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AMERICAN MANUFACTURER SPACEX MAKES HISTORY PAGE 12
NORTH AMERICAN OUTLOOK PAGE 30
METALS OUTLOOK PAGE 38
AUTOMOTIVE OUTLOOK
MAY ISM PMI: 43.1%
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Released June 1st -The Full Executive Summary Report On Business - Page 26
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Manufacturing Outlook / June 2020
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Publisher LEWIS A WEISS Editor in Chief TIM GRADY Creative Director CRAIG ROVERE Contributing Writers ROYCE LOWE CRAIG ROVERE NORBERT ORE CHRIS KUEHL THOMAS R. CUTLER
TABLE OF CONTENTS
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PUBLISHER’S STATEMENT A word from our publisher
6 MANUFACTURING OUTLOOK A look at manufacturing around the globe
8 LETTERS TO THE EDITOR UNSUNG
by John Kennedy, PhD.
MANUFACTURING TIDBITS
Production Manager LINDA HOPLER
10 THE DEATH OF KANBAN CARDS
Current Circulation 45,200
12 COVER STORY: AMERICAN
Editorial Office JACKET MEDIA CO. 75 LANE ROAD FAIRFIELD, NJ 07004 (973) 808-8300
by Thomas R. Cutler
MANUFACTURER SPACEX MAKES HISTORY by Craig Rovere
18 PROTECTING BUSINESS WITH OPTIMIZED WIFI NETWORKS by Roger Sands
20 ULTRASOC AND CANIS LABS
PARTNER TO SECURE THE CAN BUS by Canis Automotive Labs
22 MATERIAL HANDLING: A MISNOMER by Thomas R. Cutler
24 MANUFACTURERS RETHINK EMPLOYEE Text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast. © 2020 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.
33 ASIA OUTLOOK China, Japan and India
Insights from inside manufacturing in action
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SOUTH AMERICA OUTLOOK Brazil in the spotlight
ENGAGEMENT DUE TO COVID-19 by Thomas R. Cutler
34 EUROZONE OUTLOOK A look at Europe
35 GLOBAL PMI OUTLOOK by Norbert Ore
36 THE CREDIT MANAGER’S OUTLOOK by Dr. Chris Kuehl
38 METALS OUTLOOK The cost, making and treating of metals
40 AEROSPACE OUTLOOK The aerospace industry
42 ENERGY OUTLOOK Energy and the environment
26 ISM MANUFACTURING REPORT ON BUSINESS
30 NORTH AMERICAN OUTLOOK Manufacturing in the US, Canada & Mexico
44 AUTOMOTIVE OUTLOOK Auto industry news
45 ISSUES OUTLOOK Issues around the globe
Open call for...
Contributing Writers for new and existing content. Let’s start a conversation – Contact us at info@jacketmedia.com or visit mfgtalkradio.com/writer for more information.
PUBLISHERS STATEMENT Publishers Statement It would be irresponsible, as the country works to restart and recover from COVID-19, to recuse ourselves from coverage of the recent riots. As if the virus didn’t damage enough businesses who rely on manufacturers to make goods for retail sale, whether it is bacon for breakfast at a restaurant, or fabrics for clothes, destroying retail outlets, or any other structure, business, or property, is not protest – of anything, in any name. These disturbances further upset the state of America, and accomplished nothing – in fact, they further alienated people who were trying to come together for many reasons: to overcome the damage wrought by the virus, to mend racial fences, or to find peace or solace in an upside-down world. George Floyd’s unnecessary and cruel death sparked pent-up racial anger, but rioters and looters were not there to protest one more outrageous act of brutality – they were there knowing the protests, and darkness, would provide them an opportunity to steal and act without regard for life, liberty or personal responsibility. The U.S. recovery, and the world recovery, from COVID-19, will be reliant upon the consumer feeling confident to buy, and to do so in public, and safely. COVID-19 will put many business into bankruptcy, as small business owners and national retailers alike are unable to hold on with zero revenues and on-going expenses of rent, refrigeration, equipment leases, aging inventory, and other financial commitments that don’t just evaporate. They still have to pay their fixed expenses. But when criminals, anarchists, rioters, looters and people who get caught up in mob-mentality at the moment burn and plunder businesses that were on the verge of collapse, they virtually guarantee those business’s won’t reopen, and as past riots have proven, it is more than a decade before those painful memories pass for shop owners and customers. More jobs have been wiped out; more damage has been done to the mental state of America. Ultimately, this ripples across the economy, not just in Minneapolis or New York or Denver or Santa Monica, but through neighboring cities and towns, through the public consciousness, and through the emotions of good people trying to find peace and prosperity to raise a family. If what you have worked for can be taken from you or destroyed by a rioting mob, all we will have is anarchy. No one can deny that areas of cities and towns plagued by racial inequality have even more of these distressful impacts on residents there, where opportunity is scarce, jobs pay subsistence wages – if that, where education has failed the children, and where crime has reared its ugly head every day, not just on a night when there was a riot. So, as we recover from COVID-19, as we recover from riots and looting, let’s also recover from racial divide, sparse opportunity, subsistence wages, entrapment welfare, broken homes and education that fails children. We have seen great equalizers expand across America – the Internet, smart phones, and tablets that can make education available to every child, and information available to every adult. As we seek a cure for COVID-19, let’s be sure it is available to every person, not just those who can afford it. That cost has to be borne by drug companies, insurance companies, businesses, and taxpayers. It should be part of the cost of a healthy workforce, healthy homes, and a healthy future. A great opportunity faces America. Let the 2020’s be a decade of healing, which will usher in a decade of prosperity, a decade of manufacturing and good paying jobs, a decade and more of K-12 education that works for every student, so all households will rise up and lift America to fulfill its promise that all are created equal and have an equal opportunity for life, liberty, and the pursuit of peaceful happiness. Lewis A. Weiss, Publisher
Contact laweiss@mfgtalkradio.com or text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast. Lewis A Weiss, Publisher Manufacturing Outlook / June 2020
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MANUFACTURING OUTLOOK
JUNE 2020
MANUFACTURING OUTLOOK by ROYCE LOWE
GLOBAL MANUFACTURING IS SHOVING ITS NOSE OUT OF THE HOLE, BUT ONLY SLIGHTLY. SPACE X SHOT UP THERE. TRUMP HAS A LOT ON HIS PLATE.
The COVID -19 virus continues to take an awful global toll, and is still causing humanitarian and economic havoc. There has been “opening up” but its effects are unknown at the moment. The BLS jobs report for May shows a gain of 2.5 million non-farm payroll jobs, with the unemployment rate at 13.3 percent. This reflects a limited resumption of economic activity, with employment up sharply in leisure and hospitality, construction, education and health services and the retail trade. Manufacturing gained 225,000 jobs, with the gains evenly split between durable and nondurable goods. There were gains in motor vehicles and parts (28,000), in fabricated metal parts (25,000) and in machinery (23,000). Construction jobs were up by 464,000, gaining back almost half April’s decline. Mining jobs continued to decline in May by 20,000, of which most, 16,000, were in mining support activities. Mining has declined by 77,000 over the past three months. The Bureau of Economic Analysis recently released its ‘second’ estimate for the annual rate of Real GDP growth in the first quarter of 2020, putting it at minus 5.0 percent. The figure for the fourth quarter of 2019 was 2.1 percent.
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Manufacturing Outlook / June 2020
The ISM PMI figure for U.S. manufacturing retrieved a little ground in May, moving from 41.5 percent in April to 43.1 percent in May. The overall economy returned to expansion after one month of contraction. IHS Markit’s remarks on the U.S. show weak demand leading to a significant decline in production and new orders, hence employment, along with the steepest drop in selling prices on record. COVID - 19 continues to disrupt supply chains. The IHS Markit PMI was at 39.8 percent in May, up from April”s 36.1 percent. There should be some improvement with companies restarting production, so perhaps this is the start of an upturn, which will undoubtedly be slow in the light of high unemployment, job insecurity and corporate losses, all of which will put a brake on consumer and business spending. U.S. LIGHT VEHICLE SALES The sales below for May 2020 are based on estimates, but are considered to be a good approximation of true figures. The total percent change for the month was minus 32.1 percent. The Seasonally Adjusted Annual Rate has been estimated at 11.8/12.2 million.
MANUFACTURING OUTLOOK
The month of April saw an increase in car sales, yearover-year, in China, of 4.4 percent, and this following 21 consecutive months of sales downturns. The same month saw an 80 percent year-over-year drop in car sales in Western Europe and the UK.
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 % change on the previous quarter, annual rate. The consumer price increases represent year-over-year changes. The unemployment figures, %, are for the month as noted.
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
Manufacturing Outlook / June 2020
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LETTERS TO THE EDITOR
Unsung by JOHN KENNEDY, Ph.D., CEO, NJMEP
DEAR EDITOR: One of my favorite shows is called ‘Unsung’ on TV-One. The focus is music from many R&B and Soul artists… their tragedies and triumphs. Funny, that even though I know many of them already, I find myself rooting for a positive outcome. However, I always celebrate their talents and what they overcame in their lives. To me – this show provides me with inspiration, as they deserve the accolades, timely or not. During the COVIC-19 Pandemic, we have a similar situation as we are currently stopping to recognize so many people that tend to just pass through our lives. While the loss of so many good people is difficult to fathom on any level, I am heartened to see that we are actually stopping to recognize the 1st Responders, Medical Staffs, Home Health Aides, Store Clerks, and Truck Drivers…to name just a few. Even with a mask on, we now ‘see’ them clearly. It is about time. That brings me to another episode on Unsung…a Made in New Jersey episode. Our 11,000 manufacturers and their 380,000+ employees who have quietly gone to work every day and kept making the items that we cannot live without for long. Those that protect us / medicate us / feed us / sustain us. They have done so without fanfare, and they, too, understand fully the risks they are taking to help others. I do think that our Governor, Phil Murphy, has done a solid job overall, because dealing with a pandemic is not an easy lift. It is difficult to foretell how any of us would perform in such a situation, and it is so easy to ‘Monday Morning Quarterback’. His decision to keep 100% of manufacturing open in NJ put us ahead of many others states and shows his understanding of the value in a healthy Supply Chain. I also appreciate how he does ‘shout outs’ to various groups during his briefings; well-deserved. I was especially moved when he cited NJMEP (New Jersey Manufacturing Extension Program) for its work with the Industry and State on Critical Supply Chain (CSC). It was motivational to our Team that had been going 24/7 for about 8-weeks at the time. While some of you may know me, I’d like to take a moment to unmask a few others here that have stood up. People like Rob Stramara, Lynore DeSantis, Peter Okun, Sally White, Kathleen Baldwin, Stacy Cooke, Chris
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Manufacturing Outlook / June 2020
LETTERS TO THE EDITOR DePace, Laura Fisher, Kia Sanders, and about 30 others that have decided that they needed to make a positive difference every day during this crisis. Individuals that I am proud to work with at NJMEP. If you add in the (70+) experts that make up our Resource Team – and – the Professional Affiliates, many of both have work for no fee, then you get to see the real picture. That being said, I would like to strongly suggest to Governor Murphy and so many others across the State to make sure that you include our Made in NJ Manufacturers in your ‘shout outs’ for what they have done – and – what they will do to drive us out of the inevitable financial downturn that will ensue. We will ignore this critical sector at our own peril, as COVID-19 has taught us several major ‘new’ tenets: Being Prepared is not just a pithy motto for Scouts We need to invest in and rebuild portions of our Supply Chain in NJ, and nationally Everyone on Earth needs ‘stuff’ – so – let’s make it here in NJ Diversity means all of us…together…we need everyone to succeed Let me end by doing my own shout-out to a few amazing NJ-Based Manufacturing Firms. This list is by no means all-inclusive, but if you don’t know these companies, you should:
Shocktech Zago QPSI Unionwear Unex Suuchi General A&E Lamatek GEMCO Triangle Manufacturing Inrad Optics
LPS Industries Tektite Case Medical Weiss-Aug K&S Industries Kuehne Chemical City Theatrical Marotta Controls Opex DSM
…and so many more – Unsung
John W. Kennedy, Ph.D., Chief Executive Officer New Jersey Manufacturing Extension Program, Inc. 2 Ridgedale Ave, Suite 305, Cedar Knolls, NJ 07927 Cell: 201-506-0642 Email: jkennedy@njmep.org Website: www.njmep.org Manufacturing Outlook / June 2020
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MANUFACTURING TIDBITS
The Death of Kanban Cards by TR CUTLER
A Kanban card is a visual representation of a work item. Translated from Japanese, it literally means visual (kan) card (ban). It is a core element of the Kanban system as it represents work that has been requested or is already in progress. Think of Kanban cards as sticky notes on a whiteboard to represent their work items. As bugs are corrected and features added, the team moves the sticky notes through columns labeled Prioritized, Design, Development, Testing, Blocked, and Done. Each bin of parts had a Kanban card attached that served as an alert signal to workers whenever stock dropped below the quantity indicated on the card. When that happened, it triggered the replenishment process, and the factory sent the empty bin with its Kanban card to the supplier.
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Manufacturing Outlook / June 2020
By referencing the card—which included information about the part specifications, required quantity, and expected delivery time—the supplier could quickly fill the order and send the restocked bin with its Kanban card back to the factory floor, just in time to keep the production cycle going. The overall construct is brilliant and still applicable, except NO MORE KANBAN CARDS. Paper Kanban simply does not work in today’s global, 24/7, fast-paced manufacturing environment, with suppliers and customers located on every continent. COVID-19 has rendered the manual Kanban card system obsolete. Demonstrating agility in this new remote working environment is central to achieving success in the rapidly changing pandemic supply chain.
MANUFACTURING TIDBITS
Identifying the parts and materials that are suitable for Kanban is a critical first step. Correctly determining the sizing parameters for a Kanban system and mapping existing on-hand and on-order inventory to an initial Kanban loop size must follow. Similarly, bulk resizing a Kanban based on demand, lead time, or lot-size changes must take place for a successful paperless Kanban. Transparency to data and metrics central to supply-chain processes is data-driven. Paper-based Kanban processes do not offer reports and analytics, both during COVID-19 nor in a return to work safely process. Kanban leaders have been using spreadsheets to make initial calculations and ongoing changes for decades. There is not possibility of scaling this process with tens of thousands of parts and suppliers and when key decision makers are working remotely. The death of Kanban cards in a return to work COVID-19 process Kanban is not dead; the cards requiring manual touches is inefficient and perhaps dangerous. Besides planning and tracking the strategic initiatives, programs and projects, digital or e-Kanban (electronic Kanban) helps manufacturers deal with specific functionality at the organizational level.
At the organizational level, leadership must prioritize the right programs based on the real-time data needed for these Kanban projects. Using the extensive visualization hierarchy modeling in e-Kanban combined with statistical modeling and forecasting capabilities, a new efficiency level is achieved. These powerful insights are derived from using these data predictively, rather than lagging data from other solutions like ERP (Enterprise Resource Planning.) e-Kanban is alive and well and needed more during the pandemic than ever before. Author Profile Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. Contact Cutler at trcutler@trcutlerinc.com Manufacturing Outlook / June 2020
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COVER STORY
SPACEX DEMO-2 LAUNCH (NASA/JOEL KOWSKY)
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Manufacturing Outlook / June 2020
WE’RE BACK! COVER STORY
AMERICAN MANUFACTURER SPACEX MAKES HISTORY by CRAIG ROVERE
History was made on May 30th, 2020 as NASA astronauts Bob Behnken and Doug Hurley climbed into the SpaceX Crew Dragon capsule, perched atop the SpaceX Falcon 9 rocket, making final preparations for launch. It’s been over 9 years since an American astronaut launched from American soil, not to mention aboard an American rocket. As the final seconds ticked away, launch control radioed the capsule, “Dragon, SpaceX… go for launch.” The response from the crew - “SpaceX, Dragon, we’re go for launch. Let’s light this candle.” And with that, for the first time ever, a private company, working with NASA, sent American astronauts to the International Space Station (ISS) on board a rocket privately manufactured in America. The last manned flight from the Cape took place on July 8th, 2011 when the shuttle Atlantis took off on the final mission of the shuttle program, STS-135. After that, the Space Shuttle program was closed, and all subsequent manned flights would be made from the Baikonur Cosmodrome in Kazakhstan, on board Russian Soyuz 2.1a rockets at a cost of around $80 million per astronaut. For comparison, a Falcon 9 launch, like the one on May 30th, including crew and cargo, costs roughly $62 million in total.
As of May 30th and the SpaceX launch, American manufacturing has changed everything and put America back at the helm of it’s own destiny in space. Elon Musk’s SpaceX company designed and built the Falcon 9 rocket and the Dragon capsule with the express purpose of bringing manned space flight back to American soil. In doing so they not only leveraged the might and ingenuity of the best manufacturers, engineers and scientists in America, they revolutionized how space travel is done. By introducing reusable rockets that return to Earth and land safely on a remote pad, with revolutionary safety features and advanced artificial intelligence built into every system, SpaceX has returned the United States to the forefront of manned space travel. Mercury. Gemini. Apollo. Ironically, it is our cold war enemy, the Russians, that have once again motivated this latest accomplishment in our space program. The high cost in both dollars and pride to put American crews on Russian rockets is the reason SpaceX exists. Over 60 years ago when the Russians launched the first satellite in orbit, Sputnik, the American space program was motivated to make great strides in manufacturing technology. Spurred on by a fear of Russian space dominance, Congress urged action immediately. The National Aeronautics and Space Administration came into being on October 1, 1958. Only six months later, the world was introduced to the seven Project Mercury Astronauts: Walter H. Schirra, Jr., Donald K. Slayton, John H. Glenn, Jr., Scott Carpenter, Alan B. Shepard, Jr., Virgil I. Gus Grissom, and L. Gordon Cooper. Work on the rockets and associated technology needed to safely Manufacturing Outlook / June 2020
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COVER STORY In order to achieve success, American manufacturers had to develop materials and manufacturing techniques that never existed before. Metal alloys that would withstand incredible temperature swings that included the sub-freezing temperatures of space as well as the 3,000 degree re-entry burn. Electronics, life support systems and even the first real on-board computers were developed for the Mercury program with American manufacturers working hand-in-hand with NASA to design and build something the world had never seen before.
ASTRONAUTS JAMES A. LOVELL JR. (RIGHT), COMMAND PILOT, AND EDWIN E. ALDRIN JR., PILOT. PHOTO CREDIT: NASA
Much of the technology originally developed by American manufacturers for the manned space program are still in use to this day. Technology such as water filters wouldn’t exist without the space program. Since water is pretty heavy, and weight at launch needs to be kept to a minimum, water recycling through filtration was developed. The first cordless power tools were developed for the space program as well as memory foam, scratch resistant lenses and even athletic shoe insoles, originally developed for the Apollo moon missions, owe their existence to the American space program.
return astronauts from space became a national priority and American manufacturing led the charge that paved the way for Neil Armstrong to plant the American flag on the moon in 1969, signifying America’s winning of the space race. Back then, American manufacturing stepped up and developed America’s manned space program through hard work and ingenuity.
After Mercury came Gemini, which took the achievements of the Mercury program to the next level, focusing on developing the tools and techniques for extended time in space that would be required to reach the moon. Gemini missions included the first American extravehicular activity, and new orbital maneuvers including rendezvous and docking.
The first American spacecraft, the Mercury capsule, was designed and built by the McDonnell Aircraft Corp. in St Louis, MO. NASA contracted McDonnell to design the spacecraft, and over the course of twoand-a-half years, worked with over 4,000 American contractors and suppliers to develop what we now know as the Mercury spacecraft. The Mercury program used two launch vehicles: Redstone for the suborbital and an Atlas for the orbital flights, each successfully launching Americans into space and returning them to Earth.
Gemini gave way to the Apollo program in 1961. Apollo was the culmination of everything learned and developed throughout Mercury and Gemini. Manufacturers refined their materials and techniques. The rockets grew to enormous size to carry the ultimate payload: the Lunar Module. On July 15th, 1969 Apollo 11’s massive Saturn V rocket roared to life and lifted off from the Kennedy Space Center bound for the moon. Four days later, the national goal set forth by President John F. Kennedy was fulfilled. Commander Neil Armstrong set foot
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Manufacturing Outlook / June 2020
COVER STORY
SPACEX DEMO-2 LAUNCH (NASA/BILL INGALLS)
on the moon. Together with astronaut Buzz Aldrin, they planted the American flag on the lunar surface. American manufacturing and ingenuity had made the dream of reaching the moon a reality. SpaceX Fast forward to 2002. Since the STS-135 launch, American astronauts have had to pay their way to catch a ride to the ISS on Russian rockets, launching from Russian facilities. The American Space Shuttle program has been shut down and the once majestic shuttles have been relegated to museums. America’s role in the international space program had been reduced to paying passengers. Our once cuttingedge Space Centers had been assigned mundane telemetry and tracking duties for the ISS. That same year, Elon Musk founded Space Exploration Technologies Corp., or SpaceX as it would come to be known. SpaceX was originally founded as an aerospace manufacturer and space transport services company. Musk could see the writing on the wall when I came to the aging Shuttle fleet and identified an opening in the space transportation market. He travels to Russia in an attempt to buy some of their rocket engines to use in his spacecraft, but returned empty handed as the price was too high to make the endeavor profitable. On the plane ride home, Musk, a graduate of the Wharton School
of Business, did some math. He calculated that the raw materials needed to build a rocket engine only represented 3% of the sale price. He came up with a plan to vertically integrate the entire process from the ground up. By producing nearly 85% of launch hardware in-house and developing a modular approach to software development, which he learned when he started the online bank X.com, he was able to reduce launch costs by a factor of ten, yet still enjoy a healthy 70% ROI. Musk set up shop in a warehouse in El Segundo, California that same year. By 2017 SpaceX had grown to 7,000 employees, almost all of which were Americans as the U. S. Government classifies rocked technology as “advanced weapon technology”, making hiring non-Americans very difficult. Musk, a citizen of South Africa and Canada had to become an American citizen to clear the way for him to participate in rocket development. The company has made major advances in manufacturing that would be impossible to achieve at NASA. The lack of bureaucracy, the forward-thinking structure of the company and the freedom to pivot and adjust methodologies gave SpaceX a crucial advantage over the federally-funded NASA. SpaceX developed a number of reliable, reusable launch systems, and by 2018 SpaceX had over 100 successful launches under it’s belt, which translated to roughly $12 billion in revenue. Manufacturing Outlook / June 2020
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COVER STORY
In Q1 of 2020, SpaceX launched over 134,000 lbs of payload mass to orbit while all Chinese, European, and Russian launchers moved only 46,000 lbs, 35,000 lbs, and 29,000 lbs into orbit, respectively. Some of SpaceX’s other notable achievements include: The first privately funded liquid-fueled rocket to reach orbit (Falcon 1 flight 4 on September 28, 2008) The first privately developed liquid-fueled rocket to put a commercial satellite in orbit (RazakSAT on Falcon 1 flight 5 on July 14, 2009) The first private company to successfully launch, orbit, and recover a spacecraft (SpaceX Dragon on COTS Demo Flight 1 on December 9, 2010) The first private company to send a spacecraft to the International Space Station (Dragon C2+ on May 25, 2012) The first private company to send a satellite into geosynchronous orbit (SES-8 on Falcon 9 flight 7 on December 3, 2013) The first landing of an orbital rocket’s first stage on land (Falcon 9 flight 20 on December 22, 2015) The first landing of an orbital rocket’s first stage on an ocean platform (Falcon 9 flight 23 on April 8, 2016) The first relaunch and landing of a used orbital rocket stage (B1021 on Falcon 9 flight 32 on March 30, 2017) The first controlled flyback and recovery of a payload fairing (Falcon 9 flight 32 on March 30, 2017) The first reflight of a commercial cargo spacecraft. (Dragon C106 on CRS-11 mission on June 3, 2017) The first private company to send an object into heliocentric orbit (Elon Musk’s Tesla Roadster on Falcon Heavy test flight on February 6, 2018) The first private company to send a human-rated spacecraft to space (Crew Dragon Demo-1, on Falcon 9 flight 69 on March 2, 2019) The first private company to autonomously dock a spacecraft to the International Space Station (Crew Dragon Demo-1, on Falcon 9 flight 69 on March 3, 2019) The first use of a full flow staged combustion cycle engine (Raptor) in a free flying vehicle (Starhopper, multiple tests in 2019). The first reuse of payload fairing (Starlink 1 Falcon 9 launch on November 11, 2019). Fairing was from the ArabSat-6A mission in April earlier that year. The first private company to send humans to the ISS (Crew Dragon Demo-2 on May 31, 2020).
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Manufacturing Outlook / June 2020
COVER STORY system designed to carry both crew and cargo to Earth orbit, the Moon, Mars and beyond. Starship will be the world’s most powerful launch vehicle ever developed, with the ability to carry in excess of 100 metric tonnes to Earth orbit.”
NASA ASTRONAUTS BOB BEHNKEN, LEFT, AND DOUG HURLEY CREDIT: SPACEX
Looking ahead Even as astronauts Behnken and Hurley were leaving the launch pad on their way to the ISS on their historic mission, engineers and manufacturers at SpaceX were making preparations for more launches in the coming weeks and months. Work continues on SpaceX Starship, the shiny aluminum rocket that looks like something out of a Buck Rogers comic book. Starship is designed to, among other things, transport the first humans to Mars. According to the SpaceX website, “SpaceX’s Starship spacecraft and Super Heavy rocket (collectively referred to as Starship) represent a fully reusable transportation
It would be an understatement to say that American manufacturing has once again pushed the United States to the forefront of the space industry. By privatizing space transport, SpaceX has given rise to hundreds of new developments in technology that may not have been developed in the United States, if not for forward thinking SpaceX program. American manufacturers of all sizes throughout the country have once again answered the call to push the envelope, to rethink what is possible and build the stuff of dreams. Author profile: Craig Rovere is Creative Director at Rovere Media, a full-service advertising and marketing agency specializing in helping manufacturers achieve their marketing goals. Craig can be contacted at craig@roveremedia. com Rovere Media can be found at RovereMedia.com
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Manufacturing Outlook / June 2020
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WIFI OUTLOOK
PROTECTING BUSINESS WITH OPTIMIZED WIFI NETWORKS
by By Roger Sands, CEO and Co-Founder of Wyebot, Inc.
A wireless network is no longer something niceto-have, but a competitive necessity and a critical resource in the manufacturing industry. Many manufacturers use wirelessly connected devices and applications to improve the efficiency of operations and increase customer satisfaction. This can include automated robots, Voice over Internet (VoIP) phones, wireless printing, wireless inventory scanners, IoT devices that monitor energy consumption or that track and monitor machine performance, and many others. None of these devices supply manufacturers with the data and insights they were purchased to provide without an optimized wireless network. Therefore, if manufacturers want to improve business outcomes, they need the right wireless optimization solution in place. Network Optimization The goal of network optimization is to design and maintain a WiFi network that is reliably consistent, fast, and secure. This is an ongoing process that
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Manufacturing Outlook / June 2020
involves monitoring and analyzing a network to understand its current health, performance, and usage; reviewing past analytics to determine how network health, performance, and usage have changed over time; and planning the necessary upgrades and infrastructure changes to maintain an optimized network into the future. Because networks are dynamic, changing constantly throughout the day and night, network monitoring must be 24/7/365. In order to best provide IT with the analytics that they need to maintain the network, the use of an AI-based analytics solution is recommended. These solutions keep “eyes� on the network at all times, and can instantly alert IT to any perceived or ongoing issues. This supports network optimization, while also allowing IT to focus on other mission-critical responsibilities. When you are deciding on an analytics solution, keep in mind the following requirements:
WIFI OUTLOOK be able to remotely access the network in order to monitor and troubleshoot any issues. Proactive and Automatic The faster that issues are resolved, the better a wireless network performs, and when issues are identified proactively, before they affect users, network optimization is only a step away. AI-based analytics solutions can learn to recognize normal network behavior, and then proactively and automatically alert IT if that baseline changes in any way. In addition, solutions that enable IT to schedule consistent network tests (recommended because of the dynamic nature of WiFi networks) further support this proactive approach. Some solutions will send automatic alerts if any test fails as well as identify the root cause of the failure for quick resolution. Complete Visibility The first step to achieving network optimization is to achieve complete network visibility. There can be no “dark spots,” no mysteries, no single piece of the network that IT doesn’t have complete visibility over. This includes all backend and frontend infrastructure, all connected devices and applications, and the entire radio frequency (RF) spectrum. WiFi is a shared medium, which means that all nearby networks share the same airspace and can cause interference issues for one another, and monitoring the entire RF spectrum instead of only a single network makes it possible for IT to spot these issues and resolve them accordingly. If an analytics solution boasts device profiling and/ or device fingerprinting, all the better. This allows the solution to identify each connected device individually, and understand its specific capabilities and network requirements. For example, is it 2.4Ghz compatible, 5GHz, or both? Is it WiFi 6 capable? Remote Accessibility It isn’t always possible for IT to travel onsite, whether because they are responsible for multiple locations, or because an external event like a natural disaster makes travel impossible. For this reason, IT must
Historic Analytics As mentioned above, part of network optimization lies in understanding how the network has changed over time. Historical analytics from the past weeks or months allow IT to answer questions such as: Is the network nearing max capacity? How many devices are on the network now compared to 6 months ago? What types of devices are on the network? What types of issues did the network experience over the last few months? Have servers and access points (APs) exhibited any degrading performance? With clear answers, IT can promote effective and efficient budget and capacity planning, ensuring network optimization into the future. The Importance of WiFi Manufacturers depend on WiFi to keep their business operations running smoothly. Working with an AI-based analytics solution ensures that the network is always optimized, consistently providing the most reliable, fast, and secure service possible. In conclusion, protect your business and optimize your network today. By Roger Sands, CEO and Co-Founder of Wyebot, Inc.
Manufacturing Outlook / June 2020
19
MANUFACTURING TIDBITS
UltraSoC and Canis Labs partner to secure the CAN bus
by CANIS AUTOMOTIVE LABS
Hardware-based detection and mitigation of “the number one cybersecurity vulnerability in the automotive industry” CAMBRIDGE, UK – 27 May 2020 UltraSoC and Canis Automotive Labs today announced a partnership that addresses one of the most serious cybersecurity vulnerabilities in the automotive industry: the lack of security features within the CAN bus, which is commonly used to interconnect in-vehicle systems such as brakes, steering, engine, airbags, door locks, and headlights. The partnership between the two companies will yield hardware-based intrusion detection and mitigation techniques for common exploits on the CAN bus. These include automatic hardware anti-spoofing; defence against bit-level attacks such as the Bus-Off attack and bit-glitching; and resistance to denial of service (DoS) style attacks. The collaboration centers on the deployment of Canis Labs’ CAN-HG technology, a new fully-compatible augmentation of the standard CAN bus protocol that includes bus guardian security features, and has the added benefit of being able to carry payloads twelve times larger than standard CAN frames.
20
Manufacturing Outlook / June 2020
When combined with UltraSoC’s semiconductor IP for detection and mitigation of cyber threats, CANHG allows designers to secure their CAN bus designs at the hardware level. The cybersecurity capabilities enabled by the collaboration employ fast bits within the CAN-HG augmented part of a CAN frame to add security information to CAN frames. This can be used by UltraSoC’s protocol-aware monitoring hardware to identify and block suspicious or unauthorized traffic traveling over CAN. These new capabilities will be refined and proved for deployment as part of Secure-CAV: an ambitious project that seeks to improve the safety and security of tomorrow’s connected and autonomous vehicles (CAVs). Aileen Ryan, UltraSoC CSO, commented: “Automotive cybersecurity requires an ecosystem approach. We’re delighted to add Canis Labs to our list of partners working in this area, which already includes NSITEXE-DENSO and Agile Analog; as well as our partners in the Secure-CAV project, Copper Horse and the Universities of Coventry and Southampton. Up to now the industry has been forced to use sticking plaster solutions to defend CAN interconnect, relying on software techniques or perimeter security. Incorporating Canis Labs’
MAANUFACTURING TIDBITS innovative CAN-HG technology into UltraSoC’s products allows us to secure the vehicle ‘from the inside out’: within the underlying electronic hardware.” Ken Tindell, Canis Labs’ CTO, added: “The most effective way to protect a CAN bus from attacks is to deploy a hardware security device – or better still, use semiconductor IP to incorporate hardware protections into the underlying system. We believe that the combination of UltraSoC and Canis Labs IP provides a robust solution to CAN security, which is one of the most pressing problems for any CAN bus user – whether they are in automotive, aerospace, or any other industry sector.” CAN is a hugely successful interconnect protocol which emerged in the 1980s in response to the need for an efficient, lightweight interconnection method that could cope with the harsh environments found in vehicles. Today it remains a common choice not only in the automotive industry but also in industrial, cyberphysical and robotics applications, where safety is paramount. But while it is physically robust, CAN is almost entirely lacking in cybersecurity features. Most existing approaches to CAN security are software-based, meaning that they are often unable to react quickly enough to prevent protocol-level attacks. Because it is hardware based, a joint Canis Labs / UltraSoC solution can react quickly enough to prevent an attack from completing. This has two implications. First, many exploits rely on creating a “window of opportunity” during which the system is in a vulnerable or unknown state. A fast reaction time can eliminate this window and significantly improve the overall robustness of cybersecurity defenses. Second, CAN bus is used in many cyberphysical systems, in which elapsed time equates to distance traveled. A faster response time therefore has significant benefits in terms of mitigating the physical consequences of an attempted intrusion, better protecting the safety of citizens and infrastructure. About UltraSoC UltraSoC is a pioneering developer of analytics and monitoring technology at the heart of the
systems-on-chip (SoCs) that power today’s electronic products. The company’s embedded analytics technology allows product designers to add advanced cybersecurity, functional safety and performance tuning features; and it helps resolve critical issues such as increasing system complexity and ever-decreasing time-to-market. UltraSoC’s technology is delivered as semiconductor IP and software to customers in the consumer electronics, computing and communications industries. For more information visit www.ultrasoc.com. About Canis Automotive Labs Canis Automotive Labs is a creator of hardware IP for the automotive industry, focused primarily on augmenting CAN bus. The company was founded in 2016 by automotive veterans Antal Rajnak, CEO and instigator of the LIN protocol, and Dr. Ken Tindell, CTO and creator of Deadline Monotonic Analysis for CAN bus. For more information visit www.canislabs. com. Contacts Andy Gothard andy.gothard@ultrasoc.com +44 7768 082 044 David Marsden david.marsden@ultrasoc.com +44 7968 407 739 Twitter: @ultrasoc Canis Labs contact Ken Tindell ken.tindell@canislabs.com Manufacturing Outlook / June 2020
21
MANUFACTURING TIDBITS
MATERIAL HANDLING: A MISNOMER
by TR CUTLER
Hands free, touchless, and material flow are the themes of manufacturing and distribution both now during the height of COVID-19 and forever thereafter. The efficacy and urgency for automation has changed. Solutions which empower material flow, throughput, and productivity have been popular for the past decade. That said, pre-pandemic, the seminal question was an ROI (return on investment) calculation. Now material HANDLING is anachronistic; new linguistics are needed to describe the value proposition of products which support the back-to-work safely paradigm for many generations to come. Until COVID-19 few Americans knew the acronym PPE (Personal Protection Equipment.) Now that vernacular is repeated thousands of times a month. Ultimately material movement includes any process that involves the movement between vehicles, conveyors, storerooms, and other forms of logistics support where employees are involved to some extent. The extent of employee involvement will vary by operation and may include manual, automated, and semi-automated material handling events. The safety required to reopen manufacturing operations means the amount and frequency of manual contact must be significantly reduced if not eliminated. Before COVID-19, the foundation for a safe workplace started with policies and procedures as a requirement of EHS (Environmental Health and Safety) or OHS (Occupation Health and Safety) senior management team
22
Manufacturing Outlook / June 2020
MANUFACTURING TIDBITS member. Comprehensive health and safety policies include the appropriate level of guidelines on material movement and the associated employee training programs. That requirement, as seen recently in meat packing plants, has reached a stage 4 metastasis. People are dying in plants, and without a flair for dramatics, material HANDING must be called material flow or material movement. A key portion of the policy would be the safety compliance activity that is essential for the business to operate. As new OSHA requirements are updated, there is a need to effectively communication these new policies informing the entire workplace team about the shared responsibilities of each employee in keeping the workplace safe. Material management encompasses the entire company where employee safety risks frequently encountered in distribution centers, warehouses, shop floors and loading docks. The mitigation of safety risks starts with proper training in awareness, procedures, and safety equipment. Before COVID-19, safety training was mandated for all employees involved with lifting, carrying, loading, or transporting materials in any form. In addition to new hire training, the safety risks and potential safety compliance rules required re-certification on an annual or other regular time cycle. Since COVID-19, daily safety training, new protocol processes, and mitigation strategies are the norm. Before COVID-19, the day-to-day procedures of materials management were to ensure an accident-free or injury-free workplace. Safety procedures were monitored to ensure they were consistently followed. Since COVID-19, the fast-changing frequently modified procedures start with awareness of the specific risks involved and the proper safety equipment for the situation. Procedures would cover the types of material, and the conditions of the work area including social distancing, PPE, and temperature checks.
The Manufacturing & Business Podcast Network
O U R
P O D C A S T S :
MFGTALKRADIO.COM
L I S T E N TO O U R P O D C A S T S AT:
www.jacketmediaco.com
Author Profile: Thomas R. Cutler is the President and CEO of Fort Lauderdale, Floridabased, TR Cutler, Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. More than 4200 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com. Manufacturing Outlook / June 2020
23
MANUFACTURING TIDBITS
MANUFACTURERS RETHINK EMPLOYEE ENGAGEMENT DUE TO COVID-19 by TR CUTLER
As most manufacturing companies are adjusting to unforeseen working conditions during COVID-19, keeping workers, shift managers, operations managers, and QA/QC managers engaged with teams has proven challenging. With fewer workers permitted onsite at any given time, increased stress levels resulting from project delays, product delays, and supplier constraints are impacting all manufacturers. These changing routines and regulations, accompanying the pandemic, are redefining work and employee frustrations. Manufacturers must invest in the appropriate resources and tools to help teams cope, remain engaged, and maintain productivity. With nearly 40 million unemployed, many manufacturers feel workers are fortunate to have a job, yet the stress defies and mitigates that assumption.
24
Manufacturing Outlook / June 2020
Employee engagement drives plant floor safety. Whether essential manufacturers, who have operated during the pandemic or those companies returning to work as states open, the manufacturing plant floors, distribution centers, and warehouses are some of the most dangerous locations for employees. Gallup research reports that work floor accidents in manufacturing improve 62% when employees are fully engaged. The Society of Human Resource Management (SHRM) reported other safety benefits resulting from high levels of employee engagement: “Disengaged employees are five times more likely to have an accident than fully engaged employees…a whopping seven times more likely to have a lost-time accident.”
MANUFACTURING TIDBITS Engaged employees reduce absenteeism According to the Journal of Occupational Psychology, job satisfaction plays a big role in how employees feel about getting to work every day, even when they feel ill or disinclined. The cost of absenteeism is rarely calculated; it measures the degree to which a manufacturing worker (with a positive attitude) is less likely to gossip. Just as engagement is contagious, so is disengagement, especially when managers get disengaged. Recent COVID-19 plant data revealed that manufacturing employees reporting to a disgruntled manager are four times more likely to be disengaged themselves. When an employee is kept in the dark about a manufacturing organization (current state, future state, and the big picture), they become more isolated, less enthusiastic about work, and the employer. Never has this been more felt than today when all companies are working to manage employee fear, anxiety, and the unknown. Adjusting to the “New Normal� Lost production time, missed delivery dates to customers, over-time to offset absenteeism cannot be overlooked. Absenteeism is a message to management: healthy communication is lacking. Automation is often touted as the primary driver of productivity improvement. In fact, effective communication drives employee engagement which is a better benchmark for productivity. Although employee engagement is always important, now as employees face return to work anxiety, it is an especially critical time to take a closer look. To provide the flexibility and guidance employees need, human resource policies should be adjusted appropriately to foster environments where employees feel heard, considered, and have a sense of community. There are several key strategies manufacturers can implement to improve employee engagement.
Accountability: It may feel like professional milestones have been forgotten but setting performance expectations and providing employees flexibility when meeting will keep them motivated. Work/life integration and social meetings: In the absence of lunches and social context usually found in the workplace, many manufacturing organizations have created regular online events with teams which have nothing to do with day-to-day work, such as virtual happy hours. Schedule check-ins: There are no longer spontaneous interactions, so managers must deliberately create check-in schedules for even minor reasons. Manufacturers must create a hybrid communication strategy: It is not enough to simply communicate more. There must be a multifaceted communication strategy, including messaging apps, video conferencing, and texting. It is not hyperbolic to suggest that employee engagement, in this pandemic era, is truly a matter of life and death. Author Profile: Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. More than 4200 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@ trcutlerinc.com.
Manufacturing Outlook / June 2020
25
ISM REPORT OUTLOOK
THE INSTITUTE FOR SUPPLY MANAGEMENT’S MANUFACTURING REPORT ON ® BUSINESS
BREAKING NEWS
ISM PMI at 43.1% for May ISM PMI for the past 5 years
26
Manufacturing Outlook / June 2020
ISM REPORT OUTLOOK
reportonbusiness
Analysis by
Timothy R. Fiore, CPSM, C.P.M.,
Chair of the Institute for Supply Management® Manufacturing Business Survey Committee
ISM® Report On Business®: Manufacturing
Economic activity in the manufacturing sector contracted in May, and the overall economy returned to expansion after one month of contraction, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The May PMI® registered 43.1 percent, up 1.6 percentage points from the April reading of 41.5 percent. This figure indicates expansion in the overall economy after April’s contraction, which ended a period of 131 consecutive months of growth. The New Orders Index registered 31.8 percent, an increase of 4.7 percentage points from the April reading of 27.1 percent. The Production Index registered 33.2 percent, up 5.7 percentage points compared to the April reading of 27.5 percent. The Backlog of Orders Index registered 38.2 percent, an increase of 0.4 percentage point compared to the April reading of 37.8 percent. The Employment Index registered 32.1 percent, an increase of 4.6 percentage points from the April reading of 27.5 percent. The Supplier Deliveries Index registered 68 percent; though down 8 percentage points from the April figure of 76 percent, this high reading elevated the composite PMI®. Of the 18 manufacturing industries, the six that reported growth in May — in the following order — are: Nonmetallic Mineral Products; Furniture & Related Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Paper Products; and Wood Products. ISM
‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).
14
ISMMAGAZINE.ORG
PMI at 43.1% ®
PMI
The PMI® registered 43.1 percent. The PMI® 2018 2019 2020 contracted strongly in April and May after dropping below 50 percent in March. The PMI® recorded its second-lowest level since April 2009, when it registered 39.9 percent. 50% = Manufacturing Economy Among the big six industries, only Food, Breakeven Line 42.8% = Overall Economy Beverage & Tobacco Products expanded. Breakeven Line 43.1% Four of the five PMI® subindexes continue to be negatively impacted by the COVID19 pandemic. New Orders, Production and Employment remain in strong contraction territory, and the high Supplier Deliveries reading is primarily a product of coronavirus-related supply problems. 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
May Index
Apr Index
% Point Change
Direction
Rate of Change
Trend* (months)
PMI®
43.1
41.5
+1.6
Contracting
Slower
3
New Orders
31.8
27.1
+4.7
Contracting
Slower
4
Production
33.2
27.5
+5.7
Contracting
Slower
3
Employment
32.1
27.5
+4.6
Contracting
Slower
10
Supplier Deliveries
68.0
76.0
-8.0
Slowing
Slower
7
Inventories
50.4
49.7
+0.7
Growing
From Contracting
1
Customers’ Inventories
46.2
48.8
-2.6
Too Low
Faster
44
Prices
40.8
35.3
+5.5
Decreasing
Slower
4
Backlog of Orders
38.2
37.8
+0.4
Contracting
Slower
3
New Export Orders
39.5
35.3
+4.2
Contracting
Slower
3
Imports
41.3
42.7
-1.4
Contracting
Faster
4
Growing
From Contracting
1
Contracting
Slower
3
Overall Economy Manufacturing Sector
*Number of months moving in current direction. Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
Commodities Reported Commodities Up in Price: Alcohols; Crude Oil; Freight (2); Personal Protective Equipment (PPE) (2); PPE — Gloves (3); and PPE— Masks (2). Commodities Down in Price: Acrylate Monomers; Aluminum (4); Base Oils; Copper (4); Corn (2); Diesel Fuel (3); Methanol; Nylon; Oil Based Products; Packaging Materials; Plastic Products; Polypropylene; Solvents; Steel — Carbon; Steel — Cold Rolled; Steel — Hot Rolled (4); Steel; Steel — Stainless (2); and Steel Products (2). Commodities in Short Supply: Alcohols; Disinfectants & Soaps (2); Disinfectant Wipes; Hand Sanitizer (3); N95 Masks (2); PPE; PPE — Gloves (3); and PPE — Masks (3). Note: The number of consecutive months the commodity is listed is indicated after each item.*Reported as both up and down in price.
Manufacturing Outlook / June 2020
27
ISM REPORT OUTLOOK
ISM Report On Business ®
®
manufacturing
May 2020 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee
New Orders (Manufacturing) 2018
2019
New Orders
2020
ISM’s New Orders Index registered 31.8 percent in May, an increase of 4.7 percentage points compared to the 27.1 percent reported in April. Of the 18 manufacturing industries, the four that reported growth in new orders in May are: Textile Mills; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; and Paper Products.
52.5% = Census Bureau Mfg. Breakeven Line
31.8%
20
Production (Manufacturing) 2018
2019
Production
2020
The Production Index registered 33.2 percent in May, indicating that production contracted for the third straight month. The four industries reporting growth in production during the month of May are: Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; and Paper Products. 51.7% = Federal Reserve Board Industrial Production Breakeven Line
33.2%
20
Employment (Manufacturing) 2018
2019
Employment
2020
ISM’s Employment Index registered 32.1 percent in May, 4.6 percentage points higher than the April reading of 27.5 percent. Of the 18 manufacturing industries, the two industries to report employment growth in May are: Apparel, Leather & Allied Products; and Paper Products.
50.8% = B.L.S. Mfg. Employment Breakeven Line
32.1%
20
Supplier Deliveries (Manufacturing) 53.1% 2018
2019
2020
68%
80
Inventories (Manufacturing) 2018
2019
44.3% = B.E.A. Overall Mfg. Inventories Breakeven Line
‡Miscellaneous
2020
50.4%
Manufacturing (products such as medical equipment and
supplies, jewelry, sporting goods, toys and office supplies).
28
Manufacturing Outlook / June 2020
Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower in May, as the Supplier Deliveries Index registered 68 percent. All 18 industries reported slower supplier deliveries in May, in the following order: Miscellaneous Manufacturing; Apparel, Leather & Allied Products; Printing & Related Support Activities; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Nonmetallic Mineral Products; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Textile Mills; Wood Products; Fabricated Metal Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; and Paper Products.
Inventories The Inventories Index registered 50.4 percent. The seven industries reporting higher inventories in May, in order, are: Nonmetallic Mineral Products; Plastics & Rubber Products; Furniture & Related Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; and Electrical Equipment, Appliances & Components.
ISM REPORT OUTLOOK
ISM Report On Business ®
®
manufacturing
May 2020 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee
Customer Inventories (Manufacturing) 2018
2019
2020
Customers’ Inventories ISM’s Customers’ Inventories Index registered 46.2 percent. Of the 18 industries, the five industries reporting higher customers’ inventories in May are: Wood Products; Transportation Equipment; Nonmetallic Mineral Products; Miscellaneous Manufacturing‡; and Furniture & Related Products.
46.2%
Prices (Manufacturing) 2018
2019
2020
40.8%
52.5% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line
Backlog of Orders (Manufacturing) 2018
2019
2020
Prices The ISM Prices Index registered 40.8 percent, 5.5 percentage points higher than the April reading of 35.3 percent, indicating raw materials prices decreased for the fourth consecutive month, and at a slower rate in May. The three industries reporting paying increased prices for raw materials in May are: Textile Mills; Miscellaneous Manufacturing‡; and Computer & Electronic Products.
Backlog of Orders ISM’s Backlog of Orders Index registered 38.2 percent in May, a 0.4-percentage point increase compared to the 37.8 percent reported in April, indicating order backlogs contracted for the third consecutive month. The two industries reporting growth in order backlogs in May are: Textile Mills; and Paper Products.
38.2%
New Export Orders (Manufacturing) 2018
2019
2020
New Export Orders ISM’s New Export Orders Index registered 39.5 percent in May, up 4.2 percentage points compared to the April reading of 35.3 percent. The two industries reporting growth in new export orders in May are: Paper Products; and Food, Beverage & Tobacco Products.
39.5%
Imports (Manufacturing) 2018
2019
2020
Imports ISM’s Imports Index registered 41.3 percent in May, down 1.4 percentage points compared to the 42.7 percent reported for April. The three industries reporting growth in imports in May are: Apparel, Leather & Allied Products; Paper Products; and Food, Beverage & Tobacco Products.
41.3% ‡Miscellaneous
Manufacturing (products such as medical equipment and
supplies, jewelry, sporting goods, toys and office supplies).
Manufacturing Outlook / June 2020
29
NORTH AMERICAN OUTLOOK
JUNE 2020
NORTH AMERICAN OUTLOOK by ROYCE LOWE
The Institute of Supply Management PMI figure fell to 41.5 in April from 49.1 in March but rose to 43.1 percent in May. The month of May might be the precursor of a V-shaped recovery or a checkmarkshaped recovery as stable businesses come back on line. Some businesses with fixed costs, such as space leases, that required a regular cycle of monthly revenues to pay the bills month-by-month have already shuttered. At this time, it is unknown how many of those will not reopen, and as a result will not have jobs for former employees. In 2016, the latest year for which statistics are available, there were 5.6 million businesses with employees. Firms with fewer than 20 employees made up 89% of the 5.6 million. Add in nonemployer businesses, or a business with no employees on payroll like some sole proprietor Internet businesses, of which there were 24.8 million in 2016, then businesses with fewer than 20 employees make up 98% of all businesses in the U.S. More of the nonemployer entities are likely to survive because they generally have lower overhead costs, but some portion of the
30
Manufacturing Outlook / June 2020
5.6 million small businesses that employ millions of people across the U.S. will cease operations, throwing employees out of work until they can find new jobs. They only silver lining is that businesses in general were desperately searching for new hires in a tight labor market, so some people who lose their jobs will find different opportunities and get back to a steady paycheck, and perhaps a better one. Production, new orders and employment are contracting slower; supplier deliveries are slowing slower and backlogs are contracting slower. Raw materials inventories are growing from contracting, customer inventories are too low. Prices are decreasing slower and exports and imports are contracting. Of the 18 manufacturing industries, the six that reported growth in May — in the following order — are: Nonmetallic Mineral Products; Furniture & Related Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Paper Products; and Wood Products.
NORTH AMERICAN OUTLOOK The 11 industries reporting contraction in May, in order, are: Printing & Related Support Activities; Primary Metals; Transportation Equipment; Petroleum & Coal Products; Fabricated Metal Products; Machinery; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products. There are mixed comments from the industry, but on the whole there is somewhat more optimism than was apparent in April. There was a perk up in Computer & Electronic Products, for example, but social distancing and (much reduced) customer demand are noted as negative factors. Commodities Up in Price Alcohols; Crude Oil; Freight (2); Personal Protective Equipment (PPE) (2); PPE — Gloves (3); and PPE— Masks (2). Commodities Down in Price Acrylate Monomers; Aluminum (4); Base Oils; Copper (4); Corn (2); Diesel Fuel (3); Methanol; Nylon; Oil Based Products; Packaging Materials; Plastic Products; Polypropylene; Solvents; Steel; Steel — Carbon; Steel — Cold Rolled; Steel — Hot Rolled (4); Steel — Stainless (2); and Steel Products (2).
Commodities in Short Supply Alcohols; Disinfectants & Soaps (2); Disinfectant Wipes; Hand Sanitizer (3); N95 Masks (2); PPE; PPE — Gloves (3); and PPE — Masks (3). Note: The number of consecutive months the commodity is listed is indicated after each item. CANADA’s PMI - 40.6 in May from 33.0 in April was at its second-lowest level since the survey began in 2010. There was a steep drop in employment during May. Growth, where reported, was linked to a gradual reopening of manufacturing, supply chains, and for some firms increased sales of healthcarerelated products. There was a further decrease in export sales, and cutbacks in spending among clients in the energy sector. There was severe stress on manufacturing supply chains in the form of low inventories and international shipping delays. May saw a slight improvement in business optimism over April. MEXICO saw a sharp deterioration in its manufacturing sector in May, with further declines as production dropped sharply with factories closing and new orders continuing their significant fall. Their PMI for May was at 38.3, up from April’s 35.0.
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800.600.9290 - 973.276.5000 - CANADA: 416.363.2244 - INFO@STEELFORGE.COM - STEELFORGE.COM Manufacturing Outlook / June 2020
31
SOUTH AMERICAN OUTLOOK
GLOBAL OUTLOOK
SOUTH AMERICA by ROYCE LOWE
BRAZIL saw further severe drops in production and new orders, with job losses on the increase and purchasing activity reduced at a record pace. There are intensifying inflationary pressures. The PMI rose slightly from 36.0 in April to 38.3 in May. Brazil’s crude steel production for the month of April was 1,811 MT, a decrease year-over-year of 39.0 percent. 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) – saw a slight reversal from April amid the continuing global manufacturing downturn. Production and new orders were again down sharply, and there were marked cuts in employment and purchasing. However, international trade suffered a steep drop. The Global PMI rose from 39.8 in April to 42.4 in May.
32
Manufacturing Outlook / June 2020
Weaknesses in the global economy, particularly Europe, were recovering just before the pandemic hit and shut production down. If, as businesses reopen and employees return to paychecks, the optimism of the consumer rises, then economic recovery will follow. If the consumer hedges, waffles, or produces weak demand, then 2020 will be a dismal year. But, the pundits speak of a strong Q3 followed by a strong Q4.
ASIA OUTLOOK
GLOBAL OUTLOOK
ASIA OUTLOOK by ROYCE LOWE
CHINA saw a solid increase in production following the easing of COVID-19 restrictions, and, in fact, the strongest increase in production since January 2011. The sales trend was subdued and there was weak export demand. There was a stabilization in supply chain performance. Employment was down, but at the slowest rate for four months. The May PMI, at 50.7, was up from April’s 49.4. Business confidence was up in May, with a general optimism regarding an increase in production over the next year.
the financial crisis. Export orders were reported in decline compared to April by 46 percent of respondents, with only 7 percent reporting an increase. Supplier delivery times lengthened significantly once more, largely because they were simply not operating rather than spikes in new order demand for inputs. Employment stabilized following a sharp fall in April, with 88 percent of respondents reporting no job cuts in May. The PMI in Japan fell from 41.9 in April to 38.4 in May.
CHINA produced 85,033 MT of crude steel in April, up 0.2 percent year-over-year; Japan 6,617 MT, down 23.5 percent year-over-year; India 3,137 MT, down 65.2 percent year-over-year and South Korea 5,500 MT, down 8.4 percent year-over-year. Taiwan produced 1,650 MT in April, down 16.3 percent. China’s vehicle sales for April were up 4.4 percent year-over-year to 2.07 million units, following 21 consecutive months of downturn.
INDIA saw another significant deterioration in business conditions in May, with production decreasing along with lower demand, following April’s record slump. Staff were let go at the quickest rate in 15 years. But the decline was slightly softer than in April, with new orders continuing to fall after April’s record slump. The PMI was up slightly from 27.4 in April to 30.8 in May. In spite of all this, manufacturers are optimistic regarding the one-year business outlook.
JAPAN saw a sharper fall in production in May, and new orders down at a rate not seen since
Manufacturing Outlook / June 2020
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EUROZONE OUTLOOK
GLOBAL OUTLOOK
EUROZONE by ROYCE LOWE
IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) rose to 39.4 in May from 33.4 in April, as the continued sharp contraction in Eurozone manufacturing continued.
Russia’s crude steel production for April was at 4,700 MT, down 19.4 percent year-over-year; Ukraine’s was 1,339 MT, down 30.9 percent yearover-year.
There were sharp drops in new orders and production, but at noticeably slower rates than in April. There is a pessimistic outlook on the employment front, with France, Spain and Germany particularly hard hit, but with severe reductions in all Business confidence showed a slight improvement, and was up to a three-month high.
IHS Markit’s PMI for the UK saw an easing in the pace of contraction since April, rising from 32.6 in April to 40.7 in May. Production, new orders, and employment were all down, but less so than in April. There were some pockets of growth, mostly linked to healthcare-related or PPE products. There is a general feeling of uncertainty in UK manufacturing. The UK produced 560 MT of crude steel in April, down 11.2 percent year-over-year.
Car sales in Western Europe were down 80 percent in April, with French sales down 88.8%; German down 61.1%; Spanish down 96.5%; Italian down 97.6% ; and UK down 97.3%. Forecasts are putting the reduction in sales for the year at 20-25 percent. Crude steel production in Germany in April was at 3,000 MT, down 10.7 percent year-over-year; in Italy 1,350 MT, down 30.7 percent year-over-year; in France 800 MT, down 37.9 percent year-over-year and in Spain 670 MT, down 48.0 percent year-overyear.
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Manufacturing Outlook / June 2020
GLOBAL PMI OUTLOOK
GLOBAL PMI OUTLOOK
by NORBERT ORE, DIRECTOR, HEAD OF INDUSTRIAL SURVEYS, STRATEGAS RESEARCH PARTNERS Global manufacturing took a first step on the road to recovery in May. Two of the 18 PMIs we follow reported above the 50-mark while 12 others reversed direction. Global supply chains are still in chaos, but it appears that they have begun the necessary reset. China is the contrarian as both PMI surveys printed slightly above the mid-point. China is the first country to recover as it quickly rebounded from the precipitous drop in February when both surveys set record lows. Eurozone countries registered a combined 39.4 in May with Germany (36.6, +2.1) slightly improved, but still lagging. The region has not grown for 16 consecutive months. The ISM PMI® - In May, the U.S. Manufacturing ISM PMI® (43.1, +1.6) proved resilient as the rate of decline slowed in the sector. The sector is recovering, following
a deep dive precipitated by April’s record low index levels of new orders, production, and employment. The past relationship between the PMI® and the overall economy indicates that the PMI® for May (43.1) corresponds to a 0.1-percent increase in Real GDP on an annualized basis, according to the ISM press release. However, this is based on the historical relationship between the ISM Manufacturing PMI® and U.S. GDP. It does not include provisions for the impact of the Covid-19 Global Pandemic which has chaotically impacted global supply and demand. Drivers: The PMI® month-over-month improvement in May was led by Production (33.2, +5.7), Employment (32.1, +4.6), and New Orders (31.8, +4.7). Supplier Deliveries (68.0, -8.0) was the only component above the mid-point. A Supplier Deliveries reading above 50 is typically associated with improving demand. However, the strong Supplier Deliveries reading in this instance may be misleading as delivery times slower due to plant closures, limited hours, supply shortages, and product mix. Given the state of the other components, we believe slowing delivery times are an indication of weakness at this time. New Orders Minus Inventories: This key measure shows New Orders (31.8) are contracting faster than Inventories (50.8). Compared to the average gap (+4.4 pp beginning in 2011), a significant inventory correction needs to take place.
Manufacturing Outlook / June 2020
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GLOBAL PMI OUTLOOK
CREDIT MANAGERS’ OUTLOOK by DR. CHRISTOPHER KUEHL MANAGING DIRECTOR OF ARMADA CORPORATE INTELLIGENCE THIS REPORT REPRINTED COURTESY OF THE NATIONAL ASSOCIATION OF CREDIT MANAGERS (NACM.ORG) WHERE MORE IN-DEPTH INFORMATION CAN BE FOUND.
Combined Sectors There is a temptation to look at the May Credit Managers’ Index (CMI) data and start cheering wildly, but it would probably be a good idea to show some restraint—at least for the time being. NACM Economist Chris Kuehl, Ph.D., reports that after a catastrophic month in April, there are signs of a recovery showing up in May. As usual, there are plenty of caveats, but it is important to remember the CMI is very often a harbinger of things to come due to the nature of credit management. The focus of a credit manager is always on the future—trying to gauge the likelihood of getting paid 30, 60, 90, 120 days from now. The data this month would suggest that many are seeing a better future ahead. It may be possible to assert that April will be the bottom of this crisis and conditions should improve from this point. Over the last few months, the majority of the damage has been seen in the favorable factors as the lockdown recession took its toll. It was impossible for the majority of the business community to function at any level under these conditions, but now there appears to be a slow and halting movement to allow the recovery of the economy. This appears to be resonating with the data in this month’s CMI. The combined score for the CMI is still thoroughly mired in contraction territory (below 50) with a reading of 44.1. In April, it sat at 40.6. The index of
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Manufacturing Outlook / June 2020
favorable factors at 32, had plunged to levels not seen since the recession of 2008. The favorable factors data this month shows a gain to 39.5. That is still very, very low and no reason to celebrate, but it is heading in the right direction. The index of unfavorable factors gained a little as well—moving from 46.3 to 47.2. Kuehl notes that obviously, this remains in contraction, but it is significant that the negatives have not worsened and may, in fact, be improving. Last month, the subcategories told a very bleak story. These numbers were as low as they have been in the history of the CMI. The improvement this month still leaves the data below 50, but there was considerable concern these numbers would get even worse before starting to rebound. The sales numbers fell like a rock the last couple of months— from 64 in February to 39.5 in March and a crushing 20 in April. This month’s gain is significant but still leaves the index near historical lows with a reading of 28.6. The new credit applications number rose to 43.3 from 31.1. “It is a very good sign and shows that companies are starting to prepare for the rebound that was promised this summer,” said Kuehl. The dollar collections data also left the 30s behind with a reading of 43.2 as opposed to the 35.5 notched the month prior. The amount of credit extended stayed roughly the same as it had in April
CREDIT MANAGER’S OUTLOOK as it moved from 41.6 to 42.8. It is not a huge move, but it is a move in the preferred direction. The unfavorable factors have not been as miserable as the favorables as there has not been enough time for these issues to start kicking in. Kuehl said that this was the month when there was an expectation of more angst in these numbers, but so far, the data is holding more or less steady. The rejections of credit applications fell just slightly from a reading of 52.7 to 51.9, but the important consideration is that it remains out of contraction territory. There was an improvement in accounts placed for collection from 47.4 to 49.1. This has been one of the crucial markers as far as the index is concerned. “Collections will start as creditors are unable to meet their obligations,” he said, “but thus far, there has not been time for these issues to develop given that the crisis is roughly two months old.” The disputes category improved a little as it climbed from 50.8 to 51.5. There has also been a slight rebound in the dollar amount beyond terms reading. “As business was locked down, the majority became very guarded as far as cash flow,” he said. This led to a huge surge in slow pays and a reading of 27.6. The latest number is still deep in contraction territory at 32.4, but it is an improvement, nonetheless. The dollar amount of customer deductions climbed out of contraction territory (49.4 to 50.9). The filings for bankruptcies numbers started to fall, however, and that is a concern. The number in April was 50.2 and now it is sitting at 47.3. This is the first time the bankruptcy numbers have been below 50 in several years. He added, “this is a sign that already weak companies are succumbing to the lockdown recession.” Manufacturing Sector According to Kuehl, the numbers this month are certainly not great but they are better than they were in April. The wholesale collapse in the favorable factors seems to have slowed, although the readings are still very firmly in contraction territory. There was not a great deal of change as far as the unfavorable categories are concerned. NACM CMI — 2 — May 2020 The overall manufacturing readings showed that the decline has started to slow and reverse—if only by a very narrow margin. The index was at 42 last month and is now up to 44.1. Not the most inspiring level, but hopefully the beginning of a trend that would extend over the next few months. “Last month, the damage in the favorable
categories was considerable. It dragged the entire index down to levels not seen in several years,” Kuehl said. “The data this month still shows the damage, but there has been some slightly more encouraging news as the numbers went from 34.3 to 38.6. Whatever optimism this generates is tempered by the knowledge these readings were at 62 in February and had not been below 56 in over a year.” The shift in the unfavorable factors was far less dramatic as it went from 47.2 to 47.8, but at least it is hovering close to the expansion zone. The details within the categories tell the story. The sales data stayed in the 20s although there has been a slight improvement from 21.4 to 27.5. That remains a very long way from the readings as recently as February when it hit 65.7. Kuehl noted, “there has been a complete crash in the sales of manufactured goods.” The biggest gain came with the category of new credit applications as this went from 35.7 to 43.2. This is still a very low reading, but far better than had been seen earlier. The dollar collections data also jumped back into the 40s with a reading of 40.5 as compared 35 in April. The amount of credit extended data slipped a bit from 45.1 to 43—not such a good development. “It suggests that those who are seeking and getting credit have been slowing down.” The data from the unfavorable categories has not changed as much. The rejections of credit applications improved a little and stayed in positive territory (53.3 from 52.8). “This would suggest that most of those applying for credit are having some success.” There has been stability as far as accounts placed for collection as the reading this month was 50.4 and last month it was at 50. “There has not been enough time for many companies to get to the point that collection is an option, but that could well develop in the next few months if there is a slow economic rebound.” The disputes category saw an improvement from 50.6 to 51.6. There was even some recovery as far dollar amount beyond terms. The reading is still bad but has climbed out of the 20s by notching a 31.9 compared to the previous month at 28.6. The dollar amount of customer deductions remained very similar to what it had been—going from 50.1 to 50.5. The filings for bankruptcies slipped a bit from 51.1 to 49.3; this is a concern. He noted that there had not been time for the bankruptcy issue to develop in previous readings, but it is now clear that companies that were already weak are starting to get in some real trouble. This is a category that will require a lot of attention in the weeks and months to come. Manufacturing Outlook / June 2020
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METALS OUTLOOK
JUNE 2020
METALS OUTLOOK by ROYCE LOWE
Not surprisingly, the world steel industry is taking a beating in the midst of the coronavirus pandemic. The month of April saw the U.S. mill price for hot-rolled coil drop from just under $530 per ton to just under $470 per ton, that of coldrolled coil from around $690 per ton to around $640 per ton. This represents drops in hot-rolled from $590 to $470 since early March and from $750 to $640 for cold-rolled in the same time frame. A similar pattern was observed for hot-dip galvanized material.
demand naturally leads to production cutbacks at mills, with capacity utilization rates dropping below 60 percent, or the lowest levels recorded since September of 2008.
Under these conditions, with the U.S. steel sector being an “essential industry� during the epidemic, and demand dropping over the past few weeks, steel buyers are obtaining significant discounts from domestic suppliers, who are out looking for orders. Delivery lead times are short, and tonnages at service centers and endusers are down, particularly from automakers and associated parts manufacturers. This falling
The U.S. construction industry is slowing, but still remains one of the better-performing enduser sectors. Domestic long-product prices are expected to fall in the near term, following an April reduction in mill scrap costs.
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Manufacturing Outlook / June 2020
Recovery in steel demand, and hence prices, will depend upon the scheduling of the lifting of restrictions, which is presently an unknown. In the wake of all this bad news, Nucor Corp and Arcelor Mittal recently announced increases in hot-rolled, cold-rolled and hot-dip galvanized flat products of a minimum of $50 per ton.
Stainless steel production for the year 2020 is forecast to fall by 10 percent to 46.8 million tons. A similar pattern is being observed in Europe, where
METALS OUTLOOK
flat-rolled prices were largely unchanged in late March/early April, but reductions in auto output resulted in the inevitable lack of demand. Mills cut back production in the hopes of stabilizing prices, but the orders just aren’t there. Even though the Chinese steel industry and Chinese manufacturing are improving, these factors alone cannot bring things back to normal. The global steel industry is in for a fairly long recovery process, and normal may not be normal, if ever, for a good long time. In the midst of this, steel trading has been suspended in both India and South Africa, where virus conditions are virtually shutting down these countries. Brazil and Mexico are suffering similar, but not as drastic, conditions. Cleveland Cliffs, which recently completed the acquisition of AK Steel, has announced it is idling production at iron ore mines in Minnesota and Michigan. Meanwhile, “sources” say that AK Steel’s Dearborn Hot Strip Mill is to be idled. These same sources say it will not be coming back, and that
slab rolling will be moved to Middletown, Ohio. STEEL PRODUCTION WAS DOWN BY 6.0 PERCENT YEAR-OVER-YEAR IN THE MONTH OF MARCH for the 64 reporting countries – which represent 99 percent of world crude steel production – to 147,054 MT. Primary Global Aluminum Production in March was reported at 5.447 million tons, with production in China, at 3.100 million tons, representing 57 percent of world total. Production was 507,000 tons in GCC; 348,000 tons in the rest of Asia; 287,000 tons in Western Europe; 342,000 tons in North America and 354,000 tons in Eastern and Central Europe. In the U.S., non-ferrous metal data show aluminum steady through April at $0.66 per lb; copper ranging from $2.18 per lb to $2.35 per lb through the month; nickel from $5.05 to $5.50 and zinc from $0.84 to $0.87. Canada produced 1.060 MT of crude steel in March, down 15.3 percent year-over-year. Manufacturing Outlook / June 2020
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AEROSPACE OUTLOOK
JUNE 2020
AEROSPACE OUTLOOK by ROYCE LOWE
NASA ASTRONAUTS BOB BEHNKEN, LEFT, AND DOUG HURLEY CREDIT: SPACEX
On May 30, Space X’s rocket took off from the Johnson Space Center in Florida, en route for the International Space Station. It was the first time a private enterprise had launched humans into orbit. Some nineteen hours later it docked at the ISS and the first part of the mission was deemed an unqualified success. The length of time the two astronauts who made the journey will stay “up there” has yet to be determined. Since the termination of the Space Shuttle program in 2011, NASA astronauts had been hitching rides to the ISS aboard Russian rockets launched from Kazakhstan. The Commercial
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Manufacturing Outlook / June 2020
Crew Program at NASA was founded with the aim of developing spacecraft by private companies ‘with the goal of achieving safe, reliable and costeffective access to and from the ISS and low-earth orbit.’ This latest flight, a Falcon 9 rocket and a Crew Dragon capsule, is a cruise to certify that the spacecraft meets NASA’s needs and standards of safety to start routine trips taking astronauts to and from the ISS. Success of the mission will entail the return to earth of the two astronauts Bob Behnken and
AEROSPACE OUTLOOK
ELON MUSK CREDIT: NASA/AUBREY GEMIGNANI
Meanwhile, the commercial aircraft and engine manufacturers find themselves in COVID-19 disarray, with Airbus, Boeing, Rolls Royce and G.E.Aviation all looking to let go some 10 to 15 percent of their workforce.
SPACEX CREW DRAGON CAPSULE CREDIT: SPACEX
Doug Hurley in the Crew Dragon, which they have named Endeavor, the same as the retired space shuttle they both flew on, and the British sailing ship in which Commander James Cook explored the Pacific. Boeing, the other company on the original list for this mission, experienced difficulties during test flights, but is also on the list for future manned launches, the first of which is expected for early next year. The Associated Press says that NASA’s project to return to the moon in the near-term, and a voyage to Mars in the 2030s, will look to Space X and Boeing, both companies having received large contracts for services and support.
Airbus has completed construction of its A220 final assembly line in Mobile, Alabama, a 270,000 sq.ft. complex to assemble both the A220-100 and A220-300 versions of the twin-engine, single-aisle aircraft. This is the second assembly plant for the A220, the primary plant being in Mirabel, Québec. The A220 originated as the Bombardier C series, in which Airbus purchased a majority stake in 2017, forming a partnership with Bombardier Aerospace and Investissement Québec, a provincial development agency. The C series was relabeled as the A220 series in 2018. Airbus increased its holdings to 75 percent earlier this year as Bombardier exited the partnership, and Investissement Québec taking a 25 percent share. To date there are 642 orders for the C series/ A220 aircraft and 113 have been delivered. Boeing has started low-volume production of the 737 MAX , but the aircraft has not yet been approved to resume service with its redesigned flight-control program. Manufacturing Outlook / June 2020
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ENERGY OUTLOOK
JUNE 2020
ENERGY OUTLOOK
by ROYCE LOWE
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Manufacturing Outlook / June 2020
ENERGY OUTLOOK The electric vehicle, commonly known as the EV, is, as we all really know, here to stay. It has been touted as the vehicle that will save the planet, but it’s not selling at all to beat the band, and perhaps the big reason for this is its price and the lack of a vroom vroom that is so popular with certain members of the population. It may also have something to do with the range. A decade ago, when a new generation of electric vehicles started to appear on the roads, researchers at The Georgia Institute of Technology spent a year tracking the habits of almost 500 American motorists to see how suitable such vehicles would be for them. They found that almost a third could have completed most of their journeys using an EV with a range of only 100 miles. On the few occasions that people needed to travel farther, they could have charged up en route, or hired a gas-powered car. An electric car means a battery, and a battery means the type that was first commercialized by Sony in 1991. At that time, the batteries were used to power such appliances as phones and laptops, but it was this same battery, the LI-ion battery, that made EVs possible. The Li-ion battery is special. It has a high energystorage capacity, and a modern battery can pack 200 watt-hours of electrical potential into a single kilogram (2.2 pounds) of kit, for an energy density of 200wh/kg. This represents a fivefold improvement on the old lead-acid battery, and researchers are, of course, constantly trying to do better. Li-ion cells get their name from the movement within them of lithium ions, that have a positive charge. When the cell discharges, the ions are created at one electrode, the anode. They then pass via a separator through a liquid electrolyte to a second electrode, the cathode. Electrodes that leave the anode, meanwhile, travel towards the cathode via an external electrical circuit, creating a current that can be used to power an electric motor. For such a weight-sensitive application, it’s good that lithium is the lightest metal in the periodic table, but it is also reactive. Construction must be such that there be no short circuits, hence
a fire risk. Anodes usually consist of a carbonrich material, and the lithium in the cathode is typically an oxide, lithium cobalt oxide. Cobalt is the costliest material in the battery, hence producers are trying to reduce its use. Plus most of the world’s cobalt comes from the Democratic Republic of Congo, not the easiest part of the world to negotiate. So cobalt’s use is reduced by replacing some of it with nickel and manganese, to produce what are called NMC cells. Last year, China’s biggest manufacturer of electric-car batteries, Contemporary Amperex Technology Limited (no kidding) or CATL, began mass production of NMC batteries with an energy density of 240wh/kg. Other firms, Tesla included, hope to get rid of cobalt completely. Reduced materials cost and economies of scale are bringing down the price of batteries. BloombergNEF says that in 2010 the price averaged $1,160 per kwh and by 2024 it may drop below $100. Such a number would make EVs more competitive with ICEs. Further work on lithium-ion batteries includes variations in the materials used for anodes, plus attempts to replace the liquid electrolyte by a solid electrolyte. Li-ion batteries will continue to be the subject of much research and development, both for car batteries and for batteries to store solargenerated energy. Work will continue at a steady pace, coincident with the auto and energy-related industries. Manufacturing Outlook / June 2020
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AUTOMOTIVE OUTLOOK
JUNE 2020
AUTOMOTIVE OUTLOOK by ROYCE LOWE
We can’t talk about automobiles these days without talking about energy, be it oil or be it electricity. Either way, the pandemic that hit our globe recently will have an effect on the way we look at cars, and certainly upon the way we choose what we think is best for us. Recent events in the oil industry, where we saw a negative value for a barrel of oil, brought home how vulnerable this business can be to world events. Just a few months after Aramco’s IPO, when it was hoping to break all records, the first quarter of 2020 was impacted by declining global crude oil demand resulting from COVID-19 and its impact on worldwide economic activity. This led to lower crude oil prices and continued pressure on refining and chemicals margins, according to a statement from Saudi Arabia’s oil giant. Chevron is laying off due to low oil demand and prices. Layoffs are happening in the self-driving sector of the auto business, a sector that doesn’t even seem to fit in there these days. With April auto sales in the U.S. at just over 700,000 units, around half what they were a year ago, it’s survival mode in the industry. May’s figure was forecast at just over a million units, or a 32.1 percent year-overyear decrease. April auto sales in Europe were down some 80 percent, year-over-year, reflecting the degree of lockdown there. But it could be a
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Manufacturing Outlook / June 2020
temporary downturn if it creates pent-up demand when people return to work and paychecks. Research and development into electric vehicles is ongoing, and billions of dollars have been committed by the major automobile companies to ensure that one stays ahead of the others. The penetration of electric vehicles has been low, unless you live in Scandinavia. An independent forecast says that automobile sales in North America will fall by 26 percent in 2020, and will come back by 12.6 percent in 2021, but that the 2021 figure will be only 85 percent of the 2019 total. All this to say that anyone looking to buy a new car these days will think long and hard before opting for an EV, due partly to the price of gas and also to the relative cost of the new vehicles. The pandemic and the accompanying loss of jobs leave no doubt that there will be fewer buyers chasing the cars available. In what can only be described as a humanitarian gesture, Ford and GM have agreed to pay, on delivery, small suppliers with cash-flow problems. In the meantime, automobile production has resumed.
ISSUES OUTLOOK
JUNE 2020
ISSUES OUTLOOK by ROYCE LOWE
A recent survey by the National Association of Manufacturers (NAM), the Manufacturers’ Outlook Survey, when reviewing the second quarter of 2020, found that despite a fall in optimism due to the ongoing pandemic to nearly 34 percent, the vast majority of manufacturers have carried on in business or only temporarily halted operations. The survey further found that manufacturers are looking for solutions to keep businesses running while protecting workers and communities. Some 22 percent are retooling to produce PPE; 67 percent are reengineering processes to reflect COVID-19 safety protocols; 12 percent are looking at a complete reevaluation of their firm’s mission. To counter the difficult conditions being experienced by the nation, NAM’s CEO, Jay Timmons, urges a focus on a renewal agenda laid out in the American Renewal Action Plan, which stresses the safety and appropriate protection of employees, and further, significant investment in America’s infrastructure. Mr. Timmons continues: We have been encouraged by actions taken thus far, but there is still greater need for targeted liability reform, tax provisions to ensure investment in manufacturing, and measures to reaffirm the U.S. supply chain to protect those businesses that continue to work on the front lines of the COVID-19 response to ensure as swift a recovery as possible.
The reference to America’s infrastructure, long a bone of contention, is surely timely. With so many out of work, and a great number not sure of a job at the end of the crisis, now would be a good time to grab this issue, which seems too big to tackle, before it really runs out of reach. America needs to fix this problem. America’s infrastructure, for the large part, is a mix of outdated roads, bridges, waterways, ports, runways, and drinking water systems, many of which are over fifty years old. But this is hardly news; the American Society of Civil Engineers gave the nation’s infrastructure a rating of D+ in a 2017 survey. The U.S. Department of Transportation says that 65 percent of major U.S. roads are in “less than good condition.” Connecticut, for example, has the richest one per cent of any state, but according to several studies of crumbling infrastructures, its roads are among the worst in the country. As are its bridges, its traffic congestion, and its traffic fatality rates. In fact, its roads come in at number 46 in the nation. Perhaps all the funds put aside for tax breaks for the rich might be put to good use on America’s infrastructure. Connecticut would be a good place to start. Manufacturing Outlook / June 2020
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AUTOMOTIVE OUTLOOK
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Manufacturing Outlook / June 2020
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