Manufacturing Outlook September 2021 by Manufacturing Outlook

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A GAME-CHANGER

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MANUFACTURING OUTLOOK PAGE 6

MANUFACTURING TIDBITS PAGE 10

HOW CAN VR IMPROVE MANUFACTURING POST COVID-19? PAGE 10

SIMULATION SOFTWARE

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SEPTEMBER ISM PMI: 59.9%

Released September 1st -The Full Executive Summary Report On Business - Page 26

THE CASS TRANSPORTATION INDEX PAGE 24

NEW SECTION: CYBER SECURITY OUTLOOK PAGE 50

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Manufacturing Outlook / September 2021

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

5 PUBLISHER’S STATEMENT Watchful recovery

6 MANUFACTURING OUTLOOK Global PMI slips

8 COVER STORY: GRAPHINE: A GAME CHANGER by John Hamlin

MANUFACTURING TIDBITS

Insights from inside manufacturing in action

12 HOW CAN VR IMPROVE MANUFACTURING POST COVID-19?

PMI Hold Strong at 59.9%

30 NORTH AMERICA OUTLOOK by Amelia Roy

32 SOUTH AMERICA OUTLOOK

33 ASIA OUTLOOK by Chris Anderson

by Emily Newton

EUROZONE OUTLOOK

by Chris Anderson

DRIVING DIGITAL TRANSFORMATION THROUGH MOBILE TECHNOLOGY

35 GLOBAL PMI OUTLOOK

by Robin Fleming

by Norbert Ore

SIMULATION SOFTWARE by TR Cutler

THE CREDIT MANAGER’S OUTLOOK by Dr. Chris Kuehl

LIVE INDUSTRIAL EVENTS AND TRADESHOWS MAKE A CAUTIOUS RETURN

METALS OUTLOOK

by TR Cutler

MANUFACTURERS TURN TO GEN ZERS PARLAYING STREAMING INTO PRODUCT SELLING CHANNEL

© 2021 Jacket Media Co. No part of this publication may be reproduced or used in any form without the prior written permission of the publisher. Manufacturing Outlook is a registered trademark of Jacket Media Co.

ISM MANUFACTURING REPORT ON BUSINESS

by Jeanne-Marie Lowrie

Text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast.

by TR Cutler

24 CASS INDEX

Cass Transportation Systems

It’s still about steel

44 AEROSPACE OUTLOOK Boeing getting nearer...

46 ENERGY OUTLOOK Fusion and wind

48 AUTOMOTIVE OUTLOOK Where have all the cars gone?

50 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.

NEW CYBER SECURITY OUTLOOK Ransomware: crippling manufacturers

54 ISSUES OUTLOOK Printed houses

PUBLISHERS STATEMENT Publisher’s Statement

Watchful Recovery If you follow the numbers, like the Purchasing Manager’s Index from ISM, or IHS Markit, or JP Morgan Global (all discussed within this issue), or the growth in manufacturing employment of +37,000 hires, as well as New Order demand and growing backlogs, along with the 14 month expansionary trend, you could conclude that the U.S. economy is doing well. But the pandemic still plagues us all, globally, and there is kind of a gray funk in our lives because we haven’t beaten the virus yet. Every business is torn between honoring personal choice and/or political rhetoric and the responsibility to protect employees from any Covid exposure, with the weight falling in favor of requiring employees to get vaccinated. And, likely, if a company fails to take that approach, then the lawsuits could start flying. No one needs a new burden of legal entanglements on top of employee health, and getting the work at hand completed. Yet, we are in the 14th month of an expansion, which generally last 35-36 months, and some can be considerably longer. At this moment, the inflation headwind may be abating a bit, while the chip shortage will continue to be problematic for up to two more years. And steel prices, as discussed in Metals Outlook (in this issue), may remain lofty for many more months. What we, collectively, need to do is move forward with the conviction that ‘it will be all right’. On way to help ensure it is all right is to protect your company from the cyber attacks flying around the digital world that are their own pandemic. Covid is bad enough; ransomware for a company is a double whammy they just don’t need! New Outlook Section: CYBER SECURITY OUTLOOK We are excited to introduce a new Outlook section in Manufacturing Outlook dedicated to being Cyber Security watchful and mindful. Ken Fanger and his team from On Technology Partners join us as the contributing writers, as they have a particular expertise in cyber security. We look forward to each monthly article, including this issue’s Ransomware Crippling Manufacturers. Cover Story: Graphene – A Game Changer Graphene, that amazing 2-dimensional material under development in dozens of research locations and coming to commercial production to improve existing products and create a myriad of uses in new applications is an exciting read. If you are in this arena, get in touch with us. We’d love to interview you on Manufacturing Talk Radio, and/or present an article from you in Manufacturing Outlook. Be sure to subscribe to Manufacturing Outlook at www.manufacturingoutlook.com as we expand our coverage of this digital, dynamic, and diverse industry called manufacturing. n

Have a Special Day Lewis A. Weiss, Publisher Contact laweiss@mfgtalkradio.com or text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast. FOLLOW US:

Manufacturing Outlook / September 2021

MANUFACTURING OUTLOOK

SEPTEMBER 2021

MANUFACTURING OUTLOOK GLOBAL MANUFACTURING PMI SLIPS. SUPPLY CHAINS STILL A MAJOR ISSUE, RAW MATERIALS STILL SCARCE AND EXPENSIVE. STEEL PRICES IN U.S. STILL ON UP. CHIP SHORTAGE HURTING AUTO SALES WORLDWIDE. SKILLED LABOR SHORTAGE. by ROYCE LOWE The ISM PMI figure for U.S. manufacturing rose slightly from 59.5 in July to 59.9 in August. The overall economy returned to a fifteenth month of expansion. Nonfarm payroll employment increased by 235,000 jobs in August, and the unemployment rate was down 0.2 percent to 5.2 percent. Professional and Business Services added 74,000 jobs, Transportation and Warehousing 53,000 jobs, Private Education 40,000 jobs, and Manufacturing 37,000 jobs, of which 24,000 were in motor vehicles and parts, and 7,000 in Fabricated Metal Products.

The Bureau of Economic Analysis says the Real Gross Domestic Product increased at an annual rate of 6.6 percent in the second quarter

of 2021, according to the Bureau’s “second” estimate. The real GDP increase in the first quarter of 2021 was 6.3 percent.

continued

Manufacturing Outlook / September 2021

MANUFACTURING OUTLOOK IHS Markit’s remarks on U.S. manufacturing for August show their PMI figure at 61.1 down from July’s 63.4. IHS states that August saw a marked improvement in operating conditions amid strong demand conditions. There was a substantial increase in new orders, but production growth was held back by material shortages. Firms struggled to retain staff and to find suitable candidates for current vacancies. Manufacturers upped input buying in August, and there were attempts to build safety stocks. There was a sharp increase in backlogs. Optimism was up in August amid hopes for further growth in client demand. The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – rolled up to 54.1 in August compared to 55.4 in July. This continues to reflect expansion in country economies.

Supply chain constraints again hindered production growth of the global manufacturing sector in August, and again led to increased input costs. There was easing in both production and new orders. There were softer increases throughout with supply-chain issues and “shortages of labor and skills.” The growth in new export orders eased to a seven-month low. Employment was up for the tenth consecutive month.

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

Manufacturing Outlook / September 2021

COVER STORY

GRAPHENE:

A GAME-CHANGER by John Hamlin

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Manufacturing Outlook / September 2021

COVER STORY In recent years, many academic institutions, and R&D departments of major corporations, have been exploring the applications of graphene, one of about 25 twodimensional materials that have length and width, but are only one-atom thick. Graphene is a revolutionary material that can improve conventional materials as basic as concrete, replace existing technologies, or create new uses from high-tech applications to everyday life. Its potential lies in its excellent properties that are not found in other materials. Because of its promising capabilities, its applications are truly endless, with many surely yet to be discovered. Properties of Graphene Graphene is a single layer of carbon arranged in a hexagonal lattice. It is the building block of graphite and was isolated in 2004. Scientists once believed that 2D compounds could not exist because of thermal instability upon separation, until the isolation of monolayer graphene was discovered. According to the latest research, the thermal stability of graphene stems from its small and strong carbon to carbon bonds. The following are the properties that make graphene an exceptional material of the 21st century: Strong. It is approximately 200 times stronger than steel. It has an ultimate strength of 130 GPa, compared to 0.4 GPa of A36 structural steel. Lightweight. It is 1000 times lighter than paper. It only weighs 0.77 mg per square meter. Thin. It is a million times thinner than the diameter of a single human hair. It is only one atom thick.

Applications of Graphene Graphene is making transformative changes in the electronics industry. To support the fastgrowing technology, research and development of high-speed devices, sensors, thermally and electrically conductive composites, and transparent electrodes of solar cells are all in various stages of commercial development. Graphene has the potential to enhance the performance of present-day electronics and create next-generation electronics currently existing only in sci-fi. In addition, it can create more energy-efficient and renewable energy sources.

Flexible and Elastic.

It can be bent and can return to its initial size after being strained. Using atomic force microscopic (AFM) tests, graphene sheets with a thickness of 2 to 8 nm are found to have spring constants of one to five N/m and Young’s modulus of elasticity of 0.5 TPa.

Graphene Transistors The integration of graphene into electronic devices has been the subject of a large amount of research around the world. Graphene has been explored in the development of transistors. As the number of transistors in an integrated circuit doubles every two years, a smaller transistor size is needed. Now, further size reduction of siliconbased processors presents a high risk of instability. Graphene, having the thickness of one atom, can help overcome this obstacle; it can be used in combination with silicon or replace silicon. A graphene transistor can make smaller and faster electronic chips with an operating frequency in hundreds of GHz or even THz.

Electrically Conductive.

The electrical conductivity of a monolayer of graphene is found to be 70% higher than that of copper. This is due to zero-overlap semimetals with electrons and holes as charge carriers. Thermally Conductive. It has a thermal conductivity of around 4000 W/m-K at room temperature. Furthermore, it can easily convert electric current to heat because of its high Seebeck coefficient. Transparent. It has high optical transparency and can replace indium tin oxide. Indium tin oxide has an optical transmittance of above 80% at 450 nm to 550 nm.

Because of this, more transistors can be placed in a single microchip to produce more powerful processors for use in electronic devices. Graphene-based processors also have lower power consumption than silicon-based processors. Wearable Electronics The use of graphene in printed electronics has also been of interest. Graphene can be used as a continued

Manufacturing Outlook / September 2021

COVER STORY Transparent Memory

The development of transparent memory technology started with the use of silicon dioxide as the active component. A pure silicon crystal nanochannel is produced from pushing a strong charge through standard silicon dioxide. This phenomenon is used to create a two-terminal memory device using graphene. After the nanochannels are produced from the initial charge, smaller charges allow the circuit to encode binary information while other smaller charges check the memory status. This application takes advantage of the electrical and optical properties of reduced graphene oxide. Through resistive switching, information is stored in a memory module. Transparent memory modules are the future of transparent electronic devices and appliances. Graphene Batteries

conductive ink in the manufacture of printed circuits. Because of graphene’s flexibility, it allows further development of wearable devices that can be rolled and folded depending on the application. Currently, indium tin oxide is used for touch screens, however, it is brittle. Graphene can

make way for bendable phones, smart clothes, and wearable medical diagnostic devices. Moreover, graphene can also be used to make flexible batteries. This will allow charging of wearable devices while wearing them since graphene also has energy-harnessing capabilities.

Graphene is used to improve the electrochemical conductivity of batteries. It can be incorporated in the anode or the cathode in various battery systems. One of the major hurdles in energy application is the continued

Manufacturing Outlook / September 2021

COVER STORY inefficient charge and discharge rates. With the addition of graphene, lithium-ion batteries or other rechargeable batteries can have better characteristics such as higher capacities, faster charging time, and longer lifespan. Because of this, fully charging electric cars is possible in a few minutes.

supercapacitors are lightweight, they can also reduce the weight of the vehicles such as cars, trains, or planes. Solar Energy

Graphene Supercapacitors

A high surface area is desired to maximize capacitance because it means there is larger electrostatic charge storage. Graphene has a higher surface area than activated carbon, making it an ideal substitute for use in supercapacitors. The combination of the high surface area and excellent electrical conductivity of graphene significantly enhances the energy performance of supercapacitors; it improves the charge and discharge efficiencies. Supercapacitors are used to supply sudden bursts of energy such as in the acceleration of an electric vehicle. They charge and discharge quicker than a battery but do not stay charged for long. On the other hand, batteries cannot efficiently handle peak power demands because of their slow charging and discharging cycles. Because of this, supercapacitors and batteries are best used together. Other automotive applications of supercapacitors include providing backup and peak power for hybrid buses, assisting train acceleration, and opening aircraft doors in case of power failures. Because graphene

Solar energy is one of the cleanest renewable energy sources to replace the use of fossil fuels. It is widely available and harnessing it requires energy storage or converting devices to make the system more efficient and cost-effective. Graphene can be used to manufacture solar cells with enhanced power conversion efficiency. Solar cells require conductive and transparent materials which are both characteristics of graphene. However, graphene does not perform well at collecting electric current generated inside the solar cells. Graphene oxide, on the other hand, is more transparent and is better at collecting charge, making it of great use in solar panels. Because of this, graphene oxide is highly suggested to replace indium tin oxides in transparent electrodes of organic photovoltaic cells. n

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https://www.iqsdirectory.com/articles/ thermocouple/rtd-sensors.html Author profile: John Hamlin is a freelance writer who has a background in engineering. With a keen interest in technology and writing, John has been working online providing insight and direction for many years. His latest work has been on a compilation of industrial manufacturing techniques. Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

How Can VR Improve Manufacturing Post COVID-19? by Emily Newton

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Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

The COVID-19 pandemic has changed manufacturing for the long term and left company leaders exploring technologies to stay productive. Virtual Reality (VR) is among the options showing promise, both for people in the sector for years and those looking to start careers in it. Here are some specific ways VR in manufacturing could stimulate the post-pandemic recovery process and strengthen the facilities that use it. Perfecting Assembly Processes Streamlining how employees assemble products at a plant can prevent them from engaging in too much repetitive motion or unnecessary actions. That allows them to save energy and avoid injuries. Plus, once manufacturing leaders figure out the best processes, overall productivity at the plant should rise, too. Mercedes-Benz uses VR to make “virtual assembly stations” that cre-

ate avatars of the factory’s employees. They then used those models to figure out the best ways to assemble different parts of a vehicle. A worker stands on a digital floor, surrounded by two digital walls. After donning VR glasses, they see their avatars and digitized versions of vehicles to assemble. That setup lets them test different methods and processes before applying them in the real world. Tobias Brandstetter, a spokesperson of global business communications at the company, explained, “Should a component be better installed from the left or from the right? Is this position ergonomically comfortable for the assembly station staff or too taxing over a long period? Through test runs with the avatar, experienced employees can assess how everyday work processes can be configured more efficiently.”

This VR application allows the Mercedes-Benz team to check and perfect critical assembly processes two years before implementing them within a factory line. Knowing the optimal approaches that far in advance could mean workers perform their tasks faster and with fewer errors, increasing overall output. The brand can then meet or exceed targets, ensuring the cars are ready for people who want to buy them. Improving Training Curriculums The COVID-19 pandemic substantially disrupted industries such as live music and travel. Some people in affected sectors may look for work elsewhere, including manufacturing. However, a significant amount of knowledge transfer must happen for a new worker to start strong — even in an entry-level role. It’s not always feasible for a senior employee to spend weeks or months ensuring that continued

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

a more recently hired team member has the know-how they need to succeed. Applying VR in manufacturing to enhance existing training curriculums could help.

At least 50 people have taken part in this blended learning system so far. However, organizers will explore the possibilities of a fully remote option, too.

Researchers at the Rochester Institute of Technology are working on immersive VR training programs that give new manufacturing personnel access to realistic scenarios and expert tips. The goal is for people to go through safe, realistic simulations of factory processes while wearing VR goggles. The educational platform would provide feedback, reinforcing high-quality learning while correcting mistakes. Such content could help people gain essential skills faster.

This is an example of how better workforce education can close the gap between people without skills and those with the ability and willingness to learn. The convenient thing about VR is that a person does not necessarily have to be close to a factory to get the training. They could receive it anywhere and relocate later.

One current program reskills current military service personnel and their families for manufacturing roles using VR. The Heroes MAKE America initiative offers training and company placement. As of January 2021, the organization began using virtual reality to complement hands-on training.

Manufacturing Outlook / September 2021

Enhancing Recruitment Efforts VR could also make it easier for factory managers to find new hires. For example, COVID protocols likely prevent people from sending dozens of high school or college students to a local factory to see what happens there. However, a VR headset could let people get familiar with the environment safely and visualize themselves in some of the available roles.

Using virtual reality could also help potential candidates get past their preconceived negative ideas about manufacturing jobs. For example, many people assume the roles are dirty, dangerous and physically draining. Those are not the prominent characteristics for all types of this work, especially with automation becoming more widely used. Many companies use robots to handle the duties that are the highest risk for humans. A kiosk with VR headsets could also help capture interest from passersby at job fairs. People are used to getting brochures and business cards. Still, they’d almost certainly appreciate virtual content that shows them what it’d be like to work in a facility and highlights the most impressive parts of a facility. That’s a more engaging option than giving people printed materials they might forget about and never read. Plus, the immersive aspects of VR continued

MANUFACTURING TIDBITS

could help interested parties imagine themselves at a company more effectively than traditional methods allow.

interactive experience than reading a textbook or listening to a lecture would provide.

Another advantage is that a company that uses VR in recruitment could get a reputation for being on the cutting edge of technology. That’s an attractive association, particularly for younger people who may already be familiar with VR due to gaming.

People interested in using VR to cut down on waste should examine which processes are the most likely to cause it. That puts them in a good position to see whether virtual reality platforms exist to deal with the matter.

Reducing Product Waste Although automation boosts productivity in many manufacturing plants, tasks still frequently happen manually. However, people often waste products and supplies while learning the technique. Using VR in manufacturing could prevent that by teaching workers what they need to know in ways that don’t use so many resources. For example, a company called VRSim Inc. offers a portable system that teaches powder coating skills with virtual reality. It combines real equipment with virtual scenarios and dozens of parts that people paint. The set comes with an applicator gun that includes motion-tracking capabilities. Learners can get quick feedback about their efforts, creating a more

Minimizing Administrative Headaches Not all manufacturing operations happen on the factory floor. There are also hardworking administrative teams planning new equipment installations, assessing production capacity necessities, onboarding employees, crunching monthly report data and more. COVID-19 led to a rise in such office-based activities happening remotely. However, thanks to VR, technology can bridge the physical distance. For example, a company called Virbela has a 180-person team that interacts solely in a VR campus, complete with virtual offices and employee avatars. People have their workspaces over six floors, and the public can “visit” another by downloading the VR software.

Such arrangements could help manufacturing professionals tackle administrative tasks more productively, even if they have team members working in multiple locations and time zones. One of the arguments against remote opportunities is that they negatively affect the connection people feel when collaborating in person. Using VR like this could offer the next best thing, especially since everyone’s in the virtual world. VR in Manufacturing Should Gain Momentum Bringing virtual reality to manufacturing is not yet a widespread practice. However, it’s becoming more popular, especially as leaders look for practical approaches to stimulate a post-COVID recovery. The trend of exploring it within the sector should continue as executives notice its meaningful payoffs that could affect short- and long-term results. n About the Author Emily Newton is a technology and industrial journalist. She is the Editor in Chief of Revolutionized.

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

Driving Digital Transformation Through Mobile Technology By: Robin Fleming, Co-Founder & CEO of Anvl The past year brought a significant paradigm shift to the “normal” way of working around the world. During the pandemic, there was an emphasis on the necessity to keep workers safe, product quality high and operations streamlined. This led to an increased investment in Connected Worker technology and the implementation of digital technologies to make manufacturing processes safer and more efficient.

This technology has been essential in keeping manufacturing operations on track, even in the face of pandemic roadblocks and labor shortages. In the last year alone, 85% of global industry executives invested in Connected Worker solutions and market analysts predict massive growth in the next decade and beyond. However, despite these investments and the prioritization of digitalization

initiatives, less than half of manufacturing companies have deployed technologies in their operations with their frontline workers in mind. That is where mobile technology fits into the future forecast of the manufacturing industry. The Future Since more than 96% of younger workers already have smart phones, mobile Connected Workers solutions continued

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS are less likely to cause any friction in adoption of new processes because they are familiar with the tech. These solutions capture and unlock real-time data to help businesses improve product quality, increase worker safety and streamline operations. Products like Anvl even provide guided, digital workflow experiences that serve to support and guide workers. It’s estimated that an overwhelming 70% of businesses that have been successful with digital transformations, like implementing a connected workforce, have done so by leveraging mobile solutions for workers. Almost half of workers in a recent global survey said they wish they had access to better technological solutions. The right tools lead to increased engagement, ultimately allowing companies to unlock data to find out what’s happening on the factory floor in real-time. They are able to identify patterns and trends, and act quickly on the information. Frontline workers benefit from digital solutions that increase awareness and heighten sensitivity through reminders and situational considerations. Engaging mobile Connected Worker applications is critical for capturing key data from the most knowledgeable workers. Mobile connected worker platforms make it easy and engaging for frontline workers to be connected. They are easy to integrate because the solution is on devices that workers are already familiar with – smartphones and tablets. Their expertise and experience transfer over to the job. Even for a multigenerational workforce, mobile solutions can be easy for workers to adapt to when it comes to operational procedures, daily checklists, processes and more.

Frontline workers tend to abandon overly cumbersome technology, which then bypasses data collection. Mobile solutions are highly deployable and cause little friction when introduced to frontline workers. Benefits of Mainstream Mobile Solutions Investing in mobile Connected Worker Solutions is crucial for manufacturing companies data collection, especially now at this pivotal point in industrial innovation. Understanding the ROI for technology to connect and empower workers is a critical first step for leaders. In the simplest solutions, a workforce that is connected through mobile technology can save manufacturing leadership teams budget spend on the physical items they are currently using and unlock critical data. As opposed to data that is trapped on paper, electronic forms that are not analyzed in real time, or multiple separate systems, data that is unlocked with easy-to-use technology provides leading indicators to support continuous improvement. Leading indicator data identified in mobile workflows can provide two key avenues to proactively solve issues: in-the-moment support and real-time escalations and alerts. Instead of waiting minutes, hours, days or weeks to uncover and resolve issues, mobile tech can leverage data in the moment when attention is needed. The outcome is capturing data at the most important point in the improvement cycle: with the frontline worker at the point where work occurs. Companies will ultimately propel their own digital transformation forward with mobile technology.

Conclusion The future of the manufacturing industry includes mobile Connected Worker solutions that empower workers to be the voice for innovation and positive outcomes, which in turn builds lasting cultural changes where the most knowledgeable employees are driving the most valuable improvements. Frontline workers have been resilient throughout the pandemic. Now, manufacturing leaders have an opportunity to capture and leverage data for ongoing continuous improvements. Moving forward, as the market for Connected Worker platforms grows, the manufacturing industry will continue down the path of digital transformation. Investing in mobile Connected Worker platforms needs to be a priority for the manufacturing industry to increase worker engagement and ensure long-term success. n Author profile

Robin Fleming is the co-founder of Anvl, an award winning software company helping companies unlock real-time data to improve product quality, safety and productivity. Anvl’s easy-to-use connected worker platform has collected over 10 million leading data points and routinely sees over 90% engagement from their user base. She is an entrepreneur and leader focused on developing innovative software technology solutions. Having previously served in leadership roles for brands such as Angie’s List (now now ANGI Home Services) and Match.com, Robin is now applying her expertise to workplace innovation for the millions of “deskless” workers with connective mobile solutions.

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

Simulation Software

By Thomas R. Cutler Manufacturers to Spend US$2.6 Billion on Simulation Software by 2030 According to ABI Research simulation software acts as an insurance policy against costly mistakes because it enables manufacturers to understand how a product or component will behave before it is put into use or how it will affect the production line. The global tech market advisory firm forecasts that manufacturer’s spend on simulation software will surpass US$2.6 billion in 2030. Spending will accelerate over the forecast period (growing by CAGR 7.1% between 2022 and 2030) as the user base of simulation software expands in aerospace, automotive, heavy machinery, and the consumer-packaged goods sectors.

electronic device. Also, manufacturers’ production lines are moving from batch to continuous manufacturing, so they need the ability to anticipate and alleviate bottlenecks relating to switchovers,” explained Michael Larner, Principal Analyst Industrial & Manufacturing.

“In the past, manufacturers would create prototypes and test under certain conditions. Simulation software provides more flexibility by enabling manufacturers to examine how, for example, components in aircrafts and automobiles respond to heat and vibration, or how to optimize the layout of a printed circuit board in an

Larner did acknowledge that vendors of simulation software for industrial applications face some challenges. “There is also a persistent tribal knowledge within some facilities where staff is hostile to change and so suppliers will need to overcome their lack of trust in simulation results. Suppliers will also need to work with

Simulation software solutions from the likes of Siemens, Dassault Systèmes, and Hexagon help manufacturers not only to create robust products but also expand usage of simulation software by specialists as well as individuals in product development and on the factory floor. Simulating software now supports a wide number of decision makers, such as plant managers, systems engineers, and maintenance teams.

their customers to understand the performance parameters and the acceptable tradeoffs in different verticals so that findings are based on reality and users trust the results.” Automotive Thermal Engineers Dissatisfied With Current Modeling Capabilities A recent study by Future Facilities revealed that 30% of automotive thermal engineers were dissatisfied with the current modeling capabilities of their thermal simulation platforms. Sixty percent (60%) of thermal engineers working on automotive designs were unable to optimize user safety due to inadequate simulation software. Nearly half reported they were unable to perform simulations to the desired level to achieve the needed data. This was most often due to hardware limitations or poor access to manufacturer models for thermal simulation. The study reported that the biggest challenges for thermal engineers are identifying consolidation, automation, and electric vehicles. These issues are significantly impacting important parts of the design procontinued

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS Author Profile:

cess, including graphics and model creation, which can slow down the process and the time-to-market. Scott Heide, founder of Engineering Intent suggested that it is vital that companies find effective and more accessible ways of modeling and automating model creation to speed up the bidding, delivery, and

accuracy process. This need has been poorly addressed until solutions such as Knowledge Bridge were created to facilitate the simulation process. Read the Manufacturing Outlook article by Scott Heide titled, “Engineer Price Quote: Replacing Traditional CPQ Solutions.” n

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

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Manufacturing Outlook / September 2021

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Live Industrial Events and Tradeshows Make a Cautious Return

By Thomas R. Cutler CES in Vegas requiring vaccines. Want to suggest this will be in the industry norm and a sincere effort to avoid having these gatherings become super spreader events. After nearly two years of endless webinars, virtual conferences, tradeshow that were passively and remotely attended, there was great hope that 2021 would portend a resurgence of live events. Now with the virulent Delta variant rampant, the hope of some return to in-person conferences and tradeshows appears to be tenuous. While tradeshow firms are trying very hard to put a hopeful spin on things, the data at this time is less than encouraging. Airlines and hotels are being quite forgiving if events are cancelled, however tradeshows and conferences are planned far in advance and if resources need to be reallocated to other marketing and customer outreach, that information must be known ASAP.

The events below are planned for Q4 this year; all safety precautions will be taken, and proof of vaccination may well be mandated along with mask wearing. No organization, association, or publication, wants to be the proximate cause of a super-spreader event.

Design-2-Part Show – October 6 – 7, 2021 Akron, OH. The most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services. From design and prototypes to production, finishing, and assemblies

These are a sample of the Q4 2021 industrial events currently scheduled for in-person attendance. These are all subject to change, so it is advised that one checks with the organizers before getting on a plane.

Additive Manufacturing Conference + Expo October 10 – 12, 2021, Cincinnati, OH.

Women in Manufacturing Summit — October 4-6, 2021, Cleveland, OH. The event attracts hundreds of manufacturing professionals from around the country, the WiM SUMMIT is the only national conference of its kind. Houstex — October 5-7, 2021, Houston, TX. HOUSTEX is the leading southwest manufacturing trade show and Houston manufacturing event for manufacturing professionals.

Eastec — October 19 – 21, 2021, West Springfield, MA. The East coast’s largest manufacturing tradeshow. Design-2-Part Show – October 20 -21, Oaks, PA. The most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services. From design and prototypes to production, finishing, and assemblies. Southtec — October 26 – 28, 2021, Greenville, SC. A regional show that gathers manufacturers and suppliers together in South Carolina. continued

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS Process Expo – November 2 – 5, 2021, Chicago, IL. The global food equipment and technology show. Design-2-Part Show -- November 3 – 4, 2021, Indianapolis, IN. The most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services. From design and prototypes to production, finishing, and assemblies. AI Manufacturing – November 3 – 4, 2021, Dallas, TX. While manufacturing is the backbone of the economy, COVID-19 has highlighted the issues that plague operations, including material forecasting, flexibility, and optimization. Artificial Intelligence and Machine Learning are essential tools in digital transformation, from preventing disruptions and downtime to improving inventory management and product quality.

The Manufacturing & Technology Show – November 9 – 11, 2021, Cleveland, OH. Strategies for Excellence from Design to Delivery.

Author Profile:

Aerodef Manufacturing — November 16 – 18, 2021, Long Beach, CA. The smart technologies and people propelling aerospace and defense manufacturing. Westec — November 16 – 18, 2021, Long Beach, CA. The West Coast’s premier manufacturing event featuring hundreds of exhibitors. Design-2-Part Show – November 17 – 18, 2021, Raleigh, NC. The most efficient place to meet hundreds of high-quality American suppliers of custom parts, stock parts, and manufacturing services. From design and prototypes to production, finishing, and assemblies. n

Manufacturing Outlook / September 2021

MANUFACTURING TIDBITS

Manufacturers Turn to Gen Zers Parlaying Streaming into Product Selling Channel By Thomas R. Cutler The new Gen Z and Entertainment divisions of the Manufacturing Media Consortium are looking at the way young D2C (direct to consumer) entrepreneurs use streaming to build an audience, a customer base, and most importantly generate sales. The old models of marketing methods for manufacturers have given way to TikTok, Instagram, and streaming platforms such as Twitch. Taking a page out of Wendy Williams mantra, “How you doin’?” the Gen Zers are using social media and streaming entertainment.

Manufacturing Outlook / September 2021

The popularity of streaming has become the preferred way to promote a manufactured product to a receptive and loyal audience. Those that succeed derive a dual source of income from streaming: they are “gifted” a digital currency created by viewers. Some streamers earn $10,000+ per month and subtly pitch links or make suggestions to entrepreneurial product lines and websites. These viewers are deeply and continuously engaged, tuning in 24/7 to feel connected to favorite streamers; this has been particularly true during COVID where

isolation is rampant. Streaming provides an outlet for everyone involved to feel human connection, even if only digitally. These young entrepreneurs know what they are doing. Every successful streamer is focused on engaging the viewers, even if it is a quasi-fashion show (if they design clothes or jewelry) they must always make sure the people watching their stream are priority. The D2C model also allows the inventory SKU and production levels to be commensurate with continued

MANUFACTURING TIDBITS a popular streamer’s broadcast. Companies realize how many people are watching live streams, and they want to get brand exposure.

viewers demand in real-time. It is the Gen Zer version of QVC. It is entertainment without the heavy purchase push. These platforms allow advertisers to jump on board and creating fifteen-second commercial ads the viewer must endure in order to continue watching the stream. Similar to advertisement in television, ad companies want to sell their clients’ products by placing commercial breaks during

As the founder of the Manufacturing Media Consortium, we are tracking and monitoring the dramatic uptick in streaming as a communication model for manufacturers. It is more than pushing products; in a Kardashian world, these Gen Z streamers are more than brand influencers or ambassadors. They are creating product lines just like any other manufacturing organization; they have turned to the communication dynamic which is natural, obvious, and authentic for them and their peers. Ultimately, whether the streamer receives gifts or uses their network to sell products, they are appealing to their customers, viewers, and loyal followers via this outlet and it’s very smart. n

Author Profile:

Manufacturing Outlook / September 2021

CASS INDEX OUTLOOK

Cass Transportation Index Report by CASS INFORMATION SYSTEMS, INC.

To see the complete report, including charts, visit jacketmediaco.com/cass Cass Freight Index - Shipments The shipments component of the Cass Freight Index® grew 12% y/y in August and should slow to mid-singledigit growth into year-end on tougher comps. On a seasonally adjusted (SA) basis, the Cass Shipments Index rose by 5.0% m/m in August, after a 7.2% m/m drop in June and July The two-year stack reaccelerated to 3.7% growth from 0.5% in July. The recovery after a skid in June and July amid further slowdowns in rail volumes suggests trucking is picking up slack from the railroads, currently snarled by the chassis shortage. But shipment volumes remain limited by the capacity of the freight network, as shown by the backlog of 125 or so containerships at anchor off North American ports. SoCal just hit a new record of 49. This containership backlog clearly represents a stronger

Manufacturing Outlook / September 2021

and longer than average peak season demand outlook. The extent to which constraints on equipment and driver supply ease in the coming months will largely dictate volumes, with declines likely to continue in intermodal and more pressure on trucking to shoulder the load. Equipment. The intermodal chassis shortage, following tariffs totaling over 200% on key imported steel back in May, is a key reason chassis production has been dismal this year and the intermodal network has run short. Class 8 tractor and trailer supply chain challenges have also limited capacity. Drivers. Though driver capacity is still generally tight, the BLS trucking employment data have improved for three straight months and the ACT Research For-Hire Driver Availability Index continues to recover.

Freight Expenditures The expenditures component of the Cass Freight Index measures the total amount spent on freight. This index slowed a little more in August to 42% y/y growth from 43% in July. If normal seasonality were to play out for the rest of this year, the full-year increase in this index would be 35% in 2021, after a 7% decline in 2020 and no change in 2019. After a 4.8% month-to-month drop on an SA basis in July, August expenditures surged 11.3% m/m as a result of both higher volumes and rates. On a two-year stacked basis, the Cass expenditures index was up 35% in August, about 90% of which is due to higher rates, with the rest due to volume. Tougher comparisons in the coming months will naturally slow these y/y increases further, but extraordinary growth rates will continue in the

continued

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

CASS INDEX OUTLOOK near-term, driven by increases in both shipment volumes and freight rates. Inferred Freight Rates A simple calculation of the Cass Freight Index data (expenditures divided by shipments) produces a data set of inferred freight rates that explains the overall movement in rates. The expenditures component of the Cass Freight Index measures the total amount spent on freight. This index slowed a little more in August to 42% y/y growth from 43% in July. If normal seasonality were to play out for the rest of this year, the full-year increase in this index would be 35% in 2021, after a 7% decline in 2020 and no change in 2019. After a 4.8% month-to-month drop on an SA basis in July, August expenditures surged 11.3% m/m as a result of both higher volumes and rates. On a two-year stacked basis, the Cass expenditures index was up 35% in August, about 90% of which is due to higher rates, with the rest due to volume. Tougher comparisons in the coming months will naturally slow these y/y increases further, but extraordinary growth rates will continue in the near-term, driven by increases in both shipment volumes and freight rates. A good bit of the month-to-month movement in this data series can be attributable to modal mix shifts, but the average m/m increase over the past six months has been 2.5%, with a 15% total increase. For full-year 2021, if normal seasonality were to play out, this index would be up 20% from 2020. Outside of mix shifts impacting the m/m data patterns, this data series shows broad and material increases in freight rates across modes. The data set is diversified among all modes, with truckload representing more than half of the dollars, followed by rail, LTL, parcel, and so on. Truckload Linehaul Index The Cass Truckload Linehaul Index® value of 148.8 in August rose 1.1% from July and 12.6% y/y, decelerating from a 13.4% y/y increase in July. This series has been under some pressure from longer-haul mix related to the

and manufacturers are on it, we’d roughly estimate it will take six to nine months before chassis production gets to the point where the shortage starts to ease. So, intermodal volumes are unlikely to bounce back quickly. Chassis production data and forecasts are available in this month’s Freight Forecast report.

chassis shortage and intermodal network congestion in recent months, so we would again caution shippers not to get too excited and carriers not to worry too much. This mix issue is noise, not signal, and the dampening effect on the index is considerable. Even as easing shortages become more likely, the number of broken or strained links in the supply chain has risen recently, including likely inflationary effects from Hurricane/ Tropical Storm Ida, the Delta variant worsening the chip shortage, and the chassis shortage. With a still-tight supply/demand balance, we would suggest the uptrend isn’t over yet. Though equipment production is still limited by parts and labor shortages, capacity is beginning to return as drivers respond to higher pay, utilizing parked equipment until parts shortages ease. This will gradually change the trajectory of truckload rates, but it will take time. The length of haul in the data rose considerably again this month, about 20% y/y and 5% m/m, and as shown in the chart below, rates tend to fall on a per mile basis as mileage lengthens. The mix of these large carriers is not comparable to the Cass data, but it illustrates that longer mileage equals lower rates. So, we would argue that underlying truckload rates are up more in the 15%-20% range, more in line with the Cass Inferred Freight Rates and public carrier rate trends. This shift in freight patterns is more symptomatic of the congested rail network, leading to more transloading of longer-haul import shipments from the West Coast ports to the Midwest via truck. Freight Expectations Class I railroad trends have had a rough few months, lagging seasonal trends due in large part to worsening chassis shortages. ACT Research expects chassis production to be significantly limited for some time, and the intermodal network is unlikely to be able to adjust to a large shortfall in chassis quickly. Though some sizable orders have been placed

Normal seasonality would suggest high-single-digit growth in rail volumes in Q3, down from the 23% y/y increase in Q2, but momentum slowed significantly over the past few months as network fluidity has suffered and chip and chassis shortages have worsened. Q3 may still end up with low-single-digit growth, but rail volumes may well decline y/y in Q4. Trucking isn’t subject to the same capacity constraints, and the truck driver recovery, though gradual, is likely to help the trucking industry continue to pick up the slack in the coming months. Eventually this will help rebalance the market, but several recent factors, including Hurricane Ida, the Delta variant and the chip and chassis shortages have been inflationary for freight rates, extending the cycle at the margin. Freight demand fundamentals remain strong, based on a strong U.S. consumer balance sheet, inventory restocking, and an industrial sector struggling to grow into record orders with infrastructure stimulus likely on the way. But the dynamics of tight supply and exceptionally strong demand which have characterized the past year or so will not last indefinitely. The chip shortage continues to be a key fulcrum on which much in the world economy depends. As discussed in depth in ACT Research’s monthly report, there’s good reason to hope easing will start in Q4. n

Manufacturing Outlook / September 2021

ISM REPORT OUTLOOK

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

BREAKING NEWS

ISM PMI at 59.9% for August 2021 Released September 1

ISM PMI for the past 5 years

AUGUST 2021 59.9%

Expanding Contracting

continued

Manufacturing Outlook / September 2021

ISM REPORT OUTLOOK INSTITUTE FOR SUPPLY MANAGEMENT®

Analysis by

reportonbusiness Economic activity in the manufacturing sector grew in August, with the overall economy notching a 15th consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The August Manufacturing PMI® registered 59.9 percent. The New Orders Index registered 66.7 percent, increasing 1.8 percentage points from the July reading of 64.9 percent. The Production Index registered 60 percent, an increase of 1.6 percentage points compared to the July reading of 58.4 percent. The Prices Index registered 79.4 percent, down 6.3 percentage points compared to the July figure of 85.7 percent; this is its first reading below 80 percent since December 2020 (77.6 percent). The Employment Index indicated contraction with a reading of 49 percent, 3.9 percentage points lower compared to the July reading of 52.9 percent. The 15 manufacturing industries reporting growth in August — in the following order — are: Furniture & Related Products; Computer & Electronic Products; Machinery; Primary Metals; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Plastics & Rubber Products; Chemical Products; Miscellaneous Manufacturing‡; Food, Beverage & Tobacco Products; Transportation Equipment; Wood Products; Printing & Related Support Activities; Paper Products; and Petroleum & Coal Products. ISM

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

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

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

MANUFACTURING

PMI at 59.9% ®

PMI

Manufacturing grew in August, as the Manu2019 2020 2021 facturing PMI® registered 59.9 percent, 0.4 59.9% percentage point higher than the July reading of 59.5 percent. The Manufacturing PMI® continued to indicate strong sector expansion and U.S. economic growth in August. Four 50% = Manufacturing Economy out of five subindexes that directly factor into Breakeven Line ® the Manufacturing PMI were in growth terri43.1% = Overall Economy Breakeven Line tory. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Manufacturing at a Glance INDEX

Aug Index

Jul Index

% Point Change

Direction

Rate of Change

Trend* (months)

Manufacturing PMI®

59.9

59.5

+0.4

Growing

Faster

New Orders

66.7

64.9

+1.8

Growing

Faster

Production

60.0

58.4

+1.6

Growing

Faster

Employment

49.0

52.9

-3.9

Contracting

From Growing

Supplier Deliveries

69.5

72.5

-3.0

Slowing

Slower

Inventories

54.2

48.9

+5.3

Growing

From Contracting

Customers’ Inventories

30.2

25.0

+5.2

Too Low

Slower

Prices

79.4

85.7

-6.3

Increasing

Slower

Backlog of Orders

68.2

65.0

+3.2

Growing

Faster

New Export Orders

56.6

55.7

+0.9

Growing

Faster

Imports

54.3

53.7

+0.6

Growing

Faster

Overall Economy

Growing

Faster

Manufacturing Sector

Growing

Faster

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

Commodities Reported

Note: The number of consecutive months the commodity is listed is indicated after each item.

Commodities Up in Price: Adhesives (2); Aluminum (15); Aluminum Extrusions; Aluminum Products (5); Capacitors (2); Caustic Soda (3); Cement; Copper-Based Products; Corrugate (11); Corrugated Packaging (10); Crude Oil (3); Diesel Fuel (8); Electrical Components (9); Electrical Motors (2); Electronic Components (9); Freight (10); High-Density Polyethylene (HDPE) (8); Hydraulic Components (2); Labor — Temporary (4); Linear Low-Density Polyethylene (LLDPE); Lumber* (14); Natural Gas (2); Ocean Freight (9); Packaging Supplies (9); Pallets (2); Plastic Resins (12); Polyethylene (7); Polypropylene (14); Resin-Based Products (7); Resistors (2); Rubber-Based Products; Semiconductors (7); Soybean Oil; Steel (13); Steel — Carbon (9); Steel — Cold Rolled; Steel — Hot Rolled (12); Steel Products (12); Steel — Scrap (4); and Steel — Stainless (10). Commodities Down in Price: Lumber* (2); and Wood. Note: To view the full list, visit the ISM website at ismworld.org.

ISMWORLD.ORG

Manufacturing Outlook / September 2021

continued

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI® New Orders (Manufacturing) 2019

August 2021 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

2020

2021

New Orders

66.7%

ISM’s New Orders Index registered 66.7 percent. Of the 18 manufacturing industries, the 14 that reported growth in new orders in August — in the following order — are: Furniture & Related Products; Computer & Electronic Products; Printing & Related Support Activities; Machinery; Paper Products; Food, Beverage & Tobacco Products; Primary Metals; Plastics & Rubber Products; Petroleum & Coal Products; Chemical Products; Miscellaneous Manufacturing‡; Transportation Equipment; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.

52.8% = Census Bureau Mfg. Breakeven Line

Production (Manufacturing) 2019

2020

Production

2021

60%

52.1% = Federal Reserve Board Industrial Production Breakeven Line

The Production Index registered 60 percent. The 13 industries reporting growth in production during the month of August — listed in order — are: Furniture & Related Products; Wood Products; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Chemical Products; Petroleum & Coal Products; Machinery; Fabricated Metal Products; Primary Metals; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing‡; and Transportation Equipment.

Employment (Manufacturing) 2019

2020

Employment

2021

ISM’s Employment Index registered 49 percent. Of the 18 manufacturing industries, the seven reporting employment growth in August — in the following order — are: Electrical Equipment, Appliances & Components; Furniture & Related Products; Primary Metals; Computer & Electronic Products; Machinery; Fabricated Metal Products; and Transportation Equipment.

49% 50.6% = B.L.S. Mfg. Employment Breakeven Line

Supplier Deliveries (Manufacturing) 53.1% 2019

2020

2021

69.5%

Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower in August, as the Supplier Deliveries Index registered 69.5 percent. The 16 industries that reported slower supplier deliveries in August, in the following order: Apparel, Leather & Allied Products; Textile Mills; Furniture & Related Products; Paper Products; Machinery; Fabricated Metal Products; Miscellaneous Manufacturing‡; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Chemical Products; Primary Metals; Nonmetallic Mineral Products; and Transportation Equipment.

Inventories (Manufacturing) 2019

2020

2021

54.2% 44.5% = B.E.A. Overall Mfg. Inventories Breakeven Line

‡Miscellaneous

The Inventories Index registered 54.2 percent. The 10 industries reporting higher inventories in August — in the following order — are: Plastics & Rubber Products; Furniture & Related Products; Primary Metals; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Transportation Equipment; Machinery; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing‡.

Manufacturing (products such as medical equipment and

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

Inventories

Manufacturing Outlook / September 2021

continued

ISM REPORT OUTLOOK

ISM Report On Business ®

Manufacturing PMI®

August 2021 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

Customer Inventories (Manufacturing) 2019

2020

2021

30.2%

Customers’ Inventories ISM’s Customers’ Inventories Index registered 30.2 percent. No industries reported higher customers’ inventories in August. The 15 industries reporting customers’ inventories as too low during August — listed in order — are: Nonmetallic Mineral Products; Textile Mills; Primary Metals; Furniture & Related Products; Machinery; Miscellaneous Manufacturing‡; Chemical Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; and Transportation Equipment.

Prices (Manufacturing) 2019

2020

2021

79.4%

52.7% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line

Backlog of Orders (Manufacturing) 2019

2020

2021

68.2%

Prices The ISM Prices Index registered 79.4 percent. In August, 16 of 18 industries reported paying increased prices for raw materials, in the following order: Apparel, Leather & Allied Products; Plastics & Rubber Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Paper Products; Machinery; Transportation Equipment; Electrical Equipment, Appliances & Components; Primary Metals; Computer & Electronic Products; Miscellaneous Manufacturing‡; Chemical Products; Wood Products; and Food, Beverage & Tobacco Products.

Backlog of Orders ISM’s Backlog of Orders Index registered 68.2 percent. The 15 industries reporting growth in order backlogs in August, in the following order, are: Apparel, Leather & Allied Products; Textile Mills; Furniture & Related Products; Printing & Related Support Activities; Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Miscellaneous Manufacturing‡; Plastics & Rubber Products; Paper Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Primary Metals.

New Export Orders (Manufacturing) 2019

2020

2021

56.6%

New Export Orders ISM’s New Export Orders Index registered 56.6 percent. The eight industries reporting growth in new export orders in August — in the following order — are: Furniture & Related Products; Computer & Electronic Products; Paper Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing‡; Chemical Products; Transportation Equipment; and Fabricated Metal Products.

Imports (Manufacturing) 2019

2020

2021

54.3%

‡Miscellaneous

Imports ISM’s Imports Index registered 54.3 percent. The eight industries reporting growth in imports in August — in the following order — are: Chemical Products; Primary Metals; Computer & Electronic Products; Furniture & Related Products; Transportation Equipment; Food, Beverage & Tobacco Products; Plastics & Rubber Products; and Machinery. n

Manufacturing (products such as medical equipment and

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

Manufacturing Outlook / September 2021

NORTH AMERICAN OUTLOOK

AUGUST 2021

NORTH AMERICAN OUTLOOK by Amelia Roy The Institute of Supply Management PMI figure rose slightly from 59.5 in July to 59.9 in August as the U.S. economy continues in expansion for the 14th consecutive month. ‘‘These expansions generally continue for 35 to 36 months on average, so we are less than half way through this expansion,’’ said Tim Fiore, Committee Chair of the Institute for Supply Management’s Manufacturing Report on Business®.

New orders and production are growing, employment is contracting, supplier deliveries are slowing at a slower rate, backlogs are growing, raw materials inventories are growing, customer inventories are too low, prices are increasing, and exports and imports are growing. All of the six biggest manufacturing industries — Computer & Electronic Products, Fabricated Metal Products, Chemical Products, Food, Beverage & Tobacco

Products, Transportation Equipment, and Petroleum & Coal Products, in that order — registered moderate to strong growth in July. The 15 manufacturing industries reporting growth in August — in the following order — are: Furniture & Related Products, Computer & Electronic Products, Machinery, Primary Metals, Electrical Equipment, Appliances continued

Manufacturing Outlook / September 2021

NORTH AMERICAN OUTLOOK & Components, Fabricated Metal

Hydraulic Components (2); Labor —

Products, Plastics & Rubber Products,

Temporary (4); Linear Low-Density

Chemical Products, Miscellaneous

Polyethylene (LLDPE); Lumber*

Manufacturing, Food, Beverage &

(14); Natural Gas (2); Ocean Freight

Tobacco Products, Transportation

(9); Packaging Supplies (9); Pallets

Equipment, Wood Products, Printing

(2); Plastic Resins (12); Polyethylene

& Related Support Activities,

(7); Polypropylene (14); Resin-Based

Paper Products, and Petroleum &

Products (7); Resistors (2); Rubber-

Coal Products. The two industries

Based Products; Semiconductors

reporting a decrease in August

(7); Soybean Oil; Steel (13); Steel

compared to July are Textile Mills,

— Carbon (9); Steel — Cold Rolled;

and Nonmetallic Mineral Products.

Steel — Hot Rolled (12); Steel

CANADA’s PMI rose to its fourthhighest value in the series history in August, from 56.2 in July, to 57.2. A worsening supplier deliveries situation led to advance input buying. Input price inflation was at a new series high amid shortages. The month saw a quicker expansion in production, new orders, exports and purchases. There were increased sales to the U.S. and European markets. Production and backlog increases meant employment was up, bringing the current period of job creation to 14 months. There were serious shortages of steel and resin, plus transportation difficulties. Some firms reported difficulties finding skilled and unskilled workers.

Products (12); Steel — Scrap (4); and Comments from the industry stress

Steel — Stainless (10).

the two major concerns of obtaining raw materials on time, and at a

Commodities down in price:

reasonable cost. Chips are a problem.

Lumber (2)* and wood

A very important concern, however, is finding skilled labor. Covid-19 is

Commodities in short supply:

causing absenteeism. The end of

Adhesives & Paint (2); Aluminum

government paycheck subsidies in

(5); Aluminum Products (4);

September may force people back

Cable Assemblies; Capacitors (2);

to work, but there is a fair amount

Corrugated Packaging (2); Electrical

of career changing taking place so

Components (11); Electronic

previous employees are not returning

Components (9); Foam; Hydraulic

to their previous jobs. That means

Components (2); Labor — Temporary

a lot of retraining expense for new

(4); Lumber (2); Metal Components;

hires, both skilled and unskilled.

Ocean Freight (5); Plastic Products

Light vehicle sales in Canada during August were estimated at 146,925 units, down 11.4 percent year-overyear, and down 19.2 percent from August, 2019. The seasonally adjusted

(7); Plastic Resins — Other (6); Commodities up in price:

Polypropylene; Printed Circuit Board

Adhesives (2); Aluminum (15);

Assemblies; Resin-Based Products;

Aluminum Extrusions; Aluminum

Resistors (2); Rubber-Based Products;

Products (5); Capacitors (2); Caustic

Semiconductors (9); Steel (9); Steel

Soda (3); Cement; Copper-Based

— Hot Rolled (10); Steel — Stainless

Products; Corrugate (11); Corrugated

(6); Steel Castings; and Steel

Packaging (10); Crude Oil (3); Diesel

Products (7).

Fuel (8); Electrical Components (9); Electrical Motors (2); Electronic Components (9); Freight (10); HighDensity Polyethylene (HDPE) (8);

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates those commodities reported both up and down in price.

annualized rate fell to just 1.62 million units. MEXICO was back to bad-news time, with faster rates of contraction in new orders and production, and sharp declines in employment, input buying, and stocks. Business confidence weakened, with Covid-19 again being the major issue. The PMI for August, at 47.1, was down from July’s 49.6, both showing economic contraction. n Amelia Roy, Staff Writer

Manufacturing Outlook / September 2021

SOUTH AMERICAN OUTLOOK

GLOBAL OUTLOOK

SOUTH AMERICA by Jeanne-Marie Lowrie BRAZIL is continuing to rebuild post-production inventories. There is solid but softer growth in production. Brazil is continuing with hiring efforts. The PMI for August was at 53.6, showing a slower expansion from July’s 56.7. Most sales were

domestic. There are shortages of raw materials and subdued export sales. Vendor performance continues to deteriorate. There is still optimism for the year ahead. Regardless of the area of the world,

supplier performance is directly tied to labor. When overseas suppliers are operating at output capacities of only 60%, production imports are affected. n

NEW EPISODES EVERY TUESDAY AT MFGTALKRADIO.COM

Manufacturing Outlook / September 2021

Jeanne-Marie Lowrie, Staff Writer

ASIA OUTLOOK

GLOBAL OUTLOOK

ASIA

by Chris Anderson CHINA’s manufacturing sector saw a slight deterioration in business conditions in August, with a renewed drop in production and a further reduction in new orders. There was subdued market demand, hence less purchasing and employment. The PMI fell from 50.3 in July (expansion) to 49.2 in August (contraction), its lowest reading for 18 months. Supply chain delays continued in August. There is still optimism for production

for the next year, but also concerns regarding the global pandemic. July saw the third consecutive slip in vehicle sales in China, with a drop of 11.9 percent year-over-year to 1.86 million vehicles. Plug-in sales were up some 143 percent year-over-year, with 231,000 passenger cars registered. JAPAN’s PMI eased slightly from 53.0 in July to 52.7 in August. Japan

saw production and new orders increase at slower rates, with export orders down for the first time in seven months. Manufacturers noted that rising Covid-19 cases, both domestically and in S.E.Asia, had reduced production and demand. Employment was up for the fifth consecutive month in August. There was difficulty sourcing raw materials. There was softer optimism regarding future production, due to pandemic issues. INDIA saw its production and new orders increase at slower rates. There was a sharp increase in input costs. Raw material scarcity was a key factor causing longer supplier delivery times. Firms see production growth in the year ahead, but again there is concern regarding the pandemic. As such, with slower sales, there is less hiring and lower business confidence. Their PMI for August, 52.3, a slower expansion from Chris Anderson, July’s 55.3. n Staff Writer

Manufacturing Outlook / September 2021

EUROZONE OUTLOOK

GLOBAL OUTLOOK

EUROZONE by Chris Anderson HS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI), showed expansion again in August to 61.4, compared to July’s 62.8. Growth slowed to a six-month low in August, with production and new orders falling further from March’s survey highs. Total new orders were up for the 14th straight month, with new export orders also growing at a marked rate. Manufacturers added to increasing workforce numbers.

There was again considerable lengthening of vendor delivery times. There was a slight easing in input inflation. There was continuing strong optimism regarding the next twelve months. The UK PMI rolled up slightly less high, from 60.4 in July to 60.3 in August. Production growth decreased on input supply issues. Input cost and selling price inflation were close to survey records. There

were still good gains in production, new orders and employment. Average supplier lead times lengthened to the second-greatest extent in survey history. Manufacturers reported further increases in new export orders. Companies reported increased demand from the U.S., the EU, China, Asia, and South America. Two-thirds of respondents are forecasting increased production in the coming year, with only 4 percent looking for a decline. The European auto market dropped again, with a selling rate of 10.5 million units per year in July, down from 11.9 million in June. The semiconductor shortage is the main culprit here. Forecasts are for a gradual improvement in the second half of the year and well into 2022, but further restrictions due to the Delta variant cannot be Chris Anderson, Staff Writer ruled out. n

Manufacturing Outlook / September 2021

GLOBAL PMI OUTLOOK

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

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

Our scatterplot shows varying degrees of expansion as 16 of the 18 surveys we follow closely were in the upper quadrants in August. The Eurozone and U.S. remained in strong expansionary mode while Asia’s expansion was significantly slower. The Caixin, the China multinational survey, fell below 50 for the first time in 16 months. Mexico was contractionary for the 22nd consecutive month. Manufacturers continued to be challenged to meet their customer’s requirements in a volatile pricing environment. For example, a record number of cargo ships are waiting to unload cargo outside the LA/Long Beach ports. The ISM U.S. Services PMI registered a new high in July (64.1) and then softened slightly in August (61.7).

continued Manufacturing Outlook / September 2021

GLOBAL PMI OUTLOOK ISM U.S. Manufacturing PMI™ The Manufacturing PMI has averaged 59.9 for the past 12 months. According to the ISM release, the Manufacturing PMI for August (59.9, +0.4) corresponds to a 4.8% increase in real gross domestic product (GDP) on an annualized basis. Sector performance could be stronger if it were not for bottlenecks. U.S. manufacturers are struggling to keep products flowing. Many raw materials and intermediate components remain in short supply and subject to allocation at some level by their suppliers. Labor shortages are also compounding challenges for producers.

aligned with its historical average (54.9). New Orders Minus Inventories: This key spread declined to 12.5 despite stronger New Orders (66.7) and more balanced Inventories (54.2). Customers’ Inventories: The index (30.2, +5.2) for raw materials, components, and finished goods were “too low” for the 61st consecutive month. The index set a new low

in July and has been under 40 percent for the past 13 months. No industries reported higher customers’ inventories in August. Prices: The Manufacturing Prices Index established a new high in June at 92.1, fell in June to 85.7, and then fell again in August to 79.4. This de-escalation coupled with shorter supplier delivery times is encouraging for constrained supply chain.

Drivers: The August PMI was boosted by New Orders (66.7, +1.8) and Production (60.0, +1.6). Employment (49.0, -3.9) reacted negatively and was consistent with the average of the last five months (51.6). Supplier delivery times (69.5, -3.0) shortened for the third consecutive month, becoming more

continued

Manufacturing Outlook / September 2021

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

Manufacturing Outlook / September 2021

CREDIT MANAGER’S OUTLOOK

CREDIT MANAGERS’ OUTLOOK by DR. CHRISTOPHER KUEHL MANAGING DIRECTOR OF ARMADA CORPORATE INTELLIGENCE THIS REPORT REPRINTED COURTESY OF THE NATIONAL ASSOCIATION OF CREDIT MANAGERS (NACM.ORG) WHERE MORE IN-DEPTH INFORMATION CAN BE FOUND.

Combined Sectors That euphoric sense that we had started to turn the corner on the economic decline has largely dissipated and it only took a few weeks. After several months of steadily improving data there has been a stall and even a decline in the last month. Most of the indicators are drifting back and showing strain. Thus far they have not fallen to alarming levels but the enthusiasm that was evident in mid-summer has evaporated. The latest CMI data reflects that trend as the overall numbers remain very healthy but they have all slipped from the positions they occupied a short time ago. The same pattern is showing up with the Purchasing Managers’ Index, a measure that the CMI very often anticipates. The August reading for the combined score is back to 57.7 and that is about where the numbers stood in June (57.5). In July there had been some growth in evidence with a reading of 58.4. Thus far this year there has been quite a bit of variability with readings as high as 60.6 in April and a low set last September of 56.0. This latest reading is the fifth lowest in the last twelve months – making it a fairly average mark. The index of favorable factors slipped a little

from the 67.0 notched in July with a reading of 66.0 but this number remains very comfortably in the 60s. The closest this sector has gotten to the 50s was in September of last year when it hit 60.8 and these favorable factors have not dipped close to the contraction zone since the recession in Q2 of 2020. The index of unfavorable factors remained stable with a reading of 52.1. This score has been in the 52 range for three straight months (52.7 in June and July and now at 52.1). This is a bit closer to contraction territory than would be preferred. The shift in some of the subsectors was interesting. The sales data went from 73.3 to 68.6 and that marks the first time sales have been out of the 70s since February. The current month’s reading is the lowest since November of 2020. There was also a slip in the data for new credit applications with a 64.4 compared to 69.8 in July. The dollar collections reading did not change all that much and that is encouraging as it points to the desire to continue staying current on debt. It was at 63.8 in July and is now at 62.8. The amount of credit extended actually jumped significantly with a reading of 68.4 compared to last month’s 61.1. The explanation for some of this has been

the surge in “hoarding” by many companies that have worried about the breakdown in the supply chain and the potential for higher inflation. They are buying far more than one would think they needed. The rejections of credit applications stayed right where it was with a reading of 52.2 and that seems a comfortable position given the pace of new applications. The accounts out for collection dipped slightly but has remained just out of the contraction zone with a reading of 51.7 compared to last month’s 52.0. The disputes category remains in contraction territory but no deeper than it was the prior month. The current number is 49.5 and in July it was at 49.4. There was a small dip in the numbers for dollar amount beyond terms as it went from 52.4 in July to 51.6 this month. The dollar amount of customer deductions has fallen very close to contraction territory with a reading of 50.1 compared to the 52.2 noted in July. There was also a slight dip in the data for filings for bankruptcies as it went from 58.2 to 57.4. These are still very solid numbers for bankruptcies as this month’s reading is still better than any of those from April of this year back through 2020. continued

Manufacturing Outlook / September 2021

CREDIT MANAGER’S OUTLOOK

Manufacturing Sector There has been a surprising level of volatility in the manufacturing data. Through the bulk of 2020 there was generally more stability in manufacturing than in the service sector as the pandemic impact was clearly felt more profoundly on services ranging from hospitality to entertainment and travel. In many

cases the consumer spent more than they usually do on manufactured goods but in many cases, this spend was directed at imports. The manufacturers oriented to those service sectors saw declines and they have been further affected by supply chain breakdowns. The latest

numbers are lower than might have been expected. The combined score slipped from 58.1 to 57.8 – not a major drop but it takes the data back to June levels. The index of favorable factors remained very stable with a reading of 66.5 compared to 66.6. The index has been in the 60s and

continued

Manufacturing Outlook / September 2021

CREDIT MANAGER’S OUTLOOK 70s for the last twelve months. The index of unfavorable factors slipped as well – from 52.5 to 51.9 but this is a fairly modest adjustment and the data is still in expansion territory. There was not much change in the sales category as the reading dropped out of the 70s. The current number is 69.0 and last month it was at 74.7 (but in June it was sitting at 68.2). The new credit applications number saw a more dramatic shift from 71.9 to 63.4. This takes readings back to where they have been through much of the year. The dollar collections data barely budged with a reading of 65.0 compared to the 65.5 noted last

month. The most dramatic change was seen in the amount of credit extended category as there was nearly a 15 point move from 54.3 to 68.7. As mentioned above there is evidence of significant hoarding (or more politely – stockpiling) as manufacturers worry about supply chain failures and future inflation. There was very little movement in the data for rejections of credit applications as it was at 53.7 in July and this month it stands at 53.1. There was actually some improvement in the accounts placed for collection data as it went from 51.6 to 53.1 on the strength of some determination to stay current

with credit. The disputes category remained in contraction territory but it is slightly less deeply entombed as the reading this month is 48.3 and last month the numbers were at 47.3. The dollar amount beyond terms data slipped almost into that contraction zone with a reading of 50.8 contrasted with the 54.3 noted in July. The dollar amount of customer deductions also veered very close to contraction with a reading of 50.0. It was slightly more comfortable in July at 50.6. The data on filings for bankruptcy shifted down a little from 57.5 in July to 56.5 this month but in general there has been good news as far as numbers of bankruptcies.

continued

Manufacturing Outlook / September 2021

CREDIT MANAGER’S OUTLOOK

n Author profile Dr. Christopher Kuehl (PhD) is a Managing Director of Armada Corporate Intelligence and one of the co-founders 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. He is the Economic Analyst for the Fabricators and Manufacturers Association and writes their bi-weekly publication, Fabrinomics, which details the impact of economic trends on the manufacturer. Chris is the chief editor for the Business Intelligence Briefs, distributed all over the world by business organizations and he is one of the primary writers (with Keith Prather) for the Executive Intelligence Briefs. He also makes close to a hundred presentations each year to business and industry associations in the US and overseas. He is on the Board of the Business Information Industry Association in Hong Kong and serves as a resource for the media and for many trade publications. Chris has a doctorate in Political Economics and advanced degrees in Soviet Studies and Asian Studies and was a professor of international economics and finance for over 15 years prior to starting Armada.

Manufacturing Outlook / September 2021

METALS OUTLOOK

SEPTEMBER 2021

METALS OUTLOOK by Royce Lowe Global crude steel production was up by 3.3 percent year-over-year in the month of July for the 64 reporting countries – which represent 99 percent of world crude steel production – to 161.7 million tons (MT). U.S. crude steel production for July was 7.5 MT, up 37.9 percent yearover-year. For January through July, the U.S. produced 49.5 MT, up 18.5 percent year-over-year. In July, China produced 86.8 MT, down 8.4 percent year-over-year; India 9.8 MT, up 13.3 percent; Japan 8.0 MT, up 32.5 percent; Russia 6.7

MT, up 13.4 percent; South Korea 6.1MT, up 10.8 percent; Germany 3.0 MT, up 24.7 percent, and Brazil 3.0 MT, up 14.5 percent. The EU (27) produced 13.0 MT, up 30.3 percent. Primary Global Aluminum Production in July was reported at 5.414 million tons, with production in China, at 3.343 million tons, representing 62 percent of world total. Production was 496,000 tons in GCC; 384,000 tons in the rest of Asia; 279,000 tons in Western and Central Europe; 333,000 tons in North America, and 350,000 tons in Russia and Eastern Europe.

It’s Still About Steel In early August 2020, a ton of hotrolled steel coil was worth around $440 in the U.S. In early August 2021, that same ton was going for just over $1900. Just a few months before this, steel buyers were scratching their heads, wondering whether or not to place orders at $1300 per ton. Not to belabor the point, but the situation, particularly in the U.S., has led to one of the tightest steel markets ever recorded. Some might say the tightest. Mills are putting customers on reduced allocation, and in some continued

Manufacturing Outlook / September 2021

METALS OUTLOOK cases, are actually cancelling orders they would have bent over backwards to take a year ago. Steel consumption in the U.S. is heading for around 104 million tons in 2021, and around 108 million tons in 2022. Domestic production in 2021 is estimated at 87 million tons, in 2022 at 91 million tons. The shortfall is being taken up, of course, by imports, and in July this year the U.S. imported 3 million tons of steel, 2 million of which was finished steel products. In this mix, it should be noted that July over June imports from Vietnam were up 165 percent, and this at the expense of all the usual exporters to the U.S.: South Korea, Japan, Turkey, and Germany. Despite tariffs and freight costs, imported steel looks attractive to U.S. customers. Vietnam has traditionally supplied most products apart from flatrolled coil, but it is understood that these products will be arriving in significant quantities late this year. The country’s exports to the U.S. in finished steel to date this year are up 82 percent. The tight market situation in the U.S. will likely be aggravated by planned maintenance shutdowns in quarter four this year at U.S. Steel’s Gary Works in Indiana, and its Granite City Works in Illinois, both for work on blast furnaces with a combined hot-metal capacity of around 4 million tons per annum. The outages will last for 7 to 10 days. There will, further, be a 10-day outage at its Big River Steel in Arkansas. Cleveland Cliffs’ CEO told investors in the last quarter that the company wasn’t going to produce more tonnage because this would eventually lead to oversupply and cause price deterioration. So all in

all, profit, rather than production, is the word. When work starts seriously on infrastructure in the U.S., the demand for steel is likely to go skyhigh again. Although we have spoken in the recent past of an overall tight market, including Asia and Europe, recent signs are that outside the U.S. there has been a definite loosening of late. Over the past six months, the hotrolled price in Europe went from 750 euros per ton to a peak of 1190 in late June, and to 1135 in late August. South East Asia saw its hot-rolled prices from $710 per ton to a peak of $925 in late July and $887 in late August. The general consensus, certainly for the U.S., is that the tight market will last at least until the end of the year. With the temporary loosening elsewhere, it is more than likely that exporters will come knocking on the U.S. door. There have been cries from U.S. manufacturers to remove the tariffs from steel, and of course there will be cries from producers to keep them on. The worldwide steel business is in a state of flux, but it is certain that

following the rough times steel companies recently experienced, they will look to keep the market tight for as long as possible. Meanwhile the price of aluminum futures recently reached a ten-year high, around $2,600 per ton, up over 30 percent in the past year. Heineken NV say the rising costs of the metal, used in beer cans, plus freight costs, will affect next year’s profit. Reynolds, makers of the famous aluminum Wrap, said it is facing costs of $400 million this year, due in large part to aluminum and resin prices. Goldman Sachs is forecasting record prices above $3,000 per ton by late 2022. China, which makes around 60 percent of the world’s aluminum, is reputedly cutting back production to meet green targets. Non-ferrous metal prices, in August, saw aluminum up to $1.25 per pound with a spike to $1.60 in late August; copper easing to $4.25; nickel down to $8.62 and zinc effectively unchanged at $1.35. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

Manufacturing Outlook / September 2021

AEROSPACE OUTLOOK

SEPTEMBER 2021

AEROSPACE OUTLOOK by Royce Lowe BOEING GETTING NEARER... Boeing continues to grab the news as the Federal Aviation Administration (FAA) shows renewed concern for Boeing’s safety oversight. It is starting an enquiry into allegations that staff engineers, delegated by the FAA to monitor design safety, have been pressured by Boeing to minimize such issues. A significant number said they couldn’t raise safety concerns without interference. It seems that Boeing, America’s largest exporter, will continue to make news

until the 737 Max issue is settled once and for all. The FAA will see to it that any doubt regarding Boeing’s quality procedures will immediately be questioned. There were two countries that had not lifted the ban on the 737 Max, namely India and China. India recently lifted its ban, and the decision was made after it observed “no untoward reporting” on jets already flying since 17 global

regulators allowed it to resume flights, according to the Directorate General of Civil Aviation. Boeing met local requirements in India, including setting up a simulator, and India is now satisfied with the jet’s performance. India is a target for Boeing, since they have only one customer with orders, Spicejet Ltd. Boeing is negotiating with Akasa, a new airline, to sell it as many as 80 Max planes. The company continued

Manufacturing Outlook / September 2021

AEROSPACE OUTLOOK Guillaume Faury, the head of Airbus, recently stated, “we will probably go from a duopoly to a triopoly, at least on single-aisle, by the end of the decade”. Airbus, with all its previous experience, took well over 10 years to get to 30 jets per month of the A320.

forecasts a market in India of 2,200 new jets, worth on the order of $320 billion. Meanwhile India is home to fleets of Airbus A320s. The only country left for clearance is thus China. Boeing carried out a twohour test flight from Shanghai in early August for Chinese regulators, who have so far held off approving the plane’s return. This is long after the U.S., with Europe and others, lifted the ban in late 2020. China could well take its time before allowing commercial service to resume. China’s three criteria are that any design change needs approval, pilot training must be comprehensive, and the conclusion of investigations into the two 737 Max accidents should be clear and improvement measures effective. Along with Boeing and Airbus, China has its own plane coming into play. Comac, the Commercial Aircraft Corporation of China, has for some years now - as already reported here

- been developing its own single-aisle jet, the C919, as a rival to the Boeing 737s and the Airbus 320s. The plane has been a decade in development, and has cost some $72 billion in state support, according to a U.S. think tank. Comac has announced close to 1,000 orders and options for the plane from mainly domestic customers. The first delivery to China Eastern Airlines is due by the end of this year. But the plane is still some way from taking to the skies. Even once confirmed by the Chinese regulator, there are questions whether Comac has the ability to support the aircraft while in service. To be globally competitive, the C919 will require approval from the FAA in the U.S. and from the European Union Aviation Safety Agency. This certification could take five to seven years. Such a process will be long, even uncertain.

Comac may not be a threat to anyone outside China, but China is the biggest export market on the planet. For the time being, and probably for a goodly time in the future, Comac needs the expertise of western suppliers, as it presently depends upon western parts suppliers to build its planes. Most analysts believe China’s market will be big enough in the next 20 years to support reasonable deliveries of C919s, as well as Airbus A320neos and Boeing 737 Max. This “battle” will go on for some time. Its resolution may augur well for trade relations between the U.S. and China. Meanwhile, Delta Air Lines recently picked up options for 30 more Airbus A321neo aircraft to add to its initial order of 125 of the twin-engine, narrow-body jet. The order could be worth around $20 billion. The first planes of this order will be delivered in early 2022, and many of them will be assembled in the Airbus plant in Mobile, Ala. The planes will be equipped with a Pratt and Whitney PW1100G turbofan engine and will have a capacity of around 200 passengers. They will fly mostly U.S. domestic routes. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

Manufacturing Outlook / September 2021

ENERGY OUTLOOK

SEPTEMBER 2021

ENERGY OUTLOOK

FUSION AND WIND by Jocelyn Bright Nuclear fusion is when two or more lightweight atoms join together to form one heavier nucleus, with any energy released due to the conversion being converted into nuclear energy. An example of nuclear fusion is the process of four hydrogens coming together to form helium. Sustainable nuclear fusion has been a hypothesis for a long time, but recently came closer to reality. Scientists at the National Ignition Facility, (NIF), part of the Lawrence Livermore National Laboratory, announced that they had produced about 10 quadrillion watts of fusion power after blasting a hydrogen capsule with an array of laser beams. The burst lasted only a fraction of a second, but it offered significant new evidence that harnessing fusion energy could one day be feasible.

It is, of course, too early to cheer. The field has been hyped up for decades, and the old joke is that fusion energy is just 20 years away, and always will be. Then there are the myriad problems involved in building a reactor. And the yield produced at the NIF, some 70% of the experiment’s energy input, is still way short of a viable energy source. There are reasons to be optimistic. Other recent innovations are likely to speed progress in fusion. There have been advances in high-speed computing, artificial intelligence, superconducting magnets, 3-D printing, and materials science, all of which should help in the development of a feasible fusion device. The breakthrough at NIF, in fact, was largely due to better computer modeling.

There is also help coming from the private sector. Some two dozen companies are now involved in fusion projects, with $300 million already committed in the last year, according to BloombergNEF. Both Bezos and Gates are involved, with Amazon’s leader looking to break ground on a demonstration plant next year, and Gates expected to demonstrate net energy gain by 2025. Advances in this technology will doubtless go a good way to helping with Joe Biden’s goal of zero emissions by 2050, but there are many obstacles to be met, and much work to be done. This is a complex technological challenge. With federal funding down 40 percent in the past 40 years, commitment and money are needed, as are skilled workers and researchers. Public-private continued

Manufacturing Outlook / September 2021

ENERGY OUTLOOK partnerships with fusion companies could help push the process forward, as is the case with NASA’s collaboration with SpaceX, which resulted in major spaceflight cost reductions in less than a decade. Regulations for fusion should not be the same as they are for the fission process. Fusion is safer than fission. Research and Development for this process requires government support, not its interference. Moving back down to earth, or rather out to sea, the North Sea, home of Orsted’s projects Hornsea One and Hornsea Two, the world’s two biggest wind farms, with Hornsea Two surpassing its older sibling to become the world’s biggest. We are speaking here of a huge project, involving the fabrication of foundations, monopiles, electrical substations, miles and miles of electrical cable, plus all the attendant transportation to move items that in some cases weigh thousands of tons.

The Hornsea Zone, as it is known, covers an area of 4,735 square meters, or 1850 square miles. It is located some 90 kms (55 miles) off England’s northeast coast. In this zone are projects Hornsea One and Hornsea Two, with projects Three and Four due for completion in 2025 and 2027 respectively. Hornsea One, with an area of 462 sq. kms (180 sq. miles), consists of 171 turbines, 242 kms (150 miles) of subsea cable and 64 kms (40 miles) of onshore cable. It has been operating since 2020. Hornsea One generates 1.2 GW from its 7MW, 154 meter (505 ft) rotor turbines. At the time of its start up, it was the world’s largest offshore wind farm. Hornsea Two’s first turbine was raised in May 2021. Construction continues and completion is forecast for early 2022. Each 8 MW turbine will stand 200 meters (656 ft) above sea level, with a swept diameter of

167 meters (548 ft). There are 150 kms (94 miles) of subsea cable, 40 kms (25 miles) of onshore. Hornsea Two will power 1.3 million UK homes. It will be the world’s largest wind farm. The logistics behind this huge project, the companies involved, and the manufacturing involved, are a story unto themselves, one we’ll tell in the next issue. China’s MingYang, meanwhile, says it has the world’s largest offshore wind turbine. The 16 MW turbine, with a 242 meter (794 ft) diameter rotor, and 118 meter-long blades, is said to generate 80,000 MwH of electricity each year, enough to power over 20,000 households. Full prototype rollout is set for 2022, prototype installation for the first half of 2023, and commercial production for the first half of 2024. This would all be a Jocelyn Bright, Staff Writer sight to behold. n

Manufacturing Outlook / September 2021

AUTOMOTIVE OUTLOOK

SEPTEMBER 2021

AUTOMOTIVE OUTLOOK by Lawrence Makagnon WHERE HAVE ALL THE CARS GONE? The big news in the auto world these days is that there aren’t enough cars and SUVs or light trucks to go around, particularly in the case of SUVs and light trucks. J.D. Power and LMC Automotive report that auto retail sales would be expected to fall in August, as the global semiconductor shortage, coupled with the fast spreading Delta variant, have squeezed inventories in dealerships. They expect a 14.3 percent fall to 987,110 units yearover-year. We do not know for sure,

since most auto manufacturers do not publish monthly sales figures. At last count, dealers were holding 942,000 vehicles, as opposed to an inventory of 3 million two years ago. Inventories are not likely to improve in September, due to ongoing supply chain issues and recently announced production cuts. Forbes says consumer demand is “robust”. Ford says its August sales are down 33 percent, due mainly to the chip shortage. Inventories are at lows and prices are skyrocketing.

In other news this month, GM is fixing problems with its Chevy Bolt passenger cars and Bolt EV SUVs. The company recalled models from 2017 to 2021 because of lithiumion battery fires. The vehicles are manufactured with LG Corp., which manufactures the batteries, drivetrain, instrumentation, and HVAC systems. There are difficulties securing a reliable supply of new batteries from LG. Costs for this will be in the order of $1 billion, and GM will be looking to LG for reimbursement. continued

Manufacturing Outlook / September 2021

AUTOMOTIVE OUTLOOK vehicles to operate on surfaced roads at a maximum speed of 35 m.p.h. in “fair weather” conditions. The vehicles have radar, thermal imaging and 360-degree cameras to direct their movement. They have no steering wheel, pedals or side-view mirrors. So far the vehicles have delivered groceries, pizzas and stuff from Walmart.

Toyota, meanwhile, is the victim of Covid-19 surges in Vietnam and Malaysia, two important countries in its supply chain. These surges are a bigger problem for Toyota than the semiconductor shortage, a crisis that Toyota mostly overcame. Toyota was looking to produce a little under 900,000 vehicles worldwide in September, but this has been cut back to 500,000 vehicles; a 40 percent decrease. Production in North America, China, and Europe will be down by some 200,000 vehicles. In June, the latest month for which results are available, the company produced 831,533 vehicles worldwide, 537,146 of which were produced outside Japan.

Manufacturing Park (IAMP) adjacent to the Nissan plant.

Nissan unveiled a $1.37 billion investment plan to create an EV hub, Nissan EV36Zero, in Sunderland in Northeast England. There are three parts to this project: electricvehicle manufacturing (including a new-generation, all-electric vehicle), renewables generation, and battery production. Envision AESC, a battery technology company, is partnering with Nissan. Envision AESC already owns and operates Europe’s first battery plant in Sunderland, and will build the U.K.’s first gigafactory on the International Advanced

As an addendum to the electric vehicle scene, Siemens will expand its U.S. manufacturing operations to support EV infrastructure. It is preparing to manufacture over a million chargers for the U.S. over the next four years. This will be part of the $7.5 billion included in the recent infrastructure bill, and plans are to start manufacture in early 2022.

Rivian Automotive is an Amazonbacked manufacturer of electric trucks and utility vehicles. It recently announced a filing for a stock market listing. It filed confidentially for an Initial Public Offering. Rivian has raised $10 billion in funding, including participation from Ford, since its founding in 2009. Amazon, another backer, has pledged to buy 100,000 electric delivery vans from Rivian, whose valuation was $26.7 billion earlier this year. In addition to the Amazon order, the company will produce electric trucks and SUVs for the consumer, starting at $70,000.

Nuro provides a commercial, driverless delivery service, and has passed the required regulations necessary to allow its autonomous

Nuro was founded in 2016 by Jiajun Zhu and Dave Ferguson, two former Google engineers, in Mountain View, California. It currently offers autonomous delivery to communities in Texas, Arizona, and California. The company recently announced that it would build a manufacturing facility in Southern Nevada, where it will invest $40 million for 125,000 square feet of space and over 80 acres of property development, in an effort to meet the demand for its thirdgeneration autonomous vehicles. It receives funding from Japan’s Softbank. In addition to the manufacturing plant, the company is investing in a closed-course testing facility to check out its bots before letting them loose in local communities. The company will build the facility on 74 acres of the Las Vegas Motor Speedway. The testing track will measure performance under various conditions, from avoiding pedestrians and pets to giving bicycles space on shared roadways. There will also be environmental tests and validation of vehicle systems. Both facilities are Makagon, expected to start up Lawrence Staff Writer in 2022. n

Manufacturing Outlook / September 2021

CYBER SECURITY OUTLOOK

SEPTEMBER 2021

CYBER SECURITY OUTLOOK Ransomware: Crippling Manufacturers By Ken Fanger MBA, CMMC-RP, President, On Technology Partners

Manufacturing Outlook / September 2021

CYBER SECURITY OUTLOOK IIOT & OT Issues Over the last year, ransomware attacks, like the one that shut down JBS Foods, have jumped more than 150% and ransom demands more than doubled during that time, according to Venturebeat.com. This has led to a massive problem for small and midsize manufacturers. Ransomware can attack any number of systems, beyond the normal computers, and the introduction of intelligent IIOT devices for OT (operational technology) has greatly increased that risk. IIOT devices are often distributed around the entire plant production and may not have the same security standards of other network-attached devices. Often the OT deployment is outside of the IT department’s management and the cyber security risks may not be known or understood. It is very common for IIOT devices to be built on older technologies that have dangerous security vulnerabilities. As ZDNet reported (https:// www.msn.com/en-us/money/other/ security-researchers-warn-of-tcp-ipstack-flaws-in-operational-technology-devices/ar-AAMW2E8?li=BBnb7Kz), “Security vulnerabilities in the communications protocols used by industrial control systems could allow cyber attackers to tamper with or disrupt service.” What this means is that IIOT devices not properly implemented and secured could create a back door into company networks. The OT gateway problem is felt at all levels in companies of every size. Many may remember the cyber attackers that used the HVAC control system to get in and attack Target. That attack resulted in the theft of millions of user accounts. These vulnerabilities therefore affect both companies and customers.

However, this problem is felt more acutely by small to midsize manufacturers because they lack the cyber security teams to design and control network access and management. The advantages that OT/IIOT technologies offer are vital to the financial success of manufacturers but do open a door that could be exploited to hurt any company. According to Cybercrime Magazine, 60% of small businesses that get hacked close within 6 months. That is a terrifying thought that your IIOT devices could result in losing the company. How To Protect Your Company The first step is to understand your risks. Find out if you have IIOT/OT technologies deployed. If there are, then see if your IT team can isolate them from the general network. By keeping the devices isolated, it will be easier to protect the other vital systems.

Second, create an inventory of all IIOT/OT devices that are in use on the manufacturing floor. It is becoming easier to have smart devices that you forget about. Always remember those smart devices are tiny computers attached to your network. By knowing which devices are connect to a network, it is easier to find what weaknesses may exist with those devices. Third, segment off IIOT devices. Most modern enterprise networking equipment will allow you to create segmented network areas for IIOT/ OT systems. Companies like HPE have specifically designed network structures to assist in the deployment of IIOT/OT technologies that incorporate security, even if the IIOT device does not. Target’s attack shows the dangers of not segmenting off a network. As shared by Computerworld: “Target chose to allow a third party access to its network, but failed to properly secure that access…” continued Manufacturing Outlook / September 2021

CYBER SECURITY OUTLOOK • Restrict user accounts to only the rights required (Least Rights Rule) • Restrict system accounts (like the ones that run IIOT) to Least Rights Rule • Have a spam filter on your email system ave a good cyber training program H which is fun and engaging None of these items is a guarantee that ransomware or another attack will never get through, but it will reduce the chance of an attack and it could reduce or remove the damage caused by such an attack. A direct example of this is that a manufacturing client here at On Technology Partners did have a ransomware attack reach their server; however, because of a proper ransomware-resistant backup solution and monitoring, we were able to detect the attack and reverse the damage. They were only down for fifteen minutes, and there was no loss of data. n Fourth, monitor your systems. It is important to know if there is an attack or a breach. You want to have a way to monitor your system and assure that it has not been breached. Different companies offer SIEM (Security Information and Event Management) monitoring to assist in protecting a company’s network. Then, have a plan of action to address attacks including ransomware.

When looking for protection from ransomware attacks, make sure to ask the providers if they are using ransomware-resistant backups. This means that the backups use AI to detect and prevent the ransomware from spreading across the backup. It also means that backups are not directly connected to the protected system, allowing the backup to exist outside of the OT system itself.

These plans should include what actions to take to stop the spread of a ransomware attack, such as how to contact customers and provide information to the outside world. The days of keeping silent about an attack has proven disastrous for many companies. Because it has become so common to have attacks, most customers understand that it does happen and are grateful for the heads up when the attack happens.

Next, ask for a ransomware rollback system. This is a way to have a computer that, if it is affected by ransomware, is able to return files to a good state like before the ransomware happened.

Manufacturing Outlook / September 2021

Lastly, you should have these areas defined: • Strong passwords • Anti-virus/anti-spam

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

CYBER SECURITY OUTLOOK

If you would like to learn more about protecting your business, please contact us at info@ontechpartners.com with the subject ‘Cyber Response.’ Sign up for our cyber tips and a chance to win $100 each month. For more information, please visit: https://ontechnologypartners.com/cybersecurity-tips/ *Notice: Our site uses HTTPS to make sure that your information is secure. Manufacturing Outlook / September 2021

ISSUES OUTLOOK

SEPTEMBER 2021

ISSUES OUTLOOK

by Royce Lowe

PRINTED HOUSES It’s no news that houses around the U.S., and in many parts of the world, are costing dear these days. It’s a fact that there are some 1.6 billion people on this planet lacking adequate accommodation. A batch of new houses in California is selling fast, and in the past two months, 82 have been bought, and there’s a waiting list for a further 1,000. Big deal we might say, but when will the buyers see their houses? Palari Homes and Mighty Buildings, headquartered in Oakland, are able to erect one of their homes in 24 hours. They make it from prefabricated

components, not a new idea, but in this case the components are printed by 3D printing, a process that has been around since the 1980s. The process has made great strides over the years, but of late its shine has been dimmed by electric cars and space flights. It is regularly used for the production of (relatively small) aircraft parts and for orthopaedic implants, and in fact, for any suitably engineered part that does not warrant long production runs requiring complicated setups. Mighty Buildings uses the current 3D printing method, extruding

a composite material that is subsequently cured and hardened by ultraviolet light. They can print walls and ceilings and eaves, and can erect a home in 24 hours. Their process is fast, done on site, and is environmentally friendly (green) in that it exudes no carbon. The construction industry is responsible for 11 percent of the world’s manmade carbon-dioxide emissions. The company has already reined in significant investment funds, and its plans are for micro Mighty factories that can produce 200 to 300 houses per year in locations where housing continued

Manufacturing Outlook / September 2021

ISSUES OUTLOOK gaps exist. They will use 3D printing, robotics, and advanced composite materials. Their in situ production methods will obviate the need for the majority of the transport involved in normal construction. The use of robotics will improve productivity (which is low in the construction industry), and will also ease the problem of shortages of skilled labor. The company is aiming for carbon neutrality by 2028, some 22 years before the construction industry in general. Switzerland’s Holcim, the world’s largest cement manufacturer, joined with CDC Group, a Britishgovernment development and finance group, to form 14Trees. It operates in Malawi, where it says it can print a house in 12 hours for less than $10,000. Work is being carried out in Mexico and in Eindhoven in the Netherlands, where the keys to Europe’s first 3D-printed home were handed over

in late July. This house is the first of five detached two-bedroom dwellings in a collaboration between several companies, with St-Gobain, a French building materials company, developing the concrete.

This mix can then be squeezed through a nozzle, after which it strengthens, thus bears the weight of the next layer. The process does away with cement and the need to transport it to the site.

But of course it doesn’t all end here. Nothing so Utopian. Making cement for such undertakings is by no means a green process, plus the ingredients need to be trucked to the building site. But a group at Texas A&M University, led by Sarbajit Banerjee, has developed a way to turn the process around. Some years ago, Dr. Banerjee was behind a project to construct supply roads to remote parts of Alberta using stuff immediately at hand. He combined local soil and wood fibres, held together by liquid or water-soluble silicates that then hardened and acted as cement. To build houses, he uses clay and rock debris that happen to be under the topsoil near the construction site, crushes it into a powder and blends it with silicates.

Construction codes could be a limitation. In this respect, UL (Underwriters Laboratories), one of the world’s largest certifying agencies, has collaborated with Mighty Buildings to develop the first 3D-printing standard, applicable in all states except Wisconsin. There is still a way to go, but Germany is in there, as are Dubai and Saudi Arabia. Once all the bugs are out, as bugs there will surely be, the technology could be extended to warehouses, offices and other commercial buildings. This is truly a worthwhile technology. n Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook.

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