Manufacturing Outlook May 2022 by Manufacturing Outlook

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THE SUPPLY OF SKILLED LABOR

PAGE 24

FEATURE STORY: THE EFFECTS OF THE WAR IN UKRAINE ON THE GLOBAL SUPPLY CHAIN PAGE 10

THINGS ARE LOOKING UP FOR WOMEN IN ROBOTICS AND MANUFACTURING PAGE 14

THE CASS INDEX REPORT PAGE 18

ASIA OUTLOOK PAGE 34

METALS OUTLOOK AFRICA OUTLOOK PAGE 42

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Manufacturing Outlook / May 2022

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TABLE OF CONTENTS

Publisher LEWIS A WEISS Editor in Chief TIM GRADY Creative Director CRAIG ROVERE Contributing Writers ROYCE LOWE NORBERT ORE CHRIS KUEHL THOMAS R. CUTLER AMELIA ROY JEANNE-MARIE LOWRIE JOCELYN BRIGHT CHRIS ANDERSON LAWRENCE MAKAGON CHRISTINE CASATI KEN FANGER FAITH WINRU ROB BRITT MAGGIE OLTARZEWSKI BEN TALBERT Production Manager LINDA HOPLER Advertising ADVERTISE@MFGTALKRADIO.COM

PUBLISHER’S STATEMENT

Some Thins Improve, Some Not So Much

6 MANUFACTURING OUTLOOK Global Expansion With Few Exceptions by Royce Lowe

MANUFACTURING TIDBITS

Insights from inside manufacturing in action

10 FEATURE STORY: THE EFFECTS OF THE WAR IN UKRAINE ON THE GLOBAL SUPPLY CHAIN by Faith Wainru

14 THE AUTOMATE SHOW: A PREVIEW LABOR AND LEARNING FROM A SHARK by Rob Britt

16 THINGS ARE LOOKING UP FOR WOMEN IN ROBOTICS AND MANUFACTURING by Maggie Oltarzewski

18 CASS INDEX LOGISTICS REPORT Cass Transportation Systems

20 ISM MANUFACTURING REPORT ON BUSINESS 23rd Month Of Expansion

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24 COVER STORY: TALENT OUTLOOK: THE SUPPLY OF SKILLED LABOR by Ben Talbert

28 © 2022 Jacket Media Co. No part of this publication may be reproduced or used in any form without the prior written permission of the publisher. Manufacturing Outlook is a registered trademark of Jacket Media Co.

NORTH AMERICA OUTLOOK

The Positives Outweigh the Negatives – So Far by Chris Kuehl

EUROZONE OUTLOOK Expansion Slowing - Still Growing by Chris Anderson

31 GLOBAL PMI OUTLOOK Growth Overcomes Obstacles by Norbert Ore

34 ASIA OUTLOOK General Trends and Diverse Responses as Asia Awakens From COVID by Christine Casati

38 METALS OUTLOOK Steel’s Short Range Outlook by Royce Lowe

40 INNOVATION OUTLOOK Revolutionizing Lightweight Metal Manufacturing

42 AFRICA OUTLOOK Two Signs of African Industrial Innovation: Startups and Halal Food by TR Cutler

46 AEROSPACE OUTLOOK Flying Into The Future by Royce Lowe

48 ENERGY OUTLOOK Dogger Bank Wind Farm: Quite a Project by Jocelyn Bright

50 AUTOMOTIVE OUTLOOK EVs Charging Up by Lawrence Makagnon

52 CYBER SECURITY OUTLOOK Vampire Hackers are at Your Door – Don’t Let Them In by Ken Fanger

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54 ISSUES OUTLOOK The Language of Manufacturing by Royce Lowe

PUBLISHERS STATEMENT

Some Things Improve, Some Not So Much As we converse on Manufacturing Talk Radio with people who make their living watching the economy, studying government reports, and analyzing institute information, we are pleased by any news that shows something moving in a positive direction, especially in the supply chain. Everyone’s watchfulness was heightened when Russia invaded Ukraine, as we learned what products from both countries were integrated into the supply chain for manufacturers around the world, including Europe and the U.S. Just as supply chain managers were enjoying new supplier relationships post-Covid, Russia created a new set of supply problems as well as concern about how far President Putin was willing to go in his nuclear threats. We all believe that the first nuke fired will be immediately followed by a volley of retaliatory missiles where everyone loses. But it is the present supply chain disruptions and the near-term agricultural growing season in Ukraine that are of direct concern. There are indications that the chip issue may begin to resolve for the automotive industry later this year. There is no doubt that the disruption caused by Covid created the conditions to move more chipmaking back to the U.S., Vietnam, Brazil, and India are going to become even more popular as sources for rare earth metals for manufacturing as relations with Russia and China fluctuate. There is a silver lining here: technological advances, especially in 2-dimensional materials, may create replacements for some rare earth metals. Our cover story addresses the impact of the Russian invasion of Ukraine. Unless you are a manufacturer, you might not be aware that exports from Ukraine include fruit and vegetable juices, seed oil, other vegetable oils, snack foods, and even pig iron and iron pipes. Manufacturers in the U.S. have already had to modify or replace ingredients in their products because they are unable to get, for example, sunflower seed oil on a reliable basis – if at all. Europe is scrambling for natural gas sources and the U.S. is exporting as much as we can deliver. The supply chain truly is global. Each of our Outlook sections is intended to provide you with a perspective on a subject, an industry, or an area of the world as it affects manufacturing but is not covered well in the mainstream media. We continue to follow stories as they evolve, such as Boeing problems and the automotive industry struggles, because these developments need to be updated to keep our readers current and informed. The Institute for Supply Management’s Tim Fiore continues to report that the economy is in the 24th month of a demanddriven cycle which usually lasts 35 to 36 months. We can expect steel demand to perform well, especially if the automotive chip issue begins to resolve and demand for new cars climbs. The biggest headwind is the shortage of skilled labor (our cover story). At present, there are more than 11 million job openings in the U.S., 5 million more than the available labor pool (disregarding skill sets). During March 2022, 4.5 million employees in the U.S. quit their jobs for higher pay somewhere else, lack of job satisfaction, or to launch a business of their own. This has created instability in labor and no amount of training will offset these shifting winds. The push to automate is present in every industry, from food service staff to pilotless aircraft and driverless trucks. The current mindset to work from home is in conflict with manufacturing’s need for people performing tasks onsite. And, with the U.S. nearing zero population growth, all industries are automating for the continuing shortfall of workers. The Aerospace Outlook section discusses a facet of this conversion, on page 46. We hope you are a subscriber, even if you access Manufacturing Outlook for free on our website. There is more to learn as we publish future issues. n Lewis A. Weiss, Publisher Contact laweiss@mfgtalkradio.com for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast or any of our podcasts.

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Manufacturing Outlook / May 2022

MANUFACTURING OUTLOOK

MAY 2022

MANUFACTURING OUTLOOK GLOBAL MANUFACTURING PMI AT 19-MONTH LOW, BUT NORTH AMERICA HOLDING UP. CHINA PLUNGING. SUPPLY CHAIN DISRUPTION WAS EASING, BUT WAR IS INTERFERING. DEMAND FOR NEW CARS OUTSTRIPPING SUPPLY. U.S. STEEL PRICES “UNSTABLE” By: Royce Lowe continued

Manufacturing Outlook / May 2022

MANUFACTURING OUTLOOK The Bureau of Economic Analysis says the U.S. Real Gross Domestic Product decreased to an annual rate of -1.4 percent in the first quarter of 2022, according to the “advance” estimate. In the fourth quarter of 2021, GDP increased 6.9 percent. S&P Global’s remarks on U.S. manufacturing for April show the PMI figure moving up from 58.8 in March to 59.2 in April. This is a seven-month high, amid stronger demand. There were sharp selling price increases. Production growth was at its fastest in nine months. The S & P Global components are weighted: 30 percent New Orders, 25 percent Production, 20 percent Employment, 15 percent Supplier Deliveries, and 10 percent Raw Materials Inventories. There was a marked improvement in operating conditions, through quicker production expansion, after a deterioration of vendor performance and a series-record rise in pre-production inventories. Severe material and capacity shortages at suppliers led to sharper increases in cost burdens and selling prices. Additional workers were hired to ease capacity pressures, but there is still a labor shortage. Firms were upbeat regarding the 12-month outlook, but inflation concerns and geopolitical tensions pushed confidence to its lowest in six months. Export orders

showed their highest growth in almost a year. GLOBAL CRUDE STEEL PRODUCTION WAS DOWN BY 5.8 PERCENT YEAR-OVERYEAR IN THE MONTH OF MARCH for the 64 reporting countries – which represent 98 percent of world crude steel production – to 161.0 million tons (MT). U.S. crude steel production for March was 7.0 MT, down 1.7 percent year-over-year. In March: China produced 88.3 MT, down 6.4 % year-over-year; India 10.9 MT, up 4.4 %; Japan 8.0 MT, down 4.3%; Russia (estimated) 6.6 MT, down 1.8%; South Korea 5.7 MT, down 6.1%; Germany 3.3 MT, down 2.9%, and Brazil 3.0 MT, up 5.4%. The EU (27) produced 12.8 MT, down 8.5%. Primary Global Aluminum Production in March was reported at 5.693 million tons, with production in China at 3.293 million tons, representing 58 percent of the world total. Production was 520,000 tons in GCC; 390,000 tons in the rest of Asia; 253,000 tons in Western and Central Europe; 325,000 tons in North America and 350,000 tons in Russia and Eastern Europe. Since January 2021, the semiconductor shortage has cost

North American auto production around 2.3 million cars and trucks, and potentially nearly 3.5 million if lost production can’t be made up. Analysts predict some 1.2 million car and truck sales in April, down 21 percent from a year ago. Last year, dealerships had 1.7 million vehicles in inventory, versus 900,000 this April. The estimated transaction price for April 2022 is just under $44,000, up 14.7 percent from a year ago. The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced by JPMorgan and S & P Global in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – fell from March’s 52.9 to 52.2 in April. North America was the bright spot, with both the U.S. and Canada showing up well. Production fell across the consumer, intermediate, and investment goods industries. Selling price inflation was at a record high, with substantial cost increases. International trade flow deteriorated for the second successive month. There was a downturn in worldwide manufacturing production for the first time since June 2020. This decline was mainly reflected in a steep contraction in China, where escalating COVID restrictions were a major factor underlying the sharpest drop in production volumes for 26 months. The production index excluding China was at 52.2 almost five points higher than the index including China. Global manufacturing employment rose for the 18th month running in April, but at the slowest pace since January. Inflationary pressures remained high in the global manufacturing sector in April. continued

Manufacturing Outlook / May 2022

MANUFACTURING OUTLOOK THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, with reference to a given quarter or month. The figures for GDP represent the percent change on the previous quarter, or annual rate. The consumer price increases represent year-over-year changes. The unemployment percent figures are for the month as noted. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

Manufacturing Outlook / May 2022

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FEATURE STORY

The Effects of the War in Ukraine on the Global Supply Chain By: Faith Wanjiru

continued

Manufacturing Outlook / May 2022

FEATURE STORY Global supply chains were beginning to show signs of recovery from two years of upheaval brought about by the COVID-19 pandemic when the Ukraine crisis hit. With no clear signs of ending soon, supply chains all over the globe are once again being tested by the extraordinary events taking place in Ukraine. Beyond the increase in the price of gas along with rising inflation, the war waged by Russia on Ukraine is now sending shockwaves to what is an already frail global supply chain. Why the Russian/Ukraine Conflict is Worth Watching Close to 300,000 firms in the United States and Europe have suppliers in Ukraine and Russia, something that puts their national economies at high risk. And as the war in Ukraine continues to escalate followed by sanctions imposed on Russia by the U.S. and other nations, so does its impact on global supply chains intensify. The rising costs of electricity across Europe, long chip delivery times, and airspace bans that are disrupting cargo routes are fur-

ther affecting the already delicate supply chains. The war in Ukraine is a fluid and fast-moving scenario. And besides the terrible humanitarian crisis, it’s already clear that the Russia/Ukraine conflict has far-reaching consequences for plenty of supply chains. In particular, there are immediate consequences, especially for ground-based freight networks that used to transport goods between Europe and Asia by rail and road. Jennifer Bisceglie, the

founder and CEO of a supply chain risk management firm, Interos, said, “Russia’s invasion of Ukraine is an invasion of the global supply chain.” Bisceglie didn’t stop there. She further observed, “We are experiencing the biggest shift in supply chains since the era of globalization began—perpetual disruption is the new normal. Now and in the future, continuous real-time monitoring continued

Manufacturing Outlook / May 2022

FEATURE STORY

of every tier of [the] supply chain will be the norm to help companies get ahead of the next crisis. Additionally, leaders will need to look at investing in new strategies for alternative sourcing which may include a blend of regional and global supply partners. Continued pressure on global supply chains will exacerbate imbalances between supply and demand, causing increased inflation and potentially stagflation,” Bisceglie further warned. The Europe-Asia Land Route Last year, a significant number of shippers that were suffering from the chaotic events in container shipping brought about by the coronavirus pandemic turned

to rail transport as an option for the Europe-Asia trade routes. Rail operators operated more than 1,200 freight trains per month in 2021 between Europe and China, transporting close to 1.5 million containers. Plenty of these trade routes from China pass through Russia, Ukraine, and Belarus on their way to several Western European countries.

result in both extensive delays and instances of record-high freight rates. On closer examination, just about every other supply chain across the globe will ultimately feel a negative impact of the Russia/Ukraine crisis, an apt example being the rising cost of fuel prices, along with several crucial shipping routes being diverted or canceled altogether.

Unfortunately, as Russia continues to attack Ukraine, the risks facing such containerized rail-freight seem significantly high. It means that traders have to frantically look for alternative routes to use at a time when the sector of containerized shipping is still beleaguered by cases of port congestion, container shortages, and shipping delays that

The Bigger Perspective Undoubtedly, the war in Ukraine is already disrupting entire industries and a significant number of global supply chains that rely on oil, raw materials, transportation, and logistics. Even though some companies seem to have secured enough components aimed at maintaining continued

Manufacturing Outlook / May 2022

FEATURE STORY means that the supply chains of such products cannot function as they used to. What Next?

their production output, once their supplies are depleted, scarcity will drive the price of goods up. Disruptions in the supply chain might delay PC, smartphone, and automotive releases at some point this year, along with shrinking device output with supplies running out. Additionally, disruptions in global supply chains are now forcing several PC and smartphone makers that have managed to sufficiently stockpile components and chips to adjust everything to do with their overall production output as they anticipate looming shortages. Food supply chains haven’t been spared either, and have taken a major hit because of this crisis. With both Ukraine and Russia being major exporters of several agricultural products, global food supply chains have also been negatively impacted. Russia, for instance, exports over $6 billion of wheat yearly. Russia is a major producer of significant amounts of crucial raw ingredients for fertilizer products used in produce grown in many places across the globe. On the other hand, 15% of global grain exports come from Ukraine, as well as vegetable and animal oils, seed oils, and cereals, together representing close to 40% of Ukraine’s exports. But with the Russian invasion of Ukraine, it

No one knows when the Russian/ Ukraine conflict will end. Some people are of the opinion that this conflict won’t end anytime soon, with others arguing that it may extend through next year. With that said, many industries are now bracing or rather preparing themselves for the war’s domino effect, especially on global production, along with the delivery of chips and other components. Matters to do with delays along with congestion do suggest longer-lasting effects on global supply chains. With Russian products now subject to bans and sanctions, it means that shippers will be compelled to steer away from the Euro-Asian route. It means that the subsequent delivery of crucial products to several European manufacturers will have to face delays – if delivered at all. As the war continues, logistical passageways might have to be rerouted, meaning that not everything will return to normal anytime soon. Whatever happens, without a doubt, global trade flows will have to be significantly reshaped, especially by jurisdictions that source alternatives for commodities, along with the shift towards increased self-sufficiency – which seemed already visible even before the Russian/Ukraine war – being spurred even further. Author Profile: Faith Wanjiru is a contributing writer and blogger with interests in manufacturing, technology and finance. n Manufacturing Outlook / May 2022

MANUFACTURING TIDBITS

THE AUTOMATE SHOW: A PREVIEW LABOR AND LEARNING FROM A SHARK by Rob Britt Lack of labor is the problem addressed at the upcoming Automate Show. Since the total cost of a fork truck driver including benefits, training, vacation time averaged $40,000 before COVID, that price tag is up 50% to $60,000. That increase is almost impossible to absorb for manufacturing operations, warehouses, and distribution centers, operating two and three shifts. Operations Managers report the budget can rarely absorb increased wages, and human resource managers see significant challenges in replacing fork truck drivers.

Simple magnetic A to B AGV solutions solve the HR challenge and they work three shifts, without breaks, or health insurance. They are readily available and the fastest 2022 automation implementation solution.

When the Automate Show was colocated as part of ProMat, pre-COVID, it was the “cool and sexy” James Bond gadget part of the show. The Automate Show, in Detroit June 6 - 9, 2022 is the height of pragmatic reality, namely that automation is no longer optional.

Because there is such a shortage of fork truck drivers for the foreseeable future, automation has become an imperative. The only alternative is to automate with AGVs (automated guided vehicles) and AMR (automated mobile robots), bringing loads of finish goods (or sub-

assembly) from docks to warehouses and warehouse to docks. Until now, so many of the automated solutions were chock full of unneeded bells and whistles. While IIoT (Industrial Internet of Things) and continued

Manufacturing Outlook / May 2022

MANUFACTURING TIDBITS Industry 4.0 initiatives are useful and helpful, they are not the cause of the 2022 imperative to automate. More about the Automate Show

Automate is produced by the Association for Advancing Automation (A3) and is the largest solutions-based showcase of automation, robotics, vision, motion control, and more in North America. Automate will feature a full spectrum of automation technologies and solutions, from tried-andtrue to cutting-edge. Automate will highlight solutions from 500 global vendors with 250,000 square feet of exhibits featuring live demonstrations of products and systems that are solving industry challenges. Attendees have access to over 20,000 decision makers from around the world—spanning 40+ industries and performing every type of application. From small and medium-sized companies to global enterprises, attendees are looking to unlock tomorrow’s possibilities. Seventy percent of them plan to purchase within 12 months of being at the show. Some great speakers at Automate Shark Tank fans know him well. Daymond John, Founder/ CEO of FUBU and Presidential Ambassador for Global Entrepreneurship, will share his 5 Shark Points: Fundamentals for Success in Business and Life.

Daymond has been a phenomenally successful businessperson for over 25 years. Along his entrepreneurial journey, through his many successes as well as failures, he has learned a few things about getting the best out of business and life. He believes the keys to his success include establishing the right mindset and following a few fundamental principles, which he calls his five “S.H.A.R.K. points.” Thursday, June 9th, Rachele Focardi, will discuss the Future of Work: The Multigenerational Post-Covid Workplace. She will share data and findings about Generational Diversity, Multigenerational Workforce Effectiveness, and Employer Branding. Focardi insists that acknowledging and addressing generational differences and preferences has never been more important than it is right now – especially in today’s remote/hybrid work environment. Focardi is a best-selling author of “Reframing Generational Stereotypes” and leading expert on Multigenerational Workforce Effectiveness will create awareness around the challenges and opportunities in a multigenerational workforce, go beyond the lazy,

sweeping stereotypes around the evolution of peer groups, and truly analyze the key attributes that set generations apart and bring them together. She will also share fresh research and insights to address some of the most pressing topics related to the future of work through the eyes of our multigenerational colleagues, including how Baby Boomers, Gen X, Millennials and Gen Z have experienced work during the Pandemic; what they think the Future of Work should look like; and what employers can do to support them amongst all this disruption.

Kivnon will highlight robotics automation during the Automate Show at Booth #4152. Author Profile:

Rob Britt brings more than 20 years of sales and management experience to the Sales Engineer position at Kivnon USA. His diverse background includes technical sales and involvement in large capital projects involving AGVs. Britt brings a dedication and enthusiasm to the company that will ensure customer satisfaction and increased market share for Kivnon in the U.S. Britt can be reached on LinkedIn. n Manufacturing Outlook / May 2022

MANUFACTURING TIDBITS

THINGS ARE LOOKING UP FOR WOMEN IN ROBOTICS AND MANUFACTURING by Maggie Oltarzewski The robotics and manufacturing industries are improving for women. As a Millennial completing a master’s degree this year and serving as Solutions Engineer for BALYO Robotics (a French company with US operations based in Massachusetts), it is great to report that the general push for women in STEM (Science, Technology, Engineering, and Mathematics) is paying off. There are significant numbers of manufacturing and robotics companies which have publicly stated the importance and value of gender equality; they are eager to find female talent. This is applicable in robotics, manufacturing, as well as other engineering disciplines. For qualified female candidates, this can only work in their favor.

The collegial experience of women in robotics and manufacturing I am very pleased to have formed relationships with other women in robotics and manufacturing. Attending events such as the Robotics Summit & Expo allow young profession women to foster relationships with other women in industry helped greatly. There is a respect and kinship between women in industry; we all understand what it takes for a woman to be successful in a male-dominated field. The women who have come before me helped blaze a trail that made it possible for me to get where I am today. I intend to pay it forward to the female engineers who follow me.

Admittedly, fostering these relationships can be difficult when it is so common to be the only woman in the room. Clients and other professionals in the supply chain, logistics, and engineering industries are noticeably more receptive to women than three years ago. Role models build credibility for all women in robotics and industry Some report there is still a perceived credibility gap for women in robotics and manufacturing. While not as overt as it may have once been, it still rears its head in small ways. It helps when a male colleague stands up for female workers. Ironically, women’s work product may still be attributed to a male coworker even when she is leading all the communication. Having male and female champions, allies, and role models goes continued

Manufacturing Outlook / May 2022

MANUFACTURING TIDBITS Manufacturability, Production, and Distribution Track was well-attended by women which featured these issues: • Robotics-as-a-Service • Robotics Innovation Clusters • Distributors and Wholesalers • Fostering a Developer Community • Legal Services / Protecting IP • Selling Robotics: Retail, OEM, and VAR Options • Global Partnering Opportunities Gender equality as a competitive advantage

a long way to help establish credibility, but that should not be a prerequisite for respect.

further to go for equality, but at least it reinforces the idea that women can, and should, have a place in STEM fields.

STEM impacts women’s acceptance in robotics and manufacturing

The forecast of women in robotics and manufacturing

The STEM push for women in precollege, college, and post graduate degrees has made the market more accustomed to working with women. When women are more prevalent in those spaces, it raises the bar for everyone involved. There is still

Because there are hiring challenges in industry overall, a remarkable opportunity for women in robotics and manufacturing has never been stronger. The labor shortage throughout automation and robotics may actually be an advantage for women hoping to enter the field. Having recently attended the Robotics Summit & Expo May 10 – 11 in Boston, more women attended and participated than ever before. The

Companies striving for gender equality in robotics and manufacturing are recognized as having a competitive advantage. Companies desperate to hire the best candidates also realize the core value in diversity. The more diversity within a team, whether gender, race, ethnicity, or economic background, the more powerful that team becomes. Everyone accepts that it is important to hire people with diverse skillsets and education to form a well-rounded team. By 2025 more than one-third of all jobs in robotics, engineering, and manufacturing will be filled by women. Embrace it. Author Profile:

Maggie Oltarzewski is the Solutions Engineer for BALYO in the US. After spending several years installing BALYO’s AGV systems, she uses the knowledge gained in the field to help develop projects in the sales stage. Oltarzewski attends Tufts University Gordon’s Institute earning her (TGI) Masters of Science in Engineering Management (MSEM). She appeared on the Women and Manufacturing (WAM) podcast last year. n

Manufacturing Outlook / May 2022

CASS INDEX OUTLOOK

Cass Transportation Index Report by CASS INFORMATION SYSTEMS, INC.

Cass Freight Index - Shipments U.S. freight volumes fell in April from March and the year-ago period. And with more difficult comparisons in the next few months as global supply chain disruptions are set to intensify, more softness is on the horizon. The shipments component of the Cass Freight Index fell 0.5% y/y, following a 0.6% y/y increase in March. The shipments component of the Cass Freight Index fell 2.6% from March, and this was 0.9% below the normal seasonal pattern.

Manufacturing Outlook / May 2022

Freight was slowing even before the war in Europe began, but the effects of the additional surge of inflation and recent interest rate increases seem to have push volumes over the edge. After a nearly two-year cycle of surging freight volumes, the freight cycle has downshifted with a thud. It’s possible the April data include some indirect impact from lockdowns in China, but with container ship backlogs still off North American ports, the direct effects on finished goods imports seem more likely in the June/July timeframe.

The prospect of freight recession is now considerable, as substitution from goods back to services spending picks up pace, and as inflation slows overall spending, particularly via higher fuel prices and by pressing up interest rates. Freight Expenditures The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, rose 0.2% m/m in April against a shipment decline of 2.6%. Compared to a year ago, total freight expenditures were up 31% y/y. Overall rates were up 2.9% . continued

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

CASS INDEX OUTLOOK On a seasonally adjusted basis, expenditures fell 2.0% m/m while shipments fell 1.0% m/m. Rates are still creeping higher. The two-year stack compares against the worst of the pandemic shutdown, so it isn’t very meaningful, but the Expenditures component of the Cass Freight Index was up 90% over April 2020, with shipments up 27% and rates up 49%. This index rose 38% in 2021, after a 7% decline in 2020 and no change in 2019. Tougher comparisons in the coming months will naturally slow these y/y increases, but just using normal seasonality from here, the increase in 2022 will still be about 24%. Inferred Freight Rates The freight rates embedded in the two components of the Cass Freight Index slowed to a 31% y/y increase in April from 32% in March. Cass Inferred Freight Rates rose 1.5% m/m on a seasonally adjusted basis in April, setting another new record, but this was likely mainly on fuel surcharges. These rates are representative of the industry’s mix of contract and spot rates, but spot rates have turned sharply lower exfuel recently in the more real-time spot markets. Though these rates are all-in, in contrast to the Cass Truckload Linehaul Index which excludes fuel and accessorials, this signals significant deceleration in the next six months, even assuming higher fuel costs persist. Significant risks remain, such as new COVID variants, and equipment capacity remains limited and could tighten further if the Russia/Ukraine

war worsens the chip shortage. But 2022 has featured big improvement in driver availability and slowing of freight demand. This is a deflationary combination, though it will take several months to filter from the spot market into contract rates.

Truckload Linehaul Index The Cass Truckload Linehaul Index® rose 14.1% y/y in April to 167.1 after rising 14.2% y/y in March. While truckload rates have had an extraordinary cycle, the key leading indicators have fallen sharply over the past few months, which we expect to limit further upside in the Cass Truckload Linehaul Index and change its trajectory over the course of the year. Normal contract timing would suggest there’s room for this index to continue to rise for a little longer after the peak in spot rates, but the clock is ticking.

There have been tentative signs of recovering intermodal network fluidity as chassis production continues to accelerate and brisk hiring continues. But intermodal volumes continue to underperform the shipments component of the Cass Freight Index, and rail network congestion continues to add to Cass Inferred Freight Rates via excess miles in the freight network. Excess miles, rising fuel surcharges, and accessorial fees are all factors excluded from the Cass Truckload Linehaul Index, so the true increase in freight cost, depending on how these factors shake out, is between the 14% y/y increase in the Cass Truckload Linehaul Index and the 31% y/y increase in the inferred rate. Freight rates rose 23% in 2021. The normal seasonal pattern from here would suggest some acceleration this year, and it is likely to accelerate next month on an easy comparison, but we would expect a slower fullyear rate change. Cass Inferred Freight Rates are a simple calculation of the Cass Freight Index data, expenditures divided by shipments, producing a data set that explains the overall movement in cost per shipment. The data set is diversified among all modes, with truckload representing more than half of the dollars, followed by LTL, rail, parcel, and so on.

Freight Expectations As recently as the start of this year, pricing power in the truckload market was firmly with fleets. After nearly two years in this position, the concept of the pricing power pendulum almost seemed obsolete to many. Until it swung and cratered rates. Once a pendulum gets going, it’s very hard to stop. Not coincidentally, the SupplyDemand Balance in ACT Research’s for-hire survey turned loose this month, for the first time since June 2020, as the rebalancing, drawn-out by the pandemic, hit critical mass. The combination of inflation, Fed monetary tightening, war in Europe, and substitution back to services from goods are all leading to a downshift in the freight cycle. And consistent with the fundamental reason for cyclicality in the freight sector, the capacity response is occurring just as the surge in demand is ebbing. While this will be good news to some, including shippers and those anxious about broader inflation, it is a sign for fleets to batten the hatches. Far from stagflation, these dynamics strongly suggest freight rate deflation is on the horizon. n

Manufacturing Outlook / May 2022

ISM REPORT OUTLOOK

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

ISM PMI at 55.4% for April 2022 Released May 2nd ISM PMI for the past 5 years

APRIL 2022 55.4%

Expanding Contracting

continued

Manufacturing Outlook / May 2022

ISM REPORT OUTLOOK INSTITUTE FOR SUPPLY MANAGEMENT®

Analysis by

reportonbusiness Economic activity in the manufacturing sector grew in April, with the overall economy achieving a 23rd consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The April Manufacturing PMI® registered 55.4 percent. This is the lowest reading since July 2020 (53.9 percent). The New Orders Index registered 53.5 percent, down 0.3 percentage point compared to the March reading of 53.8 percent. Manufacturing performed well for the 23rd straight month, with demand registering slower monthover-month growth (likely due to extended lead times and decadeshigh material price increases) and consumption softening (due to labor force constraints). Overseas partners are experiencing COVID-19 impacts, creating a near-term headwind for the U.S. manufacturing community. Seventeen manufacturing industries reported growth in April, in the following order: Apparel, Leather & Allied Products; Machinery; Plastics & Rubber Products; Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Paper Products; Primary Metals; Furniture & Related Products; Chemical Products; Textile Mills; Fabricated Metal Products; Miscellaneous Manufacturing‡; and Wood Products. ISM

‡Miscellaneous Manufacturing (products such as medical

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

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

MANUFACTURING

PMI at 55.4% ®

PMI

Manufacturing grew in April, as the Manu2020 2021 2022 facturing PMI® registered 55.4 percent, 1.7 percentage points lower than the March read55.4% ing of 57.1 percent. The 55.4-percent reading 50% = Manufacturing Economy is the same as in August and September Breakeven Line 2020 and the lowest since July 2020, when 48.7% = Overall Economy the composite index registered 53.9 percent. Breakeven Line The Manufacturing PMI® continued to indicate solid sector expansion and U.S. economic growth in April. All five subindexes that directly factor into the Manufacturing PMI® were in growth territory.

Manufacturing at a Glance INDEX

Apr Index

Mar Index

% Point Change

Direction

Rate of Change

Trend* (months)

Manufacturing PMI®

55.4

57.1

-1.7

Growing

Slower

New Orders

53.5

53.8

-0.3

Growing

Slower

Production

53.6

54.5

-0.9

Growing

Slower

Employment

50.9

56.3

-5.4

Growing

Slower

Supplier Deliveries

67.2

65.4

+1.8

Slowing

Faster

Inventories

51.6

55.5

-3.9

Growing

Slower

Customers’ Inventories

37.1

34.1

+3.0

Too Low

Slower

Prices

84.6

87.1

-2.5

Increasing

Slower

Backlog of Orders

56.0

60.0

-4.0

Growing

Slower

New Export Orders

52.7

53.2

-0.5

Growing

Slower

Imports

51.4

51.8

-0.4

Growing

Slower

Overall Economy

Growing

Slower

Manufacturing Sector

Growing

Slower

*Number of months moving in current direction. Manufacturing ISM® Report On Business® data has been seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.

Commodities Reported Commodities Up in Price: Adhesives and Paint (5); Aluminum (23); Aluminum Products (4); Brass (2); Caustic Soda (2); Copper (4); Corrugate (3); Corrugated Packaging (18); Diesel Fuel (16); Electrical Components (17); Electronic Components (17); Energy (2); Epoxy; Freight (18); High-Density Polyethylene (HDPE); Hydraulic Components (2); Labor — Temporary (12); Lumber (5); Natural Gas* (10); Nickel (2); Packaging Supplies (17); Paper (2); Plastic Resins (4); Plywood (2); Polypropylene (2); Polyvinyl Chloride (PVC); Resin Based Products; Rubber Based Products (9); Solvents (3); Soy Based Products (4); Steel (21); Steel — Cold Rolled; Steel — Hot Rolled (2); Steel — Stainless (18); Steel Products (20); and Titanium Dioxide.

equipment and supplies, jewelry, sporting goods, toys and office supplies). Note: To view the full report, visit the ISM ® Report On Business ® website at ismrob.org

The number of consecutive months the commodity has been listed is indicated after each item. *Reported as both up and down in price.

continued 12

ISMWORLD.ORG

Manufacturing Outlook / May 2022

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI® New Orders (Manufacturing) 2020

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

New Orders

2022

2021

ISM’s New Orders Index registered 53.5 percent. Of the 18 manufacturing industries, 11 reported growth in new orders in April, in the following order: Printing & Related Support Activities; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; Furniture & Related Products; Paper Products; Fabricated Metal Products; Machinery; Miscellaneous Manufacturing‡; Chemical Products; and Plastics & Rubber Products.

53.5%

52.9% = Census Bureau Mfg. Breakeven Line

Production (Manufacturing) 2020

Production

2022

2021

53.6%

52.4% = Federal Reserve Board Industrial Production Breakeven Line

The Production Index registered 53.6 percent. The 14 industries reporting growth in production during the month of April — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Primary Metals; Wood Products; Plastics & Rubber Products; Transportation Equipment; Machinery; Computer & Electronic Products; Miscellaneous Manufacturing‡; Paper Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Chemical Products.

Employment (Manufacturing) 2020

2021

Employment

2022

ISM’s Employment Index registered 50.9 percent. Of 18 manufacturing industries, nine industries reported employment growth in April, in the following order: Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; Machinery; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products.

50.9%

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

Supplier Deliveries (Manufacturing) 53.1% 2020

2021

2022 80

67.2%

Supplier Deliveries The Supplier Deliveries Index registered 67.2 percent. Of 18 manufacturing industries, 16 reported slower supplier deliveries in April, in the following order: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Paper Products; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Computer & Electronic Products; Machinery; Primary Metals; Furniture & Related Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing‡; Nonmetallic Mineral Products; Transportation Equipment; and Electrical Equipment, Appliances & Components.

Inventories (Manufacturing) 2020

2021

2022

51.6%

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

‡Miscellaneous

The Inventories Index registered 51.6 percent. The 11 industries reporting higher inventories in April — in the following order — are: Apparel, Leather & Allied Products; Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Paper Products; Machinery; Chemical Products; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; and Computer & Electronic Products.

Manufacturing (products such as medical equipment and

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

Inventories

Manufacturing Outlook / May 2022

continued

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI®

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

Customer Inventories (Manufacturing) 2020

2021

2022

37.1%

Customers’ Inventories ISM’s Customers’ Inventories Index registered 37.1 percent. Only Apparel, Leather & Allied Products reported customers’ inventories as too high in April. The 13 industries reporting customers’ inventories as too low during April — listed in order — are: Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Machinery; Fabricated Metal Products; Wood Products; Primary Metals; Miscellaneous Manufacturing‡; Computer & Electronic Products; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components.

Prices (Manufacturing) 2020

2021

2022

84.6%

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

Backlog of Orders (Manufacturing) 2020

2021

2022

56%

Prices The ISM Prices Index registered 84.6 percent. In April, 17 of 18 industries reported paying increased prices for raw materials, in the following order: Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Textile Mills; Primary Metals; Machinery; Food, Beverage & Tobacco Products; Furniture & Related Products; Miscellaneous Manufacturing‡; Transportation Equipment; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Printing & Related Support Activities; and Wood Products.

Backlog of Orders ISM’s Backlog of Orders Index registered 56 percent. Ten industries reported growth in order backlogs in April, in the following order: Apparel, Leather & Allied Products; Computer & Electronic Products; Paper Products; Machinery; Plastics & Rubber Products; Furniture & Related Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Miscellaneous Manufacturing‡.

New Export Orders (Manufacturing) 2020

2021

2022

52.7%

New Export Orders ISM’s New Export Orders Index registered 52.7 percent. The five industries reporting growth in new export orders in April are: Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Machinery; and Chemical Products. The only industry reporting a decrease in new export orders in April is Paper Products.

Imports (Manufacturing) 2020

2021

2022

51.4%

‡Miscellaneous

Imports ISM’s Imports Index registered 51.4 percent in April. The four industries reporting growth in imports in April are: Wood Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Chemical Products. Eight industries reported no change in imports in April. n

Manufacturing (products such as medical equipment and

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

Manufacturing Outlook / May 2022

COVER STORY: TALENT OUTLOOK

MAY 2022

TALENT OUTLOOK The Supply of Skilled Labor by Ben Talbert

continued

Manufacturing Outlook / May 2022

COVER STORY: TALENT OUTLOOK “We always say live for today and don’t waste time worrying about tomorrow. But what keeps us up at night is knowing that tomorrow is roaring down on us like a tsunami, and a lot of us don’t know how to swim.” -- Police procedural crime novelist, Barbara Nickless, from her book Ambush People often think that tsunamis are simply massive waves that submerge a body of land -- the kind of waves, for instance, that a hurricane produces. Instead, a tsunami is not only a massive amount of water covering an area of land, but also an underlying epic and violent change in the seafloor, often caused by an earthquake or volcano, that displaces a significant mass of water. The combination of displacing the water and the sudden change in the floor under that water can produce waves that arrive on land at heights of 75 to 100 feet. In the case of the largest known tsunami in Alaska, occurring in 1958, “wave run-up reached a height of 1,720 feet” according to Live Science. I’ve been a recruiter for various sectors of manufacturing for nearly a decade and prior to that I worked for 10 years as an engineer, first in a large textile and chemical manufacturer, and then for a regional design and construction firm. I can safely say that in my 20 year career I have never seen so desperate a need for manufacturing talent at all levels as this year. I frequently hear -- and have said these words myself -- “where have all the people gone?” At times the talent shortage has felt “tsunamilike” in its scale. I think, in order to solve a problem, you have to first understand why the problem has occurred. In the case of our current talent shortage we have, like natural tsunamis, two

different causes, one immediate and circumstantial, and the other an epic generational shift.

retail, restaurants, events, and yes, manufacturing -- was most effected by the shut-downs and layoffs.

2020 Response & Consequences The immediate, circumstantial lack of talent right now has occurred because of the events of 2020 and response to it from both companies and governments. You’ve heard of “The Great Resignation” and maybe you’ve even experienced it at your company. Think of these employment changes as the immediate wall of water rushing towards land.

Some of those who remained within the corporate structure have struggled as well. The uncertainty and confusion of a year or more of tenuous employment damaged their motivation and commitment.

1) A large number of employees were laid off by companies or were forced to stop working by government edicts. I think we are underestimating what that did to people’s minds and hearts. Some of those who are driven and resourceful determined that they would never again be as subject to the “whims” or power of companies as they were then -- and they often went to work for themselves. Entrepreneurship was given a significant boost during the pandemic in part because people felt as if they had no other options. In particular in-person employment -- like

2) Significant burnout occurred for those in the most-effected industries as they were left to carry the load with less staff, fewer resources, logistics and supply shortages, and often tense and angry customers. That also led to many rethinking their careers and lifestyles. 3) People were faced, some for the first time, with the thought of their own mortality and this has caused perspectives and priorities to change. People simply developed different values over what is now an approaching three year mark. 4) Plenty of baby boomers simply chose this time to finally retire. They looked at a sea of shortages, stress, staff depletion and thought “I can move on from this.” continued

Manufacturing Outlook / May 2022

COVER STORY: TALENT OUTLOOK

5) Three million women were forced to leave a job because of the logistics of family, children, and schooling during COVID. Only two million have returned, leaving a gap of one million who have not yet returned to work and may never do so due to either childcare issues, changing values, or other reasons. (For further discussion on this issue see the latest U.S. Bureau of Labor Statistics jobs report, this CNBC story, and this SHRM analysis.) Give people an opportunity to live life a different way -- and some people never look back.

An Epic, Generational Shift The immediate, circumstantial causes of our talent gap would be enough to create quite a wave. But underlying that massive wave is the underlying epic shift under the water at the seafloor level. For probably one of the first times in history, we have five generations in the workforce -- Silents/Traditionalists (now in their 70s), Boomers, Gen-X, Gen-Y/ Millennials, and Gen-Z -- all shaped by staggeringly different life experiences, at different stages in life, and with different cultures and values -- and yet we frequently offer a onesize-fits-all workplace environment. Furthermore, to add to the challenges of coping with the needs of very different generations in the workforce, power in the hiring process has shifted from employer to the candidate. What that means is that the employer has to work at least as hard as the candidate to be attractive to that candidate. In other words, the company must market itself not just to its customers, but to potential employees.

6) Many people learned that they liked working virtually, flexible hours, and being at home rather than commuting to the office. If I’ve heard it once I’ve heard it a thousand times: “I get more done at home, and I don’t waste an hour in the car driving to and from the office either.” In fact, one of the motivating factors for some finding new jobs, new careers, and new industries was the “back-tothe-office” announcements that staff didn’t want to hear.

According to now-familiar demographic research, each of the five generations is accustomed to and appreciates a different managerial style, has sought different career goals (even in their youth, Traditionalists sought security and stability over autonomy/freedom/ options), and perceives different reward structures for work. Without reviewing every category for each generation, let me mention a few well-recognized contrasts in style.

To sum up the above, there are more options for people to make money than there have ever been before -and, increasingly, people have learned to more greatly value career freedom.

-- Both traditionalists and babyboomers saw job stability -- staying with one company or at most two or three (if they were daring!) -- as appropriate and positive. The average millennial has

held somewhere around seven jobs before age 30. They think nothing of switching jobs -- it’s considered a natural part of life and career. Careers for four generations were built on the annual review and limited formal feedback. Gen-Z is used to real-time constant feedback at the push of a button. Now.

Gen Z doesn’t “go online” -- they live online. They are digital natives -extremely tech-savvy -- and born to live in a digital/virtual world. Increasingly younger generations of workers rely on workplaces to provide purpose and personal development. The purpose -- not duty -- of the work is what motivates them to get out of bed in the morning and head to the workplace. They don’t pursue sameness or stability; they pursue change, growth, stimulation, and the new and different. If you are thinking of keeping Gen Y or Gen Z employees in the same jobs or roles for even a one-year period, you will lose them. To sum up the above, unless manufacturers are able to flexibly adapt to the needs, cultures, goals, and values of the newer generations, they will not appreciably close the talent gap. That combination of the unique circumstances of the past two+ years, continued

Manufacturing Outlook / May 2022

COVER STORY: TALENT OUTLOOK which has led to a radical shift in employment values for a large portion of the workforce, plus the significant underlying epic generational shifts that manufacturers must adapt to, is what I believe has led to our staggering talent losses. The best way that I know to succinctly describe that process of appeal, adaptation, and marketing that employers will have to pursue to make up that talent gap is that leaders are going to have to pay attention to and build the employer brand as much as they have worked to build the product, service, or consumer brand of the company. Building the employer brand is easy enough to say. But tackling the steps and sometimes the deep cultural shifts that will have to take place

to build a recognizable, appealing employer brand to potential staff is the stuff of years of intentional work -- and the topic for another article (or ten articles!) as well. About the author: Ben Talbert is Founder and CEO of Better Than Found, a full-service professional and executive recruitment firm focusing on industrial sectors in manufacturing, engineering, and construction. Headquartered in Greenville, SC, BTF’s experience includes recruitment for clients throughout the Southeast in textiles, HVACR, consumer products, OEM industrial equipment and aftermarket parts

supply, capital equipment design/ engineering/automation/integration, plastics and packaging, automotive, aerospace, power generation, warehousing/distribution/logistics, chemicals, and food and beverage. The mission of Better Than Found is to leave companies, careers, and lives better than we found them. For more information, visit https:// btfsearch.com or connect with Ben Talbert at linkedin.com/in/bentalbert. expansion territory with a reading of 57.1. Consumers are still spending and corporations continue to build inventory as they seek to reverse the trend in inventory to sales. Even with much higher fuel costs and inflation showing up in everything from food to consumer goods, the retail numbers are holding. The housing market remains strong although the

Manufacturing Outlook / May 2022

NORTH AMERICA OUTLOOK

MAY 2022

NORTH AMERICA OUTLOOK

The Positives Outweigh the Negatives – So Far

by Chris Kuehl United States It appears we have reached a crossroads of sorts. Is the economy teetering on the edge of a recession as some have suggested? There certainly are some indicators that are pointing that way – most notably the inverted yield curve. This development has preceded several past recessions but the problem is timing – these recessions have emerged in a period ranging from a few months to two years. In truth, it is not the inversion of the two-year and ten-year bonds that trigger a recession, it is the actions of the Fed, or more precisely, the anticipated actions. If the Fed reacts to inflation aggressively and jacks interest rates, then the economy

can stutter and sink. If one looks at the variety of economic indicators released thus far, there is little or no threat of a downturn, much less an actual recession. The threat comes from what is expected to happen in the coming weeks and months. First, the good news. These are the factors that clearly show the economy to be robust and growing. The rate of unemployment continues to be at record lows and most predictions have it remaining below 4.0% for the remainder of the year. The latest PMI numbers are still firmly in expansion territory with a reading of

57.1. Consumers are still spending and corporations continue to build inventory as they seek to reverse the trend in inventory to sales. Even with much higher fuel costs and inflation showing up in everything from food to consumer goods, the retail numbers are holding. The housing market remains strong although the pace of new home sales has fallen from its peak a few months ago. There has been some rise in mortgage rates and the prime rate but they remain at historic lows. There is just nothing in the current data that would send much of an alarm – at least for the time being. continued

Manufacturing Outlook / May 2022

NORTH AMERICA OUTLOOK The question is whether the data has been slow to capture the extent of the economic angst. Is this the calm before the storm? The pressures on the economy are obvious enough and there are certainly actions underway designed to address them. Inflation is the topic of the moment with rates as high as they have been in four decades. The driver of these higher prices has been energy (for obvious reasons) but now there are additional motivators such as wage growth. The pace of labor costs has accelerated but not as fast as inflation so workers are still falling behind. The wage rate has risen by an average of 5.6% and inflation has been at 7.5%. If wages catch up to inflation there will be a major problem – the development of the dreaded wage/price chase. Producers will have no choice but to hike prices if wages accelerate at this pace and that, in turn, triggers more wage demands. The assumption has been that energy costs will slowly decline as more production comes on line, but this is based on some kind of end to the Ukraine war that allows Russian oil and gas to flow again. It is also based on the expectation that global oil producers will step up. Neither of these is a sure thing by any stretch. The negotiations between Russia and Ukraine are going nowhere and many of the oil producers have not been willing to go all out when there is a possibility that demand for oil will falter due to the higher prices and the fact that tens of millions of people continue to avoid the daily commute that drives most of the demand in the US. At this point, a full-scale recession, defined as two consecutive quarters of negative growth, seems highly unlikely but the confident estimates of 4.0% GDP growth this year have been replaced by predictions around 2.0% Canada The Canadian economy started to show some solid signs of recovery at the start of the year but these indicators

are not all that robust. The growth in Q1 has been just 0.2% but that marks the eighth straight month of growth. The goods-producing sector is behind nearly all of this gain – 0.8%. The service sector has not been as responsive for a variety of reasons – most notably a reaction to the pandemic at the start of the year which once again slowed the resumption of the patterns that traditionally drive the service sector. Much of the growth has also been attributed to expanded construction activity – mimicking the kind of transportation growth seen in the U.S. Given the importance of the commodity sector in Canada, there has been a surge in demand for everything from oil and gas to food. The activity in the oil sector has people referring to Ft. McMoney again! The farming sector will see good prices for output later this year but input costs have been very high (everything from fuel to fertilizer). The manufacturing sector parallels that of the U.S. and automotive has been recovering at a similar pace to that in the U.S. as some of the chronic shortages have started to ease. The bad news is that people shunned service activity at the start of the year – affecting entertainment, hospitality, travel, retail, and the like. These sectors have started to rebound as the pandemic fears have faded a bit. The retreat in January cost some 100,000 jobs but roughly two-thirds of these have returned. Mexico There has been a reduction in growth expectations for Mexico – a situation that has become very familiar for most nations. The Finance Ministry now thinks annual growth will be around 3.4% even with the higher demand for oil. The previous projection was for 5.0% to 5.5%. The culprits are familiar ones by now – pandemic and the Ukraine war (the pair of black swans that have dominated the global economy). The four legs

of the Mexican economy have long been manufacturing, oil, tourism, and remittances. Only one of these would be deemed healthy at this point. The per barrel oil price is high but the oil sector in Mexico has not been able to meet the demand due to lack of investment over the last few years. The government under Andres Manuel Lopez Obrador has shunned foreign engagement and the sector has suffered. Production is as low as it has been in over a decade. Manufacturing has overtaken oil as the dominant driver of growth and is not doing badly except for the challenges of the supply chain. The vast majority of these operations are connected to the U.S. manufacturing community and that has meant that Mexico is getting in on the move to near shore and on shore. Companies that have decided to reduce exposure in China are choosing Mexico more often. Tourism has been decked by both the pandemic and the violence that plagues Mexico. The drug wars once took place far from the tourist areas but that has not been the case in years. The number of tourists has declined sharply and outbreaks of the virus have further dampened this sector. Remittances from the workers in the U.S. have been declining as migration into the U.S. has been affected by more hostile U.S. policies. Inflation is projected to be at 5.5% by the end of 2022, slowing to 3.3% by the end of 2023. The exchange rate is seen at 20.7 pesos per U.S dollar for the end of 2022, and 20.9 pesos at the end of 2023, compared with 19.8 pesos on Friday. Mexico expects this year’s average oil price will be $92.90 per barrel, while crude production is estimated at 1.82 million barrels per day (bpd), rising to 1.85 million bpd in 2023. The oil ministry expects an average of 879,000 bpd of crude exports in 2022. n Chris Kuehl

Manufacturing Outlook / May 2022

EUROZONE OUTLOOK

GLOBAL OUTLOOK

EUROZONE

by Chris Anderson S&P Global Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI), rolled up to 55.5 in April, compared to 56.5 in March, still in expansion territory. The April PMI is at a 15-month low, and production increased only slowly and at the weakest rate over the current 22-month growth period. The subdued increase in new orders was put down to COVID restrictions in China and the conflict in Ukraine. Input price inflation increased to a five-month high, with increasing fuel

Manufacturing Outlook / May 2022

and energy costs. Manufacturers went for the fastest increase in selling prices on record in April. There were shortages of raw materials and components and considerable delivery delays. Backlogs increased and jobs growth was slightly faster than in March. THE UK saw a pick up in manufacturing growth in April, with a slight improvement in production growth, and new orders up at a slower pace, as export sales fell. Selling prices were up at a record pace with cost inflation. The PMI increased slightly from 55.2 in March to 55.8 in April. Improvements were seen in all major sectors: consumer, intermediate, and investment goods, with consumer goods showing merely a marginal expansion. Chemicals, energy, food,

freight, fuels, gas, metals, oil, plastics, polymers, timber, and transportation (by air, land and sea) were all up in price. Certain companies complained that “everything is up in price.” Along with increased vendor lead times, companies were falling over themselves to increase selling prices. Employment was up for the 16th consecutive month. European and UK car sales were down for the ninth month in a row, due to supply chain problems. The decrease was 19 percent, to 1.13 million units. A serious problem was a lack of wire harnesses, produced in Chris Anderson, Staff Writer

Ukraine. n

GLOBAL PMI OUTLOOK

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

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

Expansion Slowing - Still Growing APRIL 2022 BUSINESS SURVEY INSIGHTS

seems to be a common agreement that supply chain improvement is happening.

a long way to go to re-supply the basic industries such as food, energy, and chemicals.

According to our scatterplot of 18 surveys, five economies reported Expanding- Strengthening; an additional ten reported ExpandingWeakening, one reported Contracting - Strengthening, and two reported Contracting-Weakening. In April, both China surveys - CFLP (47.4) and Caixin (46.0) fell below 50. Mexico (49.3) failed to exceed the mid-point for the 26th consecutive month. There

There are still opportunities for further improvement, and we can start to see results in manufacturing and services. The job market remains tight, and there are numerous help wanted signs on major thoroughfares. Causes for concern persist, energy prices do not appear to have peaked, as Europe has sanctioned Russian oil and there are projections for oil in excess of $150 a barrel. We still have

Given the current PMI readings from around the globe, we see continuing expansion with numerous readings in the low to mid 50s, particularly in manufacturing. It has taken quite an effort to sew the patchwork of products and relationships that make the wheels keep turning. We don’t expect a perfect recovery out of an imperfect business cycle. However, we are seeing signs of sustainable business activity.

continued Manufacturing Outlook / May 2022

GLOBAL PMI OUTLOOK ISM U.S. Manufacturing PMI™ The U.S. Manufacturing sector has performed extraordinarily well in the previous 24 months with the PMI averaging 58.1 percent. Though that strength may or may not be coming to an end, it still shows significant resilience given the challenges that the U.S. and many of its trading partners had to survive thanks to Covid and its devastating impact on rallying sufficient forces to keep supply lines moving. Last month we noted that New Orders, Backlog of Orders, and Production weakened at least four percentage points. This month we see that downward spiral strengthening as New Orders remained flat, Employment fell by 5.4 percent, and Backlog of Orders fell by 4 percent. Factory closures globally are still presenting challenges. In April, the Chinese government decided that a regional lockdown for Shanghai was in order. This, as well as commodity shocks, has sent global supply chains into another tailspin. Major industries are impacted – metals, chemicals, agricultural, energy, and electronics, appear to be among the groups hardest-hit. The table below highlights the 12-month performance from May 2021 to April 2022.

New Orders Minus Inventories: This key spread rose to +1.9, signaling New Orders are burning inventories and improving. We like to see New Orders typically outpace Inventories by an average of 6-8 points. The outlook for growth in supply chains should improve monthly during the year. Customers’ Inventories: The index for raw materials, components, and finished goods came in at (37.1, +3.0). This is “too low” for the 67th consecutive month and the index has been under 40 percent for the past 21 months. This is an indication that buyers are still struggling to keep plants synchronized with their supply chains. It appears that priorities for 2022 will continue to be unraveling inventory issues in many supply chains.

Prices: The Manufacturing Prices Index (84.6, -2.5) fell slightly during April. Seventeen manufacturing industries reported growth in April, in the following order: Apparel; Machinery; Plastics & Rubber; Nonmetallic Mineral; Computer & Electronic; Food & Beverage; Transportation Equipment; Printing; Electrical Equipment, Appliances & Components; Paper; Primary Metals; Furniture; Chemicals; Textiles; Fabricated Metal; Miscellaneous Manufacturing; and Wood. The only industry reporting a decrease in April compared to March is Petroleum & Coal.

These five PMI components are trending lower, and we anticipate this trend will continue during the balance of the year. According to the press release, “The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for April (55.4 percent) corresponds to a 2.3-percent increase in real gross domestic product (GDP) on an annualized basis.” Drivers: While the overall PMI still lies at satisfactory level (which boosted Manufacturing activity by more than 10% in April), the overall trend is evidently slowing.

Manufacturing Outlook / May 2022

continued

GLOBAL PMI OUTLOOK A Quick Word On Capacity Eight industries are operating below their pre-pandemic capacity utilization levels in the U.S., contributing to output limitations. Looking at the relative importance, these eleven groups comprise 38% of industrial production, a reduction of 6% from last month.

Manufacturing Outlook / May 2022

ASIA OUTLOOK

MAY 2022

ASIA OUTLOOK by Christine Casati

GENERAL TRENDS AND DIVERSE RESPONSES AS ASIA AWAKENS FROM COVID The world has changed in many ways over the past few months. Global geopolitical events, the spread of Omicron in China, and the resulting global economic fallout have resulted in a major strengthening of the U.S. Dollar which has affected economies, manufacturing, and trade throughout the Asia region. Economics is now following in the footsteps of geopolitics more than ever before, a reversal of past tendencies. There is also the growing realization that the world economy may be dealing with recurring supply chain shocks for years to come. And is there still a so-called U.S.China trade war? Technically it was brought to an end two years ago when China committed to making improvements to intellectual property protection. But they have not kept this promise, have not increased transparency nor judicial independence, and need to make a

“full range of fundamental changes,” according to a report released by the Biden Administration at the end of April. It is unlikely that U.S. manufacturers will see a relaxation of trade tariffs on Chinese products anytime soon as a result. However, we have seen a lifting of trade tariffs on certain quantities of metals coming from both Japan and Europe since the beginning of the Biden administration. Another development is the potential volatile pressure on oil prices due to an anticipated drop in demand amidst China’s ongoing lockdowns and sanctions-related oil shipment bottlenecks at ports. Slowing economic growth in China, ongoing supply chain disruptions, the weakening of the Chinese Yuan, changing investor sentiment, capital outflows, and global food price swings are also contributing to the volatility in the region in diverse

ways. And there is increasing concern that China’s stubborn adherence to Zero-Covid lockdowns will persist. The latest is that Beijing is bracing for an Omicron wave and the government is hoping to control it better than Shanghai. Clusters of apartments in 8 neighborhoods are locked down, with citywide testing now expanding from one to 12 districts (4/26-4/30). But Chinese officials claim they are taking necessary measures to support the economy which will come roaring back once the threat of mass Covid spread has passed. Let’s look more closely at some other developing scenarios. EAST ASIA (China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea, and Taiwan) China/Taiwan: Tesla: China will have a difficult time bringing about an orderly re-startup continued

Manufacturing Outlook / May 2022

ASIA OUTLOOK of factories which will be slow and costly after extended lockdowns due to logistics disarray. Tesla Shanghai, which reopened on April 19 after three weeks of closure, continues to operate at less than full capacity due to supply chain woes, with truck transport having ground to a halt for now over five weeks along with their supplier shutdowns. Manufacturers in China’s Yangzi River Delta region around Shanghai, including Zhejiang and Jiangsu Provinces, all face these bottlenecks, with no end in sight, even if they have received the government’s blessing to reopen. This region contributes over one-third of China’s GDP. (WSJ Liz Webber 4/22/22) Brewing food crisis: Ukraine is a key exporter of wheat, corn, sunflower oil, and honey to China. Winter wheat is already harvested and stored in Ukraine but cannot be shipped due to the ongoing conflict with Russia. Russia has promised increased wheat shipments and they are delivering.

But lack of cooking oil and corn could lead to local shortages and inflation in China. Potential food price inflation due to war in Ukraine is a much greater scare for China than any other inflationary pressure or manufacturing slowdown arising from Covid lockdowns. (Robin Brooks, Chief Economist, Institute of International Finance 4/25/22 Bloomberg) Semiconductors: 1) Taiwan accounts for 64 percent of the worldwide foundry market. In terms of overall semiconductor revenue, it ranks second in the world. Its IC design also ranks second while its advanced chip testing industries rank first in the world. TSMC (Taiwan Semiconductor Manufacturing Company, Ltd.) has the most advanced processing technology, and other Taiwan foundries UMC, Vanguard, and PSMC are also big players. EPS News (4/25) reports that Taiwan will control 48% of global foundry capacity by the end

of 2022. Currently, 8-inch and 12inch foundries are dominated by 24 fabs in Taiwan, followed by China, South Korea, and the United States. There are 6 new plants in progress in Taiwan, followed by 4 in China and 3 new fabs in the United States. Taiwan foundries have announced plans to build fabs in China, the United States, Japan, and Singapore. Other countries are expanding production, which could lead to a slight drop in Taiwan’s share to 44% by 2025, adding pressure to Taiwan foundries. But they are actively engaged with governments around the world to help increase global production and weather the storm of shortages caused by geopolitical turmoil and supply disruption. Semiconductors: 2) China’s Huawei has lost its chip supply from TSMC after the U.S. government enforced new sanctions. In response, Huawei has been making unprecedented investments in R&D to rival Apple and Meta this year, according to continued

continued Manufacturing Outlook / May 2022

ASIA OUTLOOK and senseless draconian Covid lockdowns and business disruptions. In Taiwan, however, investor fears are based on potential military conflict with China and ongoing security concerns spurred on by Russia’s aggressive behavior in Europe and its ‘friendship’ with China. Taiwan also experienced record levels of Covid spread in April. Investors are further influenced by rising U.S. interest rates and looking to find more lucrative and stable business environments.

Bloomberg (4/25). Over the past five years, they have doubled their investments in R&D, spending 21.1 billion USD in 2021 alone, in a “do or die” effort to develop semiconductors. One example: its subsidiary, Hubble, invested in a startup named Vertilite, specializing in VCSEL chips (vertical-cavity surface-emitting laser chip technology) in 2020. Amounts of investment and percentages of ownership in such projects are murky and not disclosed by Huawei.

response to the backlash, on April 27, China announced it was closing its SZ DJI businesses in Russia and suspending all drone sales to Russia.

Drones: The Chinese company SZDJI Technology is the world’s largest drone maker. There is growing evidence that Russia is using Chinese commercial drones in the war in Ukraine. DJI Mavic drones were found on Russians doing reconnaissance near Kharkiv. Ukraine is raising the alarm and the U.S. is responding. Hundreds of small drones currently being used to find survivors are from developing U.S. startups. And new military support packages to Ukraine include newly developed military unmanned aerial weapons, dubbed the Phoenix Ghost, designed by the U.S. to strike targets in open areas, like the Donbas Region. Ukraine also heavily depends on specialized drones developed in Turkey. Meanwhile, in

China’s Censorship Drive: China has gone into overdrive, trying to prevent leaks from people caged in their homes in Shanghai accusing the government of local dysfunctions, mismanagement, and chaos. China’s elderly who test positive are undergoing forced evacuation from their homes into quarantine facilities without family consent or support. Other heartbreaking scenarios are seeping out. (CNN 4/25/22)

China’s Arms Sales to Africa: The open-source intelligence company Jane’s has estimated that 70 percent of the 54 African countries have Chinese armored military vehicles, along with military training and investment in infrastructure projects. (WSJ 4/22/22)

Capital Outflows: Both China and Taiwan are experiencing foreign investor fears and massive capital outflows, but for different reasons. Foreign investors do not like the regulatory uncertainty, China’s ambiguous stance toward the war in Ukraine, or its seemingly endless

De Minimis Rules and the Import of Chinese Manufactured Goods: In 2016, the U.S. Customs authorities received approval to increase from $200 to $800 the value of foreign manufactured goods that a U.S. tourist could bring back home taxfree. As a result, many U.S. importers and retailers have been skirting Trump-era tariffs by using this benefit to ship billions of dollars of goods via small individual shipments to themselves and customers, whereby packaged goods go directly from Chinese factories to freight forwarders managed by the U.S. importer. Mexican manufacturers also do this, sending goods to private fulfillment centers in Tijuana along the U.S. border. Retailers say the shipping costs are less than the projected tariff. Lost revenue to the U.S. government has risen to a projected $67 billion according to WSJ (4/26/22). Proponents say it is not illegal to use this law, but Treasury has taken notice and it may not be legal for much longer. Hong Kong There will be a change of leadership, as the embattled Carrie Lam announces she will step down as Chief Executive in May. She will be replaced by John Lee, Hong Kong’s Chief Secretary and a long-term supporter of Beijing’s policies. Hong Kong is now allowing non-residents back with caveats, still requiring 7 days of quarantine, down from 21. continued

Manufacturing Outlook / May 2022

ASIA OUTLOOK Japan The Japanese Yen has fallen to its lowest level in 20 years, but the Bank of Japan is determined to keep interest rates low and continue supporting the new government’s stimulus programs, even though inflation has finally caught up, approaching its long-term consumer-price inflation target of 2%. Japan depends heavily on imports of oil, food, and some supply chain manufactured goods to thrive. Expect increasing cost pressures. (Sparshott, Real Time Economics, WSJ) South Korea Health authorities are preparing to downgrade Covid-19 and treat the virus more like seasonal flu. They have led the way in Asia to transition to a more normal environment and will implement a 4-week transition period, after which they intend to downgrade Covid-19 from its riskiest

category. Those who test positive will not be subject to quarantine (currently 7 days). South Korea remains a leading manufacturing economy with strength and stability. Foreign investors are not pulling capital out, in contrast to China and Taiwan. Biden to Visit South Korea and Japan: (May 20 – 24, 2022) Biden will make his first trip to Asia as President to hold bilateral meetings with President-elect Yoon Suk Yeol in Seoul and Prime Minister Fumio Kishida, elected last fall, in Tokyo. Both leaders pledged to implement programs radically different from their predecessors. Biden will also meet with “the QUAD” (Japan, Australia, India, and the U.S.) while in Tokyo to review pressing concerns and security arrangements in the region. Biden’s visit is critically important amid a changing world order.

North Korea The country announced that it would expand its nuclear arsenal at a huge military parade on 4/26 displaying intercontinental ballistic missiles (Reuters 4/26/22). It is widely believed that North Korea’s focus on weapon development is not just saber-rattling but also an attempt to deflect world attention from the dire poverty and Covid-19 situation there, where Kim Jong Un continues to seal off borders (three years so far) and allegedly refuses to import vaccines. Author profile: Christine is cofounder and President of China Human Resources Group, Inc, a management consulting firm based in Princeton NJ. She has provided U.S. companies with strategic development and project implementation services for projects in China since 1986. n

Manufacturing Outlook / May 2022

METALS OUTLOOK

MAY 2022

METALS OUTLOOK by Royce Lowe Steel’s Short Range Outlook The World Steel Association (worldsteel) recently published a Short Range Outlook (SRO) for steel demand for the next couple of years. It forecasts that steel demand will increase in 2022 by 0.4 percent to 1840.2 MT, following an increase of 2.7 percent in 2021. The forecast growth for 2023 is 2.2 percent, to 1881.4 MT. Any forecasts for steel in the present climate must take into account the geopolitical situation, in that a stable, continuing recovery

The war in Ukraine and low growth in China suggest reduced expectations for global steel demand in 2022. Surges in virus infections in some parts of the world, especially China, and rising interest rates, will also weigh on demand.

on Russia will largely remain. Additionally, the geopolitical situation surrounding Ukraine has long-term implications for the global steel industry. These may include a possible readjustment in global trade flows, a change in energy transitions from fossil fuels to renewables, and ongoing changes in global supply chains.

The outlook for 2023 is highly uncertain. The forecast assumes an end to the war in Ukraine some time in 2022, but that the sanctions

In China, steel demand fell significantly in 2021 due to tough government measures on real estate developers. Steel demand in 2022

has been shaken by the war in Ukraine and rising inflation.

continued Manufacturing Outlook / May 2022

METALS OUTLOOK will remain flat as the government tries to boost infrastructure investment and stabilize the real estate market. The stimuli introduced in 2022 will probably support a small positive growth in steel demand in 2023. There is little doubt that China will stimulate its economy if outside forces look likely to threaten it. Steel demand in the advanced economies recovered strongly in 2021, despite COVID and supply chain problems, especially in the EU and North America. But the outlook for 2022 has weakened due to inflationary pressures and the war in Ukraine. The war’s impact will be particularly hard felt in the EU due to its high dependence on Russian energy and refugee inflows. Steel demand in the developed world is forecast to increase by 1.1 percent and 2.4 percent in 2022 and 2023 respectively, after recovering by 16.5 percent in 2021. In the developing economies, excluding China, recovery from the pandemic was more challenging, with the continued impact of the pandemic and increasing inflation. After falling by 7.7 percent in 2020, steel demand in the developing world, excluding China, grew by 10.7 percent in 2021, slightly less than the earlier forecast. In 2022 and 2023, the developing economies, excluding China, will continue to face challenges from the worsening external environment, the RussiaUkraine war, and U.S. monetary tightening resulting in low growth of 0.5 percent in 2022 and 4.5 percent in 2023. Global construction activity continued to recover from lockdowns to record growth of 3.4 percent despite a contraction in China in 2021. This recovery was driven by

infrastructure programs in many countries and these, together with projects related to the energy transition, will likely drive the construction sector’s growth for many years. The construction sector will, however, experience rising costs and interest rates. In 2021, the global auto industry suffered supply chain disruptions that held up the pace of recovery in the second half of the year. The war in Ukraine is likely to delay any return to normal from the supply chain issues, especially in Europe. Despite the slump in global auto production, the EV segment grew exponentially during the pandemic. Global sales of EVs in 2021 reached 6.6 million units, almost double those of 2020. The share of EVs in total car sales increased from 2.49 percent in 2019 to 8.57 percent in 2021.

Federally-funded infrastructure projects are mandated to use American-made metals and construction materials, effective May 14th. There will be the use of 100 percent U.S. - manufactured iron, steel, and construction materials, as well as at least 55 percent of other manufactured products by cost. There will be exceptions: if the leader of a federal agency cannot find enough material, if the necessary materials would make the project 25 percent more expensive than if sourced elsewhere, or if applying the guidelines would “be inconsistent with the public interest.” In other words, there will be a lot of imported steel in U.S. infrastructure projects.

The price of hot-rolled coil in the U.S., following its seesaw performance in 2021, is back up at around $1500 per ton. Present demand is not overwhelming, probably due to large stocks of the product at service centers and endusers that were purchased at higher prices. A similar situation exists in Europe. Nucor has on the cards a new $350 million micro-mill in Lexington, North Carolina. This mill will create some 200 jobs, and once operational in 2024 will produce 430,000 tons per year. Nucor has already 15 bar mills across the U.S., with a total annual production capacity of some 9,560,000 tons. The mill will produce specifically rebar, in other words, it is aimed directly at infrastructure. Nucor’s CEO, Leon Topalian, says the new mill will make its rebar with 97 percent recycled content.

Metal prices haven’t gone off the charts: Copper from $4.75 to $4.65 per lb.; Aluminum from $1.72 to $1.66 per lb.; Nickel from $13.0 to $15.00 per lb.; and Zinc from $1.80 to $ 1.97 per lb. As long as the economy remains in this demanddriven cycle, steel production will remain strong and the industry will perform well financially. Author profile:

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

Manufacturing Outlook / May 2022

continued

INNOVATION OUTLOOK

REVOLUTIONIZING LIGHTWEIGHT METAL MANUFACTURING LIFT (Lightweight Innovations For Tomorrow), a Manufacturing USA® institute, designs and deploys advanced lightweight metal manufacturing technologies and implements educational programs to close the gap between research breakthroughs and commercialization. Manufacturing USA, a public-private partnership with 14 manufacturing institutes across the nation, connects companies, academic institutes, non-profits, and local, state, and federal entities to solve industry-relevant advanced manufacturing challenges in new technology areas with the goals of enhancing industrial competitiveness and economic growth and strengthening national security.

Technology Focus Area Lightweight metal manufacturing provides the aerospace, automotive, shipping and defense industries with lightweighting solutions which increase fuel economy, reduce emissions, use less material waste and fewer components, and delivers new materials and improved processing technologies to save cost, reduce energy consumption, and extend the range and life of operations. LIFT focuses on addressing key metals manufacturing processes—melt processing, powder processing, thermo-mechanical processing, novel/agile processing, coatings, and joining and assembly—as well Integrated Computational Materials Engineering (ICME).

Approach to Innovation and Collaboration

LEARN MORE

CONNECT WITH LIFT Detroit, Michigan 313-309-9003 lift.technology

LIFT brings together partners needed to provide the industry with technology, innovation, and workers to capitalize on opportunities and growth potential in lightweight manufacturing. This is done through programs like: LIFT High Bay, the nation’s premier lightweighting applied research and development facility Education and workforce training through investments in over 40 initiatives to develop and educated, skilled and ready workforce, competent and confident in using the new technologies being developed and deployed by LIFT and other Manufacturing USA institutes Fast Forge, a tech development program that accelerates projects from breakthroughs to marketplace in 6-8 months

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

continued Manufacturing Outlook / May 2022

INNOVATION OUTLOOK

COLLABORATIVE PROJECT EXAMPLES “By working with LIFT, we’ve proven our system is ready and able to be installed across the fleet to improve safety immediately. We’ve also investigated opportunities for future implementation, which reduce weight and improve vehicle payload and efficiency.” – Chet Gryczan, President, Ricardo Defense Systems

REDUCING HIGH MOBILITY MULTIPURPOSE WHEELED VEHICLE ROLLOVERS: This pilot project retrofit Michigan National Guard vehicles with Ricardo Defense System’s optimized antilock braking system and electronic stability control to reduce High Mobility Multipurpose Wheeled Vehicle fatal rollovers. The system is now available for purchase by military units worldwide.

DEVELOPING AND DEPLOYING THIN-WALL DUCTILE IRON CASTINGS FOR HIGHVOLUME PRODUCTION: Integrating and implementing improved methods and alloys to decrease wall thicknesses of ductile iron cast parts by up to 50% for implementation in the auto industry.

LIGHTWEIGHT AFTER-MARKET CAR FRAME: Designed in response to growing market need for alternative lightweight vehicle frame options for cars, the frame can also be adapted for military applications to lighten loads and increase fuel economy. The frame is easily morphed into any wheelbase, vehicle length, and width without requiring additional tooling, and assembly time dropped from as much as 40 hours to two hours.

OPERATION NEXT: This pilot provides high-level technical training to separating soldiers while they are still on active duty, moving them from deployment to career in the shortest time possible and connecting them to some of the more than half-million open jobs in precision machining and industrial technology.

“Our partnership with LIFT provides us the ability to not only showcase and demonstrate our technology, but also help other LIFT members achieve their lightweighting goals. We look forward to what’s next, now and in the future.” – Steve Pegram, Vice President, Heller Machine Tools

“This is a new frontier for the U.S. This institute will deliver our next generation of global competitiveness and American advanced manufacturing. Lightweight metals are key to the future of American manufacturing capabilities.” – Andre Gudger, (Former) Acting Deputy Assistant Secretary, U.S. Department of Defense

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

Manufacturing Outlook / May 2022

AFRICA OUTLOOK

MAY 2022

AFRICA OUTLOOK

by TR Cutler

Two Signs of African Industrial Innovation: Startups and Halal Food There is no greater indication of an economy’s innovation than startups. Companies creating new and dynamic solutions are responding to economic changes, trends, and technologies.

These are hallmarks as the African continent is quickly becoming the new Silicon Valley. Some of the intriguing breakthrough startups are profiled below.

Heyfood, based in Ibadan, Nigeria, launched last year. With five members of the team, it is billing itself as the DoorDash for Africa. The company is targeting Gen Zs, Millennials, and continued

Manufacturing Outlook / May 2022

AFRICA OUTLOOK urban professionals in Africa’s top 70 cities — a number that might reach 140 million within the next decade — who want to order food once a week. Charging only one dollar for every delivery, Heyfood believes it is taking on a $50 billion market. Founder and CEO Taiwo Akinropo launched a social discovery platform for students while in the university and worked on a mobile payment solution for merchants. Heyfood operates in Ibadan and therefore does not need to compete directly with Jumia Food and Glovo. Numida, started six years ago and now has sixty employees, based in Kampala, Uganda. They provide working capital loans for

African micro-businesses. Applicants frequently in the industrial or e-commerce sectors apply for working capital on its platform and receive funding within a day. To date, Numida has provided $7.5 million in working capital to over 13,000 businesses in East Africa within the past 12 months. Topship, founded in 2020, has ten team members based in Lagos, Nigeria. It provides a platform where merchants can export and import cargo, freight, and parcels to suppliers, distributors, and customers; in other words, Flexport for Africa. Topship is building a “Global Distribution System” that makes delivery of parcels, cargo, and freight easy for African businesses. CEO

Moses Enenwali is a two-time e-commerce founder and supply chain operator. Twiga Foods and Opibus - both Kenyan-based, were named on TIME’s 2022 List Of The 100 Most Influential Companies in the world, both listed under the ‘Disruptors’ category. This second edition highlighted businesses making an extraordinary impact around the world. TIME editors evaluated each company on key factors, including relevance, impact, innovation, leadership, ambition, and success. Twiga simplifies the supply chain between fresh food producers, FMCG (fast moving consumer goods) manufacturers, and retailers through a B2B e-commerce platform. This removes the need for many continued

continued Manufacturing Outlook / May 2022

AFRICA OUTLOOK intermediaries, significantly lowering the cost of food for consumers. Twiga has over 100,000 registered customers and delivers to 10,000 every day.Twiga Foods, launched in 2014, raised a total of $55 million in debt and equity, backed by investors including Goldman Sachs and the International Finance Corporation.

Founded in 2017, Opibus is a SwedishKenyan technology company that designs, develops, and deploys electric vehicles for the African continent, leading the transition to sustainable transport. It is the first company to deliver locally produced electric motorcycles and vehicles, and with nearly 100 employees, Opibus has one of the largest fleets of electric motorcycles deployed. In January, Business Insider Africa reported the news of the Kenyan EV manufacturer launching the first all-

electric bus designed and developed in Africa. The bus was coupled inhouse with local engineering talent while at the same time utilizing local manufacturing partners. Food Manufacturing Trend: Global Halal Food Market Beyond startups are trends with dramatic manufacturing implications;

halal foods are part of this growth trajectory. The global halal food market reached a value of $1,978 billion in 2021. The IMARC Group reported in Halal Food Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027 that the halal market will reach $3,907.7 billion by 2027, exhibiting a CAGR of 11.24% during 2022-2027. continued

Manufacturing Outlook / May 2022

AFRICA OUTLOOK Halal food refers to food and beverage products that are strictly manufactured by following the norms prescribed by Islamic dietary law. As per these regulations, including blood, alcohol, animals that were found dead, pork and its by-products, are considered impermissible for consumption. Halal food products are packaged, stored, and transported in containers that have been cleaned as per the prescribed religious guidelines. They include various processed items, such as halal foie gras, pizzas, nuggets, spring rolls, and lasagna. These foods are considered healthy and hygienic when compared to non-halal foods. This has changed the outlook of nonMuslim consumers about the concept of halal foods. A small percent of the U.S. population are Muslims; however, the market for halal foods is growing rapidly. The increasing halal

consumption is a direct consequence of heightened health and hygiene awareness among consumers. The health benefits associated with halal is the main factor for promoting the acceptance and demand for halal food among non-Muslims. The most important facility in the halal food supply chain is the halal warehouse which functions to store and gather products as well as reduce the transportation cost. The halal status of the warehouses has raised global attention as there are issues regarding segregation of halal and non-halal products in the warehouse. Companies such as Egypt-based LinkMisr International are seeing significant North American expansion by providing the racking, shelving, and automation solutions to maintain halal integrity.

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

Manufacturing Outlook / May 2022

AEROSPACE OUTLOOK

MAY 2022

AEROSPACE OUTLOOK by Royce Lowe Flying into the Future… Jim Scott, the owner of components solutions experts Artemis Aerospace, recently spoke to Bloomberg about his views on the evolution of aircraft design. He noted that there have been few fundamental changes in the jet aircraft since the fifties, but jet engines have continued to improve in power and efficiency through modifications to fuselage, flight decks, and engines, among other adjustments. Efficiency has been a major factor in the constant efforts to improve and update aircraft. Lower emission engines, enhanced aerodynamics, and an increase in the use of composites are all important, help to decrease the fuel burn, and boost efficiency. Further improvements in efficiency are likely in the near future; for example Boeing’s latest: the 777X. It has used composite fan technology, composite wing construction, and folding wingtips to counterbalance considerable size increases in the aircraft’s engine and wings.

Aviation is now moving towards renewable energy sources with the development of biofuel, hydrogen, and battery technology. The aviation industry’s target, by 2050, is to reduce by half its approximately 2 percent of global emissions, and 12 percent of transport emissions. Biofuels are already being used and are blended with jet fuel up to a 50/50 ratio, which is the maximum allowed under current fuel specifications. Boeing has already committed to producing aircraft that will fly on 100 percent biofuel by 2030, and flew commercially in 2018 using 100 percent biofuel on a FedX 777 freighter. There is, of course, the question of supply, and significant market development is required to deliver the requisite levels for the aviation industry if targets are to be met for sustainable aviation fuels (SAFs). And batteries in the air? In 2010, the Swiss company Solar Impulse built an electrically-powered aircraft that ran

on solar power during a 26-hour flight. The same year saw airbus looking at electrification, with development of the world’s first all-electric, four-engine aerobatic aircraft, CriCri. In 2017, Airbus partnered with Rolls-Royce and Siemens to launch its E-FanX - a hybrid - electric, aircraft demonstrator. There was supposed to be a maiden flight in 2021, but Airbus announced the termination of the project in April 2020, stating that in view of the pandemic there were more urgent matters to consider. But the parties in the project all agreed that they had learned an awful lot that would stand them in good future sted. We hear a lot about hydrogen and its role in carbon-fee emissions. Thus with aviation. The only by-product from the use of hydrogen is clean water. Hydrogen offers three times more energy per unit mass than conventional jet fuel and more than 100 times that of lithium-ion batteries. But to date, hydrogen hasn’t done a lot of “flying.” continued

Manufacturing Outlook / May 2022

AEROSPACE OUTLOOK

There are questions regarding its feasibility. While it offers more energy per unit mass, the energy density of liquid hydrogen is only around a quarter that of jet fuel. This would mean a serious increase in the size of a storage tank, with consequent adjustments to aircraft design and passenger capacity, ultimately affecting the commercial viability of such an aircraft. The Air Transport Action Group, a highly respected not-for-profit association that represents all sectors of the air transport industry, considers that the most likely scenario is that the direct use of hydrogen will be marginal and that SAFs will be the game changer in “mission zero-emissions.” There is a “future flight deck” in development. Future avionics design is increasingly being geared towards IoT (the Internet of Things). In November 2021, Honeywell unveiled Anthem - a revolutionary, fully integrated flight deck that has been built with advanced connectivity in mind. Anthem features expanded customization options for OEMs, intuitive touch controls and smart prompting, as well as enhanced fleet management capabilities through anytime, anywhere data analytics.

Safety is also at the heart of Anthem’s design. For example, its engine-out function will automatically guide pilots to the nearest airport, taking into account such factors as terrain and wind. Its landing-assist, meanwhile, will provide help in the event of a pilot medical issue, offering path guidance to an airport before switching to pilot control, 200 feet from centreline. What about pilotless planes? Existing autopilot systems are perfectly capable of flying aircraft from takeoff to landing. However, it is unlikely this will ever be a popular option for passenger aircraft - especially in the event of an emergency. Despite this, pilotless aircraft could save airlines $35 billion per year. Pilot shortages are also causing huge challenges - particularly since many pilots were furloughed or took redundancy during the pandemic. Airbus has said that the technology for safely operating autonomous aircraft now exists. However, introducing it to commercial fleets depends on regulators and the reaction from passengers. Without pilots in place, who on board will decide what to do about emergency landings due to medical emergencies or disruptive passengers?

Advances in innovation should go hand-in-hand with commercial viability. While addressing carbon emissions is extremely important, accommodating people’s desire to travel and purchase goods cannot be overlooked. Passenger numbers will continue to rise, as will the tendency for online buying, making freight and logistics an ever-growing and important part of the aviation ecosystem. Whatever the outlook, aviation remains at the forefront of thought-provoking and cutting-edge design that inspires and drives engineering onwards. There are many options under scrutiny for the future of aircraft and flying. We won’t know for some time which will win. The story on the 737 crash in China is that Chinese authorities say they need more time to determine the cause of the China Eastern Airlines Corp. Boeing’s 737-800 recent crash that killed 132 passengers and crew. The plane took an unexpected dive, in calm weather. Data from the two (damaged) black boxes resulted in no more than a one-page report from the Civil Aviation Administration of China. The investigation is ongoing, as are allegations from a former chief accident investigator at the F.A.A. in the U.S. that such a short report may have been written by design to deflect blame. Investigations take time to sort out the facts and find the cause or causes. Again, as long as demand remains strong in the face of increasing prices on everything from components to build an aircraft to tickets for flying in one, the industry will perform well over the next 12 months. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

Manufacturing Outlook / May 2022

ENERGY OUTLOOK

MAY 2022

ENERGY OUTLOOK

Dogger Bank Wind Farm: Quite a Project by Jocelyn Bright Dogger Bank isn’t a name that rings too many proverbial bells. But it will. It’s the home of what will be, when completed, the world’s largest offshore wind farm. It’s located some 130 kilometers (80 miles) from the northeast coast of England, but the wind farm will stretch much larger than that. Dogger Bank is an isolated sandbank within the central to southern North Sea, spanning waters in the UK, Germany, Denmark, and Holland.

Research indicates that the general area was, well back in time, a landmass connecting the UK to mainland Europe, known as Doggerland. As the sea level rose after the last ice age, the area gradually became an island before being completely covered by water sometime between 8000 and 5500 years ago. The Dogger Bank Offshore Development Zone, located between 125 and 290km (77 and 178 miles) off

the east coast of Yorkshire, extends over approximately 8660km² (3280 sq. miles) and water depths range from 18m to 63m (59 to 207 feet.) The project will be completed in three phases, Dogger Bank A, B, and C. The first phase of Dogger Bank Wind Farm, phase A, is located some 131km (80 miles) from shore at its closest point and has a development area of around 515km² (195 sq. miles) Upon completion it will have an installed continued

Manufacturing Outlook / May 2022

ENERGY OUTLOOK The platform for the A phase is expected to arrive in Norway in the first half of 2022, where Hitachi Energy’s HVDC converter technology will be fitted, and completion and commissioning will occur. It will be ready for “sail away” to the Dogger Bank field in 2023, and completion later that year. The delivery of the phase B platform is scheduled for 2024, that for phase C for 2025.

generation capacity of 1.2GW. Dogger Bank B is the largest of the projects, will have a development area of around 599km² (227 sq. miles), and is also around 131km from shore at its closest point. Dogger Bank B will also have an installed generation capacity of 1.2GW. Dogger Bank C also has an installed generation capacity of 1.2GW, has a development area of around 560km2 (212 sq. miles), and is 196km (120 miles) from shore. The project was effectively begun in 2010, and following all the necessary financing and preliminary test work, it comes down to a joint venture between SSE Renewables, a renewable energy subsidiary of SSE plc, a developer and operator of onshore and offshore wind farms, and hydroelectric generation in the UK and Ireland; Equinor, a Norwegian state-owned multinational energy company, and Eni, an Italian multinational oil and gas company that joined the venture in February 2022. SSE and Equinor have 40 percent each of the project, Eni 20 percent. There have been many years of

Dogger Bank A and B will feature 190 GE Renewable Energy’s Haliade-X 13 MW turbines, scheduled to deliver the first electricity in 2023. The C phase will use the 14 MW version of the model. Once fully commissioned in 2026, Dogger Bank will provide around five percent of the UK’s electricity. Each phase of this project will generate 6 TWh annually. The GE Haliade-X turbine blades are 107 meters (351 feet) long, height of the turbine is up to 260 meters (853 feet). GE Renewable Energy is a French wind turbine maker, a division of General Electric, headquartered in Paris. It is the world’s largest wind turbine manufacturer.

meticulous development and design work, ahead of what will be several years of construction activity. Initial work on phases A and B has begun along the onshore cable route in East Yorkshire, with one-third of the high voltage cables and three-quarters of the ducts already installed. There will be foundations, undersea cables, onshore cables and ducts, onshore substations, offshore converter stations, installation of offshore substation platforms, and installation of wind turbine components. The platforms for the offshore substations are being supplied by Norway’s Aibel company, and are being cut at its plant in Thailand. As is conventional, the steel was blessed by Thai monks prior to its cutting. Aibel is working together with Hitachi Energy to deliver all the offshore grid connections for Dogger Bank Wind Farm, as Hitachi Energy has now been contracted to install high-voltage direct-current (HVDC) technology to connect the transmission links on all three phases of the 3.6 GW offshore wind farm.

There are numerous companies involved in this project, and they are all looking for sub-contractors to contribute. There is Chinese involvement in the shape of a giant offshore wind installation vessel. Pretty soon we’ll see foundations and wind turbines being towed all over the North Sea, and all projects underway will be vying for the title of the largest, most powerful on Jocelyn Bright, the face of the earth.n Staff Writer

Manufacturing Outlook / May 2022

AUTOMOTIVE OUTLOOK

MAY 2022

AUTOMOTIVE OUTLOOK by Lawrence Makagnon EVs, Charging Up It doesn’t seem too long ago that we were wondering if the EV was going to sell if people would swap their vroom, vroom internal combustion engines for a smooth, silent, fast vehicle run by a battery. Or a plug-in hybrid. There’s a new milestone. According to Bloomberg New Energy Finance (BNEF), there will be, worldwide, 20 million plug-in vehicles on the road this June. That’s up from 1 million in 2016. BNEF estimates say some 1 million per month will be added to the global total. BNEF is looking to 26 million by the end of

2022. This has taken some people and companies in the oil and automotive fields somewhat aback. BP, for example, which we’d expect to estimate low, forecast 71 million plug-in vehicles by 2035. Based on the latest available data, BNEF expects this figure to be there by 2025.

put some momentum in that market this year and next. All the remaining countries combined account for just 5% of the global EV fleet. We have to say, they are not cheap. In China, India, and Japan, the “mini” EV is popular and allows a relatively cheap purchase.

The geographic breakdown of vehicle sales shows that just a few regions are seriously opting for EVs. China accounts for 46% of total global sales to date, followed by Europe at 34%. North America is a distant third at 15%, but some form of government support should

Most of the world’s plug-in vehicles are fully electric, but there are also 5.3 million plug-in hybrids. Europe accounts for most of the hybrids, which have helped automakers meet Europe’s increasingly stringent targets for reducing carbon emissions from vehicles. BNEF is continued

Manufacturing Outlook / May 2022

AUTOMOTIVE OUTLOOK expecting a market shift from plugin hybrids in the coming years, as governments cut subsidies, and as there is wider availability of fully electric models. The industry is at the point where it is taking orders for EVs by deposit, with delivery almost a lottery. You’ll wait a couple more years for a Ford F-150 EV, or a GMC Hummer EV, a new model recently announced. If you want a Rivian pickup, you may be at the point where you’ll throw up your hands and opt for one of the many other brands and models being offered. Rivian, a company backed by Amazon as both an investor and a customer, is having problems living up to its initial forecasts. Following one of the world’s most prolific IPOs, and promises it couldn’t keep, it is now resigned to a one-shift operation, needing parts (mostly chips) but still taking orders for the first battery-powered pickup, the R1T. The company overtook a whole pile of ‘big boys’ in bringing out the pickup. It has an 85,000 waiting list for the vehicle. It forecasts 25,000 production this year, including 10,000 for Amazon, and 200,000 in 2023. The pickup has a chassis in high-strength steel and a body in aluminum and carbon fiber. Remember the name of the man who started this company: R.J.Scaringe. GM recently announced its Hummer EV, priced at a little over $110,000 and weighing a little over 9,000 pounds. This vehicle has the GM Ultium battery system and will do 329 miles on a charge. It has the equivalent of just over 1,000 horsepower and will do 0 to 60 in three seconds. One reporter said that going from 60 to 80 was “like flying.” Sounds like a good vehicle to try on the Autobahn. It’s all well and good building these wonderful EVs, but where do we charge

them? It seems there’s a battle going on for that too, with the carmakers lining up to install fast, powerful chargers, that are trying to keep up with the number of EVs hitting the highways. China claims more than half the world’s public charging points, while the U.S. and Europe are lagging. Surprisingly enough, Tesla is winning the battle for superchargers too. It installed some 10,000 of them globally in 2021 and will triple the size of its network over the next two years. The highest number in 2021 was in China, over 4,350, then 3,100 in the U.S. and 1,900 in Europe. There is a total of 465,000 fast chargers in China, which makes Tesla’s 6,000 look like a drop in the ocean. In 2021, Tesla sold 340,000 EVs in China, just 8,000 less than in the U.S. Having sung its praises, we should note that the company recently had a recall in China of some 128,000 Model 3 vehicles due to a “rear motor inverter defect” that was discovered after regulators launched a probe. “When this fault occurs when the car is driving, it will cause the vehicle to

lose its driving motion,” China’s State Administration of Market Regulation said. Tesla has also been the target of many social media complaints from Chinese users about quality and service issues. The Shanghai factory was recently closed due to a COVID outbreak that saw record infection numbers. Last December, there was a recall of 200,000 vehicles from China over a trunk defect that increased the risk of collision. And there have been recalls in the U.S. There is no doubt that money invested in EVs, batteries, and charging stations means that electrification is here to stay. It’s an industry that is still effectively in its infancy but is growing very fast. Recent hikes in the price of gasoline may have been an impetus to increase sales. Whatever the reasons, the automotive industry has come so far with the EV that there is Lawrence Makagon, no turning back. n Staff Writer

Manufacturing Outlook / May 2022

CYBER SECURITY OUTLOOK

MAY 2022

CYBER SECURITY OUTLOOK

Vampire Hackers are at Your Door – Don’t Let Them In

By Ken Fanger, MBA, CMMC-RP, President, On Technology Partners In old-timey movies with vampires, there was always a need to invite the vampire into your home. We all know how it goes: an old man comes to an unsuspecting family’s home, knocks on the door, and asks to come in. Once the nice father opens the door and says, “Welcome,” the vampire comes in and destroys everything in the house. It is funny how old stories become new again. Just like accidentally letting a vampire into your house, over 90 percent of cyber attacks happen because a person ends up letting the hackers in by accident.

The difference between the movies and a cyber attack is that the vampire is not standing on your doorstep, knocking; instead, the “vampire” is a person sitting behind a computer screen, knocking on your digital doorway. Hackers’ attempts for you to let them come in occur in a few forms. It could be an email to have you click a bad link or send them money to a fake invoice; a website that tells you there is a virus on your machine, and you need to call their support, or even a phone call that says you have not paid your

taxes and that you need to send Bitcoin right away or you will go to jail. In the movies, there is always one house where the person does not allow the vampire to come in. They say, “No, you are not welcome.” The reason that they do this is that they know that the vampire cannot get in and cause trouble if they don’t allow them in. How does that translate to the modern cyber security world? When you think about the cyber hackers as vampires, it is clear that they are always trying to continued

Manufacturing Outlook / May 2022

CYBER SECURITY OUTLOOK get you to let them in. But, just like in the movies, if you know that they have to be allowed in before they can cause havoc, then you can learn how to shut the door. In the cyber world, shutting the door translates to learning about the steps you can take to protect your data. You should be keeping up with your passwords, such as making them complex and using a password manager to protect them. Activating 2-factor authentication to make the door harder to open is another valuable tool. You will also want to avoid going to websites or clicking on links that you do not know. Lastly, always make sure that you keep all of your patches up-to-date and have antivirus current and active.

Remember to always follow company policies on cyber security, such as never leaving computers or USB sticks lying around unattended, and never sharing your passwords or user account. It is proven that training can keep you safe from vampires and that it can also keep you safe from vampire hackers who exist to drink away your money or do horrible things to your files. The hacking vampires are always looking to attack your “home”—your business—and they are always knocking on your door, so be careful what you allow in. Take some time to learn how to keep yourself safe, and place some garlic up on the windows and doors—it can’t hurt, right?

Author profile: Ken Fanger, MBA has 30 years of industry experience in the fields of technology and cyber security, and is a sought-after CMMC Registered Professional, helping manufacturers and contractors to meet DoD requirements for CMMC compliance. He is passionate about technology deployment, and his MBA in Operations & Logistics has helped him to be an asset in the designing and deployment of networks to enhance the manufacturing experience. Over the past 5 years, he has focused on compliance and security, including working on the SCADA control system for the Cleveland Power Grid. Mr. Fanger works with each client to identify their unique needs, and develops a customized approach to meeting those needs in the most efficient and cost-effective ways, ensuring client success. n

Manufacturing Outlook / May 2022

ISSUES OUTLOOK

MAY 2022

ISSUES OUTLOOK

by Royce Lowe

The Language of Manufacturing There’s a tight labor market in the U.S. and as far as manufacturing goes there is no quick, easy solution. Industry Week recently profiled Katie Brown, who is the CEO - Chief Education Officer - and founder of EnGen, a company that uses available technology to bring together the various parameters required to teach English to speakers of other languages. Katie came through academia to the point of founding this company, having realized that the teaching of English left very much to be desired. In any event, only some four percent of the population who require English instruction actually receive it. As U.S. employers continue to struggle to find workers, they may want to turn their attention to

populations who have the skills they need but lack proficiency in English. This describes many people in immigrant and refugee populations who are currently overlooked by employers and make up part of what is called the “hidden workforce.” Katie Brown says, “There is a growing sense of urgency on this issue due to the fact that by 2030, every babyboomer will have reached retirement age and 97% of net workforce growth will be immigrants and their children. The biggest barrier to integration in general and, definitely to promotion and advancement in the workforce, are English skills.” “If we think about English as something that we can do to help upskill our workforce, then we’ll be able to get those learners not just the English skills but also the

workforce skills that they need to succeed.” A recent survey in November 2021 showed that the total immigrant population in the U.S. hit 46.2 million, the highest number ever recorded in American history. This represents a large, very significant, economic power. From an education level, a third of adult immigrants had a college degree, or more, education in 2019, while over a fourth had less than a high school diploma. It was for that exact reason - to make language learning more accessible and effective - that Brown started on this journey. Ten years later, with ten patents under her belt, she created the company, as a skills-focused, virtual

continued

Manufacturing Outlook / May 2022

ISSUES OUTLOOK English language learning platform that helps companies such as Chobani, America’s number one Greek Yogurt maker, whose employees are learning English to enable them to do their jobs better. In Chobani’s case, the employees are using specifically tailored programs to improve food safety. “Traditional programs that taught English were not useful to how people performed their jobs, and so the skills these employees either already had, or could be trained to learn, were not accessible,” says Brown. “We use assessments to determine what language gaps exist that are preventing people from upward mobility at their jobs. And as employers are facing a job skills shortage, especially in manufacturing, this is an excellent and fairly easy way to bridge that gap.” Brown, using AI-based language software, has created language courses across several sectors including the U.S. government, and universities, as well as language training centers. “I have conducted extensive empirical research on how

to design online language programs that are efficient, effective, and entertaining. The key to success for this type of learning is that it’s adapted to the context, and it’s integrated. The workplace is the ideal place to learn a language as it’s used immediately.” Brown notes that their online content delivery system is created by people who have the necessary subject matter expertise, and that it offers career-specific instruction. “The courses are designed for upskilling and reskilling and match industry requirements, such as OSHA safety standards,” Brown says. She continues, “When you can match the learning to skills actually needed on the job, you can move people up quickly, which is essential today given the skill shortage, especially in manufacturing.”

taught, given the availability of the requisite expertise. Results have been positive, and as Brown stated, the programs are efficient, effective, and entertaining. Any of us who have taken second language courses can appreciate the desirability of such courses being entertaining. There is little more sleep-inducing than a boring language course. In the meantime, EnGen is looking to work with more large employers, and to help more practitioners understand the approach. The software used in these courses allows use on a mobile device, a tablet, or a desktop computer.

For manufacturing training, a number of courses are available, including General Industry Safety, Warehouse Machinery, E-Commerce Warehousing, Health and Safety, Basics of Manufacturing, Leadership and Management, and Data Science. Any aspect of manufacturing can be

There is little doubt that the teaching of English, maybe other languages, will become an urgent issue with the advent of millions of immigrants entering the U.S. workforce. Katie Brown seems to have started something here. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

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