Manufacturing Outlook September 2022

Brought to you by Thewww.jacketmediaco.comManufacturing&BusinessPodcastNetworkLISTENTOOURPODCASTSAT:OURPODCASTS: AUGUST ISM PMI: 52.8% Released September 1st -The Full Executive Summary Report On Business - Page 22 [ FEATURE STORY: PROPOSING A GOAL FOR U.S. MANUFACTURING SUCCESS PAGE 10 IN MEMORIAM: THOMAS R. CUTLER INDUSTRIAL JOURNALIST PAGE 26 ASIA OUTLOOK PAGE 40 GLOBAL PMI OUTLOOK PAGE 45 ENERGY OUTLOOK PAGE 52 CYBER SECURITY OUTLOOK PAGE 58 STATE OF INDUSTRIAL MEDIA: 2022 AND BEYOND PAGE 28

3Manufacturing Outlook / September 2022 JOIN THECAUS E JOINTHE CAUSE Help change the perception of Manufacturing in the USA! www.championnow.org terry@championnow.org 847-299-2461 Finding America’s Greatest Champion Audio Book $24.99 l eBook $9.97 Paperback $21.99 l Hard Cover $27.99 Training CNC Mill and Lathe Package Table Top Champ CNC Lathe $7,795 l Table Top Champ CNC Mill $7,795 (requires laptop or PC for each ) Package with laptop $16,995 ➧ ➧ OUR FUTURE DEPENDS ONCNCYOU.RocksVirtual Manufacturing Camp 22 videos 4.5 hours in length Schools: $500 annual subscription Industry: $750 annual subscription ➧ www.championnow.org Champion Individual Annual Corporate Membership For companies of 200 or less employees — $995 For companies over 200 employees — $1,995 With your NOW!membership you receive: l Applicant Advantage Annual Membership (student video resume portal) l Annual membership certificate l Finding America's Greatest Champion Book (signed by Terry Iverson) l CNC Rocks Virtual Manufacturing Camp (annual subscription) l Access to networking community/mentoring focused on MFG workforce development l A promotional video produced by your company posted to the ChampionNOW ROKU Channel

4 Manufacturing Outlook / September 2022 © 2022 Jacket Media Co. No part of this publication may be reproduced or used in any form with out the prior written permission of the publisher. Manufacturing Outlook is a registered trademark of Jacket Media Co. Publisher LEWIS A WEISS Editor in Chief TIM GRADY Creative Director CRAIG ROVERE Contributing Writers ROYCE JEANNE-MARIETHOMASNORBERTLOWEORECHRISKUEHLR.CUTLERAMELIAROYLOWRIECHRISANDERSONLAWRENCEMAKAGONCHRISTINECASATIKENFANGER Production Manager LINDA HOPLER Advertising ADVERTISE@MFGTALKRADIO.COM Editorial Office JACKET MEDIA CO. 75 LANE ROAD FAIRFIELD, NJ 07004 (973) 808-8300 TABLE OF CONTENTS Accelerating The Next Generation of Power Electronics INNOVATION OUTLOOK 48 Forward-Looking, Forward Thinking PUBLISHER’S STATEMENT 5 How Green Is Going by Dr. Chris Kuehl NORTH AMERICA OUTLOOK 32 Chile, a New Era? by Royce Lowe SOUTH AMERICA OUTLOOK 36 Electric Trucks and Things by Royce Lowe AUTOMOTIVE OUTLOOK The F-35 and the 787 by Royce Lowe AEROSPACE OUTLOOK 50 King Coal’s Getting Richer by Royce Lowe ENERGY OUTLOOK 52 Cost Inflation Easing by Royce Lowe MANUFACTURING OUTLOOK 6 Risk Assessments and Uncovering Your Cyber Security “Why” by Ken Fanger CYBER SECURITY OUTLOOK 58 ISSUES OUTLOOK 60 CHIPS: Start of a Long Journey. by Royce Lowe MATERIALS OUTLOOK 54 Australia, Metals, Batteries, EVs ; and Ford by Royce Lowe Insights From Inside Manufacturing In Action MANUFACTURING TIDBITS U.S. Economy Expands by Norbert Ore GLOBAL PMI OUTLOOK 45 Open call for... Contributing Writers for new and existing content. Let’s start a conversation –Contact us at info@jacketmediaco.com or visit mfgtalkradio.com/writer for more information. ISM MANUFACTURING REPORT ON BUSINESS 22 The Manufacturing PMI is 52.8% 8 FEATURE STORY: PROPOSING A GOAL FOR U.S. MANUFACTURING SUCCESS by Harry Moser Future Manufacturing Africa: Trade Fair and Summit 2023 by TR Cutler AFRICA OUTLOOK 38 Making Sense of the Semiconductor Supply Chain by Christine Casati ASIA OUTLOOK 40 Eurozone PMI continues contraction by Chris Anderson EUROZONE OUTLOOK 44 by TR Cutler WMS SPACE: ACHIEVING RAPID TIMETO-VALUE (TTV) 14 ISO CERTIFICATION: THE PROS, CONS, AND LOOKING AHEAD 16 US CUTTING TOOL ORDERS TOTALED $173.2 MILLION IN JULY 2022, BRINGING YEAR-TO-DATE TOTAL TO 7.7% OVER 2021 18 COVER STORY: STATE OF INDUSTRIAL MEDIA: 2022 AND BEYOND 28 by Lewis Weiss In Collaboration With TR Cutler 56 Cass Transportation Systems CASS FREIGHT INDEX® REPORT BY CASS INFORMATION SYSTEMS INC. 20 by TR Cutler IN MEMORIAM: THOMAS R. CUTLER 26 by Lewis Weiss

5Manufacturing Outlook / September 2022 PUBLISHERS STATEMENT

SUBSCRIBE

Manufacturing Outlook is continuously tweaking its content to parse and provide forward-looking, forward-thinking information to the industry so manufacturing can navigate the currents of change, innovation, and disruption. The digital ezine partnered with Manufacturing Talk Radio, where viewers on YouTube and listeners on Apple Podcasts, Google Play, Spotify, iHeartRadio, and dozens of other podcast platforms can hear industry thought leaders contribute to the

Manufacturing Outlook examines manufacturing trends globally, with reports on Canada, the U.S., South America, Europe, Asia, and the emerging market of Africa. Although there are more than 10 million job openings in the U.S., reshoring is still a strategic alternative to labor costs and offshore production. Chip production is shifting back to plants in the U.S. with plant expansions (Texas Instruments) and new construction (Intel, Samsung, Taiwan Semi-Conductor) with the passage of the CHIPS for America Act.

Forward-Looking, Forward Thinking

around a possible recession is discussed with Dr. Chris Kuehl on the Flagship Reports. The Manufacturing Report on Business® with Tim Fiore, Committee Chair from the Institute of Supply Management, includes manufacturing industry insights that will play out over the next few months. Manufacturing is a bellwether industry because production times range from 6 months to two years in some sectors, so softening of New Orders directly impacts employment requirements well into the future. Reductions in headcount will reduce consumer spending, and this indicator has not yet appeared in any employment data. Manufacturing Talk Radio is the only source for this type of in-depth analysis, with reports from the ISM, including the Services Report on Business® with Committee Chair Anthony Nieves, and the Hospital Report on Business® with Committee Chair Nancy LeMaster, which have a track record of more than 70 years (referencing the Manufacturing Report on Business®) of key indicator information.

FOLLOW US:

Muchconversation.ofthenoise

On Moser on Manufacturing, Harry Moser highlights the need to reshore pharmaceuticals, medical devices, and medical suppliers, such as IV contrast dyes. Presently, GE Healthcare is one of four suppliers, and the other three have not been able to ramp up production to offset the shortage created by the lockdowns in Shanghai and the shutdown of the GE Healthcare production facility there (now reopened). The pandemic exposed other critical component shortages in the supply chain, and reliance on other nations for components and healthcare needs could cripple the U.S. if geopolitical relationships fracture in the future.

Manufacturers are always looking for ways to improve their operations and grow their businesses. The Internet is the Niagara Falls of information, and manufacturers are standing below it with only a cup. Readers of Manufacturing Outlook are above the falls observing what is in the information stream before it becomes a cascading torrent of “Now and How.”

A further example of geopolitical impact has been the invasion of Ukraine by Russia, which was discussed with Dr. Chris Kuehl on the Flagship Reports. Manufacturers and agriculture have already seen the effect with energy cost spikes and increased commodity demands. The U.S. has become too comfortable and dependent on overseas supplies that didn’t seem particularly strategic before the pandemic.

When manufacturers are looking for forward-looking, forward-thinking information, Manufacturing Outlook is an excellent source worth reading. Subscribe today! n Lewis A. Weiss, ContactPublisherlaweiss@mfgtalkradio.com for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast or any of our podcasts.

6 Manufacturing Outlook / September 2022 MANUFACTURING OUTLOOK

The Bureau of Economic Analysis says the U.S. Real Gross Domestic Product decreased at an annual rate of 0.6% in the second quarter, according to the second estimate. This was following a decrease of 1.6% in the first quarter of

There2022.

CRUDE STEEL PRODUC TION WAS DOWN BY 6.5 PER CENT YEAR-OVER-YEAR IN THE MONTH OF JULY for the 64 reporting countries – which represent 98 percent of world crude steel production – to 149.3 million tons (MT). Production for the first seven months was down 6.4%

GLOBAL2021.

U.S. Light Vehicle sales for August are forecast to show the first year-over-year gain in 12 months. Ford, Hyundai, and Kia are doing well, Honda and Toyota are tumbling. EVs in the U.S. are at 6% of total sales, up from 3.3% in August

in the G7 countries, with Canada at 1.75%; Japan at 1.7%; France at 1.0%; U.S. at 1.0%; Germany at 0.75%; Italy at 0.7% and UK at 0.5%. Or a little over 50%, overall, of what they forecast 2022’s GDP growth will be.

The JP MORGAN GLOBAL MAN UFACTURING 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 51.1 in July, to 50.3 in August, a 26-month low. There were downturns in production, new orders, and international trade. Production fell in the consumer, intermediate, and investment goods sectors. Input cost

were 315,000 nonfarm jobs creat ed in the U.S. in August, and the unem ployment rate rose from 3.5% to 3.7%. Professional and Business services were up 68,000; Health Care 48,000; Leisure and Hospitality was up 31,000, com pared to the average 90,000 in the first seven months of the year. There were 22,000 manufacturing jobs created. The IMF recently published what it forecasts as GDP growth rates for 2023

Theyear-over-year.globalproduction of primary alu minum continued at its normal pace in July, with China producing almost 60% of the 5.848 MT total. This in spite of China’s efforts to cut down on electrici ty

Theconsumption.priceofhot-rolled coil in the U.S. in early September was around the $780

OUTLOOKMANUFACTURINGGLOBALMANUFACTURING,INTERNATIONALTRADESTILLSLIDING.U.S.,JAPAN,EUROZONEANDUKINCONTRACTION.COSTINFLATIONEASES.CARSDOINGBETTER.OPTIMISMINDEXUPSLIGHTLY. continued

By: Royce Lowe

and selling price inflation both eased. Ten of the 30 nations for which data are available showed increases in produc tion, most of which showed marginal growth. The U.S., the Eurozone, Japan and the UK were among the larger economies to show contraction. Business confidence edged up in Au gust, to a three-month high.

per ton mark. The prices of non-ferrous metals in August showed little change over the month, with aluminum from $1.20 per lb. to $1.17 per lb; copper from $3.50 to $3.60; nickel from $10.10 to $9.60; zinc from $1.53 to $1.63.

Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU In ternational Correspondent, Contributing Writer, Manufacturing Outlook.

THE ECONOMIST magazine, in its latest weekly report on world econ omies, 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 neces sarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month. The figures for GDP repre sent the percent change on the previous quarter, or annual rate. The consumer price increases represent year-over-year changes. The unemployment percentag es are for the month as noted. n

7Manufacturing Outlook / September 2022 MANUFACTURING OUTLOOK

PROPOSING A GOAL FOR U.S. MANUFACTURING SUCCESS

8 Manufacturing Outlook / September 2022 continued

Making Sense of the Semiconductor Supply Chain

environment that attracts more FDI (foreign direct investment). Follow ing, I discuss the potential benefits of reshoring.

Doing the Math

Since 2010, the rate of offshoring slowed from approximately 200,000 jobs each year to about 100,000 each year. Over the same period, the rate of reshoring increased from approxi mately 6,000 jobs each year to about 150,000 each year, resulting in a net gain of approximately 50,000 jobs each year. While this is a promising start, at this rate it would take close to 100 years to close the current 5 million-job deficits. Achieving an average increase of 250,000 net jobs each year would balance the $800 billion/year goods

The future state of U.S. manufacturing depends substantially on our success in reducing, rather than further increas ing, our approximately $800 billion goods trade deficit, excluding petrole um. That deficit, after adjustment for price differences, equals about 40% of actual U.S. manufacturing output, 5 million manufacturing jobs at current U.S. productivity levels. With a diverse and educated workforce, abundant nat ural resources, top technology, and the world’s largest GDP, the United States can be less dependent on imports than other countries, but we currently have trade deficits with nine of our top 10 trading partners. Less dependence on imports reduces costs and risks related to distance—freight, delivery, invento ry, etc. and country-specific costs and

By: Harry

risks—rising wages, IP risk, political instability, etc. Companies with local supply chains fair better against disrup tion. Stanley Black & Decker reported no increase in costs and “much less im pact from the coronavirus than would have been the case if it had remained in China.” In an interview with CNBC, John Quincey, CEO of Coca-Cola said plant shutdowns were limited to “just a couple of places.” He credited the good outcome to local production of Coke’s soft drinks.

We can make great strides toward bal ancing the trade deficit by doubling the rate at which we reshore, i.e. bring off shored (sourcing shifted from the U.S. to another country) jobs back to the United States and nurturing a business

FEATUREMoserSTORY

trade deficit in just 20 years. Here is the

the current rate of offshoring at about 100,000 jobs each year. Double the rate of reshoring and FDI to about 300,000 jobs each year. Increase the rate of exports (U.S. ship ments to foreign customers) to provide about 50,000 jobs each year. (Every $1 billion in new exports of American goods supports more than 6,000 addi tional jobs here at home, the same ratio as for reduced imports.)

Economistsmarkets.inacademia have long espoused a general position that the United States should make no effort to change market outcomes. If oth

Success in balancing the manufacturing trade deficit within the next 20 years will depend on government actions that increase the price competitiveness of U.S. manufacturing and corporations implementing more rapid automation, skilled workforce training, and greater use of strategic tools like TCO in sourc ing and siting decisions. These actions will drive reshoring, which will, in turn, increase capacity utilization above 80%, and drive automation investment and workforce recruitment.

Economic

Benefits of Success

Offshoring’s impact on the world envi ronment has been significant. Moving manufacturing to developing countries drives higher carbon emissions and other pollution due to reliance on fossil fuels and less efficient power genera tion modalities. Manufacturing goods far away from their ultimate sale and use location results in commensurately higher transportation-related emis sions. In addition to lowering emis sions, less shipping reduces the global quantity and types of packaging and its associated waste. Furthermore, the less environmentally responsible locations will have added incentive to achieve higher environmental standards sooner as they lose business to the environ mentally-conscious United States.

Societal

er countries want to sell products at much lower prices, the United States is enriched by buying instead of making. Others have stated that it makes no economic difference whether we make computer chips or potato chips. For ty years of stagnant median-incomes (about 0.6% each year) and declining economic and industrial resilience, however, suggest that the United States should consider more proactive meas ures.

Importing less and exporting more are the only ways to grow manufacturing at a given level of GDP and goods consumption. We can have much more of an impact focusing on reshoring (importing less) than exporting more because of the costs or “friction” of about 15% associated with exporting or importing. U.S. products are, on average, about 30% more competitive here than exported to, e.g. Asia. Figure 1 uses China as an example. Reducing imports is a larger target since im ports are about 40% higher in value and about 100% higher in volume or weight. The idea is gaining popularity among U.S. consumers at the same time countries implement more regu latory and structural barriers to protect their home

Environmental

U.S. Competitiveness

Maintainmath:

Increasing well-paying manufactur ing jobs in the United States can be a critical factor in supporting recovery from COVID-19 pandemic-induced unemployment. More tax revenue from greater economic activity could help offset spending on stimulus programs and reduce budget deficits. Strength ening U.S. manufacturing through reshoring could increase capital investment by about 20% for 20 years and drive increases in productivity and manufacturing employment, two key factors in increasing manufacturing output and economy growth.

9Manufacturing Outlook / September 2022 continued FEATURE STORY

The United States was producing an estimated 10% of its 2019 PPE (Person al Protection Equipment) requirements. Then in 2020 the pandemic struck and demand increased three-fold and foreign sources stopped shipping. U.S. factories would have had to increase output 30X in a few months. Obvious

Resilience

Increasing reshoring of U.S. manufac turing can have a wide-ranging impact on many other national challenges. For example, reshoring will bring to urban communities well-paying jobs, which can be a critical factor in balancing economic inequality. Reintroducing good job opportunities into rural areas

would help reverse the damage done by trade-related job loss at the heart of the opioid epidemic. An increase in manufacturing will strengthen overall workforce training and recruitment. Increasing well-paying manufacturing jobs in the United States can be a criti cal factor in recovery from COVID-19 pandemic-induced unemployment.

stability, similarities to U.S. laws and culture, geographic proximity, favorable currency exchange rates, and technology savvy make them a good nearshoring choice. Mexico offers wage rates similar to China’s, minimal tariffs, low travel and freight costs, quick delivery, close technical support, and a large, underutilized Theworkforce.traderelationship

pliances and machinery. In essential products, get our annual production up to at least 50% of annual consumption. Strengthen both OEM assembly and the supply chain. Make manufacturing, once again, the career of choice for smart, aggressive youth.

Collaborative Partnerships

between the three trade partners makes it important to consider Canada’s and Mexico’s trade deficits with Asia along with the United States. At the Forum & Expo Mexico Industrial Parks in Monterrey in September 2016, I urged Mexico to focus more on reducing its trade deficit with China and less on increasing its trade surplus with the United States.

ly impossible. A key consideration, therefore, is what level of production is necessary to be resilient to potential threats? I propose that, for most prod ucts, the U.S. should produce at least 50% of what it consumes and essen tially all of what it needs for defense. If we cut our manufacturing trade deficit to zero, the resulting 40% increase in production would dramatically reduce dependencies.

FEATURE STORY continued

Work is now flowing out of China, primarily to Southeast Asia. Here’s an opportunity for expanded cooperation via the United States-Mexico-Canada (USMCA) trade agreement to shift work from offshore to nearshore in North Canada’sAmerica.political

Product Mix

10 Manufacturing Outlook / September 2022

Phasing up production over 20 years will allow for incremental and sus tained skilled workforce recruitment and capital investment. U.S. largest trade surpluses are now in aircraft and spacecraft. Europe and China will not accept our getting 100% of those mar kets. I propose that, rather than becom ing even more specialized in aerospace and defense, we become less dependent in other products, e.g. medical, ap

Reshoring is enabling a higher percent age of higher-tech product production than current U.S. manufacturing, thus improving our product mix (Fig. 2).

Offshoring to China and elsewhere has cost approximately 5 million U.S. manufacturing jobs, contributed to wage erosion, and had a dramatic and negative effect on workers and the economy. For example, for every 100 jobs lost in manufacturing, about 700 indirect jobs are lost, but the same number of lost retail jobs equals just about 120 indirect jobs lost. So, the shuttering of an automotive factory would have a greater economic impact than the closure of a retail organiza tion of the same size. As the United States reevaluates manufacturing, sourcing, and purchase decisions, due to tariff and pandemic-induced supply chain turmoil, we should consider the wide-ranging advantages of collabora tive partnerships.

The United States is considering roll ing out an alliance called the “Eco nomic Prosperity Network,” that would

FEATURE STORY continued

Like the United States does inter nationally with our allies, likewise should companies, employees, sup pliers, and communities collaborate to form partnerships that benefit all

Table 1 outlines how the three coun tries could benefit from increasing our Frompartnerships.theU.S.

OEMsstakeholders.andsuppliers

must cooperate to achieve the benefits of local operation: resilience, engineering, manufacturing and communicating easily to optimize product and process. Clusters of three or four U.S.-based companies that, in aggregate, buy from and sell to each other, shortening supply chains so that more of the content is sourced domestically from cluster partners. On incremental sales, in theory, each com pany gives up some margin but picks up volume. Ask the domestic supply chain to share the margin reduction on the incremental volume. Company earnings would be flat or improved.

include like-minded countries, organ izations, and businesses. This venture has the aim of working with U.S. companies to move jobs to U.S.-friend ly countries like Australia, India, Japan, New Zealand, South Korea, and Vietnam, if they are unable to reshore into the United States.

The United States can build consensus with other developed nations that have similar concerns about Chinese trade. The EU, Japan, and United States have all publicly discussed decreasing trade dependency on China. The countries can collaborate and coordinate efforts to convince China to play by the World Trade Organization (WTO) rules.

Employees, suppliers, community, and the company’s home market would all be strengthened. Companies should strive to eliminate silos. Dr. W. Edwards Deming, American engi neer and leading management expert in the field of quality, offered 14 key

For example, Wisconsin-based Evco Plastics has been adding generally lower skill jobs in its Mexican plastic parts plants, teaching additional skills (“upskilling”) in its U.S. plants, and downsizing in China. U.S. supplied raw materials account for 60% of costs in the Mexican plants and only 15% in the Chinese plants.

Companies, Suppliers, Employees, and Communities

perspective, Mexico and Canada provide greater partnership ad vantages than manufacturing in Asian countries. Forty percent of the value in product shipped from Mexico to the United States is U.S. content and 25% shipped from Canada is U.S. content. In contrast, only about 4% of the value of product shipped from China to the United States is U.S. content. United States policy changes can shift work from Asian countries to the United States and as much as possible of the rest to Canada and Mexico.

The interests of the United States and our key allies are similar: both want to address unfair Chinese trade practices. Working in a collaborative partnership, we could file complaints about unfair practices and develop new rules for areas not covered well by the WTO rules. Together we can be more effective by leveraging our collective strengths. On this theme, on August 16, 2020, the Trump administration announced, “Back to the Americas,” a program to attract manufacturing from Asia to the Americas.

United States and All Allies

11Manufacturing Outlook / September 2022

On August 19, 2019, BRT released a new “Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” The revised statement diverges from “shareholder primacy” toward an inclusive commitment to all

awarding business based on price tag. Instead, minimize total cost.”

Companies should eliminate silos by integrating planning and development with technology, fostering collaboration from the C-suite to the factory floor.

Deming’ssolutions4thprinciple

FEATURE STORY continued

Initiative is currently partnering with individual compa nies, MEPs in Illinois, Cleveland and Dayton, Ohio, Maryland, New York, and Rhode Island; and with economic development organizations (EDOs) to drive local reshoring. Ask your local MEP or EDO to become partners.

Import Substitution Program (ISP): The ISP was created to convince and facil itate importing companies to source more domestically.

Thestakeholders.Reshoring

deals with sourcing decisions: “End the practice of

The Supply Chain Gaps Program (SCG) was designed to identify and fill U.S. supply chain gaps. The Reshoring Initiative has developed a list of target

12 Manufacturing Outlook / September 2022

Creating partnerships within the com pany by using TCO will help ensure that the needs of all departments are taken into account. Partnerships with other manufacturing technology sup pliers can be beneficial as well. Chal lenge each other to develop solutions to reshoring challenges, and then invest in those

Job shop salespeople are often told by procurement departments “the higher warranty and inventory costs from offshoring are not part of my budget.”

Federal, state and local governments can be good partners too. The federal government allocated billions of dol lars to encourage reshoring. The U.S. International Development Finance Corporation (DFC), created in 2019, is one of the best sources of this funding. DFC partners with the private sector to finance solutions to critical challenges, investing in the energy, healthcare, critical infrastructure, and technology sectors. DFC also provides financing for small businesses and women en trepreneurs to create jobs in emerging Rhodemarkets.Island

principles for management to follow to significantly improve the effectiveness of a business or organization. Dem ing’s ninth key principle recommends collaboration: “Break down barriers be tween departments. People in research, design, sales, and production must work as a team, to foresee problems of pro duction and in use that may be encoun tered with the product or service.”

To make a dent in the reshoring movement, it’s going to take all stakeholders doing their parts not just for themselves but also for the good of the whole. The Business Round table (BRT), a Washington, D.C.based nonprofit recently redefined its statement of purpose to promote “an

economy that serves all Americans.”

is developing an ag gressive reshoring program. The partnership includes the Rhode Island Commerce Corporation working with OEMs, the state Manufacturing Enter prise Partnership (MEP) working with suppliers, the Rhode Island Manufac turers Association (RIMA) engaging with the companies, and the Chafee Center for International Business at Bryant University supporting via data analysis, and the Reshoring Initiative.

AgieCharmilles, starting as President in 1985 and retiring 12/31/10 as Chairman Emeritus. Largely due to the success of the Reshoring Initiative, Harry was inducted into the Industry Week Manufacturing Hall of Fame 2010 and was named Quality Magazine’s 2012 Quality Professional of the year and FAB Shop Magazine Direct’s Manufacturing Person of the year. Harry participated actively in President Obama’s 1/11/12 Insourcing Forum at the White House, won The Economist debate on outsourcing and

Author Profile:Harry founded the Reshoring Initiative to bring manufacturing jobs back to the U.S. after working for high end machine tool supplier GF

is frequently quoted in the Wall Street Journal, NYT, Forbes, Financial Times, New Yorker, Washington Post and USA Today and seen on Fox Business, MarketWatch, PRI, NPR, Manufacturing Talk Radio and other national TV and radio programs. He received a BS in Mechanical Engineering and an MS in Engineering at MIT in 1967 and an MBA from U. of Chicago in 1981. n

offshoring, received the Manufacturing Leadership Council’s Industry Advocacy Award in 2014 and the Made in America 2019 Reshoring Award. He was recognized by Sue Helper, then Commerce Department Chief Economist, as the driving force in founding the reshoring trend and named to the Commerce Department Investment Advisory Council in August

This article first appeared on IMTS. com, the website for IMTS — The In ternational Manufacturing Technology Show, owned and operated by AMT — The Association For Manufacturing Technology.

We want your participation. Now interviewing for additional podcast hosts Now interviewing for regular and contributing writers for Manufacturing Outlook ezine New ideas wanted for monthly Manufacturing Talk Radio topics Contact Jacket Media Co. at 973-808-8300 info@jacketmediaco.comor FEATURE STORY

Harry2019.

13Manufacturing Outlook / September 2022

ed supply chain gaps and product cat egories where there is a large volume of imports but no or minimal domestic Theproduction.Reshoring

Initiative works with companies, economic development or ganizations (EDOs), and Manufactur ing Extension Partnerships (MEPs) to fill the gaps. The free online Total Cost of Ownership Estimator will more ac curately determine the real profit and loss impact of reshoring or offshoring. After doing the math, most companies will decide to bring some work back. For help, contact Harry Moser at har ry.moser@reshorenow.org.

The report encompasses analysis on advanced warehouse technologies, including AI/ML, that can handle the complexity of managing millions of SKUs. It also examined retailers’ need for warehouse platforms to optimize operational, financial, and sustainability performance.

appropriate levels of effort, staffing, and experience. Companies face unnecessary risk, poor decisionmaking, and delays in Time-toValue (TTV). Worst case scenarios have resulted in project failure. It is not all gloom and doom, as there are many very successful WMS

Other considerations such as flow of cross-docking, putaway, wave picking, returns and enabling technologies, included robotics and automation considerations.

Warehouse Management Systems (WMS) projects can be challenging from start to finish Achieving success requires process discipline and focus, and

Aimplementations.WMSsolution requires more than technical expertise to achieve success. Extensive experience in operations and TTV recommendations must be focused on operational efficiency. WMS vendors are honest about the technology as a foundational start, rather than a finished technology outcome. Aligned with Lean Manufacturing, WMS provides better operational and quantifiable outcomes.

By: TR Cutler

14 Manufacturing Outlook / September 2022

Coresight Research published a new Insight Report, “Warehouse Management Platforms: Enhancing the Central Nervous System of the Supply Chain,” which traces the evolution of warehouses from “dusty sheds where goods are stacked in a remote location” to vital connectors of supply and demand.

A deeper dive regarding the position

of the warehouse in the modern, technology-powered supply chain and functional areas of warehouse management platforms was reviewed. Projections regarding the size of the global supply chain management software market through 2027 was also reported.

MANUFACTURING TIDBITS continued

Warehouse Management Systems Space: Achieving Rapid Time-to-Value (TTV)

finished goods, time to value must be both short-term and over time.

Cutler is the President and CEO of Fort Lauderdale, Floridabased, TR Cutler, Inc., celebrating its nearly quarter century in business. Cutler is the founder of the 9000+ Manufacturing Media Consortium which includes more than 9000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler has established special divisions including African manufacturing, LATAM/Colombian manufacturing, Gen Z workforce, and Food & Beverage, and Industrial Coaching. Over 5200 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com n

MANUFACTURING TIDBITS

authors more than 1000 feature articles annually regarding the manufacturing and industrial sectors, with emphasis on robotics, lean manufacturing, technology breakthroughs, and media coverage of the sector.

Author ProfileThomas R. Cutler

Manyintegration.WMS

The laments of warehouse and operations managers are longstanding and well known; there are frequent gaps in supply chain software. Most of these limitations are mentioned in areas of document management, analytics, and robotics

vendors fail to provide solutions and products to fill those gaps and integrate natively with multiple technologies. WMS at “go-live” is just the beginning of a warehouse implementation. Issues from labor limitations may require implementation of Google glasses such as Vision-as-a-Service. Retiring fork truck drivers are replaced with AGVs (automated guided vehicles), yet the WMS integration must be solved before the robots are purchased.

A WMS platform benefits from ongoing investments using bestpractice technology and addressing ToC (Theory of Constraints) through the fast-moving B2B and B2C manufacturing, warehousing, and distribution models. Long-term partnerships are best in these vendor relationships. This is not a quick fix. With thin margins, complex supply chains, and raw material costs of

15Manufacturing Outlook / September 2022

products and services is the lifeblood of standardization and for 75 years, ISO has been at the heart of this process. It is therefore fitting that the vision of ISO for 2030 should be founded on the same tenets.”

The ISO Strategy 2030, like International Standards, will be regularly reviewed and revised ensuring that it remains purposeful and adapts to intentions and actions with the changing environment. The strategy is complemented by two key tools: the implementation plan, which outlines concrete actions and the measurement framework.

ISO is a nonprofit organization that develops and publishes standards of virtually every possible sort, ranging from standards for information technology to fluid dynamics and nuclear energy. Headquartered in Geneva, Switzerland, ISO is composed of 162 members, each one the sole representative for their home country. ISO fills the vital role as a conduit achieving agreement between individual standards developers across the world to further the goal of ISOstandardization.President,Eddy

History and Vision of ISO through 2030

ISO EddyPresidentNjoroge

Njoroge recently commented: “It is my pleasure to share with you the new ISO Strategy 2030, a result of a collaborative effort between our members, partners, and all stakeholders. Inclusiveness and finding common agreement on

ISO (International Organization for Standardization) certification is not new. Many manufacturers endure the rigor of registration because global customers require the certification to conduct business. The rigor is not imagined. ISO certification requires training to implement successfully, and it is expensive to establish quality management systems (QMS). ISO certification, no matter how automated, requires heavy emphasis on documentation and the time to achieve certification is lengthy. ISO certification comes in different “denominations” depending on the industry sector or process being certified. Of late, and unless mandated by customers, the case for ISO certification may not be as compelling as twenty years ago. There is resistance to change due to fear and misperceptions of ISO. Often there is inadequate team support or management sponsorship to dwell on the added costs and resources to implement and maintain ISO.

Poor project management or change management can spoil an ISO certification program due to unrealistic expectations prior to deployment.

The global health crises have demonstrated the universal nature of issues facing humanity and brought new perspective to the ISO work. ISO has an indispensable role to play in supporting coordinated action providing global solutions.

ISO Certification: The Pros, Cons, and Looking Ahead

MANUFACTURING TIDBITS continued

By: TR Cutler

16 Manufacturing Outlook / September 2022

Economy: Trade and Uncertainty

Cutler is the President and CEO of Fort Lauderdale, Floridabased, TR Cutler, Inc., celebrating its nearly quarter century in business. Cutler is the founder of the 9000+ Manufacturing Media Consortium which includes more than 9000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement.

ISO’s role over the next decade.

There is acceleration surrounding profound changes in society, especially digital technologies for remote learning and working. Digital transformation and the need to find new ways of working and delivering solutions are threads that run through the new ISO 2030 strategy. The new plan moving forward is well aligned to the United Nations Global Agenda for 2030 and its 17 Sustainable Development Goals.

are all strongly interlinked and large-scale disruption or crises may affect multiple drivers simultaneously. Change presents both risks and Understandingopportunities.howitoccurs by monitoring these four drivers enables ISO and companies holding ISO certification to anticipate and respond to transformative impacts in a shifting global context.

Society: Changing Expectations and Behavior

The world faces major threats to the environment; failing to adequately address risks such as climate change, biodiversity loss, and pollution are not negotiable. These and other issues cut across national borders and cannot be solved by one individual, company, or government alone. International cooperation is required, with a view of achieving sustainability rather than short-term solutions. Despite the challenges of ISO implementation and continuous process improvement, perhaps the greatest role for International Standards is the shift towards a more sustainable future.

Theseenvironment.drivers

Identifying external drivers of change and evaluating impacts

Drivers of Change

The growth of digital infrastructures and integration of digital technologies are rapidly and significantly changing the way people live and work around the world. Advancements in digital technology boost efficiency and productivity, creating a competitive advantage, and promoting innovation. ISO harnesses the power of digital technologies to improve its own value chain and agility.

Technology: the Impact of Digital

Public and civil society actors want higher levels of transparency and collaboration. There is an expectation that individual rights be upheld. By 2030 or sooner, organizations must be more inclusive, more accountable,

ISO certification companies are invited to sponsor special issues of Manufacturing Outlook and upcoming episodes of the Manufacturing Talk Radio broadcast. To learn more call 973-808-8300.

Cutler has established special divisions including African manufacturing, LATAM/Colombian manufacturing, Gen Z workforce, and Food & Beverage, and Industrial Coaching. Over 5200 industry leaders follow Cutler on Twitter daily at @ ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com n

ISO’s Future

MANUFACTURING TIDBITS

17Manufacturing Outlook / September 2022

Environment: the Urgency for Sustainability

Author Profile

The evolution of the international trading system and its impacts on the global economy are uncertain. Even as the concepts of globalization and multilateralism are increasingly challenged, the interdependence of global supply chains remains strong and essential. This context makes it difficult for organizations to predict long-term development, as access to global markets for products and services are impacted. Changes resulting from economic and trade uncertainty affect the demand for, and relevance of, International Standards.

and better able to integrate stakeholders in the decision-making processes.

Thomas R. Cutler authors more than 1000 feature articles annually regarding the manufacturing and industrial sectors, with emphasis on robotics, lean manufacturing, technology breakthroughs, and media coverage of the sector.

The four primary drivers of change identified by ISO include the economy, technology, society, and the

US Cutting Tool Orders Totaled $173.2 Million in July 2022, Bringing Year-to-Date Total to 7.7% Over 2021

McLean, Va. (September 8, 2022)

18 Manufacturing Outlook / September 2022

– July 2022 U.S. cutting tool consumption totaled $173.2 million, according to the U.S. Cutting Tool Institute (USCTI) and AMT – The Association For Manufacturing Technology. This total, as reported by companies participating in the Cutting Tool Market Report collaboration, was down 1.5% from June’s $175.9 million and up 6.7%

when compared with the $162.3 million reported for July 2021. With a year-to-date total of $1.2 billion, 2022 is up 7.7% when compared to the same time period in 2021.

of the U.S. market for cutting tools.

MANUFACTURING TIDBITS

continued

Costikyan Jarvis, president of Jarvis Cutting Tools, spoke on demand by saying, “The July 2022 cutting tool results continue to show demand is still well off 2019 levels. 2022 dollar volume is still running about 15% lower than 2019, and when inflation is considered, total unit production is even lower. This data is supported by

These numbers and all data in this report are based on the totals reported by the companies participating in the CTMR program. The totals here represent the majority

MANUFACTURING TIDBITS

19Manufacturing Outlook / September 2022

PatCONTACT:McGibbon, AMT 703.827.5255 | com216.241.7333SusanAMTonline.orgpmcgibbon@Orenga,USCTI|sorenga@thomasamc. n

2022 vehicle sales being around 13 million units versus 17 million units in 2019 and the lower production in commercial aerospace. Expect to see improving cutting tool demand well into 2023. Improvement will be driven with increased aerospace production (Boeing reported that 737 production returned to 31-permonth rates in June) and a reduction in automotive supply chain issues. Another good indicator is North America’s premier manufacturing technology show, IMTS. The show returns this month, and attendee numbers and interest will be a good gauge for future demand.”

US industries at Oxford Economics. “This is in line with the deceleration recently seen in new orders and a moderating pace of activity in key client markets.”

Tool Market Report is available dating back to January 2012. This collaboration of AMT and USCTI is the first step in the two associations working together to promote and support U.S.-based manufacturers of cutting tool technology.

The Cutting Tool Market Report is jointly compiled by AMT and USCTI, two trade associations representing the development, production, and distribution of cutting tool technology and products. It provides a monthly statement on U.S. manufacturers’ consumption of the primary consumable in the manufacturing process – the cutting tool. Analysis of cutting tool consumption is a leading indicator of both upturns and downturns in U.S. manufacturing activity, as it is a true measure of actual production levels.

“The slowdown in shipments seen in the second quarter of 2022 continued into July, although they remain well above last year’s totals,” commented Mark Killion, director of

The graph below includes the 12-month moving average for the durable goods shipments and cutting tool orders. These values are calculated by taking the average of the most recent 12 months and plotting them over time.

Historical data for the Cutting

The shipments component of the Cass Freight Index® rose 3.6% on a y/y basis in August, ahead of the revised 1.9% y/y increase in July and the -0.3% average year-to-date through July. The August reading is the best since the record set in May

continued

The2018.July index is revised to 1.199 from 1.182.

The Cass Expenditures Index was still 20% higher than year-ago levels in August, decelerating from 29% in OnJuly.an SA basis, expenditures rose 2.1% m/m in August, with shipments

The expenditures component of the Cass Freight Index®, which measures the total amount spent on freight, rose 1.9% m/m in August after a 3.0% decline in July, with shipments up 6.6% and rates down

several of the soft August indicators are from the spot market. So, to some extent, the stronger Cass data reflect the ongoing shift from spot to

by CASS INFORMATION SYSTEMS, INC.

Cass Transportation Index Report

20 Manufacturing Outlook / September 2022 CASS INDEX OUTLOOK

The4.4%.July index is revised to 4.527 from 4.499.

Cass Freight Index - Shipments

Freight Expenditures

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

On a seasonally adjusted (SA) basis, shipments rose 5.5% m/m in August, and were just 1.2% below the cycle peak level in December 2021. This data set stands above most other August freight indicators, but

Thecontract.improvement may not be sustainable, especially as pressure increases on interest rate sensitive sectors like capital goods and housing, but the summer improvement likely reflects a combination of: successful discounting campaigns by retailers, seasonal inventory building ahead of the holidays, easing supply constraints, particularly in auto production, and reversal of China lockdown effects in June/July.

Even with a summer volume uptick, freight markets are loose heading into peak season, largely due to the significant supply response which gained momentum this year.

During the active hurricane seasons of both 2020 and 2021 (June 1November 30), the ACT Research composite of DAT spot rates, ex-fuel, rose 8% and 4%, respectively, into Labor Day. This year, spot rates fell about 6%, ex-fuel, amid the calmest hurricane season since 2013.

The freight rates embedded in the two components of the Cass Freight Index rose 16% y/y in August, decelerating quickly from the 26% y/y increase in July.

On a m/m basis, the Cass Truckload Linehaul Index fell 1.8%, similar to the declines in June and July. The clarity of the trend change in the past three months is rather stunning: after a 22-month cycle of increases that averaged 1.2% per month, the index fell m/m 1.76%, 1.78%, and 1.83% respectively in June, July, and August.

up 5.5% m/m and rates down 3.2%. We estimate roughly 7pps-8pps of the y/y increase in the expenditures index is currently due to fuel prices alone, and part of the m/m decline in rates was due to lower fuel prices. This index includes changes in fuel, modal mix, intramodal mix, and accessorial charges.

The report provides monthly updates of forecasts for the shipments component of the Cass Freight Index and the Cass Truckload Linehaul Index®, as well as DAT spot rates by trailer type, including and excluding fuel surcharges. n

shippers aren’t seeing any real savings yet, such relief is now highly probable for 2023, which is welcome news for the broader inflation

The Cass Truckload Linehaul Index® rose 7.4 y/y in August to 159.7, after rising 10.5% y/y in July.

Simply following normal seasonality from here, this index is on track for a 24% increase in 2022 and would turn down on a y/y basis next February.

Moreover, the looser market balance we see in U.S. freight markets is consistent with the easing happening in global ocean spot markets, where rates were 56% below year-ago levels in early September. The broader effects of these cost savings for shippers will show up more in 2023, so should gradually become more helpful to the Fed’s fight against inflation and for resolving supply chain issues. One interesting takeaway from the IANA intermodal conference in Long Beach this week is that there’s still a whole lot of inefficient freight jamming warehouses and slowing rail service.

Freight Expectations

But there’s much more at work in the freight economy than the weather. The hurricane effect is considerable, and the season isn’t over, but we think the divergence between this year’s early September rate trend with the past two is mainly due to the looser market balance. The shipment rebound is, so far, not enough to outweigh the 4%-5% growth rates in the driver and Class 8 tractor populations presently. The story concludes in ACT Research’s monthly Freight Forecast.

Whilecome.

Now that the pendulum is swinging, some crucial questions about the freight rate cycle have been raised: How bad? How long? And when will it turn? The ACT Research Freight Forecast report provides monthly, quarterly, and annual predictions for the truckload (TL), less-thantruckload (LTL), and intermodal markets through 2024, including capacity, volumes, and rates.

excludes fuel and accessorial charges, so when factoring in sequential declines in fuel surcharges, which should continue near term, the deceleration in freight costs is accelerating.

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.

Inferred Freight Rates

With the tight supply/demand balance in U.S. trucking markets easing considerably this year, industry rates are topping out and set to slow sharply in the months to

Casspicture.Inferred

Cass Inferred Freight Rates fell 4.4% m/m (-3.2% SA) in August. Lower fuel prices were a factor in the decline, but with looser truckload market conditions, further deceleration is very likely.

21Manufacturing Outlook / September 2022 CASS INDEX OUTLOOK

Truckload Linehaul Index

We’ve consistently previewed this trend change, so it shouldn’t be a surprise, but the stunning part is the consistency in the three consecutive 1.8% declines—enough to make us look out to the hundredths of a

Thispercent.index

Similar to what has occurred in the spot market, the surge in fuel costs to shippers, which are excluded from this index, will also likely act as a brake on linehaul rates.

22 Manufacturing Outlook / September 2022 THE INSTITUTE FOR SUPPLY MANUFACTURINGMANAGEMENT’SREPORT ON BUSINESS®BREAKINGNEWS ISM PMI at 52.8% for August 2022 ISM REPORT OUTLOOK AUGUST52.8%2022 Released September 1st ISM PMI for the past 5 years Expanding Contracting continued

Of the six biggest manufacturing industries, five — Petroleum & Coal Products; Transportation Equipment; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products — registered moderate-to-strong growth in August. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Manufacturing

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

Backlog of Orders 53.0 51.3 +1.7 Growing Faster 26

full report, visit

Production 50.4 53.5 -3.1 Growing Slower 27

The August Manufacturing PMI® registered 52.8 percent. The New Orders Index registered 51.3 percent, 3.3 percentage points higher than the 48 percent recorded in July. After three straight months of contraction, the Employment Index expanded at 54.2 percent. The U.S. manufacturing sector continues expanding at rates simi lar to the prior two months. New order rates returned to expansion levels, supplier deliveries remain at appropriate tension levels and prices softened again, reflecting movement toward supply/demand balance.

Supplier Deliveries 55.1 55.2 -0.1 Slowing Slower 78

PMI 48.7% = BreakevenEconomyOverallLine 50% = LineEconomyManufacturingBreakeven 202220212020 52.8%

Prices 52.5 60.0 -7.5 Increasing Slower 27

Inventories 53.1 57.3 -4.2 Growing Slower 13

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

® Report On Business® website at

MANUFACTURING

MANAGEMENT®

New Orders 51.3 48.0 +3.3 Growing From Contracting 1

Commodities Up in Price: Caustic Soda (6); Corrugate (7); Electrical Components (21); Electronic Components (21); Freight (22); Hydraulic Components; Natural Gas (14); Paper; Plastic Resins* (8); Rubber Based Products (13); Steel Products* (24); and Styrene Based Plastics. Commodities Down in Price: Aluminum (4); Copper (2); Corn Products; Crude Oil; Freight; Gasoline; Plastic Resins* (3); Polypropylene; Steel (4); Steel — Carbon (2); Steel — Hot Rolled (4); Steel — Scrap; Steel — Stainless; and Steel Products* (2).

Overall Economy Growing Same 27 Manufacturing Sector Growing Same 27

23Manufacturing Outlook / September 2022 ISM REPORT OUTLOOK continued 12 ISM WORLD.ORG

Employment 54.2 49.9 +4.3 Growing From Contracting 1

Imports 52.5 54.4 -1.9 Growing Slower 3

The U.S. manufacturing sector grew in August, as the Manufacturing PMI® registered 52.8 percent, the same reading recorded in July. The Manufacturing PMI® continued to indicate sector expansion and U.S. economic growth in August. All five subindexes that directly factor into the Manufacturing PMI® (New Orders, Production, Employment, Supplier Deliveries and Inventories) were in growth territory.

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

PMI® at 52.8%

Commodities Reported

INSTITUTE FOR SUPPLY reportonbusiness

Ten manufacturing industries reported growth in August, in the following order: Nonmetallic Mineral Products; Petroleum & Coal Prod ucts; Transportation Equipment; Computer & Electronic Products; Printing & Related Support Activities; Plastics & Rubber Products; Primary Metals; Machinery; Miscellaneous Manufacturing‡; and Food, Beverage & Tobacco Products. ISM

New Export Orders 49.4 52.6 -3.2 Contracting From Growing 1

INDEX IndexAug IndexJul %ChangePoint Direction Rate Changeof Trend* (months)

Customers’ Inventories 38.9 39.5 -0.6 Too Low Faster 71

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

Note: To view the the ISM ismrob.org

Manufacturing PMI® 52.8 52.8 0.0 Growing Same 27

Economic activity in the manufactur ing sector grew in August, with the overall economy achieving a 27th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®

Manufacturing at a Glance

Analysis

Employment (Manufacturing) 50.5% = B.L.S. Mfg. BreakevenEmploymentLine 202220212020 54.2% 20 Supplier Deliveries (Manufacturing) 2022 80 20212020 55.1%53.1% Inventories (Manufacturing) 44.4% = B.E.A. Overall Mfg. Inventories Breakeven Line 202220212020 53.1% Production (Manufacturing) 52.4% = Federal Reserve Board Industrial Production Breakeven Line 202220212020 50.4% 70

Manufacturing PMI®

ISM® Report On Business®

Supplier Deliveries

Inventories

The Production Index registered 50.4 percent. The six industries reporting growth in production during the month of August — in the following order — are: Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Transportation Equipment; Machinery; and Plastics & Rubber Products.

The Inventories Index registered 53.1 percent. Of 18 manufacturing industries, the eight reporting higher inventories in August — in the following order — are: Petroleum & Coal Products; Miscellaneous Manufacturing‡; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Chemical Products.

by Timothy R. Fiore, CPSM, C.P.M. , Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee New Orders (Manufacturing) 52.9% = Census Bureau Mfg. Breakeven Line 2022 20 20212020 51.3%

ISM’s Employment Index registered 54.2 percent. Of 18 manufacturing industries, nine reported employment growth in August, in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Petroleum & Coal Products; Transportation Equipment; Furniture & Related Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; and Fabricated Metal Products.

Employment

ISM’s New Orders Index increased to 51.3 percent. Of the 18 manufacturing indus tries, six reported growth in new orders in August, in the following order: Textile Mills; Computer & Electronic Products; Nonmetallic Mineral Products; Transportation Equipment; Primary Metals; and Plastics & Rubber Products. Production

The delivery performance of suppliers to manufacturing organizations was slower in August, as the Supplier Deliveries Index registered 55.1 percent. Nine manufacturing industries reported slower supplier deliveries in August, in the following order: Nonmetallic Mineral Products; Primary Metals; Computer & Electronic Products; Miscellaneous Manufacturing‡; Paper Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; and Fabricated Metal Products.

New Orders

24 Manufacturing Outlook / September 2022

‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies). August 2022 ISM REPORT OUTLOOK continued

2022

New Export Orders

Manufacturing PMI®

202220212020 38.9%

2020 53%

Analysis

52.6% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line 202220212020 52.5%

202220212020 52.5%

Customer Inventories (Manufacturing)

Customers’ Inventories

Imports (Manufacturing)

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

ISM’s Customers’ Inventories Index registered 38.9 percent. Three industries (Apparel, Leather & Allied Products; Furniture & Related Products; and Wood Products) reported customers’ inventories as too high in August.

New Export Orders (Manufacturing) 2021

25Manufacturing Outlook / September 2022

Backlog of Orders

ISM’s Backlog of Orders Index registered 53 percent. Seven industries reported growth in order backlogs in August, in the following order: Nonmetallic Mineral Products; Printing & Related Support Activities; Transportation Equipment; Plastics & Rubber Products; Machinery; Computer & Electronic Products; and Miscellaneous Manufacturing‡

2022

ISM’s Imports Index registered 52.5 percent. The eight industries reporting growth in imports in August — in the following order — are: Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; Machinery; Plastics & Rubber Products; and Miscellaneous Manufacturing‡

Backlog of Orders (Manufacturing) 2021

Prices (Manufacturing)

ISM® Report On Business®

Imports

Prices

The ISM Prices Index registered 52.5 percent. In August, eight of 18 industries reported paying increased prices for raw materials, in the following order: Printing & Related Support Activities; Computer & Electronic Products; Miscellaneous Manufacturing‡; Furniture & Related Products; Paper Products; Machinery; Chemical Products; and Electrical Equipment, Appliances & Components.

‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies). August 2022 ISM REPORT OUTLOOK n

2020 49.4%

ISM’s New Export Orders Index registered 49.4 percent. Three industries reported growth in new export orders in August: Plastics & Rubber Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products.

Tom’s passion was his Industrial Journalist Career writing about manufacturing and business. That passion took him to Africa, a continent with emerging into modern manufacturing. As he travelled, he saw some extreme poverty. His humanitarianism lead him to adopt one or more starving villages, providing them with food and other resources. The village elders in one such village that was experiencing the death of a child nearly every day from starvation reported to Tom that the village hadn’t lost a single child since Tom’s adoptive philanthropy.

My friend, Tom Cutler, returned from one of his many trips to Africa, a continent filled with people he loved. On August 30th, feeling unwell, Tom went to a hospital ER in Florida. Tragically, he suffered a fatal heart attack.

Thomas Russell Cutler: Industrial Journalist – In Memoriam

I knew Tom for three years. He was brilliant, professional, efficient, kind, funny, and a friend. He was a great help to me in my professional pursuits, and I will miss him immeasurably.

26 Manufacturing Outlook / September 2022

Tom Cutler was named the number one Industrial Journalist for 24 years in a row. He wrote nearly 1,000 industrial, manufacturing, and B2B articles annually. No easy task! He was the CEO of TR Cutler Inc., where he founded and built the membership of the Manufacturing Media Consortium to over 9,000 journalists, editors, economists, and other industrial leaders worldwide.

Lewis (Lew) A. Weiss

IN MEMORIAM - THOMAS R. CUTLER

President, All Metals & Forge Group Founder, Manufacturing Talk Radio Publisher, Manufacturing Outlook ezine President, Jacket Media Co.

*Toll free within the *U.S. ISO9001:2015 SINCE 1994 AND AS9100D SINCE 1998 NIST SP 800-171 (COMPLIANCE UNDER DEVELOPMENT)

No longer is content consumed as a form of education, professional development, or comparative analysis. Solution-seekers perform a Google Search, and find matches based on the algorithms of search engine optimized rankings. There is no triangulation. Top-ten rankings constitute information gathering, but little else. Out of sight, out of mind.

Many keep running content that could have been authored twenty years ago. No contemporaneous insights, contexts, or prognostications are offered. Just more of the same.

Thomas R. Cutler, who founded the 9000+ member Manufacturing Media Consortium in 1999 and has authored more than 8000 articles in that time span; he has been working with Jacket Media Co for some time as a regular contributor to our most popular publication Manufacturing Outlook. Cutler brainstormed with Lew Weiss and contributed to the report which follows. Tom has seen all the media shifts, the transition to a wide variety of content, webinars, YouTubes, and yes, TikTok.

by Lew Weiss In Collaboration With TR Cutler

phone. The attention span for content assimilation is measured in seconds at worst; minutes at best.

This is neither good nor bad; it is. In this vast media paradigmatic shift, survivors of the media miasma live by the maxim: eat or be eaten. Many in the media have failed to look ahead.

28 Manufacturing Outlook / September 2022 COVER StateSTORY of Industrial Media: 2022 and Beyond

I’m so old I remember Yellow Pages and Rolodexes. I’m so old that a directory was a published book with a spine. The landscape of the industrial media has changed so much over the past 50 years; it is time to reflect on where we were, where we are, and most importantly, where we are going.

With daily newspapers and many monthly B2B publications gone, the frequency and velocity of industrial news, economic information, vendor specifications, and site selection have caused tectonic shifts. These earth-shaking changes leave a media landscape without full case studies, probative thoughtful investigative journalism, and have been replaced with a ‘swipe up’ on the ubiquitous cell

continued

(VC) funded companies are a prime user of the current industrial media complex. Whether affiliated with artificial intelligence (AI), machine learning (ML), or Industrial Internet of Things (IIoT), these companies must clearly capture mindshare and market share among an interested audience. Industry 4.0 is another example where aligning company objectives with the best-practice technology becomes an effective use of media outlets. The influx of VC money in industries, particularly those impacting manufacturing, material handling, and fulfillment, have garnered several billions of dollars in the past two years. Suddenly, these new companies appear at countless tradeshows, yet too often fail to leverage those lead generation events with credible editorial content. VC-funded manufacturing organizations will spend upwards of $1M on each tradeshow; the ratio of media coverage must average 12-30%

learned, and the role of the newly merged organization adds texture for customers and potentially future acquisition targets. A media spend for a year following a merger or acquisition is critical to ensure that the market sees it was a sound business decision with a deeper explanation versus a cursory press announcement.

Beyond predictive analysis and analytics, media is more than editorial opining. In fact, the questions to examine are who wants media coverage and why? Profit-based media outlets including Jacket Media Co must balance the editorial trendspotting with those of paid sponsors, content contributors, and podcast

Newhosts/guests.venture-capital

Similarly,spend.

29Manufacturing Outlook / September 2022 continued COVER STORY

Bpipeline.andC-level

Anyone hired into a C-Suite position must make a name for themself. They become part of an industrial leadership that is synonymous with the company brand and messaging. They have both a professional and personal vested interest in being known, respected, and part of the value-added proposition of the organization. They achieve this by becoming authors of thoughtleadership feature articles, guests on podcasts, as well as keynote speakers and panelists at conferences and tradeshows. Thought leadership is fairly new nomenclature yet the industrial complex is more than the technology offered, more than the products manufactured…it is the people, the vision, the mission that must be articulated with velocity, volume, and consistency. Obstacles for accomplishing this are detailed below in this exposé.

This is where expertise in content creation, succinct and precise communication, and dynamic storytelling become a paramount function whether handled internally or externally by a PR firm.

The function of marketing has changed. It used to be building brand and product awareness and acquiring lead generation, particularly through digital and traditional methodologies. The marketing role is far more engaged in the B2B industrial complex

Even if a PR firm is engaged, 90% of these firms have no prior relationships with members of the Manufacturing Media Consortium and are therefore pitching (cold calling). Cutler reports that 100% of editorial pitches (phone or email) are summarily discarded or sent to a spam folder when sent from an unknown source. In fact, some pitch emails get sent to advertising or sponsorship departments to sell revenue generating space. Without the prior relationships and without successful demonstration of content creation by a PR firm, it is a waste of time and money. Anyone can pitch a story, few know the culture of the publications, the readers, and the editors’ expectations.

responsible for bottom-line growth and an integral part of the ‘sales AND marketing’ effort. Salespeople are rarely accountable for following up with prospects except via LinkedIn or those about to issue a purchase order in 90 days. They are bonused and rewarded on closed activities, not advancing the longer-term sales

prospects are relegated to marketing management, whether via e-blasts of newsletters, public relations, social media outreach with constant messaging, and SEO (search engine optimization). Marketing is part of the sales effort. In many small and midsized manufacturing operations, a single marketing person is attempting to handle too much from conferences, tradeshows, print advertising, product messaging, promoting C-level executives, and content creation. Add to that mix, PR (public relations). Any one of those functions could be a full-time effort; doing all of them with mediocrity speaks to the high attrition rate of these professionals.

Balancing Media Coverage: Forward Thinking and Providing a Microphone

companies in mergers and acquisitions (M&A) have a relevant story to tell yet too often do little other than a single press release announcing the new entity. Much is lost when the rationale for the M & A is given short shrift. A great public spokesperson must be a guest on a myriad of podcasts, offer guest columns in a variety of industrial publications, and offer updates about the impact of the acquisition for customers. It is too important to view these events as transactional. The rationale for acquisition, the lessons

are able to convert companies’ thought leadership into publishable content. All the great content, YouTubes, podcasts, and publications that are not seen do little to advance the cause of manufacturers looking to create definitive value propositions and clear differentiation from competitors.

30 Manufacturing Outlook / September 2022

The current state of manufacturers’ marketing efforts is a hodge-podge of activities and actions. They are not a strategic campaign. Since time is the constant constraint much of that can be sourced to effective, savvy, and experience content creators in the industrial sectors. These are not PR folks who will take on any client and offer vanilla services. These are journalists and industry experts who

The Future State of Industrial Media

Velocity is understood by operations managers as the rapidity of motion such as the time rate of change or position of a body in a specified direction. Velocity is the rate of speed with which something occurs. Applying that concept to media messaging, the rapidity of action and reaction can (and must be) quantified. Whether Google search results, analytics, lead generation, frequency of inquiry, and of course, conversion to sale, these are metrics which are Theseanalyzable.arenot

IIoT Big Data, nor do they require extensive business intelligence algorithms. Running Google analytics will quickly inform senior industrial managers what is working. Likewise, if the sales

And still these best-practice operations are failing to tell their stories. They are failing to profile their leaders, and they are failing to use the new media methodologies that all GenZers have grown up with and utilize for hours a day. This failure to connect with the new generation of communication, portends a dismal outlook without immediate corrective action.

The Media Kit is Dead (or should be) Every fall until COVID, magazines, news publications, conferences, and more media outreach vehicles had a media kit which included a media calendar. No more. Sure, there are a few anachronistic examples which still prevail that look like rehashed versions of a 2010 editorial calendar. The fluidity of world events makes the media kit obsolete.

COVER STORY: STATE OF INDUSTRIAL MEDIA continued

Two years ago, few spoke about supply chain disruption, the Russian attack on Ukraine, oil prices, inflation, ‘the great resignation,’ cybersecurity challenges, and high-level robotics to solve workforce challenges. Now those topics are omnipresent. Any media calendar that was prepared in Fall of 2021 would have missed all these topics.

Anearshoring).growingnumber of manufacturers are thriving in this challenging environment. They are adopting smart manufacturing techniques, working with the needs of the supply chain, attracting and retaining a quality workforce, and making business processes faster.

Rationale for Media Outreach Integrated Campaigns for the Industrial Sector

The future state in a value stream map MUST consist of velocity, volume, and consistency. So many industrial firms have social media accounts that are barely used. DMs (direct messages) are not answered with alacrity. Following and followers are not vetted, scrubbed, and added to with regularity. Prospects on the CRM are not included in social media activity. Potential customers’ content must be retweeted. Salespeople must follow target customers on LinkedIn.

All editorial content has multiple purposes for the readers, the publishers, and the companies (paying sponsors). Ultimately, most want to know how manufacturers can succeed now and improve moving forward. To state the obvious, potential disruptions to industrial business operations keep growing every day. There is (and will continue to be) a shortage of skilled workers. Risks are rising and difficult to mitigate. Supply chain disruptions are coming from all locations (promulgating the conversation of

Thecampaign.integrated

campaign is more than a check list of “to-do” activities on Google calendars by all involved. Too much focus is placed in the day-to-day and too little focus on the notion of a campaign. Mapping a calendarized plan is essential. The combination of advertising, podcasts, webinars, tradeshows, industry events, feature article editorials, press releases, direct mail campaigns, and social media represent a cumulative effort which drive on-going branding, messaging, awareness, and lead generation. All of these campaign elements drive the Google search results, which as referenced earlier, are paramount.

The most significant factor in limiting the media messaging in the industrial sector is time. Great thought leaders, experienced marketing managers, and digital social media mavens, have too much on their plate and regularly drop the ball on one or more important functions of an integrated marketing

Author profile: Lew Weiss, founder of Jacket Media Co, host of Manufacturing Talk Radio and publisher of Manufacturing Outlook. n

The Answer is on the Phone

Currently, prospects in the industrial sector respond when there is a problem. Prospects proactively seek

31Manufacturing Outlook / September 2022

self-explanatory; it is not. The frequent lament among sponsors and advertisers is that the marketing-spend did not convert to sufficient inquiries or new sales. This goes back to the utilization of media content. Back in the ‘olden days’ (pre-2000) verified subscribers was the gold standard. Nowadays few read content consistently, rather they search by topic (not only by Google, but also by Twitter searches). The volume is measured by the push of content, not pull. In the past, there was an assumption that a feature article in a marquis publication such as IndustryWeek, would axiomatically drive so many eyeballs to content and convert to a percentage of inquiries.

While so much has changed for those of us 55 and older, the utilization of media by Millennials, GenZers, and now Generation Alpha has been on their cell phones for most of their lives. They have never heard of CDs, 8 tracks, or albums. They consume media at a volume, velocity, and consistency unimagined previously. They swipe up with a ferocity capturing bits of knowledge. We know the fate of the dinosaurs. Dynamic, agile, and creative media remains exciting and fun for those of us committed to communicating and reporting the trends in the industrial complex.

pipeline increases ten-fold and conversion to sales lags behind, the constraint can be quickly identified and Volumecorrected.mayseem

solutions using search engines. They may need to watch a YouTube video, then listen to a podcast, then see a topic such as robotic automation in a myriad of media outlets before taking the next step. Volume means that the problem a manufacturer has is solved when found (experienced: watched, heard, read, some element of Consistencyengagement).is

the company’s stability. The division of labor (in house or by a third-party agency) to accomplish consistent message is vital.

COVER STORY: STATE OF INDUSTRIAL MEDIA

the single most important variable in the industrial media market now and for the foreseeable future. One cannot be in an airport and fail to retweet. One cannot issue one press release a month; Cutler’s motto is that if a manufacturing enterprise is open for business today, they have something to say today. Periodic efforts, such as announcing a new product, service, or new hire, produces futile and half-hearted results. Such haphazard sporadic communication efforts are actually deleterious. They provoke the customers to ask why nothing new has been presented and question

will have a significant impact on manufacturing in North America. As with so much legislation, there will be winners and losers. Those that will be hurt will be those that will be forced to spend money to be in compliance

by Dr. Chris Kuehl

with the new rules and regulations, as well as those that will see higher prices for the commodities and materials they use. The winners will be those that manufacture the gear that will be required for industry and the consumer to be compliant with the new rules, as well as those that will take advantage of the incentives to “go green”.

How Green Is Going

32 Manufacturing Outlook / September 2022 NORTH AMERICA answers,legislationregardingThereSEPTEMBEROUTLOOKNORTHOUTLOOKAMERICA2022arefarmorequestionsthenewclimatechangeintheU.S.thantherearebutthissetofprograms

Some specific areas that manufacturers will need to be aware of include both penalties and incentives. There will be a fine of $900 per metric ton of methane emission over federal limits in 2024, and that rises to $1500 a metric ton in 2026. This is a regulation that will affect the agricultural sector more than manufacturing, but those in food

continued

processing will be affected directly and indirectly. There will be some $30 billion available for industry to deploy solar panels, wind turbines, batteries, geothermal facilities, and even zero-emission nuclear power plants. There are also tax credits included in this package. Another $30 billion has been directed at utilities to advance their transition away from oil, gas, and coal. There will be tax credits worth $85 a ton for carbon sequestration as well.

33Manufacturing Outlook / September 2022 continued NORTH AMERICA OUTLOOK

vehicles and developing other technologies that can replace fossil fuels. There will be a $27 billion “green bank” to support investment in alternative technologies such as solar panels on existing buildings and the use of smaller wind turbines and the Agriculturelike.

Thereconsumer.isalothere

to install solar panels, new heating and a/c gear, and so on. This is the kind of investment that encourages manufacturers as it creates a large new market for this equipment. Many of these incentive programs demand that the material and equipment be made in the U.S. This has created some tension with Canada and Mexico as both nations have considerable investment in electric vehicle manufacturing aimed at the U.S.

will be affected by the investment of $20 billion to reduce methane production from livestock through different feeds and other management options. This will have an immense impact on feedlot operations and large scale operations in poultry and swine. Forestry will be affected through reduction of logging in select areas as well as the large scale planting in areas where deforestation has been taking place.

There is a lot in this legislation that is aimed at the consumer, as well. Tax credits and direct incentives to buy electric vehicles, fuel efficient appliances, electric equipment to replace gas powered gear, and so on. There is money to get people

– some bad and some good. The challenge is to determine what elements of this effort last and which parts may be drastically altered in the future if the winds of political change keep blowing. The supporters of the initiatives assert this will mean billions of dollars for North American manufacturers, and opponents assert it will cost manufacturers billions in compliance efforts. In truth, both sides will be correct to a degree. The latest economic data for U.S., Mexico, and Canada provides the

The worst polluters in the industrial sector have been identified as in the chemical, steel, and cement industries, and there is $6 billion in grants and tax credits to encourage reduction of emissions. There are also corresponding penalties that will be assessed to encourage these efforts. There is $10 billion allocated to encourage development of hydrogen fuel, bio-diesel, and similar fuel alternatives. As part of this effort to reorient manufacturing, there will be $10 billion in tax credits going to companies that are making electric

same mixed message as it has for the last few months. The U.S. experienced two straight quarters of negative GDP growth (down 1.6% in Q1 and another 0.9% in Q2) but at the same time there was

Canada has been doing relatively well over the past several months due to the demand for the commodities the nation specializes in, but the Royal Bank of Canada has been issuing some warnings about what to expect in 2023. They are predicting a mild recession in the coming year due to the combination of higher continued

NORTH AMERICA OUTLOOK 200” Max O.D. 6” Min O.D. To 80,000 lbs. TOLL FREE IN THE U.S. 800.600.9290 - 973.276.5000 - CANADA: 416.363.2244 - INFO@STEELFORGE.COM - STEELFORGE.COM

a gain of over 500,000 jobs and an unemployment rate of 3.5%. The level of capacity utilization is now at 80% for the second straight month, and numbers between 80% and 85% are considered ideal for utilization.

According to the Armada Strategic Intelligence System, nearly every industrial sector is expecting a slump that extends through the remainder of this year before starting a recovery in 2023, but the exception is the all-important automotive sector, and it is trending sharply upwards. The expectation for the U.S. GDP going forward is for slightly higher numbers in Q3 (0.5), followed by another dip in Q4 (-0.2%). Next year starts slow with another negative quarter in Q1 (-0.4), but by the end of the year, GDP growth is back to 3.0%

34 Manufacturing Outlook / September 2022

THE FLAGSHIP REPORTS

He is the Economic Analyst for the Fabricators and Manufacturers Association and writes their biweekly manufacturer.economicdetailsFabrinomics,publication,whichtheimpactoftrendsonthe n

home as in the past.

35Manufacturing Outlook / September 2022

inflation, a chronic labor shortage, and the likelihood of higher interest rates from the Bank of Canada. The predictions are not extreme, but the current pace of growth will slow as the higher rates required by the need to tame inflation will pull down expansion. The jobless rate will increase but not by much as the labor shortage will persist. The consumer was aggressive coming out of the downturn, but that has slowed, and there will be more reaction to the higher prices. The manufacturing sector will take some of the bigger hits, but automotive is expected to remain strong – reflecting the pattern in the MexicoU.S.isdefying the negative assessments of analysts and has grown by 1.0% - marking the third quarter in a row of expansion. This has prompted a revaluation of the annual growth numbers, and now the expectation is that Mexico will

The Flagship Reports with Dr. Chris Kuehl is both an “Officer of the Watch” briefing of economic conditions and an Executive Briefing on specific situations impacting those conditions. Written and presented by the officers of Armada Corporate Intelligence, Dr. Kuehl lightens up the mood of sometimes distressful geoeconomic news with a bit of humor. This monthly podcast includes informa tion from the Flagship Reports issued 3 times and week, and AISI, the Armada Strategic Intelligence System, a tool for durable goods manufacturers that dives deep into the sector each month to pro vide more than 95% accurate near-term forecasts.

Author profile: Dr. Christopher Kuehl (Ph.D.) is a Managing Director of Armada Corporate Intelligence and one of the cofounders of the company in 1999. He has been Armada’s economic analyst and has worked with a wide variety of private clients and professional associations in the last ten years.

He is the Chief Economist for the National Association for Credit Management and is on the Board of Advisors for their global division –Finance, Credit and International Business. He prepares NACM’s monthly Credit Managers Index.

NORTH AMERICA OUTLOOK

hit 2.3% for the year. At the same time, analysts assert that 2023 will be slower but not to the point of recession. The driver for this growth has been tourism. For the past few years, the economy has been robbed of one of its key pillars, and now there seems to be a comeback underway. Traditionally the economy depends on manufacturing, oil exports, tourism, and remittances from Mexican workers in the U.S. These four sectors alternate in terms of importance, with manufacturing at the top more often than not. Tourism is often a close second and is especially crucial when it comes to employment. The pandemic crushed this sector for over two years, but the numbers are returning to normal as restrictions ease. Oil revenue is also up and for obvious reasons. The only sagging sector has been remittances, as the workers in the U.S. have been facing higher prices and can’t send as much money

36 Manufacturing Outlook / September 2022

Chile, a New Era?

This slim but very long country, with its four thousand miles of Pacific coastline, and its twenty million people, elected a new president at the end of last year. Gabriel Boric, a mere thirty-six years old, is somewhat left wing, and won office at the head of a left-wing coalition that included Chile’s Communist Party. Joe Biden called to congratulate him, and invited Boric to attend the Ninth Summit of the Americas. The two met at the gathering in June, and discussed various global issues. There was no record of them having discussed business.

Two-way trade between the U.S. and Chile in 2021 amounted to some $32 billion. The major U.S. exports to Chile were refined petroleum, some $2.4 billion, and agricultural products including pork, beef, beer and spirits, and cheeses. Chile exported some $6.5 billion of copper to the U.S., $2.35 billion of fish and seafood, $1.7 billion of fruit, and $1.2 billion of wood and wood products. The first six months of 2022 saw $20.5 billion of two-way trade between the two countries.

Chile’s “ace in the hole” as we might term it, is its standing as the world’s number one copper producer, its second-largest of lithium. It has the world’s largest open-pit copper mine that it has been operating for over a century. This mine, the Chuquicamata, uses “trucks” the size of a small family home, and carries out mining, crushing, sorting, and

SOUTH AMERICA bySEPTEMBEROUTLOOKSOUTHOUTLOOKAMERICA2022RoyceLowe continued

Chile’s total global imports for 2021 were $87 billion, including 15%

mineral fuels, 10.5% vehicles, 2.7% iron and steel, and 2% fabricated metals. Chile’s agricultural imports for 2021 were 26.5% from Argentina, 14% from the EU, and 12% from the U.S.

washing, followed by multi-smelting as a refining process. In 2021, Chile exported $13 billion in copper ore and $7 billion in refined copper to China, Chile’s biggest trading partner. Most of the mining equipment is supplied by Sweden. And there is an awful lot of Chinait.

needs Chile’s copper and lithium. When Boric was elected last year, the Chinese Embassy hand delivered a letter from Xi Jinping, in which he courteously reminded him that the People’s Republic of China was Chile’s biggest trading partner.

It is fair to say that Chile’s trading pattern will continue as is for the near future. But there are opportunities for U.S. manufacturers to up their presence in the country.

Bolsonaro is a self-confessed Trumpist, and is more than likely to contest the vote, and come out with the R - for Rigged - word. We’ll see.

Meanwhile there is an election campaign going on in Brazil, where

Author profile:Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing ManufacturingWriter,Outlook. n

In fact, the two-way trade between Chile and China amounts to some $55 billion per annum. In 2021, Chile exported to China for $28.6 billion, some $20 billion of which was copper ore and refined copper, and some $1.5 billion of pitted fruits. There will be wine, too. China exported to Chile for some $27.5 billion, including $6 billion of electrical and electronic equipment; $4 billion of machinery, nuclear reactors and boilers; $2.7 billion of vehicles other than railway, tramway; $1.4 billion of iron and steel; $1.1 billion of “articles” of iron and steel, and $300 million of aluminum.

Luiz Inácio Lula da Silva, a former president, is polling at over 40%, some 15 points in front of Jair Bolsonaro, who is seeking re-election. Mr. Bolsonaro has been desperately handing out money, in the hope of closing the gap. If no candidate receives more than 50% of valid votes on election day, October 2, a second round will take place on October 30.

37Manufacturing Outlook / September 2022

More on Brazil and its manufacturing economy next month.

SOUTH AMERICA OUTLOOK

38 Manufacturing Outlook / September 2022 AFRICA OUTLOOK continued

Exchanging valuable industry expertise to increase investment prospects in the African continent’s manufacturing sector portends great growth. The manufacturing industry is crucial to the success of companies and their countries, as it is responsible for creating many goods, giving employment to millions of people, and making goods more affordable. The African continent boasts high levels of global opportunities for investment across the manufacturing industry.

The manufacturing export market in Africa has been growing as reported in Manufacturing Outlook monthly since

by TR Cutler

SEPTEMBER 2022

Thedevelopment.manufacturing industry in Africa has great potential. Egypt, the biggest exporter of petroleum and petroleum products; Nigeria, the biggest exporter of flexible metal tubing; Ghana, the largest producer of cocoa beans in the world; are among African countries ready for investment and innovation.

Thequality.Future Manufacturing Africa (FMA) Trade Fair and Summit 2023

This first-of-its-kind event will facilitate opportunities within the manufacturing sector generating jobs and growth. FMA will create a development path for the manufacturing sector with business opportunities for companies that grow circular manufacturing for sustainable

Future Manufacturing Africa: Trade Fair and Summit 2023

the beginning of the year. According to the World Bank, much of this growth is attributable to the increased number of African countries now engaged in the manufacturing sector. Africa is now the largest manufacturing exporter in the world. Growing the African manufacturing export market requires a focus on the supply chain. This includes fair trade, innovation, futuristic technology, equipment, and machinery that provides solutions for increasing outputs and improving

AFRICA OUTLOOK

Other countries of interest are South Africa, Morocco, Algeria, Congo DRC, Kenya, Cote d’Ivoire, and Uganda.

• Cooling & refrigeration for factories

Providing loans or working capital to micro and small businesses is the sweet spot of B2B e-Commerce and retail marketplaces in Africa. How they provide this service differs. CTO Mahmoud Abdel-Fattah claims that in Egypt, a market with other upstarts such as asset-heavy MaxAB or hybrid model Capiter, Cartona stands out by integrating BNPL (buy now pay later) services into its marketplace processes without the help of a thirdparty provider. Instead of getting small businesses to pay their loans each month with interest like other platforms, Cartona allows them to repay these loans every time there is a product shipment.

Companies attending and exhibiting at the event are invited to sponsor a special issue of Manufacturing Outlook and be invited to participate in upcoming episodes of the Manufacturing Talk Radio broadcast. To learn more call 973-808-8300.

There are over 400,000 shops and thousands of international and local brands across Egypt… the sector is growing 8% annually… Overall retail market size: $120B, the food & beverage market worth $70B.

capital efficiency and growth while scaling its embedded finance product.

R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., celebrating its 24th 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.

Investors such as Global Ventures and Kepple Ventures doubled down less than a year after participating in the company’s $4.5M pre-Series A funding last September. At the time, Cartona was present in three Egyptian cities; it is now in eleven. Per a statement, the investment will allow the startup, launched in 2020, to cover all of Egypt’s governorates, grow its product, technology, and services, and explore new verticals beyond FMCG.

Cartona lends from its balance sheet for now. The executives say the company expects to receive some credit lines and venture debt from local and international partners by January 2023.

Author Profile:Thomas

and explore new verticals. Startups that solve the supply chain and operational challenges of players in the fast-moving consumer goods (FMCG) industry, helps buyers access products from sellers on a single

39Manufacturing Outlook / September AFRICA2022OUTLOOK

Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. Cutler has established special divisions including African manufacturing, Colombian manufacturing, Gen Z workforce, and Food & Beverage. Cutler was recently named the Global Supply Chain journalist of the year for the second time in a row. Over 5200 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com. n

• Sustainable technology to increase circular development in manufacturing

• Manufacturing management systems and solutions

• Packaging & bottling machinery and technology

The event will take place from May 9 - 11, 2023 at the Johannesburg Expo Centre (Nasrec), South Africa.

• Industrial machinery components and support systems

CEO Mahmoud Talaat told TechCrunch, “We believe that with this money, we would reach profitability. We will use this money for sustainable growth and only sustainable growth. We won’t expand like crazy without having positive unit economics in every city. “We plan to cover all the cities in Egypt, focus a lot on technology and products.”

The FMA Trade Fair and Summit 2023 will match exhibiting countries and buyers invested in the following:

• Raw material

the major players digitizing the traditional trade market, including mom-and-pop stores, FMCG producers, wholesalers, and distributors in Egypt, raised the Series A funding. Jordan and US-based early-stage venture capital firm Silicon Badia led the round, which also welcomed participation from the SANAD Fund for MSME, an impact investment fund for the Middle East and North Africa, Arab Bank Accelerator and Sunny Side Ventures.

The(https://bit.ly/3vgZaob)continentisrichwith raw materials and has high demand for manufactured products. This trade show will provide a platform for new and existing companies to share ideas, technologies, and equipment. The FMA Trade Fair and Summit 2023 will connect investors, entrepreneurs, and key stakeholders to create investment opportunities for possible partnerships and projects on the African continent. These opportunities can assist in crosstrading, expanding Africa’s competitive edge, and sustainability across the manufacturing sector.

Sweet Spot of B2B e-Commerce in Africa

• Health & safety control systems, solutions, and services

Cartona,platform.oneof

• Equipment and machinery

Follow the eCommerce Africa Trend for Manufacturing Egyptian B2B e-Commerce platform, Cartona recently raised $12M to scale

Cartona’s platform allows buyers to order inventory from a network of curated sellers via an app that provides a communication tool for promotions and a dashboard for market insights. The company operates an asset-light marketplace where it does not own a single product or vehicle. This model has led to customer complaints on both sides of the platform. As a result, Talaat said Cartona had to focus more on its technical integrations with big manufacturers and their warehouses, which has created more upside for the business. With these integrations, Cartona could simultaneously pursue

continued ASIA OUTLOOK

The semiconductor supply chain includes what is broadly referred to as the “integrated circuit market” (IC market) for statistics purposes. With in this market, there are three major sectors of economic activity that are required to bring a semiconductor to market: IC design, IC fabrication and IC packaging and testing. Once produced they are used in three major

40 Manufacturing Outlook / September 2022

Making Sense of the Semiconductor Supply Chain

ASIA OUTLOOK: CHIP-MAKING IN ASIA: Clearing the Cobwebs

How dominant is the semiconduc tor supply chain in Asia? And how vulnerable? Will the U.S. ever rival Asia in this sector or even become the epicenter of production for the semi conductors it needs? How long would it take? Are we chasing rainbows? It is difficult to contemplate the answers to these questions without first looking closer at how globally

integrated the semiconductor indus try already is and whether or not it is even necessary for the U.S. to become totally independent in its supply chain capacity in order to achieve economic security. Perhaps a combination of strategic self-reliance and diplomacy with secure allies is a more realistic approach. Currently, it may be the only approach.

by Christine Casati

The global semiconductor industry is dominated by companies from North America and the Asia-Pacific region. Taiwan, China, Japan, and South Ko rea are some of the biggest markets for purchasing semiconductor equip ment. The Netherlands is the home of ASML, one of the world’s leading chip-making machine manufacturers, and the only company in the world producing extreme ultraviolet lithog raphy (EUV machines), necessary for etching the microcircuits in the creation of chips (see below). In 2021, Samsung retook its market leader position in semiconductor sales with a volume of about $83 billion. Intel,

Taiwan is a major semicon ductor and manufacturing hub. There are many players, but the largest semiconductor foundry in the world is Taiwan Semiconductor Manufac turing Company (TSMC). Current estimates are that Taiwan produces between 80 and 90 percent of global chips. If we use 2020 as our anchor, Taiwan controlled 77% of the global chip foundries. (Statistica, Daniel Slotta). But Taiwan only designs about 20% of what it produces. Most design of its chips occurs elsewhere. And it packages and tests only about half of what it produces.

41Manufacturing Outlook / September 2022

The semiconductor industry is the world’s leading user of neon gas. The Asia-Pacific Region dominates the neon gas market due to its high con sumption of neon gas in cryogenics, lighting, imaging, and electronic chip manufacturing. High purity neon gas is the fuel needed for lasers to

During the Soviet era most neon gas harvesters existed in present day Russia, which remains a big player in global exports, besides Ukraine. As supplies have now been disrupted from both nations due to the war, gas companies in the U.S. may have opportunities to seek investment and expand their production. Three continued

a U.S. company, ranked second ($75.5

categories of products: big data center chips (e.g. Amazon cloud, AT&T, NASA), personal computer/ desktop chips, and everything else (smart phones, automotive controls, medical devices, space exploration, etc.) Each step involved in producing chips could occur anywhere in the world. In addition, the production of semiconductor equipment which goes into these processes occurs many places globally. No one country dom inates in all of these activities.

TAIWAN:billion).

“breathe” in DUV (deep ultraviolet) lithography systems which etch mi crocircuits onto the polished silicon wafers. This technology penetrates deeply into the UV spectrum to print the tiny features that form the basis of the microchip. Without neon gas, lasers would not be able to do etching on chips. In addition to semiconduc tor production, neon gas is needed for many imaging and lighting applica tions, LCDs, neon displays, refriger ation, medical devices, space explo ration and a myriad of other laser

NEON GAS in Semiconductor Man ufacturing: Why have prices gone up 5000% this year?

ASIA OUTLOOK

Currently,applications.global trading of neon gas supplies are threatened by geopolit ical conflicts. Reportedly up to 50% of world supplies have been shattered by Russia’s aggression into Ukraine. The world’s leading producers and exporters of neon gas are located in Ukraine. Ingas LLC and Cryoin Engineering, both privately-held companies in Ukraine, are estimated to supply between 45% to 54% of the global neon gas requirements for chip manufacturing. The U.S. is a prima ry purchaser of Ukrainian-harvested neon gas, reportedly covering up to 90% of its needs. Finding alternative sources could be difficult in the short term, and longer term planning is critically needed if chip manufactur ing in the U.S. expands under Biden’s Chips and Science Act. Neon gas can be harvested as a byproduct of steel production. As steel-making in China is so robust, it’s possible Chi nese producers could increase neon production this year.

42 Manufacturing Outlook / September 2022

its own chipmaking amid growing U.S.:demand.The pandemic curtailed semi conductor manufacturing throughout the world, leading to shortages in 2021 and delaying the roll out of 5G chips. This was exacerbated by supply chain disruptions which contributed to delivery bottlenecks everywhere.

industrial gas producers, Air Liquide, Linde, and Air Products may be the best positioned. But currently the rev enue from neon gas sales at these U.S. public companies is so minimal that they generally do not need to disclose it. There are no “pure-play” neon gas producers listed on stock exchanges. Investment is needed if the U.S. is to be strategically positioned to fuel

The CHIPS and Science Act was signed into law by President Biden on August 9, 2022. It is a comprehensive piece of legislation which over time will inject $280 billion into the U.S. economy. Of that, $52.7 billion is designated for the American semicon ductor industry. Of that $39 billion contains incentives for research, inno vation and facility development, plus $2 billion to enhance production of chips that have already been designed and are currently used in automobiles continued

Our dependance on global supplies of semiconductors became front and center when people couldn’t buy cars or computers due to chip shortages, and demand exploded. While immedi ate consumer demand for these items has since cooled off somewhat, the federal government finally had to act. In 2021, the National Defense Author ization Act called for the creation of the National Semiconductor Technol ogy Center (NSTC). A longer-term vision was clearly required.

and defense systems. Next month we will look more closely at which U.S. companies have plans to build or ex pand in the U.S. under this act and the foreign companies which are investing in the semiconductor industry here. We will also look at restrictions on uses of funding for semiconductor ex pansion under the CHIPS and Science Act.

In the meantime, if semiconductors and negative growth aren’t your cup of tea, check this out: Self driving robotaxis have taken off in Shenzhen. China has debuted a 620 kilometer per hour train, and in Shanghai a five-story building was raised on wheels to “walk down the street” to its new location. (CNN).

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

Author Profile: Author andChristineprofile:isco-founderPresidentofChina

China is currently dealing with its weakest economic outlook since the 1970s. The impact of China’s ongoing economic downturn is severe with slowdowns in spending and factory output. It has been compounded not only by sporadic and prolonged zero tolerance Covid-19 lockdowns, but also by unforeseen climate events and military posturing. For example, hy dropower, the primary source of ener gy supply in Sichuan province, home to 100 million people in Southwest

Human Resources

China, is threatened by heat waves and drought which have caused a 50% reduction in Yangzi River water flows recently. Manufacturing facilities in Southwest China may be required to curb production as a result, potentially affecting polysilicon and lithium pro duction needed for energy transition programs. Additionally, China’s infra structure stimulus has not made up for the damage caused by property woes. In the past, the State Council has au thorized massive government borrow ing to stimulate the economy through infrastructure spending. But debt has now reached 120% of GDP, so they are relying more on encouraging local investment from the Provinces. How ever, local revenues primarily come from land sales which are already approaching 90% of allowed transac tions for 2022. Adding to the econom ic uncertainty is China’s military pos ture in the region over Taiwan. China is heavily reliant on Taiwan in some sectors due to Taiwan’s dominance in

semiconductor manufacturing, so trade retaliation against Taiwan beyond sand for construction, fruit, and foodstuffs could be very costly for China.

43Manufacturing Outlook / September 2022 We want your participation. Now interviewing for additional podcast hosts Now interviewing for regular and contributing writers for Manufacturing Outlook ezine New ideas wanted for monthly Manufacturing Talk Radio topics Contact Jacket Media Co. at 973-808-8300 info@jacketmediaco.comor

NEWS FLASH: Danger Signs in China

by Chris Anderson

PMI continued in contraction, with production falling at a similar pace to that in July. New orders fell sharply again. There was a fall in price pressures as rates of input cost and selling price inflation slowed to 19- and 16- month lows respectively. Input purchases fell due to lack of demand; there was an accompanying reduction in backlogs. Business confidence was up slightly from July, but still at a subdued level. Despite positive PMI’s in some countries, the Eurozone is slipping into recession.

EUROZONEGLOBALOUTLOOK

The S&P Global Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI), fell back slightly from 49.8 in July to 49.6 in August, a 26-month low. The manufacturing production index increased slightly from July’s 46.3 to

Chris Anderson, Staff Writer

44 Manufacturing Outlook / September 2022 EUROZONE OUTLOOK

The46.5.Eurozone

GLOBAL PMI OUTLOOK

GLOBAL OUTLOOKPMI

U.S. ECONOMY EXPANDS, REST OF WORLD WEAKENS, AUGUST 2022 BUSINESS SURVEY INSIGHTS

45Manufacturing Outlook / September 2022

coming from the U.S. While the U.S. surveys were decidedly positive, we remain deeply concerned about the direction of the global economy. There is a plethora of issues, some of which have begun to be factored into PMIs, others which have not. In August’s numbers, the European surveys we track were in contractionary territory as energy prices soared and the economy began to slow. Unfortunately, it is likely that the worst is yet to come in Europe, as winter not only has the potential to bring higher energy prices than current, but industry shutdowns due to energy constraints which could

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

continued

According to our scatterplot of 18 surveys, two economies recorded Expanding-Strengthening; five reported Expanding-Weakening; one reported Expanding-No Change, one reported Contracting-Strengthening, and nine reported ContractingWeakening. In September, the U.S. proved to be a major source of strength for the global economy, with 4/8 surveys still in expansion territory

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

decimate manufacturing. Asia remains mixed, and risks remain as well. Japan’s manufacturing holds in expansion; however, it has weakened relative to previous months. While manufacturing is strong, volatility persists in currency markets, with the Yen at 145 as the JGB tries to hold on to yield curve control. Both China surveys that we track remained in contraction as the Yuan continues to weaken and the real estate market collapses. The risks in China are likely to the downside. A source outside of global strength outside of the U.S. is emerging markets, specifically Brazil and India, which have both shown

46 Manufacturing Outlook / September 2022 GLOBAL PMI OUTLOOK continued

Customers’ Inventories: The index (38.9, -0.6) for raw materials, components, and finished goods. This is “too low” for the 71st consecutive month and the index has been under 40 percent for the past 25 months. This is an indication that buyers are still struggling to keep plants synchronized with their supply chains.

The five PMI components continue to show surprising resilience as they are trending flat as the index is unchanged from last month while the other five components are trending downward. According to the press release, “The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for August (52.8

Drivers: While the overall PMI is still indicating growth, it is revealing an overall trend of soft expansion.

strength as the rest of the world has weakened. Two things appear to be certain for the medium to long term. We will be living with Inflation, and lack of Trust/Confidence. Relationships in the supply chains for goods and services that bind the global economy have been significantly compromised in that companies and government agencies have lost a tremendous amount of credibility throughout this ordeal. While we saw both signs of strength and weakness in August, the bias was toward continued weakness in the global economy, and we believe that the risks skew to the downside.

The U.S. Manufacturing sector, despite a multitude of challenges, internationally and domestically, sits just below the 260-month average of 53.1. This is the third consecutive month below the 260 month trend. While we did not see continued weakening in August, the trend, as well as global conditions, point toward continued weakness in the future. Manufacturing supply chains are still struggling with factory closures, although there have been signs that these are easing in recent months. Precipitous declines in gasoline prices, falling freight rates, and rising labor force participation will all help to ease pressures. Help wanted signs persist in most industries, and in July JOLTS job openings increased and saw substantial upward revisions to openings in prior months. We are paying attention to metals, chemicals, agricultural, energy, and electronics. Chemicals has seen weakening in previous surveys, and its importance cannot be understated because of the wide array of other industries that use chemicals.

ISM U.S. Manufacturing PMI™

percent) corresponds to a 1.4-percent increase in real gross domestic product (GDP) on an annualized basis.”

New Orders Minus Inventories: This key spread is holding in negative territory for the fourth consecutive month (-1.8), signaling Inventories are accumulating faster than New Orders. We like to see New Orders typically outpace Inventories by an average of +6-8 points. While this is an improvement over the past few

readings, concerns remain around energy prices, potential European industry shutdowns, and Chinas continued pursuance of zero covid policies, to name a few.

47Manufacturing Outlook / September 2022 GLOBAL PMI OUTLOOK n

Training in the design, production, and application of wide bandgap power electronics through university partnerships and short courses for professional development North Carolina

PowerAmerica,ELECTRONICSaManufacturing

PowerAmerica brings together partners from industry, academia, and government to transition this technology from the lab to products, directly impacting system-level efficiencies. This is done through:

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

Demonstrations and projects to scale technology innova tions and applications

Conventional silicon-based electronics cannot reach the high voltages, fre quencies, and temperatures needed for many of today’s critical applica tions. Wide bandgap semiconductors, which are made from silicon carbide and gallium nitride, have the capacity to meet these needs. Smaller and more energy-efficient, these semiconductors are suitable for compact pow er adaptors for consumer electronics. They also increase efficiency in vehi cle charging systems and industrial motors, provide more effective energy conversion and distribution for the electric grid and for renewable energy systems, and improve the efficiency of power supplies for data centers.

Networking and promotion to share tested benefits to engineers and accelerate the transition of silicon-based systems to wide bandgap technology

48 Manufacturing Outlook / September 2022 INNOVATION OUTLOOK continued

USA® institute, is making smaller and more energyefficient power electronics using wide bandgap semiconductor technology, with the goal of making this technology affordable and accessible to all U.S. manufacturers and consumers.

Approach to Innovation and Collaboration

919-515-6013 poweramericainstitute.org +

ACCELERATING THE NEXT GENERATION OF POWER

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.

LEARN PowerAmericaCONNECTMOREWITH Raleigh,

Technology Focus Area

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

49Manufacturing Outlook / September 2022

PRESiCE TM: Researchers from North Carolina State University introduced a new manufacturing process and chip design for silicon carbide devices, which will enable companies to more quickly use the X-Fab silicon carbide production line and more readily incorporate these devices into their products. This saves start-up cost and time and expedites commercialization of silicon carbide devices.

– Captain Frank Futcher, Lead, Advanced Manufacturing Industry Study, National Defense University

“Through our collaboration with PowerAmerica, we believe our silicon carbide technology work has been advanced by five years.”

COLLABORATIVE PROJECT EXAMPLES

AGILESWITCH EVALUATION SYSTEMS: Working through a PowerAmerica project, AgileSwitch has developed a new type of intelligent power module evaluation kit that enables commercial, industrial, and research organizations to immediately evaluate and incorporate power silicon carbide devices into existing applications. The kit delivers improved performance and cost-savings compared to conventional gate drive technology.

PRODUCING NEW SIC PRODUCTS AT THE FIRST U.S. OPEN FOUNDRY: The lack of costeffective silicon carbide devices limits widespread adoption in commercial power electronic applications. Monolith Semiconductor, a Texas startup and PowerAmerica member, perfected a process to manufacture silicon carbide power MOSFET’s and diodes at the X-FAB Texas silicon carbide foundry. Last year, the company successfully released both products to market through its majority investor, Littelfuse, Inc.

– Brij Singh, Sr. Engineer, John Deere

“PowerAmerica provides an example of a successful private-public partnership. The institute is a unique model of collaboration that connects people, ideas, and technology to solve advanced manufacturing challenges that ultimately enhance economic competitiveness and strengthen national security.”

ELECTRIC VEHICLE FAST CHARGER: Commercially available electric vehicle chargers require large transformers that are expensive to install in densely populated areas. This project eliminates the need for the large transformer by connecting the charger directly to the power company’s distribution power lines, which operate at much higher voltages than the low-voltage lines used for connecting customers to the utility. Directly using higher voltages reduces installation costs. In addition, the use of silicon carbide devices for the charger design cuts power conversion losses in half, and allows for a prototype that is ten times smaller than the current state-of-the-art fast charger.

INNOVATION OUTLOOK n

persisting production issues come to aggravate shortages of engine modules, inadequate depot facilities, and cost increases for the hardware processor needed for a key software upgrade. Costly retrofits are also possible if major problems are discovered during an oft-delayed simulation exercise to test the aircraft virtually against the most advanced Russian and Chinese threats. The simulated sorties were to take place

In late July, 2022, the USAF grounded its F-35 fleet temporarily due to a potentially faulty component in the ejection seat that could endanger pilots in an emergency. The issue involves explosive cartridges inside the ejection seats that help propel the seat and pilot from the plane.

in 2017, then 2020 and are now planned for sometime between June and September of 2023.

The Business Development Manager of Martin-Baker, the manufacturer of the ejection seats, said they had discovered an “anomaly” with one of the Seat Cartridge Actuated Devices in the F-35 seat this past April, and “this was quickly traced back to a gap in the manufacturing process which was addressed and changed.”

AEROSPACE OUTLOOK

SEPTEMBER 2022

The F-35 and the 787

This contract represents $398 billion in development and acquisition, plus an additional $1.3 trillion to operate and maintain the fleet over 66 years.

Lockheed Martin Corp. Has, to date, delivered over 800 F-35 fighter jets of a contract for the U.S. Defense Department, but production is still hindered by excessive defects and the necessity for rework that “risk substantial delivery delays and reduced readiness,” according to the Pentagon’s Defense Contract Management Agency.

Lockheed is the Defense Department’s top contractor. It has improved in many ways from the F-35’s first production lot through the current 14th batch, but “too many quality assurance defects” are not

Thesesaid.

50 Manufacturing Outlook / September 2022 AEROSPACE OUTLOOK continued

by Royce Lowe

picked up at the initial assembly station, but only either before or after formal acceptance of the warplanes, the agency said in a statement. F-35 subcontractors Northrup Grumman Corp. and BAE Systems Plc. also “have had many manufacturing noncompliances,” the contracting agency

The Defense Contract Management Agency said some of the persistent quality issues are being discovered after formal acceptance of aircraft. It said it’s working with the Pentagon’s Joint Program Office “to identify where these quality issues originate in the production cycle and are making the necessary changes in oversight to mitigate these issues.”

Lockheed said in a statement that it “works closely with our customers and is committed to delivering quality products on time.” Specifically, the company said, the need to scrap, rework or repair parts “has continuously improved lot-over-lot since the F-35 program began, and we reduced it by 7.6% in 2021 from 2020.”

And finally, during and post-COVID, or since 2020, Lockheed assures us they hired and trained over 500 new production line employees on, as they put it, manufacturing and quality processes. So after producing a couple of hundred F35-A aircraft, someone decided they needed to beef up their quality mentality and

The FAA and Boeing have not had a friendly relationship in recent years since design flaws in the 737 Max led to two crashes that killed 346 people in 2018 and 2019. Since that time, Boeing’s manufacturing and quality control practices have been under intense scrutiny by the FAA. The reason both the 737 MAX and the 787 have been allowed to fly again is the total satisfaction on the part of the FAA that Boeing’s revised and improved practices meet the FAA’s

Boeing and the FAA recently reached an agreement on how to fix the 787’s manufacturing flaws that had halted most deliveries since late 2020. The FAA released an email that read, “The purpose of the visit is to ensure that the FAA is satisfied that Boeing has taken the appropriate steps to improve manufacturing quality and to guarantee the autonomy of workers who ensure regulatory compliance on the company’s assembly lines.”

Thererequirements.islittle

Wow, one has to wonder who oversees the manufacture of the ejection seats, since the manufacturer was the one who

Lockheed says it “works closely with its customers and is committed to delivering quality products on time.” One would hope so, again at $120 million a pop. Any local steel service center could make such a statement with an equal degree of sincerity.

Author profile:Royce Lowe, Manufacturing Talk Radio, UK and EU Correspondent,InternationalContributing Writer, Manufacturing Outlook.n

“found a gap” in the production process. Did they tell Lockheed about “the gap” and when did they tell them?

The Federal administrator,Administration’sAviationactingBillyNolen, met with agency safety inspectors in South Carolina. He also met with Boeing officials at a plant in North Charleston to discuss the company’s new internal safety program that it began in the wake of the two fatal crashes on the 737 Max jets.

Boeing is breathing sighs of relief again, after delivering its first 787 Dreamliner in over a year, to American Airlines.

The chief U.S. aviation safety regulator, in an effort to highlight the concern about Boeing’s manufacturing processes, recently visited a plant that builds the company’s 787 Dreamliner jets.

has a long way to go, and the fighter aircraft is being sold around the world. It is to be hoped that the manufacturer, its subcontractors, and the relevant U.S. agencies can work together to greatly improve the situation.

51Manufacturing Outlook / September AEROSPACE2022OUTLOOK

Thisprocedures.contract

“During and post-Covid, we hired and trained more than 500 new production line employees on manufacturing and quality processes, we are actively working on continued improvements and presented these plans” to the Pentagon’s F-35 office, and the contracts management agency in April. The company added that “quality escapes,” or defects not caught before final delivery for this year are 0.28 per jet, “a 45% improvement from 2021.”

It seems strange that fighter jets worth around $120 million a pop wouldn’t have had skilled, vigilant workers looking over them at every stage, no matter how seemingly small the stage or the component involved. And if defects were being picked up after all production stages and final inspection, in other words in the customer’s possession, why?

doubt that the FAA will continue to keep a very close eye on Boeing, who will surely do all that is required to continue to satisfy the agency.

International orders for the F-35 continue to rise, with Finland, Switzerland, Germany and Greece the latest overseas customers. South Korea has indicated it wants more of the jets. The more than 800 F-35s delivered worldwide are out of a potential fleet of more than 3,300 for the US and partner nations. The Air Force is the largest F-35 customer, with 348 of its planned 1,763 planes now in its inventory.

So we have an energy supply problem in China, in India, and particularly in Europe and the UK. In light of the lack of natural gas, in spite of record shipments of LNG from the U.S., there was nowhere to turn except to coal. U.S. exports of LNG were at a record high, 11 billion cubic meters, or 12% of its domestic production, with exports to the EU and the UK up three times Accordingyear-over-year.toa recently-published report by the International Energy Administration, the world’s consumption of coal is set to rise slightly in 2022, taking it back to the

52 Manufacturing Outlook / September 2022 ENERGY OUTLOOK

King Coal’s Getting Richer

There was flooding in one of China’s more important coal-producing areas in 2021, and mines were shuttered for a time. Factories in China were closed to avoid exceeding limits on energy use imposed by Beijing to promote efficiency, and probably to keep the skies blue for the 2022 Winter Olympics. So electrical energy was rationed during 2021 in China. The power crunch in China, caused by tight coal supplies and toughening emissions standards, hurt production in industries across several regions, and posed a risk to already strained global supply chains.

by Royce Lowe

SEPTEMBER 2022

record level it reached nearly a decade ago. The report notes that significant uncertainty hangs over the outlook for coal as a result of slowing economic growth and energy market turbulence.

Based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tons, assuming the Chinese economy recovers as expected in the second half of the year. This global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high.

continued

ENERGY OUTLOOK

Demand for coal in India has been strong since the start of 2022, and is expected to rise by 7% for the full year as the country’s economy grows and the use of electricity expands. In China, coal demand is estimated to have declined by 3% in the first half of 2022 as renewed COVID lockdowns in some cities slowed economic growth, but an expected increase in the second half of the year is likely to bring coal consumption for the full year back to the same levels as last year. China and India, between them, consume double the amount of coal used in the rest of the world combined. China alone accounts for more than half the world’s demand. India plans to reopen 100 coal mines that had previously been considered uneconomical.

Global coal demand is being propped up this year by rising natural gas prices, which have intensified gasto-coal switching in many countries, as well as economic growth in India. Those factors are being partly offset by slowing economic growth in China and by the inability of some major coal producers to ramp up production.

“Before a perfect new power system has been built and the flexibility and storage capacity of the power system have been completely solved, it is also necessary to rely on coal-fired thermal power to ensure supply,” Yi said. “On the one hand we are grasping supply assurance, and on the other hand we are also vigorously developing zerocarbon energy systems to achieve the replacement of coal. The two are not Sophiecontradictory.”Geoghegan, a climate campaigner for the Environmental Investigations Agency, said increasingly common and severe heatwaves around the world were increasing the demand for ways of staying cool, or air conditioning. “The way that AC is used, as soon as it gets warm, everyone turns theirs on, putting a huge strain on the grid, which means that either there are power cuts or peak power is switched on, and peak power is run by coal plants,” she said. “It’s a Catch-22: it gets warm, so you turn on your AC, which increases global temps even further. So China has increased coal production to address a rising demand for cooling, but it’s a short-term fix which has long-term

n ENERGY OUTLOOK

China’s government has, in fact, renewed its focus on coal-fired electricity to ensure stability despite its massive investment in wind and solar energy. The Netherlands, Germany, and Austria have made similar moves in response to the energy crisis sparked by Russia’s invasion.

Author profile: Royce ManufacturingLowe,Talk Radio, UK and EU Writer,Correspondent,InternationalContributingManufacturingOutlook.

premier, Li Keqiang, has called for increased production of coal to stave off mass blackouts, as early summer heatwaves have prompted record electricity usage. He “urged tapping into advanced coal capacity, securing power supply and resolutely preventing power outages amid the peak summer season,” according to state media. The reports said Li also called for greater “efforts to ramp up efficient and clean coal power

“It is fair to say that after the high note set by the carbon neutrality announcement in 2020, China’s climate momentum is waning,” said Li Shuo, a senior global policy adviser for Greenpeace. “It will certainly serve as a delaying factor for China to achieve deep decarbonization over the long term. Stronger political will is needed to weather China through the current down season of climate action.”

Asconsumption.soaringnatural

53Manufacturing Outlook / September 2022

Soimplications.”wehaveChina

Jiang Yi, a Tsinghua University academic and member of the Chinese Communist party’s most recent national climate change expert committee, said the increase in coal production was not inconsistent with the government’s carbon pledges.

Coal consumption in the European Union is expected to rise by 7% in 2022 on top of last year’s 14% jump. This is being driven by demand from the electricity sector where coal is increasingly being used to replace gas, which is in short supply and has experienced huge price spikes following Russia’s invasion of Ukraine. Several EU countries are extending the life of coal plants scheduled for closure, reopening closed plants or raising caps

Observersproduction”.say

turning to coal to provide enough power for its industries and its air conditioners, and we have India reopening 100 coal mines. India is becoming richer, and although presently there aren’t that many air conditioners in the country, there will be many more. (Only 5% of the homes in the UK have air conditioning.)

As for coal, and its usage, we’re stuck somewhere between phasing out and phasing down. Another global uncertainty.

on their operating hours to reduce gas consumption. However, Europe only accounts for about 5% of global coal

gas prices have made coal more competitive in many markets, international coal prices have risen in turn. The price was approximately three times higher in the second quarter of this year than it was a year ago. Futures markets indicate that tight market conditions will continue well into next year and China’sbeyond.

The new IEA report highlights the significant turmoil in coal markets in recent months, which has important implications for many countries where coal remains a key fuel for electricity generation and industry. Worldwide coal consumption rebounded by about 6% in 2021 as the global economy recovered rapidly from the initial shock of the COVID pandemic. That sharp rise went a long way to putting energyrelated CO2 emissions, in absolute terms, at their highest level in history.

Australia, Metals, Batteries, EVs ; and Ford

Gold, in fact, is losing its glitter and taking a distant second place to the search for battery metals to push along the global move to electric vehicles. Those mining leaders most in demand are the companies working on projects that will come up with substantial quantities of lithium, nickel, manganese and cobalt. Australian miners are already supplying some

three-quarters of Tesla’s lithium requirements, and they’re looking to bring about a rapid expansion in the production of a wide range of essential metals.

by Royce Kalgoorlie,LoweinWestern Australia, is a city that was founded on a gold rush in the late nineteenth century. It is home to one of the world’s largest open-pit mines, over two miles long. It is also the site of an annual mining forum that recently saw some 2,700 executives and investment bankers gathered together to discuss the future of the mining industry.

MATERIALS OUTLOOK

54 Manufacturing Outlook / September 2022 MATERIALS OUTLOOK

IGO mines and refines nickel and lithium, having sold a stake in a gold operation. BHP, a mining giant, is forecasting electric models to represent

continued

SEPTEMBER 2022

In fact, Ford has secured batteries sufficient to build 600,000 EVs per year by 2023. The company has 70% of the battery capacity it needs to build over 2 million EVs annually, starting in 2026, as per CEO Jim Farley’s goal in March this year.

n MATERIALS OUTLOOK

Ford is looking to the worldwide demand for EVs to increase by 90% annually through 2026, or more than double the current industry forecasts. The company will begin use of the less expensive LFP battery packs from CATL on its Mustang and F150 in early 2024, and plans to source 40 gigawatt hours of those LFP batteries annually in North America in 2026, but will initially import them from China. CATL supplies a third of global EV batteries, with LG in second place with 14%.

Priceiron.jumps

Author profile: Royce ManufacturingLowe,Talk Radio, UK and EU Writer,Correspondent,InternationalContributingManufacturingOutlook.

Ford recently announced that it has been touring the globe signing longterm agreements with the world’s largest miners, refiners and battery makers. It also struck a deal to buy a huge quantity of CATL’s iron-based battery packs for use in the Mustang Mach - E and the F150 Lightning.

Ford recently announced 8,000 job cuts, mostly among its 31,000 salaried employees in the U.S., to help finance its $50 billion EV investment through 2026. The company has been shopping for lithium in Argentina and nickel in Indonesia, the world’s largest nickel producer. It has agreements with both BHP and Rio Tinto. One of the heaviest deals may be the starring role of

Ford is intent on catching Tesla, and by next year, on an annual basis, will build 270,000 Mach-Es, 150,000 F150 Lightnings, 150,000 Transit EV commercial vans and 30,000 units of a new electric SUV for Europe whose production will leap forward in 2024. GM has partnered with South Korea’s LG Chem to build battery plants in the

for battery materials have eaten into auto profits in 2022, and raw material shortages could put

PresidentU.S.

Ford is already in a joint venture with South Korea’s SK Innovation Co. to spend $11.4 billion on three battery factories and an EV assembly plant in Tennessee and Kentucky.

55Manufacturing Outlook / September 2022

the brakes on the EV Republictheaoftheproblemisbatteries.Manganese,useautomakersWesternrevolution.mostlyNickel-Cobalt-NCM,Cobaltanongoingbecausevastmajorityreservesareinsinglecountry,Democraticof

There is battery manufacturing capacity in the U.S., but not nearly enough. There are projects on the drawing board but they will take time, and neither Ford nor Tesla can afford to wait for them to come online. Further up the supply chain are the races to grab hold of the metals required to make the batteries, and the possibility that demand may exceed supply to the extent that prices will skyrocket. There again, some of the production forecasts for EVs may be somewhat inflated, since we still don’t know the depth of the pockets of the average North American motorist.

60% of new car sales by 2030, 90% by 2040. A BHP operation, Nickel West, in Kalgoorlie, is profiting from EV demand, and recently added Ford to its customer list, alongside Tesla and Toyota. They forecast a 200-300% increase in nickel demand over the next 30 years. Lithium producers are celebrating recent agreements with Tesla, Ford, and LG Chem.

Congo. The other battery, the Lithium-Iron-Phosphate, LFP, is cheaper, more stable, but generally less powerful than the NCM. But improvements in technology are being led by the major Chinese battery company, Contemporary Amperex Technology Co. Ltd., or CATL - and Tesla, who said last year it would switch to LFPs for standard range cars as part of its efforts to reduce costs.

Joe Biden has allocated billions into building an EV supply chain in the US to reduce dependence on China. Ford contends that to meet mushrooming demand for EVs, it must import batteries from the Chinese battery giant.

56 Manufacturing Outlook / September 2022 AUTOMOTIVE OUTLOOK

SEPTEMBER 2022

continued

by Royce Lowe Electric Trucks and Things

materials need to come from countries the U.S. has free trade agreements with, and not nations of concern, such as China. While it’s unclear how many will meet the required criteria, battery-powered big rigs are definitely starting to roll. Earlier this year shipping giant Maersk said it would buy 110 electric Class 8 rigs from Volvo Trucks. Nikola plans to deliver at least 300 trucks this year, and Daimler Truck also has electric models on the road.

Joe Biden’s Inflation Reduction Act loosens up $374 billion in climate and energy spending for cleaner commercial vehicles. Passage of the bill gives way to up to $40,000 tax credits per heavy-duty truck purchase. According to the Bureau of Transportation Statistics, over 20% of the fuel consumed in the U.S. is by commercial vehicles. As will be the case with passenger cars, trucks will need to meet tough requirements to be eligible for incentives. Battery

AUTOMOTIVE OUTLOOK

Following the Trevor Milton fraud scandal, Nikola seems determined to clean up its act and to get serious about the business of producing battery-powered trucks. The company recently named a new CEO, Michael Lohscheller, who brings decades of mass-production experience with Mitsubishi in Europe and VW in the U.S. They will naturally be in competition with Tesla, whose CEO says he is coming out with a 500mile range semi-truck this year, and a Cybertruck next year.

Its interesting that an industry that can’t really forecast sales of its ICE models can deign to forecast production figures for EVs for years to come. We’ll see.

Automakers including VW and Stellantis have embarked on ambitious plans to make batteries, mostly with partners, to ensure enough supply of the core EV components. VW is building six facilities in Europe alone, while Mercedes has joined Stellantis and TotalEnergies SE in a 7 billioneuro battery venture, and is looking at eight facilities globally. The European Union is also pressing for a regional battery supply chain led by Sweden’s Northvolt AB, to lessen dependence on the major Asian players.

Rivian Automotive Inc., and Arrival, two relative newcomers to the EV business, are going through tough times, supposedly due to supply chain problems. We will know more in which direction these two companies are going once the dust clears, and they get their respective houses in order.

No batteries, no cars, and as we already know there are as many, if not more, battery plants in the works than there are EV plants. And many are joint ventures. Mercedes-Benz Group AG will join China’s CATL in building a battery factory in Hungary that could run to around $7.5 billion, with some of Europe’s leading automakers set to take some of the production. The plant will have a capacity of 100 gigawatt hours, enough to power more than a million cars, and will

Mercedes first partnered with CATL in 2020, while BMW is a foundation customer for the Chinese company’s factory in Erfurt, Germany, that is due to start production at the end of this Meanwhile,year.

run on renewable energy, according to CATL. The factory is planned for Debrecen, where it will be close to BMW, Stellantis, and Volkswagen. The Debrecen plant will be Hungary’s biggest investment ever, and will create around 9,000 jobs. CATL didn’t say when production would start, but Mercedes said the batteries would go into its next generation of EVs, due to go on sale from around mid-decade.

Author profile: Royce ManufacturingLowe,Talk Radio, UK and EU Writer,Correspondent,InternationalContributingManufacturingOutlook. n

Delivery vans will qualify for government perks, too. GM’s BrightDrop unit has handed over 150 electric delivery vans to FedEx. Ted Cannis, CEO of Ford Pro, the automaker’s commercial vehicle operation, said the company is “still digesting all 700-plus pages of the bill,” but he sees potential for it to get down to business.

57Manufacturing Outlook / September AUTOMOTIVE2022OUTLOOK

Risk Assessments and Uncovering Your Cyber Security “Why”

The purpose of any risk assessment is to:

To further explain why your “why” is so vital, let me be perfectly honest with you: Cyber security can be expensive,

1. Define the risks that your company

this question frames all subsequent conversations about what is important to protect and what steps need to be taken. I’ve found that many companies haven’t had the “why” conversation. Many times, this happens because it’s not always simple to boil down, or the “daily fires” that must be addressed elsewhere take precedence.

2.facesDetermine methods to reduce or mitigate those risks

58 Manufacturing Outlook / September 2022

I always like to start assessments with the question, “Why?” Why are you doing what you do? The answer to

By Ken Fanger, MBA, CMMC-RP, President, On Technology Partners

CYBER SECURITY SEPTEMBEROUTLOOKCYBEROUTLOOKSECURITY2022 continued

3. Design a plan of action to address the defined risks and implement the methods above

When it comes to cyber security complications, it’s better to know that problems exist and work ahead to solve them than to be caught off-guard after something you were unaware of is already an issue. That’s why the foun dation of every effective cyber security journey begins with risk assessments. Risk assessments in the realm of cyber security are a means of evaluating where your business is and where it’s going.

with a manufacturing client and brought in their President to perform a basic risk assessment. We started with some of the standard risk points: “What files are important? What drives your production line? How do you take orders?” This brought us to the basic conclusion of what files are important, and how not protecting them would cost thousands of dollars a day. But we didn’t finish there. Instead, we started tapping into their “why.” “How would you feel if you couldn’t produce your product anymore?” I asked. He took a moment and reflected on that question.

If you were to lose them, would the business be able to continue?”

Iclient.wasworking

This is a process that always bears repeating more than once. Remem ber: Many times, if you are not aware there’s a problem, or are not actively working to find them, they’ll usually present themselves at the worst pos sible time and with the worst possible outcomes (figures, right?). So, to avoid catastrophes like this, remember your “why” and take the time to perform a risk assessment of your company at least once per year.

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 compli ance 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 custom ized approach to meeting those needs in the most efficient and cost-effective ways, ensuring client success. n

59Manufacturing Outlook / September 2022 CYBER SECURITY OUTLOOK

frustrating, and can feel useless. If you don’t understand the reason why you’re doing it, and the purpose it serves, then cyber security will feel like the greatest money-suck that you’ve ever encountered.

Looking pensive, he replied, “I don’t know if we could. That’s a very inter esting question. I just never thought about how that could shut me down.” It’s that “a-ha moment” that we want to get to when conducting a risk assess ment. The point is to find the reasons why things are important and to see if they are protected in correlation. It in centivizes cyber security beyond just a frustrating task to perform. In terms of conducting the risk assessment process, there are many wonderful risk frame works to use. I’ve always enjoyed the OCTAVE Allegro from SEI, but there are hundreds to choose from.

You may be wondering how a risk assessment gets you to your “why.” Let me take you through a risk assessment that I performed in the past with a

Computers really are our friends. Hear me out: like many of our friends, they can be irritating, make us do things we never thought we would, and cost us lots of money (you know who you are!). You may be familiar with the statement, “Choose your friends wisely.” This goes for your computers as well.

It’s easy to file away cyber security concerns and bemoan the complica tions of cyber security. Have you ever wished that you didn’t even need to use computers? No computers, no hackers. While this is true, do any of us really want to go back to the days of having stacks of paper covering every inch of our offices? Really, we’re trading one inconvenience for another, but I think we can all agree that computers provide more to our lives than endless piles of paper do, and we should want to optimize and protect our investment in them.

A cyber security company can partner with you on your risk assessment to make the process even more efficient. Some, including my own company, will even offer the risk assessment process for free, giving you a risk-free start to your cyber security journey (pun intended).

How is a small business going to choose their friends, their computers and devices, wisely? In the cyber industry, this is where a risk assess ment comes in. This does not nec essarily entail an entire, formal risk process that takes months of time and a ton of money. Those definitely have their place, to be sure, such as earn ing company-wide buy-in and helping large companies get insight into their “why,” but for small businesses, the process can be much simpler and easygoing. In fact, it can even be ca thartic and help identify what poten tial dangers your company faces.

Slowly, he said, “I never thought about that. I just figured that I would always be making our product. I enjoy making them, so I wouldn’t be very happy with that.” I responded, “Remember those threats that we talked about regarding your customer files, your inventory management, your shipping records?

However, if you’re not looking to be that formal, begin with this: Gather your key team together and ask them what they think is important and why. List out all the items and review what they say. Afterwards, ask yourself this simple question: “If I lose this informa tion, how can I recover?” If the answer is “we don’t know,” then here lies the holes you can begin to patch.

SEPTEMBER 2022

CHIPS: Start of a Long Journey.

in medicine, not all are convinced that domestic manufacturing is critical to their business.

President Joe Biden signed an executive order in late August to fasttrack implementation of a law aimed at boosting domestic semiconductor manufacturing and helping the U.S. compete with China’s dominance in the Theindustry.CHIPS

The bill, of course, doesn’t prevent U.S. chip makers from also producing in Europe and elsewhere, but it does provide financial incentives to make manufacturing facilities in the U.S. more attractive. Intel has already pledged to build a $20 billion chip plant near Columbus, Ohio. The facility is expected to employ 3,000 workers along with 7,000 temporary construction jobs.

60 Manufacturing Outlook / September 2022 ISSUES OUTLOOK

The package has several components. There is $39 billion that would give direct financial assistance to companies building chip manufacturing plants at home. A further $11 billion is earmarked to advance chip manufacturing research and workforce training. A $2 billion slice is set aside to move laboratory innovation into military and other applications. The major concern on the part of many people is getting a constant supply of chips, regardless of where they’re made. So, even though chip users would love to be supplied from the U.S., they are all aware that it will take many years for that to happen. Construction of a chip plant is a long process, as is attracting the talent needed to staff a new facility. Regulations, labor costs, and other roadblocks common in U.S. manufacturing are likely to further slow the process, and the timetable for when U.S. companies can obtain these home-grown chips. Analysts estimate that only about 6% of new capacity will be built in the U.S. over the next few years, compared to some 40% in China. Bloomberg’s Editors are of the continued

ISSUES OUTLOOK

by Royce Lowe

law - Creating Helpful Incentives to Produce Semiconductors

While top tech executives say a consistent supply of chips is crucial for technology advances like 5G and

- aims to sustain long-term research on the development of microchips, used in a range of products including cell phones, electric vehicles and household Siliconelectronics.Valley

The bill, known as the CHIPS-plus or Chips and Science Act, passed the Senate with broad bipartisan support. It addresses concerns expressed by both parties that the U.S. needs to bring the production of these vitally important components back home and rely less on Asia-based manufacturers. Supporters, including companies such as Intel and Global Foundries, argued that the bill was necessary since other countries subsidize their semiconductor industry, making it hard for U.S. companies to compete without help.

was a leader in semiconductor development, but the U.S. has since lost market share to manufacturers in Asia. The U.S. share of global microprocessor chip production has fallen to 10% to 12% from 40% production in earlier years, according to Commerce Secretary Gina Raimondo, who played a key role in advancing the law.

are already feeling the pressure as a result. A foundry being built in Arizona by the Taiwan Semiconductor Manufacturing Company is months behind schedule, while the company is struggling to find enough engineers and skilled technicians to staff it. For the U.S. to become self-sufficient in chip

First, the U.S. does not have the workforce to deal with this new capacity. About 40% of highly-skilled semiconductor workers in the U.S. were born abroad. Since 1990, the number of foreign-born students in relevant graduate programs has nearly tripled. Yet current immigration policy makes it exceedingly difficult to retain this talent, while the U.S. education system isn’t producing enough domestic graduates with appropriate Chipmakersskills.

Congress can head off this threat with some pro-competitive reforms, including expanding relevant freetrade deals; relaxing export controls, which often serve to impede competition; and scrapping needless tariffs. Beyond that, lawmakers must be mindful about how all this new cash is being spent - and ensure that a one-time splurge doesn’t turn into a permanent subsidy.

production, one study showed, it would need to add some 300,000 additional fabrication jobs. Even a more modest reshoring would require thousands of added high-skilled foreign-born Prudentworkers.immigration

61Manufacturing Outlook / September 2022 ISSUES OUTLOOK

don’t work. By shielding companies from the beneficial effects of market competition, they induce complacency, inhibit productivity, and dampen the incentive to innovate. It’s all too easy to imagine bloated, wasteful, government-dependent chipmakers demanding yet more handouts a decade down the line.

Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

reform is the only answer to this quandary. Congress should particularly increase visas for skilled workers and prioritize applicants with in-demand STEM skills, while exempting international graduates of U.S. schools with advanced science degrees from the cap on green-card allotments. Chips aside, such changes should be a no-brainer: they would help boost productivity, build tomorrow’s workforce, and capitalize on America’s ability to lure the world’s most talented immigrants.

A second challenge is that so much money will be difficult for the chip industry - already awash in record profits - to productively absorb. There’s a reason that protectionist measures of this kind generally

CHIPS will, doubtless, in some form, go ahead. But it has a long way to go. n

opinion that, as it stands, this huge spend is unlikely to be cost-effective. They feel that, to make the most of it, Congress needs to act on two fronts.

*Toll free within the U.S. * ISO9001:2015 SINCE 1994 AND AS9100D SINCE 1998 NIST SP 800-171 (COMPLIANCE UNDER DEVELOPMENT)

MANUFACTURINGTALKRADIO Streaming(MFGTALKRADIO.COM)NewShowsEvery Week (700 Shows Since 2013) Listen To AndExpertsTheTheirGuests Host Tim Grady Host Lew Weiss

VIDEO INTERVIEWS AVAILABLE ON YOUTUBE

PLUS 3 MONTHLY SHOWS