with Dale Carnegie: “People rarely succeed unless they have fun in what they are doing.” Industry needs a qualified workforce pipeline; kids want a promising future. By transforming skills development, career awareness, and job opportunities into mobile gaming technology, manufacturing can revolutionize how the next generation engages in – and views – skills-based careers at an earlier age. Author Profile: Tina Zwolinski is Founder and CEO of skillsgapp mobile games for manufacturing. Discover more about manufacturing workforce development games at skillsgapp.com. Follow skillsgapp on LinkedIn or contact Tina at Tinaz@ skillsgapp.com. n Manufacturing Outlook / February 2022

FEATURE STORY

Manufacturers Pivot to Find Solutions to the Computer Chip Shortage Chip Solutions In The Works By: Emily Newton The ongoing shortage of computer chips has led to compromised supplies of a variety of consumer and industrial goods – everything from smartphones to new cars. Now, almost two years after the pandemic first disrupted the computer chip production in East Asia, manufacturers appear to be done waiting for recovery. Instead, many have new plans to manufacture their own chips. Automakers, phone manufacturers, and electronics companies have all announced plans to open new chip factories in places like the United States. If successful, their plans could help end the chip shortage sooner and potentially reshape the global computer chip market. Computer Chip Shortage Continues Well Into 2022 Computer chips are necessary for a variety of modern electronics, meaning most industries have been impacted by the shortage. The computer hardware industry and auto industry, however, have been hit particularly hard.

The auto industry needs dozens of chips in every vehicle it produces for components like engine control units and infotainment screens. Most pieces of computer hardware also require chips, limiting the production capacity of businesses that manufacture graphics cards, storage devices, and RAM.

Businesses in a wide variety of industries have already announced major investments in new chip production capacity. The biggest investments are coming from semiconductor and electronics companies that have been hit particularly hard by the shortage.

Other industries that produce consumer or industrial electronics – like manufacturers of gaming consoles, smartphones, and IoT devices – are also struggling with the chip shortage.

The shift of microelectronics production back to the U.S. began in early 2021 and accelerated significantly towards the end of the year. Samsung, for example, announced in late 2021 that it would spend $17 billion on a new chip plant in Texas.

Some manufacturers have a supply of computer chips they can rely on as shortages continue, but others are close to running out completely. In late January 2022, the Commerce Department said that some manufacturers have just five days’ supply of semiconductors remaining.

The company said it expected building work to begin in 2022, and that the plant would start producing chips as early as 2024. The plant will be the largest investment the phone and electronics manufacturer has ever made in the U.S.

Manufacturers Expand Computer Chip Production in the U.S. While experts believe the chip supply shortage is temporary, many manufacturers are planning a long-term response that could reshape the global chip market and supply chain.

Intel has even bigger plans. The company recently announced it would spend $20 billion on a new chip plant – one that would be the world’s biggest – in Ohio’s Greater Columbus area. Additionally, the company is investing $3.5 billion in upgrades at its New Mexico plant. continued

Manufacturing Outlook / February 2022

FEATURE STORY Additional investments include a $12 billion factory in Arizona from Taiwanese semiconductor giant TSMC, a company that’s already responsible for nearly one-quarter of global chip production. The Auto Industry Pivots to Manufacturing Its Own Chips Several automakers are also planning to take chip production into their own hands. Hyundai, General Motors, and Tesla all announced in 2021 that they would begin producing their chips in-house. Gartner predicts that the move from Hyundai, Tesla, and GM will encourage other top automakers to shift chip production in-house. According to the firm, 5 out of the 10 leading manufacturers will be creating their own chips by 2025. Currently, auto manufacturers rely on third-party, general-purpose chips that are not necessarily designed for the electronic components they will be used in. These chips may also not have advanced features that are necessary for EVs, which often contain more complicated electronic components than cars powered by internal combustion engines. Additionally, chipmakers are typically tier 3 or tier 4 suppliers to automakers, meaning their chips will pass through two to three other manufacturers before becoming available to car manufacturers. As a result, the chip market as it exists is not particularly responsive to automakers’ demands, and most automakers don’t have direct business relationships with chipmakers. The same isn’t usually true for manufacturers of electronics and consumer goods. By managing chip production on their own, car manufacturers could more

effectively scale production, design chips, and allocate chip manufacturing resources to adapt to changing needs and market conditions. When Do Experts Think the Shortage Will End? Experts aren’t sure when supply will return to normal, but many expect conditions to improve throughout 2022 and into 2023. Businesses with strong ties to the semiconductor industry will likely recover sooner. Manufacturers of consumer electronics, for example, may be able to return to business as usual by the end of 2022. Recovery for the auto industry, however, may not come so quickly due to challenges in semiconductor design for cars that increase lead time on new chips and discourage new investment by chipmakers. The new investments by Samsung, Hyundai, Intel, and others could help speed the end of the shortage – though planned factories aren’t expected to come online until 2024 at the earliest. In any case, these factories will likely help mitigate the impact of future shortages. With greater global pro-

duction capacity, regional disruptions may be less likely to significantly reduce the supply of computer chips. New Manufacturing Plants Could Transform the Computer Chip Market The chip shortage is likely to continue, but new investments from major chip manufacturers and automakers could reduce the long-term impact the shortage may have. The new manufacturing plants planned by Intel, Samsung, and TSMC will be some of the largest in the world. They’ll also shift some of the global manufacturing capacity for chips away from East Asia to the U.S., in a major change for the market. While these new plants aren’t likely to end the shortage, they may help create a more resilient and decentralized chip market that could better stand up to future supply shocks. Author Profile: Emily Newton is a technology and industrial journalist. She is the Editor in Chief of Revolutionized. n

Manufacturing Outlook / February 2022

COVER STORY

Manufacturing Associations Expect Major Changes for 2022 By: TR Cutler

The Power Of Manufacturing Associations From NAM (National Association of Manufacturers) to NIST’s MEP (Manufacturing Extension Partnership), from states’ manufacturing organizations to sector-specific manufacturing memberships, 2022 portends much deeper engagement and participation as the industry is redefining the very nature of networking in a COVID impacted world. NAMs Addition of Innovation Research Interchange The National Association of Manufacturers President and CEO Jay Timmons recently announced plans to continue the NAM’s ambitious organizational growth by combining with the Innovation Research Interchange (IRI). The IRI is a leader in helping companies drive innovation and develop cutting-edge technologies that keep manufacturing strong. The NAM’s growing array of services and thought leadership represents another key milestone in the vision adopted by the NAM Board of Directors to become the one-stop-shop for manufacturers.

“The modern association must constantly innovate and evolve to best serve its industry, and with the addition of the IRI, NAM members will have access to the widest array of expertise and services in the history of the association. With this transformational development, the NAM and our industry will benefit from worldclass R&D thought leadership and the proven strategies that the IRI has perfected. The IRI will continue to support organizations in their mission to drive innovation, and it will enjoy access to the largest network of manufacturing companies and leaders,” said Timmons. NAM is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and all 50 states. Manufacturing employs 12.5 million men and women, contributes $2.52 trillion to the U.S. economy annually, has the largest economic multiplier of any major sector, and accounts for 58% of private-sector research and development.

U.S. Chamber offers support for National MEP Supply Chain Database Act Recently the U.S. Chamber sent a letter to the Senate supporting S. 3290, the “National Manufacturing Extension Partnership (MEP) Supply Chain Database Act,” and urged members to cosponsor the legislation. By leveraging the MEP network, the bill would establish a national database to increase government and industry insights into U.S. manufacturing supply chains. The COVID-19 pandemic highlights the need for a better picture of America’s supply chain networks. This includes whether some manufacturers should retool in certain areas to meet critical demand for key products such as personal protective equipment, medical devices, food, and defense supplies. Phil Bell to Chair NAM’s Council of Manufacturing Associations The National Association of Manufacturers announced new 2022 leadership for its Council of Manufacturing Associations at the CMA continued

Manufacturing Outlook / February 2022

COVER STORY 2022 Winter Leadership Conference. Philip Bell, president of the Steel Manufacturers Association, will serve as chair, and Melissa Hockstad, president and CEO of the American Cleaning Institute, will serve as vice-chair. Made up of 260 industry-specific manufacturing associations representing 130,000 companies worldwide, the CMA creates powerful partnerships across the industry and ensures manufacturers have the strongest possible voice. The CMA’s mission is focused on bolstering the industry’s nationwide grassroots mobilization efforts and improving the competitiveness of manufacturers in the United States. CMA members work with the NAM to unite the manufacturing association community, and ultimately the broader business community, around strategies for increased manufacturing job creation, investment, and innovation in America. Other manufacturing associations in the news:

Reasons for joining a manufacturing association Every industrial association offers something of value and unique features, advantages, and benefits. That said, in a Zoom remote world, interaction with colleagues, contemporaries, and customer prospects are reasons to consider joining an association. Associations gather data regarding trends, market insights, go-to-market strategies, and pricing analysis to strengthen new product launches. Manufacturing association members gain insights about what buyers want and are expecting from vendors. Cus-

tomer pain points addressed by products, and overcoming misconceptions about products and services, are best solved outside of a sales pitch.

edged on social media, press releases, author profiles, and conference descriptions.

Competitive analyses provide insight into how to win sales or explain why sales are lost. Only in the open collegial conversation and research process can manufacturing association members gain a better understanding of their place in the market. Brand perception in areas such as quality, reliability, innovation, ease of use, changeover, pricing, TCO, service, and support help to clarify or correct perceived value propositions.

Many manufacturing associations have a monthly or quarterly publication or newsletter. Verify, when becoming a member, if there is an editorial opportunity to contribute or be profiled as a new member. Bottom-line: participate, because joining a manufacturing association is far more than paying for annual membership dues. It is about engagement, involvement, and participation. Serve on a sub-committee, become a board member, and ask how you can help the organization. Afterall…

Thought leadership from manufacturing associations allows members to provide customers with exclusive market insights. Most associations also provide market intelligence to share with customers strengthening members’ industry authority. These data inform trends to guide future strategies and planning. Leveraging the cost of manufacturing association membership Manufacturing associations are superb at creating awareness of members’ brands and products. It is the first step in the sales process, and brand building takes time. It is an essential investment for a successful marketing plan. Keeping members’ names in front of our engaged professionals 24/7 is vital. Filling a members’ sales team’s pipeline is crucial. Too often so much is spent on print advertising or trade show exhibitions without recognizing that manufacturing associations are lead generation machines. Whether casting a wide net or identifying a more defined list of prospects, associations help members to uncover new opportunities for sales. Comprehensive audience data ensure messaging reaches the intended audience. Most manufacturing associations permit members to post logos on websites and other marketing collateral. Membership should be acknowl-

Author Profile: Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., celebrating its 23rd year. Cutler is the founder of the Manufacturing Media Consortium including more than 9000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. TR Cutler, Inc. recently launched three new divisions focusing on Gen Z, the African manufacturing sector, and manufacturing in the entertainment sector. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. Over 5000 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@ trcutlerinc.com n

Manufacturing Outlook / February 2022

CASS INDEX OUTLOOK

Cass Transportation Index Report by CASS INFORMATION SYSTEMS, INC.

Cass Freight Index - Shipments U.S. freight volumes reeled in January from the surge in Omicron cases, with the shipments component of the Cass Freight Index® down 10.8% from December and down 2.9% y/y. The 7.4% m/m (SA) drop in January in the shipments component of the Cass Freight Index is about as good an answer as we have to the question of how big an impact Omicron-related absenteeism and quarantines had on the freight economy. While these effects are lingering in February, they are beginning to

fade and we expect a rebound in the coming months as case counts fall sharply. This was not a demand-driven decline, as inventories are still lean and consumer balance sheets strong. Though the backlog of containerships off Southern California was down to 78 as of February 9th from a peak of 109 a month earlier, per our friends at MX SoCal, backlogs have been growing at several other ports, particularly Houston, Charleston and Virginia. This was yet another setback on the supply side.

Freight Expenditures The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, fell 8.9% m/m in January to 4.027 from a record level of 4.419, but was still up 31% y/y. On an SA basis, expenditures fell 6.1% m/m, more than explained by the 7.4% m/m drop in shipments, as rate increases continued. On a two-year stacked basis, the Expenditures component of the Cass Freight Index was up 57% in January, with shipments up 6% and rates up continued

Manufacturing Outlook / February 2022

This CASS INDEX has been posted with the permission of Cass Information Systems, Inc.

CASS INDEX OUTLOOK 49%. This index rose 38% in 2021, after a 7% decline in 2020 and no change in 2019. Tougher comparisons in the coming months will naturally slow these y/y increases, but just using normal seasonality from here, the increase in 2022 will still be about 20% at this Omicron-pressured trend level. Inferred Freight Rates A simple calculation of the Cass Freight Index data (expenditures divided by shipments) produces a data set of inferred freight rates that explains the overall movement in cost per shipment. The freight rates embedded in the two components of the Cass Freight Index accelerated to a 35% y/y increase in January from 33% in December. Cass Inferred Rates rose 3.0% m/m on a seasonally adjusted basis in January, to a new record. With significant negative effects on transportation capacity, Omicron has added to inflationary pressure in freight markets. But the strong January BLS employment report suggests most of these effects are temporary and related to absenteeism, which has been widespread across fleets and factories.

market, particularly off the West Coast, raising the truckload length of haul (LOH) 20% y/y in January. Trucking continues to take share from a challenged rail network with intermodal volumes at risk of two straight quarters of double-digit y/y declines in Q4’21 and Q1’22.

to be limited by mix. As intermodal network congestion gradually eases over the course of 2022, a reversal to shorter length of haul will likely add upward pressure to this index above and beyond market rate increases. Freight Expectations U.S. freight capacity remains fragile this winter, and even as the Omicron wave has started to crash and conditions briefly started to ease in late-January, a snowstorm and shenanigans in Canada were enough to press spot truckload rates back above trend in early February.

Excess miles, rising fuel surcharges, and accessorial fees are also factors which are not reflected in the Cass Truckload Linehaul Index® so the true increase in freight cost, depending on how all of these factors shake out, is between the 7% y/y increase in the Cass Truckload Linehaul Index and the 35% y/y increase in the inferred rate. After rising 23% in 2021, Cass Inferred Freight Rates are on a 20% trend for 2022 at this point. This data set is diversified among all modes, with truckload representing more than half of the dollars, followed by LTL, rail, parcel, and so on. Truckload Linehaul Index The Cass Truckload Linehaul Index® rose 2.2 points in January to 150.2 from 148.0 in December, up 1.5% m/m and up just 7.2% y/y, slower than the 8.0% increase in December.

As the railroads continue to struggle, excess miles in the freight network are persisting, which also adds to these costs. Chassis production has improved considerably for the past six months, but only enough to turn the direction of the chassis fleet from contraction to slight growth, and the chassis fleet remains far from what is needed to address rail network congestion.

This data series trends below the ~20% increases in public TL fleet per-mile rates due in part to a large increase in length of haul (LOH) resulting from rail service issues pressing longer-haul shipments onto the highways. Accessorial fees (which our index does not include) are also part of the difference, but we estimate a 3% mix effect from longer LOH in January, which reduces the rate per mile even as cost per shipment rises.

This tight intermodal offtake capacity continues to slow the network and press freight into the truckload

Strong freight demand and tight capacity are continuing to press this index higher, but its rise continues

Omicron’s widespread nature has had a major impact on the economy’s productive capacity, and freightmoving capacity in particular. And while, like each variant before it, Omicron is making a longer-term imprint on the economy, its quick decline suggests the worst is past. In addition to freight carriers, the manufacturing sector, which had recently started to show signs of easing in the everything shortage, is grappling with significant absenteeism. While expected, automotive downtime announcements have increased in February. But Omicron’s needle shape suggests the effects will be brief and set up a springtime rebound. If you rely on freight data to run your business, you may want to take a look at the ACT Freight Forecast report, which provides monthly predictions for the TL, LTL and intermodal markets, including capacity, volumes and rates, and forecasts for the shipments component of the Cass Freight Index and the Cass Truckload Linehaul Index through 2023. n

Manufacturing Outlook / February 2022

ISM REPORT OUTLOOK

THE INSTITUTE FOR SUPPLY MANAGEMENT’S MANUFACTURING REPORT ON ® BUSINESS BREAKING NEWS

ISM PMI at 57.6% for January 2022 Released February 1st

ISM PMI for the past 5 years

JANUARY 2022 57.6%

Expanding Contracting

continued

Manufacturing Outlook / February 2022

ISM REPORT OUTLOOK INSTITUTE FOR SUPPLY MANAGEMENT®

Analysis by

reportonbusiness Economic activity in the manufacturing sector grew in January, with the overall economy achieving a 20th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The January Manufacturing PMI® registered 57.6 percent. The Employment Index registered 54.5 percent, 0.6 percentage point higher compared to the seasonally adjusted December reading of 53.9 percent. In January, the Prices Index increased for the 20th consecutive month, at a faster rate (an increase of 7.9 percentage points) compared to December, indicating that supplier pricing power continues to rise. All of the six biggest manufacturing industries — Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Chemical Products; and Petroleum & Coal Products, in that order — registered moderate to strong growth in January. The 14 manufacturing industries reporting growth in January — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing‡; Nonmetallic Mineral Products; Machinery; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Primary Metals; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Petroleum & Coal Products; and Plastics & Rubber Products. ISM

‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).

Timothy R. Fiore, CPSM, C.P.M.

Chair of the Institute for Supply Management® Manufacturing Business Survey Committee

MANUFACTURING

PMI at 57.6% ®

PMI

Manufacturing grew in January, as the Manu2020 2021 2022 facturing PMI® registered 57.6 percent, 1.2 percentage points lower than the seasonally 57.6% adjusted December reading of 58.8 percent. 50% = Manufacturing Economy The Manufacturing PMI® continued to indicate Breakeven Line strong sector expansion and U.S. economic 48.7% = Overall Economy growth in January. All five subindexes that Breakeven Line ® directly factor into the Manufacturing PMI were in growth territory. All of the six biggest manufacturing industries expanded. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Manufacturing at a Glance INDEX

Jan Index

Dec Index

% Point Change

Direction

Rate of Change

Trend* (months)

Manufacturing PMI®

57.6

58.8

-1.2

Growing

Slower

New Orders

57.9

61.0

-3.1

Growing

Slower

Production

57.8

59.4

-1.6

Growing

Slower

Employment

54.5

53.9

+0.6

Growing

Faster

Supplier Deliveries

64.6

64.9

-0.3

Slowing

Slower

Inventories

53.2

54.6

-1.4

Growing

Slower

Customers’ Inventories

33.0

31.7

+1.3

Too Low

Slower

Prices

76.1

68.2

+7.9

Increasing

Faster

Backlog of Orders

56.4

62.8

-6.4

Growing

Slower

New Export Orders

53.7

53.6

+0.1

Growing

Faster

Imports

55.1

53.8

+1.3

Growing

Faster

Overall Economy

Growing

Slower

Manufacturing Sector

Growing

Slower

*Number of months moving in current direction. Manufacturing ISM® Report On Business® data has been seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. This report reflects the recently completed annual adjustments to the seasonal factors used to calculate the indexes.

Commodities Reported Commodities Up in Price: Adhesives and Paint (2); Aluminum (20); Aluminum Products; Calcium Carbonate; Caustic; Copper; Corrugated Packaging (15); Crude Oil*; Diesel Fuel (13); Electrical Components (14); Electronic Assemblies; Electronic Components (14); Freight (15); Hydraulic Components; Labor — Temporary (9); Lubricants (2); Lumber (2); Lumber — Pallets; Natural Gas* (7); Ocean Freight (14); Packaging Film; Packaging Supplies (14); Paper Products; Plastic Resins; Resin Based Products (12); Ridged Plastic Packaging Products; Rubber Based Products (6); Semiconductors (12); Soy Based Products; Steel* (18); Steel — Hot Rolled*; Steel — Stainless (15); Steel Drums; Steel Products* (17); Vegetable Based Oils; and Zinc Compounds. Note: To view the full report, visit the ISM ® Report On Business ® website at ismrob.org Note: The number of consecutive months the commodity has been listed is indicated after each item. *Reported as both up and down in price.

continued 12

ISMWORLD.ORG

Manufacturing Outlook / February 2022

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI®

Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

New Orders (Manufacturing) 2020

January 2022

New Orders

2022

2021

ISM’s New Orders Index registered 57.9 percent. Eleven of 18 manufacturing industries reported growth in new orders in January, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Primary Metals; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Plastics & Rubber Products; Machinery; and Chemical Products.

57.9%

52.9% = Census Bureau Mfg. Breakeven Line

Production (Manufacturing) 2020

Production

2022

2021

57.8% 52.4% = Federal Reserve Board Industrial Production Breakeven Line

The Production Index registered 57.8 percent. The 10 industries reporting growth in production during the month of January — listed in order — are: Furniture & Related Products; Primary Metals; Wood Products; Fabricated Metal Products; Machinery; Transportation Equipment; Miscellaneous Manufacturing‡; Electrical Equipment, Appliances & Components; Chemical Products; and Food, Beverage & Tobacco Products.

Employment (Manufacturing) 2020

2021

Employment

2022

54.5%

50.5% = B.L.S. Mfg. Employment Breakeven Line

Supplier Deliveries (Manufacturing) 53.1% 2020

2021

2022 80

64.6%

ISM’s Employment Index registered 54.5 percent. Of 18 manufacturing industries, nine industries reported employment growth in January, in the following order: Apparel, Leather & Allied Products; Miscellaneous Manufacturing‡; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Machinery; Furniture & Related Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Computer & Electronic Products.

Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower in January, as the Supplier Deliveries Index registered 64.6 percent. Sixteen of 18 industries reported slower supplier deliveries in January, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing‡; Paper Products; Textile Mills; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; Transportation Equipment; Petroleum & Coal Products; Chemical Products; Primary Metals; Fabricated Metal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; and Furniture & Related Products.

Inventories (Manufacturing) 2020

2021

2022

53.2% 44.4% = B.E.A. Overall Mfg. Inventories Breakeven Line

‡Miscellaneous

Manufacturing (products such as medical equipment and

supplies, jewelry, sporting goods, toys and office supplies).

Manufacturing Outlook / February 2022

Inventories The Inventories Index registered 53.2 percent. The 12 industries reporting higher inventories in January — in the following order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Furniture & Related Products; Textile Mills; Miscellaneous Manufacturing‡; Transportation Equipment; Primary Metals; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; and Chemical Products.

continued

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI®

January 2022 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

Customer Inventories (Manufacturing) 2020

2021

2022

Customers’ Inventories ISM’s Customers’ Inventories Index registered 33 percent. No industries reported higher customers’ inventories in January. The 11 industries reporting customers’ inventories as too low during January — listed in order — are: Apparel, Leather & Allied Products; Fabricated Metal Products; Paper Products; Machinery; Transportation Equipment; Miscellaneous Manufacturing‡; Chemical Products; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Primary Metals.

33%

Prices (Manufacturing) 2020

2021

2022

The ISM Prices Index registered 76.1 percent. In January, 17 industries reported paying increased prices for raw materials, in the following order: Apparel, Leather & Allied Products; Textile Mills; Nonmetallic Mineral Products; Paper Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Miscellaneous Manufacturing‡; Transportation Equipment; Petroleum & Coal Products; Primary Metals; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; Wood Products; Fabricated Metal Products; and Plastics & Rubber Products.

76.1%

52.6% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line

Backlog of Orders (Manufacturing) 2020

Prices

2021

2022

56.4%

Backlog of Orders ISM’s Backlog of Orders Index registered 56.4 percent. The 11 industries reporting growth in order backlogs in January, in the following order, are: Apparel, Leather & Allied Products; Textile Mills; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery; Primary Metals; Miscellaneous Manufacturing‡; Transportation Equipment; Chemical Products; and Computer & Electronic Products.

New Export Orders (Manufacturing) 2020

2021

2022

New Export Orders ISM’s New Export Orders Index registered 53.7 percent. The eight industries reporting growth in new export orders in January — in the following order — are: Miscellaneous Manufacturing‡; Plastics & Rubber Products; Primary Metals; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; and Chemical Products.

53.7%

Imports (Manufacturing) 2020

2021

2022

55.1%

‡Miscellaneous

Imports ISM’s Imports Index registered 55.1 percent. The nine industries reporting growth in imports in January — in the following order — are: Furniture & Related Products; Nonmetallic Mineral Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing‡; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical Products.

Manufacturing (products such as medical equipment and

supplies, jewelry, sporting goods, toys and office supplies).

Manufacturing Outlook / February 2022

NORTH AMERICA OUTLOOK

FEBRUARY 2022

NORTH AMERICA OUTLOOK Mexico Struggles by Amelia Roy CANADA saw rising COVID-19 cases and material shortages affect production growth in January, as witnessed by a slight dip in the PMI. New orders increased at a sharper pace and inflationary pressures continued to ease. Production, new orders, purchases, and employment all expanded, while business sentiment improved. But

Manufacturing Outlook / February 2022

delivery delays, port congestions, and a rise in Omicron cases were in play, and vendor performance resulted in poor input availability and weaker production growth. The PMI for January at 56.2, was slightly down from December’s 56.5. With a decrease in production growth, domestic demand for Canadian

manufactured goods increased sharply at the beginning of the year. Export sales also improved and employment thus grew. There were higher costs for lumber and metals, and higher transportation costs, adding to input price inflation. The 12-month outlook for production improved, but the degree of optimism is lower than the average seen for 2021, continued

NORTH AMERICA OUTLOOK with the influence of the Omicron variant. DesRosiers Automotive Consultants says Canadian auto sales were up by 0.6 percent in January from a year earlier, at 91,411 units, and a SAAR of 1.66 million. The U.S. continued to show strength with a January 2022 PMI reading of 57.6, well above the expansion midpoint of 50, with a 12-month average of 60.5, one of the strongest 12-month cycles in the history of the report. January is the 20th month of manufacturing economic expansion in a cycle that usually lasts 3536 months. So, unless growth is choked off by inflation of the Fed’s response to it, manufacturing should enjoy a solid year in 2022. Although the supply chain continues to struggle, primarily with labor shortages that diminish its ability to produce and

transport raw materials, and all forms of transit also suffering from worker absences and unfilled jobs, the supply chain is transforming and is likely to become significantly shorter and much more automated. With $22.99 trillion in GDP, the U.S. continues to lead the world’s economies. New orders, at 57.9, continue to be expansionary and strong, with production and employment keeping pace despite rising prices and extremely tight raw material inventories. Automobile sales continue to be solid, with the price of used cars holding up better than most years due to the shortfall of chips that support digital gadgets and functions in new cars. And although chip factories are being expanded or built in the U.S., they won’t come online until late 2024. Nonetheless, both new and used car

prices will continue to rise as prices for raw materials, jumping to 76.1 in January, continue to increase unabated in 2021 or the foreseeable 2022. MEXICO continues to host bad news. January saw new orders and production contract at quicker rates; staffing levels fell sharply amid a rise in COVID-19 cases; input cost inflation held close to December’s near five-year high. Mexico’s PMI fell from 49.4 in December to 46.1 in January. Mexico, like Brazil, may continue to struggle to achieve economic growth as long as the country is mired in the drug trade and corruption, a fate they seem unable to escape that creates general insecurity and economic Amelia Roy, Staff Writer instability. n

Manufacturing Outlook / February 2022

EUROZONE OUTLOOK

GLOBAL OUTLOOK

EUROZONE

Tariffs Being Removed by Chris Anderson IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI), rose from 58.0 in December to 58.7 in January. January saw faster expansions in production and new orders, with employment growth improving to a five-month high. The month saw the least marked deterioration in supplier performance for a year. The Eurozone manufacturing sector regained some momentum at the beginning of the year, with production, new orders, and employment all registering faster increases. There are signs that supply

Manufacturing Outlook / February 2022

chain issues are starting to abate, and vendor performance deterioration is at its weakest extent in a year. There is easing in input price inflation, but there are rapid increases in selling prices. All three market sectors registered strong improvements in manufacturing conditions in January, with investment goods makers the best performer. New export order growth quickened slightly over the month. The full-year forecast for 2021 for Western European car sales was 10.59 million, which is 1.9 % below

2020, which was 24.5 % below 2019. Manufacturing employment increased for the 13th consecutive month, with the rate of expansion the second-highest in 11 years. There were many products up in price, chemicals, electronics, energy, foodstuffs, metals, packaging, and timber. There was an easing of supply disruption. There were reports of companies pre-purchasing inputs to avoid price increases, with supply problems and efforts to build up safety stocks. The UK saw production increase in January at the fastest rate in six months, but new order growth slowed despite a mild increase in their export business. There was an easing of input and output price inflation. The PMI rolled up slightly less than December’s 57.9, to 57.3 in Chris Anderson, January. n Staff Writer

GLOBAL PMI OUTLOOK

by NORBERT ORE, DIRECTOR, HEAD OF INDUSTRIAL SURVEYS, STRATEGAS RESEARCH PARTNERS

Prices Rise Omicron Spreading January 2022 Business Survey Insights The January Survey Insights indicates buyers are being challenged in many ways they have never been before. The solution for high prices lies in redesigning costs out of the supply chain, or new products into the supply chain or substituting one product for another as with technology. In addition to the product

challenges, buyers working on projects such as outsourcing parts and processes to suppliers that have not proven themselves is a very risky situation in the long term. For now, the two biggest challenges are inflation and the Pandemic. Supply managers have in the past been able to solve problems in a matter of weeks and months. Now we see and hear more instances of solutions that take months and years. According to our scatterplot, five

Norbert Ore, Director, Head Of Industrial Surveys, Strategas Research Partners

economies recorded ExpandingStrengthening; an additional nine reported Expanding-Weakening; three reported contracting/weakening, and one reported Unchanged from the prior month. The clustering in the middle indicates global economies share a lot of common characteristics. There are ten surveys above 55 this month, another positive for the first quarter month.

continued Manufacturing Outlook / February 2022

GLOBAL PMI OUTLOOK ISM U.S. Manufacturing PMI™ In January, the U.S. Manufacturing PMI (57.6, -1.2) weakened marginally while maintaining a position of global recovery in spite of the problems with commodity prices; particularly, oil garnering $90 dollars plus per barrel. The 12-month performance for the PMI components depicts growth in output, weak employment, and insufficient inventory replenishment across a broad spectrum of products. We look for these trends to remain in place during 2022. A PMI reading above 48.7 percent generally indicates an expansion of the overall economy. Therefore, the Manufacturing PMI in January indicated the overall economy grew for the 20th consecutive month following a contraction in April 2020. According to the ISM press release, “the past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for January (57.6 percent) corresponds to a 3.1-percent increase in real gross domestic product (GDP) on an annualized basis.” This performance could be stronger if supply chain disruptions (i.e. labor disincentives, component shortages, school closures, skill mismatches, high inflation) were less impactful.

There is still a long way to go in terms of inventory replenishment, but the data is showing improvement. New Orders Minus Inventories: This key spread fell from +6.4 to +4.7, signaling New Orders are slowing and Inventories are growing; a source of necessary replenishment. We like to see New Orders typically outpace Inventories by an average of 6-8 points. The outlook for supply chains is more promising than experienced in the second half of 2021. Customers’ Inventories: The index (33.0, + 1.3) for raw materials, components, and finished goods was “too low” for the 64th consecutive month. The index has been under 40 percent for the past 18 months. This is an indication that buyers are still struggling to keep plants synchronized with their supply chain. It appears that priorities for 2022 will continue to be unraveling inventory issues in many supply chains.

Prices: The Manufacturing Prices Index (76.1, +7.9) jumped upward in January. Recovery of costs related to inflation is the probable driver. Historically, manufacturers like to raise prices in January to allow them to cover costs throughout the budget year. A comparison of prices paid increases received versus prices recovered shows even though manufacturers are getting higher prices received, they still lag prices paid. The number of January price increases are greater than space allows. A broad generalization would be Metals; Building Materials, Electronics; Maintenance, Repair and Ops; Plastic Parts and Resins; Energy; Freight; Chemicals; Semiconductors; Scrap; and Vegetable Oils (and one final category – just about everything else!). (* indicates reports of both increases and decreases in market pricing which we interpret indicates a turning point in the market).

Drivers: New Orders (57.9, -1.2), Production (57.8, -1.6), and Employment (54.5, +0.6) boosted Manufacturing activity in January, continuing the growth experienced so far this year. Supplier Deliveries (64.9, -0.3), a contrarian in that it signals slower delivery times above 50.0 as economically bullish, are still stretched. An encouraging indicator is the Inventories Index which has averaged 55 for the past six months and significantly better than the 50.0 average for the first 7 months of 2021.

continued

Manufacturing Outlook / February 2022

GLOBAL PMI OUTLOOK A Quick Word On Capacity Thirteen industries are still operating below their pre-pandemic capacity utilization levels in the U.S., contributing to output limitations. Looking at the relative importance, these thirteen groups comprise 65% of industrial production.

Manufacturing Outlook / February 2022

ASIA OUTLOOK

Asia Outlook by Christine Casati

The Belt And Road Initiative

continued

Manufacturing Outlook / February 2022

ASIA OUTLOOK Ongoing Global Tensions And Economic Rebalancing As we go to “press” after the twoweek period that welcomed the Lunar New Year of the Tiger, China’s President Xi is poised for more worldwide attention while hosting the Olympic Games in Beijing. Russia’s President Putin, in the meantime, is seizing the opportunity to court Xi in person to gain more support for Putin’s aggressive initiatives in Europe. It is questionable how successful Putin will be despite what appears to be a blossoming strategic partnership between China and Russia. President Xi has not been outside China in over 400 days and likely relishes the opportunity to meet foreign leaders in person. The senior diplomats of other key global players, such as the U.S., Canada, and the U.K., are boycotting the occasion due to China’s alleged human rights abuses and thereby avoiding the messiness and inconvenience of China’s Zero Covid quarantines. Instead, they are blowing kisses to the athletes over Zoom. But few foreign athletes may benefit from these well-wishers because they may not have their cell phones or laptops with them. They have been encouraged by several governments, including the Netherlands, Belgium, the U.K., and the U.S. to leave these devices at home to prevent cyber surveillance. Athletes who have arrived early have reported that they face draconian controls within the Olympic bubble itself, far worse than in Japan last summer. And all arrived by charter flights. Beijing has canceled most international flights. China has much to gain by maintaining its neutral status quo while it rebalances its economy amid its lowest growth rate in decades (estimates for 2022 range between

4.8 and 5.1%) and undertakes reforms to bolster stability, which is the underpinning of its expansive Belt and Road Initiatives (BRI) in Asia, Europe, the Mideast, and Africa. For now, the focus is on stability over growth. China’s misguided timing and too sudden curtailing of lending to overheated property markets last year have sent the housing and financial markets into a tailspin with ongoing consequences for investors, home builders, and buyers alike. Since then, policymakers have had to ease those policies and oversee financial restructuring of some huge developers, such as Evergrande, currently in default. Estimates are that property developers and related industries have accounted for over 30% of China’s growth in recent years. We have yet to see the complete domestic and global fallout which could get worse. Chinese policymakers have also clamped down on Chinese investors wanting to list on stock markets overseas, and have strengthened their regulatory control of the internet as well as fastgrowing technology and social media companies. It is nearly certain that China will suffer more disruptions to its economy and trade relationships as Omicron spreads there. Zero Covid policies, which have closed down entire cities for weeks when a few cases were discovered, and weak vaccines have led to a nationwide lack of immunity, which translates into a new pandemic waiting to happen. Some good news is that China has been successful in containing its energy crisis and stabilizing stateowned industrial production. Last year it had gobbled up available global LNG supplies during shortages, but it is now releasing those cargoes to other markets to help

ease the supply situation in Europe during the winter. In late January, we also saw moves by the U.S. to convene meetings with Japan, China, and India about sending more gas to Europe. China’s cooperation in energy markets is worth noting as fears of Russia disrupting gas supplies to Europe in the event of armed conflict with Ukraine are spreading. The impact of all of the above on industrial raw material prices has been uneven. While the price of nickel continues to soar both outside and inside China, non-nickel alloy steel prices seem to have stabilized after a slight downturn late last year. Belt And Road In The Balkans Last month we took a deep dive into China’s key BRI land project in Central Asia located in Kazakhstan, linking China with both Northern and Central Europe. Let’s travel further along the BRI Silk Road land route through the CEE (Central Eastern Europe) Region and explore other notable BRI developments. CEE and Greece have now become gateways to Europe for BRI. Serbia has also become a very important partner for China in the Balkans (North Macedonia, Albania, Kosovo, Serbia, Montenegro, Bosnia, and Herzegovina) and represents a gateway to its Maritime Silk Road. Historically, Germany has been the dominant player in these areas in terms of trade and FDI (foreign direct investment), not China. But over the past decade, these nations have no longer ignored cooperating with Asia’s largest economic power. There are now visible links due to BRI. Beijing has invested in the region since 2005. Its cooperation with Serbia was first initiated in 2011, two years before BRI was launched. After 2013, however, ongoing small projects on investment, transport, financing, continued

Manufacturing Outlook / February 2022

ASIA OUTLOOK training, and science eventually converged with the objectives of BRI to link infrastructure. The central BRI project with Serbia has been the modernization of the Budapest-Belgrade Railway due to be completed next year, worth nearly 2 billion USD. There is also an agreement between Serbia and China’s Power Construction Corporation which began construction of a new metro network in Belgrade in 2020. By the end of 2018, the Chinese share (including Hong Kong) of total foreign direct investment into Serbia grew to 20.3 percent for the period 2014-2018. Chinese investors went on a buying spree, buying up debt-laden mines, outdated steel mills, bridges, thermal power plants, highways, copper producers, stakes in vehicle spare parts and component producers, becoming major exporters of automotive parts. They took the state-owned Nikola Tesla airport in Belgrade under concession, paying a fee of 500 million euros. They have built the first Chinese car tire factory in Europe, the Shandong Linglong Tire Co. near the northern Serbian town of Zrenjanin. Financial estimates of total investment in the region vary. China on average has invested between $1 and $1.8 billion USD per year since 2011. The London-based International Institute for Strategic Studies puts the figure closer to 1 billion. The American Enterprise Institute puts it at $1 billion annually since 2005. The Washington-based Center for Strategic and International Studies puts the figure closer to $1.8 billion annually. Experts agree that 80% of whatever the figure is has gone to Serbia, by far the largest developing country in the western Balkans. Yet this is a small portion of total annual FDI these days. The

EU invests approximately 70% annually. Still, there is increasing concern that China’s growing investments and clearly stated longterm interests in the region may lead to worrisome influence. Total Chinese loan indebtedness in Serbia alone is estimated to be approaching $8 billion USD. Yet the Serbians continue to welcome Chinese investment, perceive it as positive for Serbia, and complain that it is easier to obtain loans from China than the EU, which has stricter guidelines, more conditions, and too many strings attached. China counters that if Serbia can’t get the money it needs for upgrades from other countries, they are forced to invest there to ensure their other investments are supported. And there is the argument that these investments have helped stabilize job creation in the region. But it’s a mixed picture. Recently there have been allegations of exploitative treatment of Vietnamese migrant laborers at the tire company. Another Balkan nation, Montenegro, is facing a major crisis after a $1 billion Belt and Road loan for a major highway project created havoc with Podgorica’s public finances. The first phase of the Bar-Boljare highway connects the Adriatic seaport of Bar and the border with Serbia. It went to bid without public tender resulting in a national debt higher than its GDP. It is part of China’s BRI Maritime Silk Road Initiative. Ivan Vujacic, an economist at the University of Belgrade and Serbia’s Ambassador to the U.S. from 2002 to 2009, has said that regional corruption, including “political elites who deliberately misrepresent Chinese loans as investment,” is partially responsible for putting public assets and workers rights at risk, a warning for other countries in the region. Western response to China’s investment in the

Balkans was minimal until recently, when the EU earmarked $46 billion for the western Balkans, targeting technology and infrastructure spending. For updates on Chinese global investment and construction contracts, consult The China Global Investment Tracker (CGIT). Next month we will take a close look at China and Africa, where China has been investing ever since western colonial powers moved out. With 54 countries, all with seats at the United Nations, and an abundance of natural resources that China needs, Africa has been the perfect continent through which to invest in its own Belt and Road Initiatives.

CHINA saw increased COVID-19 cases in January, and their attendant restrictions adversely affected manufacturing performance. There were renewed, although modest falls in production and new orders during the month. China’s new export business fell at the quickest pace since May 2020, and supply chain delays worsened. Manufacturers are confident that production will increase over the next 12 months. The PMI fell back from December’s 50.9 to 49.1 in January. As in every month since August 2021, employment across China’s manufacturing sector fell in January, and job shedding was the quickest since April 2020. China car sales were very slightly up year-over-year continued

Manufacturing Outlook / February 2022

ASIA OUTLOOK in December at 2.36 million units. Sales were up 5.7 percent on 2020’s figures. EV sales saw a record at 502, 545 units, with BEV sales, at 407,000 representing 17 percent of total sales. JAPAN’s PMI rose from 54.3 in December to 55.4 in January, a 95-month high. There was a stronger improvement in operating conditions in January, with production and new orders, both domestic and export, increasing at quicker rates. Production rose at the quickest pace in nearly eight years. Delivery delays and material shortages continued to weigh on input costs. There was the sharpest rise in selling prices since July 2008. Firms report that sustained disruption had encouraged them to boost safety stocks, thus raw material

inventories increased at the secondstrongest rate in the survey history. Workforce numbers increased for the tenth month running coincident with a continuing increase in backlogs. Business optimism strengthened at the start of 2022. The easing of tariffs is likely to help Japan’s exports to the U.S. and boost their economy. INDIA saw manufacturing sustain robust growth in January, despite increasing COVID-19 cases. New orders and production expanded at slower, albeit marked rates. Input cost inflation eased, but there was a quicker upturn in selling prices. The PMI fell back from 55.5 in December to 54.0 in January. Concerns regarding the pandemic, and attendant possible further restrictions being introduced, and

price pressures, dragged down business confidence. This reduced business optimism led to another monthly decline in manufacturing jobs. Average lead times from India’s suppliers lengthened moderately, to a lesser extent than in December.

Author profile: Christine is cofounder and President of China Human Resources Group, Inc, a management consulting firm based in Princeton NJ. She has provided U.S. companies with strategic development and project implementation services for projects in China since 1986. n

Manufacturing Outlook / February 2022

METALS OUTLOOK

FEBRUARY 2022

METALS OUTLOOK

by Royce Lowe Steel’s Carbon Emission Problem The iron and steel industry is responsible for 11 percent of global carbon dioxide emissions. Things will need to change rapidly to meet the world’s climate goals. To appreciate the scope of the problem, Global Energy Monitor has analyzed 553 steel plants that represent 82 percent of the world’s actual capacity, plus another 42 planned installations. Over 60 percent of the current installed capacity uses the Blast Furnace -

Basic Oxygen Furnace (BF-BOF). China has 62 percent of the global BF-BOF capacity. The 42 plants currently under development represent 5 percent of the current global steelmaking capacity and are mainly in China. Some 65 percent of this capacity would use the BF-BOF method, 88 percent of which is in China. The BF-BOF method involves the use of huge quantities of coking coal, thus the huge emissions. All future planned capacity in the U.S. is based on the Electric Arc Furnace (EAF).

The 553 plants considered here are responsible for 9 percent of all global carbon dioxide emissions, some 3 billion tonnes. The figures quoted regarding the enormity of China’s contribution to this situation make one wonder what can be done, globally, and how long it might take to do it. But all have to start somewhere, and a start was made recently in Sweden, where steel was made without the use of fossil fuels, in a joint venture between Swedish steelmaker continued

Manufacturing Outlook / February 2022

METALS OUTLOOK SSAB, energy company Vattenfall, and iron ore miner LKAB. The technology is dubbed HYBRIT - or Hydrogen Breakthrough Ironmaking Technology, where green hydrogen (hydrogen produced by renewable energy and electrolysis to split water, and different from grey hydrogen, which is produced from methane and releases greenhouse gases into the atmosphere, replaces fossil fuels both in the production of the iron pellets (the blast furnace feed) and in the BOF where carbon is removed from the hot metal produced in the blast furnace to make liquid steel. SSAB then processes the resulting steel into semi-finished and finished products. A shipment of the steel was made to Volvo AB’s truck division. Industrial quantities of the steel will not be available until 2026. Sweden’s minister responsible for the sector said, “Industry, especially the steel industry, creates large emissions, but is also an important part of the solution.” Sweden, as a country, produced just over 45 million tonnes of carbon dioxide emissions in 2020, and SSAB’s operations were responsible for almost 9 million tonnes. The case for HYBRIT is that by eliminating fossil fuels for the steelmaking process, it could reduce Sweden’s total CO2 emissions by “at least” ten percent. SSAB recently announced an almost $4 billion plan to “largely eliminate” carbon dioxide emissions right across its manufacturing sites in just eight years. Sweden has made the world’s first non-fossil fuel steel. Sweden’s carbon emissions represent 1.5 percent of the global total. For any inroads to be made into the problem, it will require concerted action on the part of China, India, and other countries making significant quantities of steel by the BF-BOF method. China’s Baowu,

and the world’s, largest steelmaker, has committed to achieving net-zero carbon emission by 2050. Further work is being carried out in India and Japan. The new steelmaking capacity being planned in China will, it is hoped, serve to replace a good portion of what is already installed. China might think of the EAF route and may be able to power them to a large extent by renewable energy. There would appear to be no quick fix to this problem: 2050 and 2060 seem distant as dates to obtain zero emissions, but at the rate we’re making progress in the world’s steel industries, they will likely come around too quickly. A sobering thought comes from the consultant McKinsey, who recently stated that decarbonizing steel requires an investment of $145 billion a year on average for the next 30 years, and could increase production costs by 30 percent. New steel capacity is planned in the U.S., with both U.S. Steel and Nucor recently announcing expansions of 3 million tons per year; Nucor in West Virginia, U.S. Steel in Arkansas. Start-up for both plants is for 2024, and both companies will take the EAF - continuous casting route and will supply hot-rolled, coldrolled, and coated steels, mainly for the automotive, appliance, and construction industries. In Nucor’s case, this will represent both the company’s and West Virginia’s largest-ever investment.

months for the price to increase from $1,300 per ton to $1,950 per ton; four months for it to go back to around $1,300 again. Not to worry say the CEOs of U.S. Steel and Nucor, it’s a temporary glitch. We’ll see. The purchasing manager who can forecast the price of steel should be in for a huge bonus, particularly if he or she bought imports, too. Meanwhile, Nucor’s CEO sees falling demand for steel as a temporary situation, adding that demand, particularly in the automotive sector, will turn around significantly in 2022. There was again significant movement in the price of both aluminum and nickel in January. The price of aluminum rose from $1.29 per lb in late December to $1.40 per lb in late January. ( The World Bank is looking at $3,000 per ton in 2022.) Nickel moved up from $9.40 per lb in late December to $10.30 per lb in late January. Copper moved from $4.35 per lb in late December and peaked at $4.50 in late January, before ending the month at $4.36. Zinc rose slightly from $1.63 in late December to $1.65 in late January.

In India, JSW Steel will install a new melt shop with two 350 ton BOFs and continuous casting. The annual capacity will be 5 million tons. Hot-rolled coil steel prices, which peaked in the U.S. last fall, are on their way down again. It took six

Author profile:

Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook. n

Manufacturing Outlook / February 2022

INNOVATION OUTLOOK

MANUFACTURING THE FUTURE OF BIOFABRICATION ARMI (Advanced Regenerative Manufacturing Institute), a Manufacturing USA® institute, created the BioFabUSA program. ARMI is a member-driven, non-profit organization, whose mission is to make practical the large-scale manufacturing of engineered tissues and tissue-related technologies. BioFabUSA was established to lead the charge in largescale manufacturing of engineered tissues and regenerative medicine research, turning foundational breakthroughs in the manufacture of engineered tissues and tissue-related technologies into life-changing possibilities for everyone. Manufacturing USA, a public-private partnership with 14 manufacturing institutes across the nation, connects companies, academic institutes, non-profits, and local, state, and federal entities to solve industry-relevant advanced manufacturing challenges in new technology areas with the goals of enhancing industrial competitiveness and economic growth and strengthening national security.

Technology Focus Area Biofabrication is the industrial production of biological tissues which can be used for infinite therapeutic applications, including for burn injuries or damaged vasculature, in toxicology screening to test the safety of drugs under development, and to develop therapies to cure diseases including renal failure and diabetes. To reach its goals, BioFabUSA is removing hurdles to manufacture biological tissues more reliably, produce scalable processes and integrated technologies for the field, and develop disruptive cell and tissue-based technologies that will accelerate the discovery and characterization of new small molecules and biologics.

Approach to Innovation and Collaboration BioFabUSA brings together partners in government, industry, and academia to collectively overcome manufacturing challenges in commercializing tissue engineering technology through:

LEARN MORE

CONNECT WITH BIOFABUSA Manchester, NH 603-666-3905 info@armiusa.org armiusa.org

Participating in the Standards Coordinating Body for Regenerative Medicine to accelerate development of tissue products and creating needed standards in cell therapy, gene therapy, regenerative medicine, and cell-based drug discovery Developing an ecosystem of large and small institutions, start-ups, and established firms working together to accelerate this new market opportunity Projects that focus on developing technologies that are broadly applicable and supportive of manufacturing multiple tissues to create more standardized practices across the industry; and Accelerating development of an advanced biofabrication workforce by establishing a new series of skills in advanced regenerative manufacturing and related curricula for learning institutions

Reprinted with the permission of:

Advanced Manufacturing National Program Office, NIST | www.ManufacturingUSA.com | 301-975-2830 | amnpo@nist.gov

continued Manufacturing Outlook / February 2022

INNOVATION OUTLOOK

COLLABORATIVE PROJECT EXAMPLES “When science meets Manufacturing, we save lives. As part of a public-private partnership, Rockwell Automation will bring together advances in manufacturing, biotech, medicine and life sciences and automate those new bio manufacturing processes to add a new chapter to medicine—a story that, as it unfolds, will integrate biomanufacturing science with production techniques that increase capacity, speed, modularity and quality. We’ve committed $10 million to ARMI to develop ways to scale up production of new technologies to produce tissues, such as growing artificial skin for grafts, which have been under development in labs around the country.” – David Vasko, Director, Advanced Technology, Rockwell Automation

WORKFORCE SKILLS IN 3D BIO PRINTING:

In partnership with the University of Minnesota, and its 3D Bio printing Facility, BioFabUSA will develop educational programs to support the 3D bio printing skills required to train future workers. 3D bioprinting represents a disruptive technology with the potential to transform health care as part of the revolution in the personalized medicine industry. The benefits of 3D bio printing include the ability to build functional tissues, organs, supports and guiding scaffolds, tailored to the patient’s size, specification and histocompatibility. In addition to the creation of transplantable/implantable tissues, the ability to build small and reproducible human tissue models brings unprecedented capability to predict drug interactions and toxicities, as well as to study disease in a context approximating the natural 3 dimensional complexity. These programs will ultimately include exposing young students (K-12) to 3D printing (STEM, Anatomical Models, & Robotics), specially focused bio printing courses for 2- and 4-year degree programs and graduate school, Veterans education, and intense 1-week workshop courses for Industry professionals.

“I am astounded by the 21st century science fiction done by scientists in the field of regenerative medicine. I am equally astounded by the science fiction in their labs, where the manual labor conducted by technicians is reminiscent of Louis Pasteur’s laboratory. It is amazing that these miracles can be performed without modern process controls, robotics, and sensors, but this field will need 21st century engineering and manufacturing to mature into an industry capable of manufacturing FDA-approved tissues at the scale they are needed. BioFabUSA will build the coalition of industry, academia, and government that I hope will make that happen and enable the next big advance out there.” – Dean Kamen, Executive Director, BioFabUSA Advanced Manufacturing National Program Office, NIST | www.ManufacturingUSA.com | 301-975-2830 | amnpo@nist.gov

Manufacturing Outlook / February 2022

AFRICA OUTLOOK

FEBRUARY 2022

AFRICA OUTLOOK

by TR Cutler US Trade and Investment in Africa at US Senate Foreign Relations Committee Details Why USA and Africa Are Perfect Strategic Partners Six months ago, there was powerful Senate Foreign Relations Committee testimony about the growing, dynamic, and new relationship with Africa and the U.S. Rather than editorializing or opining about the sworn testimony, it is best for the readers of Manufacturing Outlook to assimilate these assertions into a workable business paradigm. Manufacturers are desperate for labor in the U.S.; African nations have a strong workforce willing to work at a fraction of the America wage structure. The first Latin phrase I learned was:

Manus Manum Lavat. (One hand washes the other.) It is quite apropos in how the U.S. and Africa manage the relationship. While African nations vary as much as U.S. states, the pros and cons of this global relationship represent a unique window into the narrative of the American footprint over the next several decades. China has already claimed the title of infrastructure leader for the African continent. It is not too late to improve the relationship. Just as the U.S. was instrumental in advancing health initiatives for HIV in Africa forty years ago, we are doing so now with COVID vaccines. That goodwill buys U.S. industry gratitude among African nations.

Africa represents tremendous trade and investment potential, along with expanding continental integration and global partnerships.

“Borders frequented by trade seldom need soldiers.” William Schurz, second President of the American Institute for Foreign Trade now the Thunderbird School of Global Management

Landry Signé spoke to the Senate Foreign Relations Committee. His book, Unlocking Africa’s Business Potential (Washington: Brookings Institution Press, 2020) serves as a guide to why trade and investment are not just about money and prosperity. continued

Manufacturing Outlook / February 2022

AFRICA OUTLOOK Landry Signé, Ph.D., is the Executive Director & Professor at Thunderbird School of Global Management as well as a Senior Fellow, Global Economy and Development Program, Africa Growth Initiative, Brookings Institution Member, Regional Action Group on Africa & Global Future Council on Agile Governance, World Economic Forum. Below is an abbreviated transcription of the testimony by Signé Advancing trade, investment, and technology in Africa offers enormous economic growth and increased prosperity for both regions and is best realized through value-based foreign policy and a market-based model of development, education, and accountability. There is no better time to accelerate U.S. trade and investment in Africa than now. Despite Africa’s tremendous economic potential, the U.S. has lost substantial ground to

traditional and emerging partners, especially China. Indeed, while recent trends indicate that the U.S. engagement with the region has fallen, it has not and should not cede its relationship with the region to other powers. Importantly, the U.S. can build on new regional momentum to revive and strengthen its partnership with Africa for mutual prosperity, including building on the recent launch of the African Continental Free Trade Area (AfCFTA), given the promise of the initiatives of the DFC, Prosper Africa, and the post-AGOA 2025 options. To do so means a shift in emphasis in the relationship to one more focused on a value-based foreign policy, and building upon the areas of strength and convergence with African citizens’ preference, such as trade, investment, technology, market-based model of development, education, and accountability.

Africa’s economic transformation and business potential are more substantial than most people think: the world’s next growth market. Considered a hopeless continent in 2000 by The Economist, Africa has seen the two best cumulative successive decades of its existence in the 21st century. Trade in and with Africa has grown 300% in the last decade, outperforming global averages (196%). It has become home to many of the world’s fastest-growing economies, offering unique opportunities for U.S. trade and investment. Moreover, Africa has tremendous economic potential and offers rewarding opportunities for local and global partners looking for new markets and long-term investments with some of the highest returns, but also the potential to foster economic growth, diversification, job creation, including for women and youth, and improved general welfare.

continued Manufacturing Outlook / February 2022

AFRICA OUTLOOK The fast population growth on the continent could be turned into demographic dividends, or threats to global prosperity and stability. Africa was home to 17 percent of the world population in 2020 and is expected to have 26 percent of the global population in 2050 (2.53 billion people). If Africa is not successfully integrated into the global economy, there could be a major threat to global prosperity and stability. Citizens could be further subject to extreme poverty, fragility, violent extremism, illegal immigration, and health challenges, among other issues—challenges that many already face on the continent. If our goal is a prosperous and safe world, Africa must not be left behind. The growth of household consumption and business spending represents a unique opportunity for U.S. trade and investment. By 2050, Africa will be home to an estimated USD 16.12 trillion of combined consumer and business spending. Africa’s prosperity can be good for the US: Such growth will offer tremendous opportunities for U.S. businesses in household consumption (USD 8 trillion) in areas such as food and beverages, housing, hospitality and recreation, health care, financial services, education, transport, and consumer goods, but also business to business spending (construction, utility, and transportation, agriculture and agri-processing, wholesale, and retail). The rise of global partnerships and the competition between traditional and new players: an opportunity for the U.S. to build on its sustainable competitive advantage. China became the region’s prime trading partner. In fact, between 2006 and 2016, China’s trade with Africa surged, with imports increasing by 233 percent and exports increasing 53 percent, as they did for several other global players as well. China’s influence goes beyond the trade relationship: It is also the top investor in infrastructure, and now is the first destination of Englishspeaking African students.

Fast Urbanization But Also Fast Rural Population Growth By 2030, Africa will be home to 5 cities of more than 10 million inhabitants and 12 other cities of more than 5 million inhabitants. Cities in Africa are becoming powerful economic centers, and a city-based approach to foreign policy, but also trade and investment, will be critical to outperform competitors and build mutual prosperity. Contributing to the prosperity of African cities will also make a difference in addressing security challenges. Africa has made tremendous progress in mobilizing resources for infrastructure development, working hard to bridge gaps in ICT, energy, water and sanitation, and transportation. Despite the remaining deficits, the Infrastructure Consortium for Africa (ICA) reported that between 2013 and 2017 the annual funding for infrastructure development in the region was USD 77 billion, about twice as much as the annual

funding average of the first six years of the 2000s. However, many of these gaps persist. In 2018, the African Development Bank (AfDB) found that Africa’s infrastructure requirements range between USD 130 and 170 billion a year, leaving a financing gap of USD 68 to 108 billion. China has played a key role in financing and has become the largest bilateral infrastructure financer in Africa. (Chinese FDI grew 40 percent annually over the last decade.) Africa has one of the fastest-growing, and is the second-largest, mobile phone market in the world. In sub-Saharan Africa alone, there were 477 million mobile subscribers in 2019; by 2025, the region will host 614 million cell phone subscribers, and 475 million mobile internet users. The internet is also expected to contribute 5 to 6 percent of Africa’s total GDP by 2025. While the Information and Communication Technology sector is making incredible advancements, water and sanitation, transportation, and energy infrastructure development still need continued

Manufacturing Outlook / February 2022

AFRICA OUTLOOK bi-partisan support for the region to develop and successfully implement a long-term comprehensive Africa strategy that effectively coordinates action around trade, investment, commerce, and economic growth. This strategy should draw from consultations with African partners and multilaterals, building on areas of sustainable competitive advantages.

significant investment. However, this is indicative of positive and extensive investment opportunities that can be undertaken on the African continent. Digitalization increased technological innovation and an accelerated 4IR. The Fourth Industrial Revolution is characterized by the fusion of the digital, biological, and technological world, and technologies such as artificial intelligence, big data, 5G, drones, automated vehicles, and cloud computing. As a world leader in technological innovation, the United States is well-positioned to play a leading role in the African digital space and contribute to Africa’s pursuit of now-vital technologies.

The AfCFTA will accelerate Africa’s industrialization as well as incomes, which will lead to the increase of both household consumption and business spending, generating unique opportunities for U.S. trade and investment. Per a World Bank study, the AfCFTA has the potential to lift 30 million people out of extreme poverty, increase the income of 68 million Africans, increase Africa’s exports by USD 560 billion, and generate USD 450 billion of potential gains for African economies by 2035. The pandemic has created unique momentum for engagement with Africa. The U.S. should seize this momentum and build on Congress’ historical

In his closing remarks Landry Signé said it is time for the U.S. to reverse the trend in the ground lost in Africa as many traditional and emerging global powers are racing to capture Africa’s tremendous economic potential. The U.S. has a sustained competitive advantage to partner with Africa, advance U.S. trade and investment with the continent, while meeting the majority of Africans’ priorities. It is up to the U.S. to seize this unique momentum to advance mutual U.S. Africa trade and investment interests. By acting promptly, and forging transformative partnerships aligned with African values, the U.S. has the opportunity not only to advance its own interests, but to contribute to the transformation of a continent that will make up nearly 40 percent of the world’s population by 2100. Author Profile:

Thomas R. Cutler is the President and CEO of Fort Lauderdale, Floridabased, TR Cutler, Inc., celebrating its 23rd year. Cutler is the founder of the Manufacturing Media Consortium including more than 9000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. TR Cutler, Inc. launched two new divisions focusing on Gen Z and the African manufacturing sector. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. Over 5000 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com. n

Manufacturing Outlook / February 2022

AEROSPACE OUTLOOK

FEBRUARY 2022

AEROSPACE OUTLOOK by Royce Lowe Air Wars Boeing is looking to launch the 777X freighter, its first new jet model in nearly five years, with a 50-plane commitment from Qatar Airways, according to those ubiquitous “people familiar with the matter.” Qatar has given Boeing a firm order for about 15 of the aircraft, the freighter version of Boeing’s largest twin-engine jet. A combination of options and conversions of existing orders will make up the rest of its commitment “the people” said. The 777X passenger version is trying to get past regulators, and its commercial debut has been delayed to late 2023. With E-commerce on the up,

and passenger numbers down because of COVID-19, the 777X freighter is presently in greater demand than the Airbus A350. Airbus, meanwhile, unveiled a freighter version of the A350-1000 to try to gain a foothold in a market that Boeing has dominated for decades. The deal with Boeing comes as Qatar Airways and Airbus are at loggerheads over potential flaws with the A350. This is known as the Paint Issue, where Qatar Airways is claiming that paint is flaking on certain parts of the A350 aircraft, and exposing surfaces

below the paint which are degrading “at an accelerated rate.” Qatar Airways has halted A350 deliveries and is requesting a thorough investigation of the problem, plus some $700 million in compensation. Qatar Airways has taken a video of the flaking paint, pointing to the exposed surfaces, for a hearing in a London court. Airbus thinks its customer is doing all this, with 21 A350s grounded by Qatar Airways, because of a lack of COVID-19 induced demand. Airbus’s rebuttal was to cancel an order from the airliner for 50 A321neos. Stay tuned, this fight will get more exciting. continued

Manufacturing Outlook / February 2022

AEROSPACE OUTLOOK Boeing is in for a $3.5 billion charge and has booked another $1 billion in “abnormal costs” related to the 787 Dreamliner program. There were manufacturing problems and no 787s have been shipped since Spring 2021. Boeing is awaiting FAA regulators regarding Boeing’s requirements to allow them to resume 787 deliveries. They are producing at a “very low” rate and looking to increase to 5 units per month. In 2021 Boeing shipped 14 787s versus 53 in 2020. They are producing 27 737s per month and are looking to up this to 31. They are hoping to soon resume deliveries to Chinese customers. In a recent statement Boeing’s CFO, Brian West, said, “We remain focused on solidifying our business for long-term success. The lessons we’ve learned and the changes we’ve implemented in the last two years will help us to do that. We’re driving safety, quality, stability into every corner of our operations to enable future growth. And we made solid progress against our goals over the last three months.”

$5.1 billion in investment in 2021, according to the consultant McKinsey. The basic design resembles a hovering drone, using multiple small rotors to take off and land like a helicopter. Regulators, at first hesitant, are starting to finalize the safety standards by which these birds will be governed.

For some time now there have been rumblings about electric air taxis, funny things that might one day ferry people between downtowns and airports, and such places. There are myriad ideas, sizes, capacities, ranges, etc., and someday, in the next couple of years, we could see some of them in service. Mark Henning, a graduate of the Technical University of Munich, has been in the aerospace industry for 25 years. He’s worked for Airbus and has since joined AutoFlight, a Chinese firm, where his mandate is to get the company’s small electrically powered air taxi approved by Europe’s air-safety regulators (EASA). Mr. Henning’s baby, called Prosperity I, can seat three passengers and a pilot, and will have a range of some 250 km. Approval is being sought from the EASA, and the process will hopefully be completed by 2025. There are other Chinese prototypes being tested. There are 200 similar projects around the world, electric vertical take-off and landing (eVTOL) and they attracted

In the U.S., Joby aviation hopes to become the first to obtain FAA certification. It is making a dozen or so aircraft at a new manufacturing plant in Marina, California. One of the company’s backers is Uber. Then there’s Archer Aviation, also in California, a company that plans a commercial four-passenger-plus-pilot design, to start in 2024, and one of whose investors is United Airlines. There are high hopes for taxis to be ready for the 2024 Olympics in Paris. Airbus and Boeing are in development and investment, and Larry Page, Google’s co-founder is investing. It won’t be for lack of money and effort that some of these birds won’t take to the skies. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

Manufacturing Outlook / February 2022

ENERGY OUTLOOK

FEBRUARY 2022

ENERGY OUTLOOK Old King Coal…Still Kicking by Jocelyn Bright At last year’s COP26 Climate Change Summit in Glasgow, diplomats spent hours arguing for the phasing-out or phasing-down of coal production and use. There was pressure from China and India - two countries that couldn’t function without coal - for the phasing-down option. So as far as the U.N. was concerned, the dirtiest of fuels was being “consigned to history.” But that’s not really the way things turned out.

Ivan Glasenberg, the erstwhile “colorful” - some say “dodgy,” head of Glencore Plc, one of the world’s largest miners, said back in 2001 that “the world was hungry for coal.” Two decades on one might say that the coal industry is booming. Asian benchmark prices have of late risen to all-time highs, with thermal coal - that used in power generation - up over $240 per metric ton. This represents the second-highest price ever and is only

slightly behind the peak in October 2021. Metallurgical, or coking coal, as used in steelmaking, is also trading at a record high, over $400 per ton. Those miners that stuck with coal are making a killing. Glencore, the world’s largest exporter of thermal coal, is having a field day. Demand is rising, but institutional investors have convinced nearly every miner to stop opening new pits. All the better for those who stayed open for business. continued

Manufacturing Outlook / February 2022

ENERGY OUTLOOK So the planet suffers through all this while Glencore and others profit. Coal is the world’s most carbon-intensive fuel, and all scenarios that see net-zero carbon emissions by 2050 involve a huge drop in its use, but the opposite is happening. In 2021, the world burned the largest amount ever of coal to produce electricity, and if things continue as they are expected to, the total global consumption for power, steel, and cement will see a record high, according to the International Energy Agency (IEA.) Many industrialists and observers said back in 2013 and 2014 that coal demand had peaked, and would soon start to slide. The best present scenario may be that coal consumption is settling at a high point, but at worst it may continue rising. The IEA forecasts some additional small demand increases for 2023 and 2024, setting fresh record highs in both years.

demand by over 20 percent from 2019 to 2024 to be compatible with the agency goal of net zero by 2050. This is not exactly where the world is heading.

China is the key reason for last year’s increases and continues to be so this year. There were electricity shortages and in late 2021 Beijing ordered its state-owned coal miners to do just what they had to do to avoid blackouts. Thus more coal than ever was dug last November and December. But it goes past China. Is Senator Joe Manchin doing his best to keep the coal industry alive? And governments in Europe and the UK are burning coal to supplement wind and sunshine. And why is Germany going out of nuclear faster than it’s going out of coal? The bottom line is that coal demand is likely to grow almost 3 percent from 2019 to 2024, reaching an all-time high of 8,031 million tons, according to the IEA. The IEA’s numbers say the world would need to reduce coal

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Debates on phase-out and phase-down do little to reduce consumption. The question remains as to why coal is in such demand and how to change it over the next ten years. [Editor’s Note: The global presumption is that greenhouse gases are inextricably linked to the rise in global temperatures, using the axiom A + B must equal C. It reminds the editor of another axiom some 500 years ago, that the world is undeniably flat. It remains to be seen if the massive costs to become green will translate into more tepid future temperatures.] n

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Manufacturing Outlook / February 2022

AUTOMOTIVE OUTLOOK

FEBRUARY 2022

AUTOMOTIVE OUTLOOK by Lawrence Makagnon

The Future of Ford’s History Those of us who are devotees of the New Yorker magazine would never have thought to find an article, and a very long one at that, on the Ford F-150 pickup, America’s best-selling truck. But we were recently treated to this, along with a short history of Henry Ford’s inventions, and his relationship with Thomas Edison. What it doesn’t mention is Thomas Edison’s relationship with Nikola Tesla, which ended in rivalry and parting of the ways.

Henry Ford was pointed out to Thomas Edison at a banquet in 1896 as a “young fellow who’s made a gas car.” The two met, and discussed Ford’s invention, and Edison reputedly cried, “Young man, that’s the thing; you have it. Keep at it! Electric cars must keep near to power stations. The storage battery is too heavy. . . . Your car is self-contained—carries its own power plant.”

Up to this time, Edison had been gungho on electric vehicles, having spent a lot of time trying to develop them, but he changed his mind again in 1903, saying electricity was the thing, with no noisy motors and no cooling system to go wrong. In January 1914, Henry Ford told the New York Times about a vehicle that he and Edison were building together, stating that he hoped manufacture of an electric automobile would begin within a year. Edison had developed a new continued

Manufacturing Outlook / February 2022

AUTOMOTIVE OUTLOOK Ford’s future, like every other company’s, will rise or fall with the purchase and acceptance of these relatively new vehicles. The one electrified Ford model that has “moved” so far is the Mustang Mach-E, which sold 2,349 units in December, and 27,140 in 2021. It sold 12,284 electrified vehicles in total in December. Globally, in 2021, it sold only about 43,000. China sold over half a million EVs in December.

nickel-iron battery, supplied by the Edison Storage Battery Company, that promised a range of up to a hundred miles. Only a few Ford-Edison cars were ever made. The batteries didn’t work as well as they were supposed to, and with the advent of World War One, oil, following its discovery in West Texas, took over the business of propulsion. The electric automobile was apparently gone and forgotten. And oil was cheap. America’s love affair with the automobile is legendary. And it all started here, with cheap gas and highways and more and more people able to buy a car, so they could drive hundreds of miles at a time across their big country. Then there was another love affair; the pickup. And through all the Mustangs and Lincolns and Edsels, there was always the truck, and its bed. Ford no longer sells sedans in the U.S., and like every other automotive manufacturer has fallen into line with the belief that gas-fired automobiles are responsible for global warming, and that something must be done to try to cure this malaise. For example, it’s taken its Mustang apart and come up

with the Mustang Mach-E, an EV that bears little resemblance to its parent that first appeared in 1964 - but which is disappointingly silent, and emission-free. The gas-powered F-150 Lightning sells around 900,000 units in a good year, bringing Ford some $40 billion. It’s said that some 200,000 people have put $1,000 deposits on the F-150 EV. But what of the 200,000 gas-powered models left behind? Used trucks emit at least as much as new ones. Ideally, most of the F-150 EVs will go to first-time buyers. The next couple of years will surely be critical ones for Ford and its F-150 EV. In addition to the Mustang Mach-E and the F150-EV, Ford is bringing out an electric Transit van. This trio will be Ford’s army in its attempt to catch up with Tesla. It will have competition over the next couple of years from electric versions of GM’s Chevy Silverado pickup, a Hummer EV, and Tesla’s futuristic-looking Cybertruck, which reportedly has over a million advance orders. Stellantis is looking at pickups and SUVs. And we don’t really know what Toyota might come up with, but its gas-powered Land Cruiser, with a present four-year waiting list, might be a good candidate.

Ford has an $8 billion stake in Rivian, whose production performance thus far is disappointing. Rivian says production of its R1T pickup will shortly improve to 200 units per week, and that its R1S SUV will follow not too far behind. As well as EVs, Ford is spending billions on batteries in Tennessee and Kentucky, in partnership with South Korea’s SK Innovation. It is bringing on 19,500 charging stations across the U.S., operated by independent providers such as Electrify America and ChargePoint. Bloomberg NEF (New Energy Financing) predicts that 2022 will see the sale of plug-in vehicles up at just over 10 million, or 14 percent of all global vehicle sales. This is up from 6.6 million in 2021 and 3.2 million in 2020. China will account for around 6 million, Europe around 3 million. The electrified car has a long way to go in North America, where only around two percent of automobiles are electrified, compared to sales of 30-35 percent in some European countries, and around 70 percent in Norway. It would be a fitting legacy to Henry Ford, the inventor of mass production and the ore-toautomobile routing, if the Ford Motor Company could make progress in a domain that would surely have fascinated the man himself. Nearly 12 decades later, his idea has come into its Lawrence Makagon, Staff Writer own. n

Manufacturing Outlook / February 2022

CYBER SECURITY OUTLOOK

FEBRUARY 2022

CYBER SECURITY OUTLOOK

The Crazy Cyber Security Terms in Fun English – Read Them!

By Ken Fanger Ever feel like cyber security people don’t even speak in English? You’re not alone! We understand it can cause you to feel frustrated and lost. This month, I want to take some time to explain some of the buzz words you may hear tossed around… waves of letters and sounds that you may think don’t seem to stand for anything… ones that cyber people love to banter around. At a cyber security event last month, I watched my compatriots streaming these nearly nonsensical phrases: “We implemented MFA for our XDR control system, so it now connects with our RMM. This combined with our new BDR system will keep our clients saf-

Manufacturing Outlook / February 2022

er.” How would you like to know what the experts are saying? I’m going to let you in on a little secret: knowing what some of these terms are will help you to better understand and successfully implement the necessary cyber security measures that keep your data secure. Here are some of the more common cyber security acronyms explained in a fun and engaging way. Here we go… CMMC – Cyber Maturity Model Cer tification. Have you ever wanted to sell to the government? Well, this won’t make you more excited (but it is necessary). CMMC is the new standard from the Department of Defense to assure

that companies have at least a basic level of cyber security and protection. It’s just one more thing that the government expects you to do… beyond death and taxes that is. MFA/2FA – Multifactor/2 Factor Authentication. Perhaps on more than one occasion, you have thought: “Passwords? I don’t need no stinking password!” Well, now you need even more than a password. MFA requires you to have two or more different ways to log into your information. The good news is that many of us already have this authentication method with our banks and other financial institutions. You will know if you have MFA because continued

CYBER SECURITY OUTLOOK when you log into a site, it will ask you for your password and, for example, a code that is sent to your mobile phone. I know you hate having to do this, but trust me, you will be very happy that hackers hate it more (it makes their job of hacking that much more difficult). VPN – Virtual Private Network. Remember when millions of people began working from home at the start of the pandemic? Well, many of us quickly found out that was a very unsafe way to work. That is when we started to implement VPNs. VPNs are a system that uses encryption (a method that makes your information unreadable to other people) to create a safer connection between your computer and the office network. A personal VPN also allows people to have protection from people watching them on the internet by creating an unreadable link to a third-party location. DLP – Data Loss Prevention. Ever wonder what would happen if someone took your medical records from your doctor’s office? Well, a DLP Plan would address this. It is a plan that would allow for the protection and recovery of important data. Let’s say you want to make sure that your client records don’t end up in the hands of a competitor. This would help to do that as well. This is a plan and its processes that make sure data is not lost or stolen. A good DLP system should protect your information from both accidental losses and “bad actors” (aka hackers) trying to steal your information. EDR – Endpoint Detection and Response. Computers are like the petri dish of your network. Bad programs and viruses tend to grow there, meaning that is where most of the bad things happen. Keeping your computers and phones safe is the primary objective of EDR solutions. When looking at cyber security, understanding what is happening on the endpoints is vital. XDR- Extended Detecting and Response. So, you have all the endpoints feeling safe, but what about the rest? Not to feel left out, the security world enhanced protection to now include not

just the endpoint, but all of the equipment in between. IDS/IDP – Intrusion Detection System/Intrusion Detection Prevention. There are just times when you want to have that big dog at the front gate. Your IDS/IDP is that big dog that is looking to keep everyone out. When you have Intrusion Detection and Prevention, you are actively keeping out bad things and watching that only good ones get in. MSSP – Managed Security Service Provider. Sometimes you just need (or want) someone else to take care of you. The MSSP will take care of all your security issues, but it is important to remember that you cannot just pass security off to someone and hope everything is good. You need to partner with someone to make sure that you are actively involved in securing what is important to you. NIST – National Institute of Standards and Technology. Ever want someone to tell you what you should do? Well, this is where NIST comes in. NIST is a government agency that builds security and compliance standards. So, when you want to be told, just ask NIST and they will tell you what to do. SIEM – Security Information and Event Management. How do you know you have been attacked? Well, that is where a SIEM system comes in. This system will collect information about your computer or network and determine if there is a threat or potential attack. SIEM systems use real-time monitoring to find and respond to attackers— as they are attacking— letting you feel safer as you go. SOC – Security Operations Center. Where do all the security people live? That’s easy! They live in a SOC… maybe next to the old lady in a shoe? All these security people spend their time at the SOC watching to see if bad people are trying to do bad things to your computers. SSO – Single Sign-On. Passwords, passwords, passwords! It seems like we enter passwords everywhere, but it doesn’t always have to be that way. A

Single Sign-On is just what it sounds like— sign on once and get access to all that you need! Yes, please! RMM – Remote Management and Monitoring. Superman from afar, the RMM allows remote monitoring to keep your systems up and running from many miles away. You don’t even need to take an Uber to get there! BDR – Backup and Disaster Recovery. Where have 30 years of all my pictures gone?! It can be terrifying to discover that all your vital information has vanished, but with a BDR, you’re able to recover all of your lost records. That should help you sleep a little easier tonight. These cyber security terms don’t have to be daunting or cause you anxiety (life already takes care of that!). Now that you know what some of the more common terms mean, you’ll be in a better position to understand the measures your cyber security professional recommends to keep your data secure. Cyber security shouldn’t be terrifying—and with a partner like On Technology Partners, it isn’t. Cyber security is about partnering to keep your data safe. It’s our privilege to be your Partner in Security. n Author profile: Ken Fanger, MBA has 30 years of industry experience in the fields of technology and cyber security, and is a sought-after CMMC Registered Professional, helping manufacturers and contractors to meet DoD requirements for CMMC compliance. He is passionate about technology deployment, and his MBA in Operations & Logistics has helped him to be an asset in the designing and deployment of networks to enhance the manufacturing experience. Over the past 5 years, he has focused on compliance and security, including working on the SCADA control system for the Cleveland Power Grid. Mr. Fanger works with each client to identify their unique needs, and develops a customized approach to meeting those needs in the most efficient and cost-effective ways, ensuring client success.

Manufacturing Outlook / February 2022

ISSUES OUTLOOK

FEBRUARY 2022

ISSUES OUTLOOK

by Royce Lowe

The Chip Dilemma GM’s CEO, Mary Barra, thinks that access to semiconductors will continue to improve and that the shortage will no longer weigh on production come midsummer. Then best current outlook - by the time the third and fourth quarters roll around, semiconductor restraints will really start to diminish. That’s not the way the Asian giant Taiwan Semiconductor Manufacturing Company (TSMC) sees things. The company recently raised its growth projections and announced record spending plans for 2022, telling the world that the large demand for chips that turned

global manufacturing on its head, is not going away soon. Apple’s most important chipmaker is now projecting sales growth of 15-20 percent annually, around double its previous expectation. The company foresees sales of around $17 billion in the first quarter of 2022 alone, at least 5 percent above estimates. It is looking to spend $40-$44 billion, expanding and improving capacity in 2022. These numbers affirm TSMC’s position in the market during an unprecedented, pandemic-triggered chip shortage, that forced huge cutbacks in the production of cars, smartphones, and game consoles. Asia’s most valuable corporation

intends heavy future investment to maintain its technological lead over Intel and Samsung while maintaining its market share. Intel recently announced it will invest $20 billion on brand new semiconductor foundry capacity near Columbus, Ohio. Two new chip factories will serve to create over 3,000 new Intel jobs and will begin production in 2025. This is the initial phase; the site could accommodate up to eight factories and an investment of $100 billion. Intel still controls some 80 percent of the computer processor market, with an even bigger share in servers. But it started continued

Manufacturing Outlook / February 2022

ISSUES OUTLOOK making mistakes some ten years ago, including not getting into chips for smartphones. A couple of dozen current and former Intel employees, who obviously don’t want to be identified, spoke of incompetence “at the top” and some engineers spoke out individually regarding technical errors the company had made. Intel is currently facing mounting criticism in China after telling its suppliers not to source products or labor from the northwestern region of Xinjiang. The company sent a letter to its suppliers in December 2021 asking them not to use labor or procure goods and services sourced from the country’s far western region. Al Jazeera, Bloomberg, and Reuters all reported on this issue, and Intel apologized, at the same time saying that it was “required to ensure that its supply chain does not use any labor or source goods or services from the Xinjiang region” following restrictions imposed by “multiple governments.” In 2020, over a quarter

of Intel’s revenues were from China. This is in no way meant to degrade Intel, nor to criticize its past actions, but the company has work on its hands to restore its reputation. It hasn’t been a player in the latestgeneration semiconductor business and has been overtaken. It has three years before new chips come out of Columbus, three years to convince the world that it is back in the game. Intel’s relatively new CEO, Pat Gelsinger, was recently interviewed by Bloomberg, and he urged the U.S. and the EU to push ahead with efforts to bring back chip manufacturing, arguing that government funding is needed to address an overconcentration of production in Asia. He mentioned 12 percent of global production in the U.S., 9 percent in the EU, with the balance effectively in Asia. He said he was optimistic that given government funding the U.S. and Europe will forge ahead with the building of plants. Good luck Mr. Gelsinger. In December, executives from more

than 50 U.S. companies called on congressional leaders to pass legislation that provides $52 billion in grants and incentives for domestic chip production, as well as a separate bill to encourage semiconductor design and manufacturing. But the legislation has been slow to move forward. The funding plan, called the CHIPS Act, was included in a large package of legislation aimed at countering China that was passed by the Senate in June. It later stalled in the House. Intel sells processors to companies in China and recently proposed using a factory in Chengdu to increase the production of silicon wafers. The Biden administration blocked the plan. It’s strange to ponder at this time that the blame for the chip crisis was the pandemic, when people stayed at home talking on their phones, playing games. Not, apparently, buying cars. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

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ISSUES OUTLOOK

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