Open Die Forgings & Seamless Rolled Rings Inconel 600 • 625 •702 • 718 • 722 • 725 • Hastelloy C276 • Hastelloy X Haynes 188 • Monel • Incoloys • Waspaloy • Maraging • A286
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MAX. WEIGHT 60,000# 60,000# 15,000# 10,000# 15,000# CYLINDERS/SLEEVES
MAX. O.D. 84” 84” 50” 72” 52” MAX. LENGTH
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108”
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MAX. DIA. 96” 96” 50” 80” 65” MAX. WEIGHT 75,000# 75,000# 20,000# 15,000# 10,000#
RINGS, ROLLED/CONTOURED/ HAND FORGED
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MAX. LENGTH 65” 65” 40” 65” 65” ROUNDS/SHAFTS (with steps or flanges)
MAX. LENGTH 420” 220” 144” 220” 144” MAX. WEIGHT 75,000# 75,000# 20,000# 10,000# 10,000#
CARBON 1006 1008 1010 1015 1018 1020 1022 1023 1025 1026 1029 1030 1035 1040 1045 1050 1055 1060 1070
ALLOY 2315 2340 2515 3140 3145 3150 3310 3312 3315 4015 4017
4020 4023 4037 4085 4112 4115 4120 4125 4127 4130 4135 4140 4142 4145 4150 4155 4160 4215 4320 4330 4335 4340 4615 4620 4630 4640 4720 5150 6120 6140 6145 6150 6170
6470 7290 8140 8150 8160 8615 8617 8620 8630 8640 8642 8645 8720 8735 8740 8750 9115 9260 9310 9315 9317 9430 9840 9850
TOOL A2 A6 A10 D2 D3 D5 D6 H11
H12 H13 H21 H26 H43 M2 P20 S1 S5 S7 T1 W1 W2
SPECIAL GRADES
D6AC HY80 HY100 F-11(1 1/4 CR1/2 MO) F-22(2 1/4 CR-1 MO) F-5(CR-1/2MO) F-91 17-22 A 17-22 AS 17-22 AV Nitralloy 135N 52100 LF1, LF2, LF3
Stainless Steel 300 Series 302 303 304L 309 310 314 316L 317L 321 322 329 330 333 347 348 400 Series 403 405 409 410 414 416 418
420 422 429 430F 431 440A,C 442 446 500 Series 501 502 Stainless Steel PH Grades 13-8MO 15-5PH 15-7MO 17-4PH 17-7PH Greek Ascoloy
Nickel, Cobalt, Special Alloys
A-286 • AM-355 Custom 450, 455 Ferralium 255 Hastelloy B2 Hastelloy C276, C, N, S, W, X Haynes 188, 230, 25 Incoloy 800, 825, 832, 890, 901, 925 Inconel 600, 601, 617, 625, 690, 702, 706, 713, 718, 722, 725, 738, 750, 751 800, 825, 902, 903 Invar 36, 42 Jethete M151, M152 Kovar, Rodar, L605 Nickel, Cobalt, Special Alloys Maraging 250, 300, 350 Monel 400, 500 (K) Nickel 200, 201 Nitronic 40, 50, 60 N155 Multimet Nimonic 75, 80, 90 Rene 41 - 125 Udimet 500, 700 Vascojet 1000 Waspalloy Zirconium 32 20 CB
Aluminum Alloys Titanium Alloys 2014 Commercially 2024 Pure 2219 5083 5086 6061 6063 7049 7050 7075 7079 7175 7475
4AL-3MO-1V 4AL-4MN 5AL-2.5SN 6AL-2SN -4ZR-2MO 6AL-2SN -4ZR-6MO 6AL-4V 6A1-6V-2SN 7AL-4MO 8AL-1MO-1V 13.5V -11CR-3AL Ti17
Copper Alloys C10100 C10200 C11000 C12300 C15000 C17000 C18200 C28000 C46400 C62300 C63020 C65500
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CONTENTS IN THIS ISSUE Publisher – Lewis A. Weiss
MANUFACTURING OUTLOOK - p.5
Editor-In-Chief – Tim Grady
NORTH AMERICAN OUTLOOK - p. 7
Design – Rovere Media
METALS OUTLOOK - p.9
Contributing Writers: Royce Lowe - Contributing Writer Tim Grady - Contributing Writer Chris Kuehl, PH.D - Chief Economist, FMA Norbert Ore - Contributing Writer Mike Womack - Contributing Writer Andrea Olson- Guest Contributing Writer
AUTOMOTIVE OUTLOOK - p.10 AEROSPACE OUTLOOK - p-12 ISSUES OUTLOOK by ROYCE LOWE - p.13 ENERGY OUTLOOK by ROYCE LOWE - p.15
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GLOBAL OUTLOOK - p.17 by ROYCE LOWE - p. 17
Tim Grady – timgrady@steelforge.com
• EUROZONE OUTLOOK - p.17
Current Circulation - 43,400 Editorial Office Manufacturing Broadcasting Corp. 75 Lane Road Fairfield, NJ 07004 (973) 808-8300 © 2017 MBC – Manufacturing Broadcasting Corporation. No part of this publication may be reproduced or used in any form without the prior written permission of the publisher. Metals & Manufacturing Outlook is a registered trademark of MBC. © 2017 MBC
• ASIA OUTLOOK - p.19 • SOUTH AMERICA OUTLOOK - 20 JUST KEEP ROLLING ALONG by NORBERT ORE - p.21 CREDIT MANAGER’S INDEX by CHRIS KUEHL - p.22 WHAT’S HOLDING US MANUFACTURING BACK? by ANDREA OLSON - p.25 | April/May 2017
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PUBLISHERS STATEMENT BY LEWIS A. WEISS The first quarter of 2017 is in the books and while it wasn’t a wild ride, it was one of the better Q1’s in the last 5 years. Though there were a few snow storms in the Northeast, business didn’t grind to a halt as it did in 2015 and 2016. And, for the quarter, there was a Trump Bump despite Congress and the President not exactly seeing eye-to-eye on subjects that are important to manufacturing. The “repeal and replace” effort fell flat for the foreseeable future, leaving all industries with the higher costs for insurance premiums than ever before on employeeprovided plans. Only time will tell if the factions of the Republican party can come together on the American Health Care Act. However intentioned, the immigration ban and ramp up to deport illegal immigrants already in the U.S. has left employers with a low-skilled labor shortage headache on top of their hightech skills gap migraine. Agriculture may lose millions of dollars in unharvested crops left in the fields in 2017 because there are not enough migrant workers to pick them. These are physically demanding jobs that agriculture employers are unable to fill economically with unemployed or underemployed U.S. citizens, and while the media floats stories of migrants taking domestic jobs, these jobs are often ignored by U.S. workers. Manufacturing is expected to need, and be unable to find, | April/May 2017
hundreds of thousands of techsavvy employees each year for the foreseeable future. In those areas where it is possible, they will fill the ‘gap’ with automation and robotics. Employers will also look to vocational schools, technical universities, STEM high schools, and other secondary institutions for graduates with computer skills, in addition to implementing their own apprenticeship programs to develop trained staff for a modern manufacturing renaissance that is upon us now. Invention will be another gamechanger for manufacturing, as new ways to use VR (virtual reality) and AR (augmented reality) are applied to production lines and assembly operations from hand-held components to ship and bridge building. 3D R&D and production lot printing will also impact subtractive manufacturing with less need for removing material to reach final form and more emphasis on the physical property soundness of materials and shapes produced by additive manufacturing. In addition, new materials such as 2D graphene and their practical applications will develop faster as human imagination joins with machine capabilities to make parts and components which used to be decades away on the drawing board but may, in fact, be only years away as bright young minds flow into manufacturing and have the opportunity to couple concept with creation from
making machines to make the parts to applying technology to achieve finished products in dramatically compressed timeframes. Keep your eye on solar power, especially with 2D highly-conductive, incredibly lightweight and nearly transparent materials that may transform almost every flat surface exposed to the sun into an affordable solar panel about the thickness of window tinting sheets. Early applications will be on skyscraper windows and car exteriors, followed soon thereafter with roofing shingles to supplement electric power and potentially provide excess capacity to sell back to the grid. How would you like your electric bill to put money into your bank account each month? Renaissance is defined as a “rebirth” or “reawakening” – and that is an apt description for today’s modern manufacturing renaissance. All the “cool tech” we live with today will pale in comparison to what comes out of manufacturing over the next 10 to 20 years. If young people want an exciting career path in products to positively change the lives of people across the planet, then modern manufacturing is the trail to begin trekking upon to create everything from almost limitless fresh water anywhere on Earth to medical breakthroughs where the blind will truly see and paralyzed people will again walk. Join us on the journey, and enjoy this issue of Metals & Manufacturing Outlook. Best Regards, Lewis A. Weiss, Publisher
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MANUFACTURING OUTLOOK BY ROYCE LOWE (50-499) created 100,000 jobs; and large business (500+) created 45,000 jobs. Manufacturing added 30,000 jobs, Construction 49,000 jobs and Natural Resources and Mining 4,000 jobs. The balance 180,000 jobs were created in the service sectors.
While most of the world’s manufacturing economies are looking better than they have for years, the icing has been scraped off the cake somewhat by events in Washington and London, but more particularly in the Middle East. We don’t know what will have happened by the time this ‘goes to press’ but can only hope that cool, clear heads will prevail and that events will follow suite. The National Association of Manufacturers reported that the results of its quarterly NAM Manufacturers’ Outlook survey show optimism increased to 93.3% during Q1 2017, a record high in the survey’s nearly 20-year history. The rise corresponds with increased manufacturing activity, NAM noted, and is based on widely shared confidence that the Trump administration will provide relief from government regulations, tax reform, and significant investments in U.S. infrastructure. The nonfarm, private sector jobs report for March from the ADP Research Institute states that 263,000 jobs were created in the month. Small business (1-49 employees) created 118,000 jobs; midsized
The BLS website states that the BLS nonfarm payroll employment edged up by 98,000 in March while the unemployment rate eased down to 4.5 percent. U.S. small business owners are reportedly at their most optimistic since July 2007. U.S. light vehicle sales were off 1.6 percent y-o-y in March, leading some to believe that the recent long sales boom has in fact peaked. But sales are still on the increase in Europe and China. British sources are somewhat worried. Meanwhile there is an ongoing global stress being put on the future output of electric vehicles. GM’s Robots, see Issues Outlook. The Brexit process was triggered March 29 by a letter from British Prime Minister Theresa May to the European Commission. Negotiations will begin when the commission deems it timely. Filtering salt out of sea water? See Issues Outlook. The ISM PMI figure for U.S. manufacturing continued in healthy growth in March but at a slightly slower
pace than in February, with the PMI reading easing to 57.2, down from February’s 57.7 percent. The overall economy grew for the 94th consecutive month. See North American Outlook. The IHS Markit PMI for the U.S. manufacturing sector moved to a sixmonth low of 53.3 in March, down from February’s 54.2 percent reading. New orders increased at their weakest pace since October 2016, and input cost inflation, due to higher raw material prices, was at a twoand-a-half year high. There was greater caution among clients alongside intense competition for new work. Export sales were slightly subdued. The five ISM components are equally weighted at 20 percent each. The IHS Markit components are weighted: 30 percent New Orders, 25 percent Production, 20 percent Employment, 15 percent Supplier Deliveries and 10 percent Raw Materials Inventories. The Bureau of Economic Analysis, in its ‘third’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2016, put it at 2.1 percent. The figure for the third quarter was 3.5 percent. GALLUP’s U.S. Economic Confidence Index dropped, in late March, to its lowest level since the election, to +5. The coincident Job
| April/May 2017
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Metals & Manufacturing Outlook
Creation Index rose to a record high in March for the third month in a row to +37. Reports of hiring were strongest in the Midwest and the South. World crude steel production for the 67 reporting countries – Vietnam was added to the list - for the month of February 2017 was 126.579Mt, up 4.1 percent y-o-y. U.S. crude steel production for February 2017 was 6.362Mt, off 6.5 percent y-o-y. Primary Global Aluminum Production in February 2017 was reported at 4.657 million tonnes, of which 2.534 million tonnes, just over 54 percent, was produced in China. The Gulf Corporation Council (GCC) produced 418,000 tonnes, North America 304,000 tonnes, Western Europe 290,000 tonnes and Eastern and Central Europe 306,000 tonnes. Here are the latest figures for US new car and light truck sales for ‘the big eight’ for March 2017. THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month. The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-onyear changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.
| April/May 2017
Here are the latest figures for US new car and light truck sales for ‘the big eight’ for March 2017.
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NORTH AMERICAN OUTLOOK BY ROYCE LOWE The Institute of Supply Management PMI figure eased back slightly from 57.7 percent in February, to 57.2 percent in March, representing the seventh consecutive month of growth in manufacturing. There was growth in the overall economy for the 94th consecutive month. Of the 18 manufacturing industries, 17 reported growth in March in the following order: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Furniture & Related Products; Textile Mills; Machinery; Primary Metals; Miscellaneous Manufacturing; Wood Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Petroleum & Coal Products. No industry reported contraction in March compared to February. Comments from the manufacturing sector were again very positive, and most industries surveyed are looking for strong business conditions to continue. Transportation Equipment responds that business is presently flat and expected to stay as such through 2017, in spite of which finding qualified personnel has been a challenge. Food, Beverage & Tobacco Products are seeing prices creeping up and raising their selling prices accordingly. Following is a summary of the five major indexes, each weighted at 20 percent in calculation of the PMI number for March. February’s readings are in parentheses:
New orders
64.5 (65.1)
Production
57.6 (62.9)
Employment 58.9 (54.2)
Supplier Deliveries
Inventories
55.9 (54.8) – slowing at a faster rate
49.0 (51.5) - contracting from growing
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The following five components are not instrumental in the PMI calculation, but are an important part of the manufacturing industry:
Customer Inventories 47.0 (47.5) – too low
Prices 70.5 (68.0) – increasing at faster rate
Backlog of orders
New export orders 59.0 (55.0) - growing faster
Imports
57.5 (57.0) – growing faster
53.5 (54.0)
Commodities up in Price in March were: Acetone; Acrylates; Aluminum (5); Butadiene (3); Caustic Soda (2); Copper (5); Corrugate (6); Corrugated Boxes; Corrugated Packaging; Foam; HDPE; Nylon; Plastic Resin; Polypropylene (2); Rubber — Natural (2); Scrap Metal (2); Stainless Steel (12); Steel (15); Steel Tubing (2); Steel — Carbon (4); Steel — Cold Rolled (5); Steel — Hot Rolled (4); and Titanium Dioxide (4). Commodities Down in Price: None. Commodities in Short Supply Capacitors; Electronic Components; and Methacrylates. Note: The number of consecutive months the commodity is listed is indicated after each item.
Manufacturing business conditions in CANADA increased in March at the fastest pace since October 2013, with strong increases in production, new orders and employment. The IHS Markit Manufacturing PMI increased from February’s 54.7 reading to 55.5 in March, the highest reading in almost three-and-ahalf years. Input cost inflation increased at its fastest rate since May 2014. There was a stronger domestic demand in March, particularly in the energy sector. All regions were up but Alberta and B.C. were at the head of the pack. There were marked increases in delivery times. Ontario showed the sharpest rise in export sales. Canada produced 1.03Mt of crude steel in February, down 3.7 percent y-o-y. Canada’s light vehicle sales were up 7.1 percent y-o-y in March to 187,540 units, with GM’s sales up 27.2 percent, and Ford and FCA’s stagnant. Nissan and Honda showed y-o-y gains of 26.7 and 18.7 percent respectively. MEXICO’s PMI increased to 51.5, a five-month high in March, from February’s 50.6 reading, on the back of good increases in production and new orders. There are subdued signs of recovery from the three-year low seen at the end of December 2016, but there is uncertainty in Mexico regarding the economic outlook. Mexico produced 1.53Mt of crude steel in February, up 7.0 percent y-o-y.
| April/May 2017
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METALS OUTLOOK BY ROYCE LOWE remains low, which is necessary when forming critical alloys (e.g., titanium aluminides) with finegrain structures.
Pratt & Whitney, a division of United Technologies Corp., announced plans to invest $386 million in its Columbus, Ga., facility to increase the production of parts and maintenance services and to reduce costs for new and existing engine programs. The investments will go toward the purchase of automated machinery and equipment upgrades as well as construction of two new buildings on the site. Construction will include a 20,000 square-foot specialized manufacturing facility and related infrastructure to house a new isothermal forging press that will be used to manufacture turbine disks and compressor rotors for Pratt & Whitney engines. In isothermal forging, the dies and the workpiece are heated to the same temperature so that the forming process can take place without loss of temperature. An important benefit of the process is that the operating force needed to shape parts
And Caterpillar Inc. has an agreement in place with FIT AG to design and produce aluminum and titanium parts using additive manufacturing technologies. Caterpillar’s role will be ‘product-specific knowledge’ whereas FIT AG will contribute expertise in additive design. Caterpillar has reportedly 80 3D printers in its R&D and production programs. Charter Steel announced plans to build a special-bar-quality (SBQ) bar mill adjacent to its existing coil mill and steelmaking operations in Cuyahoga Heights, Ohio. The highly automated rolling mill will utilize precision sizing to produce diameters from 0.75 to 3.25 inches (19 to 83 mm) in bar lengths from 12 to 50 feet (3.7 to 15.3 meters). The $150 million project, which will not interrupt existing steel coil operations, will create about 25 jobs and represents the largest single investment in the family-owned company’s 81-year history. Superior Industries Inc. has made a $715 million bid for Uniwheels AG in a deal that will lead it to establish itself as a global supplier of cast aluminum wheels to numerous automakers. Superior is already the self-proclaimed ‘largest manufacturer of aluminum wheels for passenger
cars and light-duty vehicles in North America.’ It casts and finishes wheels in Fayetteville,AR; Southfield, MI and Chihuahua, Mexico, and supplies BMW, FCA, Ford, GM, Mazda, Nissan, Subaru, Tesla, Toyota and VW. Uniwheels, Europe’s third-largest supplier of aluminum automotive wheels, has two plants in Germany and one in Poland and supplies Audi, BMW and other renowned European automakers. Gerdau Summit, a joint venture registered last year between Gerdau SA, a Brazilian steelmaker, Japan Steel Works Ltd. and Sumitomo Corp. expects to be producing forged parts for wind-power projects by early next year. Gerdau, with a 59 percent stake in the JV undertook a recent reactivation of a rolling mill where the forging operation will be built. JSW will provide the expertise to cast and forge products for power generation, and Sumitomo will contribute marketing and sales experience. The investment will be $90 million and capacity will be 50,000 tonnes per year of forgings. Sumitomo, with a 39 percent stake, is the holding company for Sumitomo Heavy Industries, a designer and builder of mechanical forging presses. JSW, with 2 percent, manufactures large castings and forgings for industrial machinery, as well as power generation systems.
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Metals & Manufacturing Outlook
AUTOMOTIVE/ AEROSPACE OUTLOOK BY ROYCE LOWE
AUTOMOTIVE OUTLOOK
Auto news these days has a lot to do with companies joining up with or buying into each other, and gearing up for the days when many of the world’s vehicles will be powered by electricity. Although its power is still very largely generated by coal, China is making serious progress in both alternate energy production and the production of electricallypowered vehicles. Yutong Bus Co. in Zhengzhou is Buffet’s Chinese rival in electric bus production, and is ceding potential U.S. sales to Buffet-backed BYD Co – also in China – saying there are enough profits to be made in countries that are ‘more welcoming’ to Chinese products. Yutong’s chairman, one Tang Yuxiang, who built his company from a bus repair shop, says his company, the world’s biggest bus maker, has vehicles in over 130 countries outside the U.S., including Singapore, Russia and Saudi Arabia. Tang says he won’t do business in North America since ‘China
| April/May 2017
and the U.S. don’t have a very good relationship; we would like to go to the markets that are friendly to China.’ This runs contrary to Chinese carmakers, some of whom have been trying to crack the U.S. market since 2005. Yutong’s sales dwarf those of Buffet-backed BYD and Germany’s MAN SE, even without a North American presence. Yutong is presently testing a driverless bus. Further automotive news from China, or sort of, sees Chinese Internet giant Tencent Holdings
Ltd. buying five percent of Tesla Inc., which may be taken as a vote of confidence in Elon Musk’s ability to bring the Model 3 to market. Shenzhen-based Tencent, while lauding Elon Musk’s various qualities and talents – including his vision - paid about $1.8 billion for 8.17 million shares, making it the fifth-largest shareholder in the company. Tesla’s fourth quarter sales of around 25,000 vehicles, somewhat over expectations, together with the Tencent share
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45 percent in China in 2016, compared with 15 percent for overall passenger car sales.
purchase and Musk’s forays into outer space, saw the company’s capitalization exceeding that of Ford. Which company is investing $1.2 billion in U.S. plants, three Michigan factories. This includes $1 billion on engine and assembly plants for Ranger and Bronco models, to replace production of the slowmoving Focus compacts whose production is moving to Mexico. A further $200 million will be invested in a new data center at
Ford’s factory in Flat Rock MI, where the company says it will add 700 jobs. These investments stem from contract negotiations with the U.A.W. Union in 2015. Ford will start production in China of its Lincoln SUVwhose sales almost tripled in 2016-by 2019, with its JV partner Changan Automobile Ltd. in Chongqing. SUV sales were up
Manufacturing Laughs
And from Europe we hear that VW’s Skoda Division will team up with India’s Tata Motors Ltd. on joint projects in India. A memo of understanding has been signed to cover market studies for the development of mobility services, vehicle components and models. VW hopes that this partnership could allow creation of models that are ‘thrifty’ enough to appeal to Indian buyers. For Tata, owner of JLR, this partnership will enable access to VW’s global presence, and will help ward off competition from FCA and PSA.MercedesBenz intends to come through with a 10 billion euro ($10.8billion) project involving production, by 2022, of 10 new electric vehicles, three years earlier than a target announced at the Paris auto Show in 2016. Mercedes’ parent Daimler said that the combustion engine would continue to be refined for a ‘transitional period.’ This seems to be to a large extent about diesel, the backlash from, and probes into, VW etc. German diesel demand in December 2016 was at its lowest level since September 2010, representing 43 percent of total sales. Daimler is working on battery production and the development of plug-in hybrids on the way to fully-electric vehicles. | April/May 2017
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Metals & Manufacturing Outlook
AEROSPACE OUTLOOK
Aerospace this month centers on Boeing, Airbus and Iran, with a side trip to space. Airbus has made its first aircraft delivery to Iran Air under the contract announced late last year. The A330-200 was delivered at the Airbus delivery center in Toulouse, and represents the first of 54 wide-body jets to be supplied under the contract. The overall contract calls for 100 aircraft – 46 from the A320 narrow-body series, 38 A330 wide bodies, and 16 A350 XWBs – reportedly worth over $18 billion to Airbus. Iran Air gave an order to Rolls Royce Plc for jet engines for the A330 and A350 XWB aircraft. Boeing has an order for $16.6 billion to supply 80 aircraft to Iran Air and has signed a memorandum of agreement to supply Aseman Airlines with 30 737 MAX aircraft for a list value of $3 billion, with options for an additional 30 of the same aircraft. Deliveries will commence in 2022. Lockheed Martin Corp, under the proverbial gun again, is working with its suppliers to squeeze $5 billion from the F-35 fighter jet’s costs as the company negotiates | April/May 2017
the Pentagon’s biggest order yet of a weapon that has endured criticism from Trump. This fantastic (sic) aircraft had costs ‘out of control’ but the fact that Trump took credit for cost savings of $728 million surprised Lockheed’s upper management. Once Lockheed get it right, which to date they apparently haven’t, oodles of these aircraft will be produced in the coming years. Space Exploration Technologies Corporation – Space X – another of Elon Musk’s ‘babies,’ has just won its second-ever launch contract from the U.S. Military, by underbidding, at $96.5 million, United Launch Alliance – a Boeing-Lockheed JV. The company will launch an Air Force GPS satellite on an upgraded Falcon 9 rocket sometime in 2019. And Space X, which builds its rockets and engines in-house, is about to launch a recycled booster rocket to send a satellite into distant orbit for a Luxembourg-based company. . Much of the expense of space travel lies in building boosters and other equipment that are typically discarded, hence succesful re-use will cut costs. NASA has awarded Space X $4.2 billion for resupply of the International Space Station. Musk recently announced that Space X plans to send two private citizens who paid ‘significant deposits’ on a week-long flight circling the moon in late 2018.
international sales – this includes about 75% of GE Aviation’s commercial revenues derived internationally. In general, about half of a GE commercial jet engine is produced with U.S. content, thus resulting in a significantly positive trade balance for the U.S. GE Aviation has a good number of suppliers, two of which have recently announced large contracts with GEA. Ellwood Texas has a new three-year contract to supply titanium parts for GEA’s production of CFM International LEAP series jet engines. These engines (Leading Edge Aviation Propulsion) were developed by CFM (the joint venture of GEA and Safran) to power jets produced by Airbus, Boeing and Commercial Aircraft Corporation of China (COMAC). GEA assembles in Durham N.C. And Lafayette IN.
Kobe Steel Ltd. is to supply large titanium alloy forgings to IHI Corp. as shafts for an unnamed GEA commercial aircraft engine program. IHI is a Tokyo-based heavy equipment manufacturer involved in aerospace, industrial, construction, energy systems and other sectors. These forgings, the largest known titanium alloy forgings, are used in jet engine construction and must exhibit the highest quality standards. They were three years in development by Kobe Steel, with recent mass production of aircraft engine shafts to supply IHI. Kobe Steel’s subsidiary, Japan Aeroforge Ltd (Jforge) produces the parts. Jforge is a joint venture About two-thirds of GE Aviation’s of Kobe Steel, Hitachi Metals, IHI and other companies, centred on more than $25 billion in annual a 50,000 tonne hydraulic press. revenues are generated from
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ISSUES OUTLOOK BY ROYCE LOWE
Patrick Shanahan, Boeing’s Senior Vice President responsible for overseeing the company’s manufacturing operations and supplier management functions, has been tapped by Donald Trump as Deputy Defense Secretary, in a pending appointment that will go for senate approval. Boeing’s CEO, Dennis Muilenburg, sits on Trump’s Manufacturing Council. Boeing is deeply involved in defense
contracts, and supplies the military with the F/A-18 Super Hornet, Apache helicopter gunships, Chinnoks and, of course, Air Force One, tagged by Trump as too expensive. A young Indian-born scientist, deeply involved in the properties and potential uses of graphene – that semi-miraculous carbon atom isolated in 2004 – is working with a team
at Manchester University in the UK towards pilot-scale testing, in two to five years time, of a graphene filter that will remove salt from sea water. Dr Rahul Raveendran Nair recently told BBC News that it will be possible to render sea water potable and that testing is not too far away. Present methods of sea water desalination involve the use of large plants constructed mostly from titanium. A space to watch. | April/May 2017
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Metals & Manufacturing Outlook
PricewaterhouseCoopers (PwC) say that up to a third of British jobs could face automation in the next 15 years, but the technology will improve productivity and create new roles elsewhere. The transportation and storage industry, and manufacturing have most at risk, according to a recent report, whereas education, health and social work are least likely to be affected due to the relatively high proportion of tasks that are difficult to automate. When questioned on this, PwC Chief Economist John Hawksworth said “Automating more manual and repetitive tasks will eliminate some existing jobs, but could also enable some workers to focus on higher value, more rewarding and creative work.” And further “By boosting productivity - a key U.K. weakness over the past
Manufacturing Laughs
decade - and so generating wealth, advances in robotics and AI should also create additional jobs in less automatable parts of the economy as this extra wealth is spent.” The Bank of England’s chief economist previously estimated that 15 million British jobs could be lost to automation. But while automation may be thought to be a ‘job killer,’ unemployment in
the U.S. has decreased as robot shipments have increased, from 12 million unemployed in 2013 to 9 million in 2015, with around 20,000 industrial robots shipped in each of the three years. It may be ‘that’s easy to say.’ GM, however, has another story to tell on robots. A quarter of GM’s 30,000 factory robots are connected to the internet and it is already reaping the benefits of less down time. In the past two years the company has avoided 100 potential failures of vehicle assembling robots by analyzing data they sent to an external server in the cloud. Connectivity is preventing assembly line interruption and robot replacements that can take up to eight hours. Auto companies were automation pioneers and continue to be the robotics industry’s largest customer. In 2016, according to the International Federation of Robotics, automotive factories installed 17,600 robots, compared to 5,100 for electronics manufacturers and 1,900 for metals producers.
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ENERGY OUTLOOK BY ROYCE LOWE
According to a study by a London non-profit group, CDP, eight of the world’s largest oil companies pollute as much as the entire U.S. (pollutes). These companies released a fifth of all greenhouse gases outside of farming and forestry since 1988, the year most governments acknowledged manmade climate change as a risk. The ‘culprits’ range from Saudi Arabia’s Aramco (4.8% global emissions), Russia’s Gazprom (4.2%) through Exxon Mobil (2.1%) B.P. (1.7%) and Petrochina (1.6%). The study’s
release coincides with Trump’s preparations to slash environmental regulations and possibly withdraw from The Paris Agreement, which promises to limit global warming to < 2 ºC (3.6 ºF) compared to preindustrial levels. Many of America’s biggest corporations, including Apple Inc. and Wal-mart Stores Inc., will not move from their pledges to fight climate change even as Trump unravels President Obama’s environmental policies.
Companies say their pledges, coordinated by the Obama administration, reflect their push to cut energy costs, head off activist pressure and address a risk to their bottom line in decades to come. Eighty one companies promised to reduce emissions prior to the 2015 Paris global climate negotiations, and Wal-Mart upped its targets last November, saying it would get half its power from renewable sources by 2025.
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Trump signed an order on March 28 telling the EPA to ‘reconsider President Obama’s policies,’ an order that met the approval of the U.S. Chamber of Commerce, who called the shift ‘vital to stimulating economic growth’ and argued that Obama’s regulations held back economic growth, preventing construction of needed pipelines, roads and other infrastructure. But many C of C members and other very large companies supported Obama’s clean power plan, or have set their own goals. Apple, Google and Microsoft are in favor, as are P&G, Nestlé Inc, Ikea and Levi Strauss. The Independent Petroleum Association of America is, not surprisingly, in favor of trump’s move. The debate over climate change and this administration’s amendments to the Paris agreement will likely affect industry’s policies and actions for the near future at least. China was the biggest buyer of U.S. oil in February, taking in 8.08 million barrels of U.S. light crude, almost four times January’s total. Exports from the U.S. were a record 31.2 | April/May 2017
million barrels, of which Canada took 6.84 million barrels. All said, U.S. crude inventories remain high, despite lower OPEC production, at 534 million barrels, the highest level going back to 1982.
goal of all-renewable electricity energy by 2045. In the meantime the state is looking to integrate greater amounts of intermittent solar into that supplied by its pricey, oil-fired power plants.
Having rescued Australia from a possible recent blackout, Tesla continues its efforts to supply more green power to the electricity grid. It has completed a solar project in Hawaii involving batteries that will sell power in the evening. The Kapaia installation includes a 13 megawatt solar system and 52 mW-hrs of batteries that can store energy during the day and send it out once the sun goes down. Tesla has a 20-year contract with the Kauai Island Utility Cooperative on the Island of Kauai to provide electricity at 13.9 cents/Kw-hr, which is lower than the diesel plant’s supply of 15.48 cents/kw-hr and about half the 27.68 cents consumers paid last December.
GE has a deal with Caithness Energy for a potential project worth over $1 billion to supply equipment for multiple power plants in the U.S., up to six of its new H-class gas turbines, along with steam turbines and other equipment. This covers plants to be developed in 2017/2018 and should be finalized imminently. The HA turbine, the size of a Winnebago, is the result of a $2 billion GE development commitment. GE supplied some 39 percent of the world market in 2016, followed by Siemens AG and Mitsubishi Hitachi Power Supplies Ltd. GE has orders for 58 HA turbines in addition to the six pending with Caithness. GE would provide equipment generating up to 3 gigawatts of electricity, sufficient to power about 2.5 million U.S. homes. Through its $10 billion acquisition of Alstom, GE has the ability to maintain and repair competitors’ products.
This is Tesla’s largest project since its acquisition of panel installer SolarCity Corp last November. Hawaii has the U.S.’s highest electricity rates and it has set a
Metals & Manufacturing Outlook
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GLOBAL OUTLOOK BY ROYCE LOWE
EUROZONE IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) took a further upturn in March to 56.2 from February’s 55.4 reading, to reach a near sixyear high. Growth took off in Germany, Italy and France, with the fastest growth of production and new orders, both domestic and export since April 2011. Growth in manufacturing was solid in Germany, The Netherlands and
Austria. New export orders were up for the 45th successive month and employment for the 31st consecutive month. All key business barometers – production, new orders, exports, backlogs and employment are
Manufacturing Laughs
close to six-year highs. The incidence of supplier delivery delays is at an almost six-year high, and there are struggles to meet increasing demand. Car sales in Europe in March were up around 2 percent, with France up 7 percent y-o-y at 211,254 units (one extra selling day) , Germany up 11 percent y-o-y at 359,683 units (two extra selling days), Italy up 18 percent y-o-y at 226,143 units and Spain up 12.6 percent y-o-y at 125,600 units. Crude steel production in Germany in February was at 3.453Mt, up 2.6 percent y-o-y; in Italy 1.973Mt, up 1.2 percent y-o-y; in France 1.240Mt, down 5.8 percent y-o-y and in Spain 1.087Mt, down 4.6 percent y-o-y. Russia’s crude steel production for February was at 5.585Mt,
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down 0.3 percent y-o-y; Ukraine’s was 1.900Mt, down 3.6 percent y-o-y. IHS Markit reports growth in production and new orders losing ground, but remaining above long-term averages in the UK’s manufacturing sector in March, with the PMI falling
slightly from February’s 54.6 to 54.2. Producers of consumer goods suffered the biggest slowdown, with intermediate and investment goods producers faring much better. Business optimism is high, with almost 52 percent of companies forecasting increased production in a year’s time and only 6 percent forecasting a decrease. Employment in UK manufacturing is up for the 8th consecutive month. The reduced buying power of the pound has led to some price increases to consumers. Supplier delivery times have begun to lag. Preliminary data says that UK car sales were up 8 percent in March – usually the year’s busiest month. The UK produced 0.626Mt of crude steel in February, up 6 percent y-o-y.
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ASIA OUTLOOK BY ROYCE LOWE Employment was up for the seventh consecutive month, a month that saw – due to a weak yen - an increase in input price inflation and cost of imports. Japan’s manufacturers are still optimistic. INDIAN manufacturing in March showed new orders and production up at the quickest pace in 5 months. Exports and employment were up, and inflation cooled somewhat in March. Intermediate goods were the leader. The PMI for March was up from February’s 50.7 reading to 52.5.
Chinese manufacturing saw a modest improvement in March, when growth in production and new orders slowed since February and new export orders increased at the weakest pace in three months. Employment continued on a slight downward trend. Optimism for the year’s business outlook was strong, but slightly down from February’s peak. There was job shedding for the 41st consecutive month. The Caixin PMI figure for March was 51.2, down from February’s 51.7 reading. Manufacturers noted a further
slowdown in the rate of input cost inflation. CHINA produced 61.187Mt of crude steel in February, up 4.6 percent y-o-y; Japan 8.34Mt, down 0.1percent y-o-y; India 8.113Mt, up 8.9 percent y-o-y and South Korea 5.508Mt, up 8.3 percent y-o-y. Taiwan produced 1.715Mt in February, up 3.5 percent y-o-y.
APOLOGY – erronoeous figures were given in March for India’s PMI. Business confidence improved in March.
Growth continues in JAPAN’s manufacturing sector, due in large part to demand for investment goods, with production, new orders and exports all up. The PMI moved back from February’s 53.3 to 52.4 in March.
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SOUTH AMERICA BY ROYCE LOWE There is a stronger demand for exports, and over two-thirds of manufacturing companies surveyed are optimistic regarding the outlook.
Things look better in BRAZIL in March. There was growth in new orders and production for the first time in 2 years. There was the slowest fall in buying levels since February 2015. The PMI for March, was up from February’s 46.9 to 49.6. Albeit, further job losses were noted.
There are tentative signs of a turnaround in manufacturing in Brazil.
composite index produced by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – stayed at February’s (corrected) 69-month high 53.0 figure.
Brazil’s crude steel production for the month of January was 2.572Mt, an increase y-o-y of 5.7 percent. The JP MORGAN GLOBAL MANUFACTURING PMI – a
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The PMI readings for consumer, intermediate and investment goods all pointed to further solid growth, with intermediate goods actually showing an acceleration over February. The Euro area showed sold growth in all nations except Greece, with sold but slower growth seen in the U.S., Japan, the UK and Russia. China saw its rate of expansion ease slightly, while contractions were seen in South Korea and Brazil – despite the rate of decline easing sharply in Brazil.
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JUST KEEP ROLLING ALONG BY NORBERT ORE The following information is written by Norbert Ore provided courtesy of Strategas Research Partners, a Macro Institutional Research & Advisory Brokerage Firm that can be reached at www.strategasrp.com
The major global economies continued their recent growth trend during March. Last month, we asked “Is this as good as it gets?” And the answer from the March data is that “it may have been” as March was marginally weaker in more than one-third of the surveys that we follow. But, that is to be expected when the indexes get to levels that are historically difficult to sustain. The current surveys portray a positive picture of North America and Europe – Asia is also positive, but to a lesser degree. Of the surveys that we follow (See Scattergram, p. 5), only South Korea and Brazil are reporting contraction. Seven surveys indicate they are expanding-strengthening, while eight surveys are expanding-weakening. The Eurozone PMI (56.2, +0.8) reached its highest level in 71 months. The accelerating expansion is led by Germany (58.3, +1.5), and reinforced by Netherlands (57.8, -0.5), and Austria (56.8, -0.4). The UK PMI (54.2, -0.3) slowed, but at a level slightly below the monthly average (54.6) since the BREXIT vote eight months ago. China’s Official Report, the CFLP PMI (51.8, +0.2) posted a six-month trend above 51 for the first time since May 2008. The Caixin China General Manufacturing PMI (51.2, -0.5) decelerated while posting growth for the ninth consecutive month. Overall, the indicators show signs of more rapid expansion. In North America, Canada (55.5, +0.8) reported growth for the 13th consecutive month and the highest level since recording a PMI of 55.3 in November 2014. Mexico (51.5, +0.9) recorded its 45th consecutive month of growth, however, a weaker trend is apparent as the PMI has averaged only 51 percent for the past ten months. The ISM PMI™ U.S. manufacturing expanded during March as the PMI (57.2, -0.5) signaled rapid growth albeit at a marginally slower rate. After averaging 52.9 for the past eight years, the PMI is making an aggressive move upward as the index has averaged 57.0 for Q1 2017. The faster rate of growth was generated by strength in Employment (58.9, +4.7; highest reading since June 2011), and support from New Orders (64.5, -0.6), Supplier Deliveries (55.9, +1.1), and Production (57.6, -5.3). At this stage of the cycle, a contracting Inventories Index (49.0, -2.5) is considered positive even though it is subtractive from the PMI when below the 50 mark. A key manufacturing measure is New Orders minus Inventories. In March, New Orders grew 15.5 pp (+1.9) faster than Inventories marking a fourth consecutive month of significant inventory liquidation. When compared to the 6.9 pp average (2014-present) gap between New Orders and Inventories this indicates increasing demand and an opportunity for inventory replenishment as a driver in Q2.
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The Customers’ Inventories Index (47.0, -0.5) shows continuing balance of outputs at the finished goods level. The two manufacturing industries reporting customers’ inventories as being too high during the month of March are: Primary Metals; and Transportation Equipment. The nine industries reporting customers’ inventories as too low during March — listed in order — are: Textiles; Apparel; Plastics & Rubber; Paper; Chemical; Machinery; Fabricated Metal; Food, Beverage; and Computer & Electronic. Six industries reported customer inventories unchanged. The following commodities were noted as Up in Price: Acetone; Acrylates; Aluminum (5); Butadiene (3); Caustic Soda (2); Copper (5); Corrugate (6); Corrugated Boxes; Corrugated Packaging; Foam; HDPE; Nylon; Plastic Resin; Polypropylene (2); Rubber – Natural (2); Scrap Metal (2); Stainless Steel (12); Steel (15); Steel Tubing (2); Steel – Carbon (4); Steel – Cold Rolled (5); Steel – Hot Rolled (4); and Titanium Dioxide (4). Numbers in parentheses indicate months appearing on the Up in price list. Overall, of the 18 manufacturing industries, 17 reported growth in March in the following order: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Furniture & Related Products; Textile Mills; Machinery; Primary Metals; Miscellaneous Manufacturing; Wood Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Paper Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal
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CREDIT MANAGER’S INDEX BY CHRIS KUEHL The following information is condensed from the NACM.org Credit Manager’s Index report issued April 28, 2017. For the full report, please visit CMI Credit Managers’ Index under News at NACM.org. The big question circulating among those who try to read the economic tea leaves is whether reality or expectation will win out as far as the future of the U.S. economy. On the one hand, there has been a rash of confidence building surveys that have been coming from consumers, business leaders and investors. In many cases these numbers have been higher than has been the case in years. The enthusiasm has been based on expectations of change—tax reform, a major rewrite of the Affordable Care Act, big spending on infrastructure, changes in the regulatory system and so on. “The reality is that consumers are not spending on retail, as sales have been down for three months; the political reality has been far rockier than expected and most of these big changes have been stalled,” said NACM Economist Chris Kuehl, Ph.D. “There has been more caution in the business community than the good surveys would seem to suggest.” The reaction as far as the Credit Managers’ Index is concerned is generally upbeat. Even the
sectors that were worrisome in March have improved a bit. The combined index was up from last month, moving from 54.3 to 55.8, slightly higher than it was in February. The index of favorable factors also saw a nice upward bump from 60.6 to 63.6, right back to the previous levels in February. The index for unfavorable factors went from 50.2 to 50.6—a modest improvement, but headed in the right direction. As is always the case, the most interesting data is in the subcategories. The performance of the unfavorable factors left a little to be desired, but this has been the pattern for several months now. The minor improvement is reflected in the specific categories as well, with most trending slightly positive. The
rejections of credit applications went from 51.6 to 52.1. Kuehl noted that the increase in applications is good news as it suggests that those seeking credit are creditworthy for the most part. The accounts placed for collection saw a very small decline from 49.8 to 49. The most important fact is that this category remains in the contraction zone (anything under 50). The disputes category improved, but not enough to escape contraction territory as it moved from 48.5 to 49.1. Last month, there was a concern regarding dollar amount beyond terms as it seemed to combine with dollar collections to set off alarms. This month, the reading is much improved and even jumped back into expansion territory by shifting from 47.4 to 51. This is | April/May 2017
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encouraging news overall and takes some of the pressure off as far as future readings. Generally speaking, “the month showed a significant improvement over the previous month as most of the numbers seemed to rebound to levels seen in February and near the high level for the last few years,” said Kuehl. “Thus far, the enthusiasm regarding economic growth remains intact and suggests that confidence levels may be pulling the economy along as opposed to the usual pattern.” Manufacturing Sector: The various reports that have been coming from the manufacturing community have been decidedly mixed. “The reports from the Federal Reserve have been weak in general, but the latest iteration of the Purchasing Managers’ Index shows numbers that haven’t been seen in a few years— especially those that make up the new orders segment of the report,” according to Kuehl. The data from the CMI reflects that enthusiasm, as there have been gains that are higher than anything seen for the last several years. The combined score for manufacturing is 56.2. That contrasts with the 54.1 last month and the 55.1 noted the month before. The index of favorable factors rose substantially and got back to where it was in February with a reading of 63.8. In March, it was 60.2 and in February it was 63.4. The index of unfavorable factors NACM CMI — 3 — April 2017 also rose just slightly, heading in the right direction | April/May 2017
as it moved from 50 to 51.1, as high as this reading has been since September of last year. The most impressive gains have been in the favorable factors, as has been the case for the last several months. The sales category went from 61.7 to 64.7. This has been linked to the overall confidence level of the manufacturer. The new credit applications reading jumped from 59.7 to 61.4, just slightly below the record level set in February. The dollar collection category also saw a significant recovery from 56.1 to 61.3. The concerns that were expressed when that reading fell in March have largely dissipated. The amount of credit extended is at a very high level now— slightly more than the level set in February. The reading is 67.8; last month it had dipped to 63.4. It has been a long time since these numbers have been this
close to 70. Products; and Petroleum & Coal Products. No industry reported contraction.
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WHAT’S HOLDING US MANUFACTURING BACK?
BY ANDREA OLSON, MSC - CEO OF PRAG’MADIK utilizing technology platforms, digitizing information, and fostering an innovative culture, are the true essentials for US middle-manufacturing growth. Here’s a short list of those essentials:
There has been an ongoing national conversation about bringing manufacturing back to the United States. The government, states, educators, and organizations have been pushing a resurgence through, addressing many of the roadblocks facing these organizations, including: lack of skilled labor, decreased sales, advancing lean manufacturing, integrating additive manufacturing, robotics, IoT and Big Data. The middle-market manufacturers - primarily in the Midwest, in the range of $50$500m in revenues, employing 10-800 people - face a unique set of challenges. While the advancement of things like
3D printing and robotics will undoubtedly change the manufacturing landscape, these manufacturers face much more basic challenges to compete and more accurately - survive the next 3-5 years. This isn’t about the “skills gap”, or “robots taking jobs”, or “offshoring”, or even “regulation burdens”. Those challenges are further downstream for these manufacturers. Today’s issues are much more fundamental. The advancements in digital technologies, communications platforms, and simply the Internet, have dramatically impacted business operations and overall competitiveness. The “blocking-and-tackling” of things like: embracing change,
1) Modernization of internal information infrastructure - Many manufacturers are running business operations on outdated technologies. This is not simply about having old computers, but the underlying software and systems. Whether it’s running Windows 97, ERP systems circa 1989, taking orders by faxes, or managing customer data on Excel spreadsheets, this lack of having a ‘modern tech stack’ limits the organization’s ability to leverage real-time business insights, dynamically connect with remote purchasing platforms at larger OEMs, and serves as a deterrent for younger employee candidates from taking a position at the company. Digital technology growth is exponential, so for every year a process is not modernized, the organization falls 3+ years behind. Without continual advancement and improvement, the technology gap will continue to expand to the point of no return, reducing the company’s competitiveness, and overall organizational value down to physical assets and customer lists. | April/May 2017
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2) Changing long-standing internal cultures - Mid-Market manufacturers often are serving as a major employer within smaller, more rural communities, where employee turnover is low. With a large set of “lifers” leading the organization, employees cling to the Status Quo out of comfort and familiarity. This resistance to change is frequently fostered by leadership, who often are second, third, or even fourth generation owners. While this of course, doesn’t apply to every private manufacturer, many leaders are not pushing a culture of continuous improvement. Platforms and processes haven’t notably changed in decades, and many small changes cycle in and out - reverting back to the “old way of doing things” within a matter of months or weeks. Without a dramatic change to the culture and it’s attitude towards change, the organization will quickly become obsolete. 3) Expanding the business acumen of middle managers Many middle managers within mid-market manufacturers have advanced to their roles through hard work and a series of promotions. Often times, these managers have worked at the organization for the majority of their careers - they’ve not been exposed to other companies, environments, or new business processes. Many have little to no formal business, finance, sales, marketing, or operations training. The challenge becomes that key leaders are not fully capable to design, develop and implement broader | April/May 2017
strategies, to streamline operations, reduce expenses, identify new markets, and drive innovation throughout the company. Without education and exposure to new ideas, the organization remains stagnant. 4) Securing talent when located in small town USA - There is no doubt that there is a skills gap, and it’s growing. But with this skills gap comes exclusivity. When there is a nursing shortage, those with an RN degree can pick and choose which hospital they want to work at, and negotiate a very competitive salary and benefits package. With the manufacturing skills gap continuing to grow, manufacturers that exist in small, remote communities, with a long commute from dense population centers, will have a harder and harder time securing the necessary talent to advance their organization. New recruitment and incentive
strategies will need to be employed to secure (and more importantly, retain) necessary talent for organizational advancement. 5) Shifting business operations from order fulfillment to value added - Manufacturers have had the advantage of being a “product provider” for many decades, as demand for equipment, components, and materials has generally stayed consistent. When major offshoring occurred in the mid-80’s, price pressures set in and it became challenging to compete with overseas suppliers. As the trend of on-shoring has begun, these manufacturers will have a new competitor to contend with - buyers with higher expectations. Buyers that are not simply seeking a product, but a strategic partner that will add value to their product, reduce costs, and help streamline their purchasing
Metals & Manufacturing Outlook operations. This new level of “service” requires a change in the mentality and business strategy for manufacturers. Examining how they can add value - not simply through added product offerings, but throughout the entire supply chain and customer engagement experience. Without this, manufacturers will continue the price race to the bottom. 6) Understanding and leveraging marketing - Back 20, 30 and even 40 years ago, manufacturers built their business on handshakes and relationships. With the expansion of online sales, automated purchasing, and even Amazon.com<http:// amazon.com>, marketing plays a much bigger and more impactful role when it comes to revenue growth. Since many of these companies have solely utilized marketing as a department for brochure creation and website updates, the lack of strategic resources keep this department from helping advance and grow the organization. Marketing is inherently communications identifying where customers are, what they want, new opportunities within the market, new or underserved markets, how information flows through the company and how the customer experience can be leveraged as a differentiator. Even traditional branding, messaging, positioning, and promotions play a part, but not without a clear strategic plan in place. If manufacturers don’t start embracing the concept of marketing, they will continue to
fall by the wayside. 7) Understanding how to use business data to make strategic decisions - Everyone talks about “big data”, but what about using the data you have at hand now to make better business decisions? Manufacturers have reams of data - including product usage, field performance, customer orders, past purchase history, and much more. Yet, an overwhelming amount of companies simply look at the P&L each quarter and see if sales are up or down, and push the sales force to increase numbers the next go-around by 10%. By examining the financials - where and how money is made, understanding margins, looking at seasonality, regionalization of purchases, and customer mix - new opportunities for building business and increasing sales can be discovered. With the identification of those opportunities, new marketing, sales, packaging, pricing, and product strategies can be employed, keeping the company cash flow humming. Even with the purchase of a data analytics platform, organizational leaders need to know the right business questions to ask to leverage that investment. Manufacturing is the backbone of the US economy. The “American Dream” was born from entrepreneurs seeking and developing new solutions and products to serve the market. American industrialists had an unmatched drive to see an opportunity in
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a market and capitalize on it. Mid-market manufacturing isn’t dead yet - we simply need to bring back the entrepreneurial spirit and business savvy from which US manufacturing was born.
Andrea Olson is CEO and Founder of Prag’madik and the author of No Disruptions: The New Future For MidMarket Manufacturing. A 4-time ADDY® award-winner, she began her career at a tech start-up and led the strategic marketing efforts at two global industrial manufacturers. In addition to writing, consulting and coaching, Andrea speaks to leaders and industry organizations around the world on how to craft an effective marketing and communications programs to discover new sources of revenues and savings. She can be reached via www.pragmadik.com.
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ISM2017
Metals & Manufacturing Outlook
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David Cameron The former Prime Minister of the United Kingdom will keynote regarding current geopolitical and public-policy issues, many of which impact global business and the supply chain. Cameron promises to deliver a riveting and eye-opening firsthand account of his own experiences, including those surrounding the Brexit vote, during his tenure as Prime Minister.
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