Metals & Manufacturing Outlook February 2018

GLOBAL PMI OUTLOOK PAGE 12

NEW SECTION: PLASTICS MANUFACTURING OUTLOOK PAGE 22

Automation and Self-Driving Technology: Revolutionizing Australian Mining PAGE 28

January

ISM PMI:

59.1%

The Full Report Page 27

IN THIS ISSUE Publisher – Lewis A. Weiss Editor-In-Chief – Tim Grady Design – Rovere Media Contributing Writers: Royce Lowe, UK and EU International Correspondent Tim Grady, Co-Host, Manufacturing Talk Radio Chris Kuehl, PH.D - Chief Economist, FMA Norbert Ore, Senior Correspondent for Global PMI Survey Reports Mike Womack, Social Media Manager, Manufacturing Talk Radio Andrea Olson - MSC - CEO of Prag’madik Advertising advertise@mfgtalkradio.com Current Circulation - 45,200 Editorial Office Manufacturing Broadcasting Corp.

75 Lane Road Fairfield, NJ 07004 (973) 808-8300 © 2018 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. © 2018 MBC.

PUBLISHERS STATEMENT - p.2 MANUFACTURING OUTLOOK - p.3 INTRODUCING WOMEN AND MANUFACTURING - p.6 NORTH AMERICAN OUTLOOK - p. 7 METALS OUTLOOK - p.9 AUTOMOTIVE OUTLOOK - p.10 AEROSPACE OUTLOOK - p.11 GLOBAL PMI OUTLOOK - p.12

by NORBERT ORE ISSUES OUTLOOK - p.13

by ROYCE LOWE ISSUES OUTLOOK - p.13

by ROYCE LOWE OFFICE APPRENTICESHIPS WILL SAVE MID-MARKET MANUFACTURING - p.14

by ANDREA OLSON ENERGY OUTLOOK - p.16 EUROZONE OUTLOOK - p.17 ASIA OUTLOOK - 18 SOUTH AMERICA OUTLOOK - 19 CREDIT MANAGERS OUTLOOK - p.20

by CHRIS KUEHL PLASTICS OUTLOOK - p.22

by JASON MIDDLETON REVOLUTIONIZING AUSTRALIAN MINING - p.28

by MIKE WOMACK JANUARY ISM PMI REPORT - p.29

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Metals & Manufacturing Outlook

PUBLISHERS STATEMENT

BY LEWIS A. WEISS Business is booming! I recently conducted interviews on Manufacturing Talk Radio with Tim Fiore, the committee chair of the Institute for Supply Management’s Manufacturing Report on Business®, Dr. Chris Kuehl, noted economist with the Fabricators and Manufactures Association International and managing partner of Armada Corporate Intelligence, and Anthony Nieves, committee chair of the Institute for Supply Management’s NonManufacturing Report on Business® who all report that this economy is moving forward with strength.

no rouge regime or terrorist group does something big to put the economy into a funk. If the Trump administration get a $1.5 trillion infrastructure plan approved, which will result in more construction jobs and manufacturing of steel, concrete, coatings, cables, asphalt, and equipment to get those jobs from concept to completion, then the economy could roll favorably into 2019 and possibly 2020. By then, the overall impact of other economic stimuli will be in full force. Whether that results in a GDP of 4.0 remains to be seen, but it is not outside the scope of reality.

One fascinating comment by Tim Fiore is that the impact of the Tax Cuts and Jobs Act of 2017 has not yet been felt in the economy and thus has not yet influenced the numbers in the reports issued by ISM. Earlier indicators are already in the news, with large multinational corporations repatriating overseas profits, capital expenditures materializing, household income rising, consumer spending increasing, and consumer confidence in the upper 120’s. Areas of concern are interest rates being bumped up by the Fed in anticipation of or as the result of inflation, and a low saving rate by consumers.

One of the flies in the ointment will be the lack of skilled labor to handle the high tech jobs in manufacturing. The hundreds of thousands of vacancies can only be ameliorated by automation and the throttling up students in STEM high schools, vocational technical schools and colleges if parents and students take a brighter view of manufacturing as an exciting and rewarding career. It is unlikely that the federal government will be much help, since much of this improvement will be local in the expanding relationship between business, industry and educational institutions in the areas where the employees are needed.

The outlook for GDP by NAM is around 2.7% for 2018 although we take a more optimistic approach at 3.2% overall for 2018 and possibly higher if

We have interviewed several influential people on Manufacturing Talk Radio in academia and industry who are right on top of this solution with

| February 2018

exciting apprenticeship programs leading to fulltime employment, or occurring simultaneously with fulltime employment. Recently, one of those discussions was with executives from Huntington Ingalls, Ingalls Shipbuilding, and Newport News Shipbuilding, who have been looking 10 years into the future for decades to prepare their apprenticeship programs to train the skilled labor needed for these fascinating jobs. These are so vital that they invest $100 million in apprenticeship programs each year.

Automation is being implemented across the spectrum of manufacturing at an everincreasing rate, with captivating technology including augmented reality, light-guided assembly, 3D printing of larger and even structural parts, and other improvements from raw materials sourcing through delivery of goods to customers with blockchain accountability throughout the entire process. There isn’t a single step in manufacturing that isn’t being tweaked or transformed in this modern marvel of research, design, development, creation and testing for the needs and demands of today and tomorrow.

Keep on top of the issues, discussions and answers with each issue of Metals & Manufacturing Outlook, Manufacturing Talk Radio (mfgtalkradio.com), and the recently launched Women And Manufacturing podcast (womenandmfg.com), all brought to you by the Manufacturing Broadcasting Corporation (MBC).

We appreciate your interest and look forward to your involvement.

Metals & Manufacturing Outlook

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MANUFACTURING OUTLOOK

BY ROYCE LOWE

Trump told Davos that, to paraphrase him, putting America first didn’t necessarily mean putting it alone. This in a week when tariffs in the order of 30-50 percent had been imposed upon solar panels and industrial washing machines, the latter to protect Whirlpool from its South Korean competitors. Further tariffs that might be levied are on steel, aluminum and pipelines. See METALS OUTLOOK and ISSUES OUTLOOK The 300 percent tariff imposed on the Bombardier C series aircraft was overturned by the U.S. International Trade Commission the day that Trump arrived in Davos. See AEROSPACE OUTLOOK. U.S. industrial output in 2017 posted its biggest gain since 2010, with industrial production for the year rising 3.6 percent on a surge of 11.5 percent in mining

activity. Manufacturing increased by 2.4 percent, its largest increase in six years. There is a more positive outlook for 2018 than was seen in 2017.

Apple expects to pay $38 billion in tax on repatriated cash. It plans capital expenditure of $30 billion over 5 years, and will creat 20,000 new jobs at existing sites and at a new planned campus.

The BLS jobs report for January shows hiring was up in the month and that wages rose at the fastest annual pace since the recession ended. Nonfarm payrolls were up by 200,000 and unemployment was at 4.1 percent. The average hourly earnings rose 2.9 percent y-o-y, the most since June 2009.

In 2017, 2.17 million jobs were created, compared to 2.34 million in 2016. Manufacturing jobs were up by 15,000 for the month and by 186,000 for the year.

Construction was up 36,000 for

the month, 226,000 for the year.

ADP Research meanwhile reported 234,000 new jobs in the month of January, of which 12,000 were in manufacturing and 212,000 in services. ADP reported that 57,000 new jobs were created in the private small business sector; 24,000 in business with 1 to 19 employees and 33,000 in businesses with 20 to 49 employees.

The ISM PMI figure for U.S. manufacturing eased back from 59.7 percent in December to 59.1 percent in January, representing the 17th consecutive month of growth in manufacturing. The overall economy grew for the 104th consecutive month. See NORTH AMERICAN OUTLOOK.

IHS Markit’s remarks on the U.S. refer to the strongest manufacturing growth in January since March 2015, with | February 2018

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Metals & Manufacturing Outlook

production and new orders up at the quickest rate for a year and purchasing activity up at the sharpest rate since September 2014.

Input price inflation eases but remains marked and selling prices are up at the second steepest since September 2014.

IHS Markit’s U.S. manufacturing PMI increased from December’s 55.1 percent to January’s 55.5 percent.

Manufacturers are experiencing longer lead times due to suppliers’ capacity pressures coupled with increasing raw material prices and transportation costs. Backlogs are up as is hiring, due to greater activity and future expectations.

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 recently released its ‘advance’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2017, putting it at 2.6 percent. The figure for the third quarter of 2017 was 3.2 percent.

World crude steel production for the 66 reporting countries for the month of December was 138.059 Mt, up 3.9 percent y-o-y.

Capacity utilization for the month was 69.5 percent, up 1.9 percent on December 2016 and down 1.4 percent on November 2017.

For the year 2017 as a whole, production was 1691.2 Mt, up 5.3 percent ye-o-y.

U.S. crude steel production for December 2017 was 6.760 Mt, up | February 2018

4.4 percent y-o-y.

Steel and metals prices are holding their own, and continued price increases are forecast for 2018.

U.S. CAR SALES were up 1 percent y-o-y, but with an extra sales day this year.

NAFTA and BREXIT.....see ISSUES OUTLOOK Primary Global Aluminum Production in December 2017 was reported at 5.392 million tonnes, of which 3.024 million tonnes – including 0.310 million tonnes estimated unreported - 56 percent, were produced in China. The Gulf Corporation Council (GCC) produced 439,000 tonnes, North America 337,000 tonnes, Western Europe 322,000 tonnes, Eastern and Central Europe 343,000 tonnes and Asia, excluding China, 363,000 tonnes.

Here are the latest figures for US new car and light truck sales for ‘the big eight’ for January 2018.

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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-over-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

Manufacturing Laughs

| February 2018

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Metals & Manufacturing Outlook

Most people have heard that women are 51% of the U.S. population and only 27% of employees in manufacturing. But there is so much more to this story than a few statistics. To bring the story to life, the Manufacturing Broadcasting Corporation (MBC), broadcasters of Manufacturing Talk Radio has launched Women And Manufacturing, an exciting new show where accomplished women interview accomplished women who can share their experiences and encourage women to look across the broad landscape of manufacturing, from the loading dock doors to the C-Suite, and the expanse of jobs and careers in between, to learn more about this exciting sector of the U.S. economy and what it might hold for them.

Never before has the manufacturing industry been in such an accelerated state of change, from retirees leaving the workforce creating a serious skills gap and brain drain to the implementation of the technological innovations of modern manufacturing often referred to as Industry 4.0, or the 4th Industrial Revolution.

The hosts of Women And Manufacturing, all successful women in their own right, will interview women who are in the midst of a successful career in the industry and their respective companies, providing the guests with an opportunity to give guidance, insight, and inspiration to women who may or may not have considered a career in the industry, from teenagers just beginning to think about their career path to women in the industry or in transition in their own professional lives.

The subject matter of the interviews will cover the spectrum of unique challenges any woman might face in the workplace or the industry from the success and accomplishments of women from the shop floor to the C-suite, from executive management to labor unions, and from educational to governmental institutions.

Each will share their thoughts in congenial, collegiate conversations with one of 6 hosts who will alternate each week. Hosts will also tease out insights through guest introspection, along with suggestions and recommendations from guests to listeners about navigating the manufacturing and corporate world.

Tune in to each episode to hear the accomplished women share their experiences with this generation and the next generation of women who will make and remake manufacturing for the generations who follow in this noble profession which contributes to the greater good of all, improving products, making things better and safer, and fulfilling lives – not just making a living.

All of us involved with Women And Manufacturing appreciate your listenership and look forward to your feedback as this incredibly exciting show develops.

Visit WOMENANDMFG.COM for more information. | February 2018

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NORTH AMERICAN OUTLOOK

BY ROYCE LOWE

The Latest Manufacturing Reports from the United States, Canada and Mexico The Institute of Supply Management PMI figure eased back from 59.7 percent in December to 59.1 percent in January, representing the seventeenth consecutive month of growth in manufacturing. There was growth in the overall economy for the 104th consecutive month.

Of the 18 manufacturing industries, 14 reported growth in January in the following order: Textile Mills; Fabricated Metal Products; Plastics & Rubber Products; Primary Metals; Machinery; Transportation Equipment; Apparel, Leather & Allied Products; Chemical Products; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. Four industries reported contraction during the period: Printing & Related Support

Activities; Wood Products; Furniture & Related Products; and Nonmetallic Mineral Products.

Comments from the manufacturing industries continue in a very positive mode, with a Chemical Products representative speaking of a 30-40 percent increase in capital expenditure, and a Food, Beverage & Tobacco Products representative complaining of a tight labor situation.

Following is a summary of the five major indexes, each weighted at 20 percent in calculation of the PMI number for January; December’s readings are in parentheses: New orders Production Employment Supplier Del. Inventories

65.4 64.5 54.2 59.1 52.3

(67.4) (65.2) (58.1) (57.2) (48.5)

The following five components

are not instrumental in the PMI calculation, but are an important part of the manufacturing industry: Customer Invent. 45.6 (42.9) Prices 72.7 (68.3) Backlog of orders 56.2 (54.9) New export orders 59.8 (57.6) Imports 58.4 (56.5) Commodities Up in Price Aluminum (15); Ammonia; Brass; Caustic Soda (7); Copper (3); Corrugate (16); Crude Oil; Electrical Components (2); Emulsions; Hardwood Lumber; Natural Gas; Nickel; Paper; Polycarbonate; Polyethylene; Polypropylene (5); Polyurethane; Pulp; Resins; Steel (2); Steel — Scrap (2); Steel – Cold Rolled; Steel — Galvanized; Steel — Hot Rolled (14); Stainless Steel (2); Sulfur; Sulfuric Acid; Titanium Dioxide (4); and Vitamins.

Commodities Down in Price None | February 2018

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Metals & Manufacturing Outlook

Commodities in short supply Capacitors (7); Electrical Components (3), Integrated circuits; Memory; Resistors (3); Silicone; and Titanium Dioxide (3).

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

The complete ISM Report on Business may be found at the end of MMO. CANADA’s manufacturing PMI, up from December’s 54.7 to 55.9 in January, shows growth continuing in early 2018, with marked increases in production, new orders and employment and backlogs of work accumulated at survey-record paces.

Selling prices are up at the strongest since April 2011. Both

| February 2018

domestic and export sales are up.

There is a lengthening of delivery times for raw materials, and input cost and output charge inflation both pick up again in January.

Alberta and B.C. see a surveyrecord upturn in manufacturing conditions. Ontario sees the fastest manufacturing growth for almost two years. Manufacturing job creation is broad-based across all regions monitored in January.

Canada produced 1.220 Mt of crude steel in December, up 21.5 percent y-o-y.

Canada sold an all-time record number of vehicles for the first month of the year, 117,300 vehicles, up 5.7 percent y-o-y.

Light trucks, with 73.2 percent of

the market were up 9.1 percent from December; passenger cars were down 2.6 percent from December.

MEXICO saw a good manufacturing expansion in January, with the PMI up at 52.6 from December’s 51.7.

New orders, production and employment were all up at quicker rates, and there was an acceleration in input costs and output charges, as selling prices were up at the greatest extent since mid-2017.

The rate of employment growth was at a five-month high.

Mexico produced 1.690 Mt of crude steel in December, up 11.9 percent y-o-y.

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METALS OUTLOOK

BY ROYCE LOWE

Hot-rolled and cold-rolled steel prices were holding at stable levels in early February, with U.S. mills looking to push up prices in the second quarter of this year.

Nucor, for example, is looking to increase the price of heattreated plate by some $50 per ton. MEPS International says the North American steel price upturn is expected to continue, with the energy and construction sectors showing increased demand.

Further significant factors would be implementation of the U.S. infrastructure bill and the imposition of a new round of trade barriers.

the California Public Utilities Commission. Bombardier is assembling 775 new rail cars for BART’s ‘Fleet of the Future’ at its U.S. manufacturing site in Plattsburgh, N.Y. Full delivery is scheduled by Fall 2021.

Bombardier is also manufacturing 300 rail cars for N.Y. City Transit, 468 for the city of Montreal (in a consortium with Alstom) and 204

streetcars for Toronto.

It is reported that 75 percent of the steels in use today didn’t exist 20 years ago, testament to the rapid development of Advanced High-Strength Steels (AHSS) urged on in large part by the automotive industry and its (mostly) quest for improved fuel consumption.

Manufacturing Laughs

Copper, aluminum, nickel and zinc were tending downwards in early February, with nickel showing a recent decrease in the order of 5 percent. Aluminum was trading at around $1 per pound.

Bombardier has delivered its first 20 rail cars for the San Francisco Bay Area Rapid Transit (BART) following comprehensive testing and (earning) certification from | February 2018

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Metals & Manufacturing Outlook

AUTOMOTIVE OUTLOOK

BY ROYCE LOWE

Volkswagen and its subsidiaries reported record sales of 10.74 million vehicles in 2017, up 4.3 percent over 2016. Sales to China were up 5.1 percent to 4.2 million and up 5.8 percent to the U.S. at 625,000.

high-margin models. Jim Hackett, Ford’s new CEO, will move the company to profitable SUVs and pickups, and steer it into trends already sweeping the auto industry, namely electric, autonomous, connected and shared vehicles. Ford’s Toyota is expected to come in with electrification commitment has figures around 10.35 million. been upped to $11 billion and the company speaks of bringing out Toyota and Mazda are reported 40 electrified vehicles by 2022. to have joined on a $1.6 billion car factory to open in 2021, the Ford is complaining about costlier only new auto assembly plant to raw materials used to build cars. be announced under Trump and Steel is up 18 percent since the Toyota’s 11th U.S. assembly plant. start of 2017 and aluminum up almost a third. So according It’s Ford’s turn at bat for the to Ford, the decision to build ‘pollution thing’ as a lawsuit claims the F-250 and F-350 Super vehicles with all-aluminum bodies may be coming back to haunt Duty diesel pickups are emitting them? But of course the use of up to 50 times the legal NOx steel in cars is hardly peculiar to pollutants limit. Bosch has been further accused of developing the Ford, plus today’s automotive steels are becoming thinner and necessary software that got Ford stronger. through its tests.

Ford says it is ‘getting out of the car business,’ by which it means it is shrinking its passenger-car lineup and moving to low-volume, | February 2018

In the wake of the U.S. tax cut, Fiat Chrysler will send $2,000 bonus checks to some 60,000 workers, and will invest $1

billion in their Michigan truck factory, creating 2,500 jobs for production of the heavy-duty Ram pickups, models that were being made in Mexico. Sergio Marchionne, FCA’s CEO for the past 14 years, warns carmakers to ‘reinvent themselves or risk being commoditized amid a seismic shift in how vehicles are powered, driven and purchased.’

On a creepy, somber note, it is reported that VW, Daimler and BMW have used both monkeys and human volunteers to test the effects of diesel fumes.

More moto than auto, but the iconic Harley-Davidson will close its factory in Kansas City Mo and consolidate production in York, Pa with the loss of about 260 jobs. This is in response to a ‘deepening slump’ in motor cycle demand. At the same time, and as reported earlier in MMO, the company is building a factory in Thailand to assemble bikes using parts shipped from the U.S.

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AEROSPACE OUTLOOK

BY ROYCE LOWE

BOEING reported record jet deliveries in 2017 with unit sales of 763, good for the 737 and 787 models. The company’s backlog was up by 912 aircraft, a total estimated to be worth $134.8 billion, with the total backlog at a record 5,864 aircraft at year end, or seven years’ production.

Boeing further went on to state it had ‘delivered more commercial airplanes than any manufacturer for the sixth consecutive year.’

And yet Boeing was still miffed when the U.S. International Trade Commission overturned the 300 percent duty levied against Bombardier’s C series sale to Delta Air Lines, ruling that it did not harm Boeing. As such Bombardier are open to do aircraft business in the U.S., particularly since their tie up with Airbus means 50 percent of the C series aircraft is manufactured at Airbus’ factory in Alabama.

listed at $446 million, is so big that some airports had to expand their running facilities to handle it. But just in time Emirates came through with a $16 billion order for 20 A 380s and options for 16 more, deliveries to begin in 2020. This is to add to the 41 orders already in place for A 380s for Emirates, again to add to the 101 in their current fleet. The aircraft will be equipped with either Rolls Royce

or GE Aviation engines.

Airbus published its 2017 figures, stating a 15th consecutive annual increase in commercial aircraft deliveries, a new record 718 aircraft to 88 customers, up 4 percent over 2016. The company logged 1,109 net orders in 2017 versus Boeing’s 912, and had a backlog of 7,265 at year end, worth $1.059 trillion at list price.

Manufacturing Laughs

AIRBUS meanwhile were reporting worries over the future of their A380 model, the 550-seat jumbo that Emirates must buy to keep the program alive. This aircraft, | February 2018

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Metals & Manufacturing Outlook

GLOBAL PMI OUTLOOK

BY NORBERT ORE Despite higher prices, prolonged delivery times, inventory shortages, scarcity of labor, and a looming threat of inflation, the PMI surveys are collectively enjoying an extraordinary expansion as all 18 advanced for a third consecutive month. By any standard, the business surveys indicate more fast-paced global growth in 2018. The EZ, UK, and U.S. continue to be the strongest players.

Eurozone: The Eurozone PMI (59.6, -1.0) eased slightly from December when it posted its highest level since April 2000. The EZ’s manufacturing expansion continues to be led by Netherlands (62.5, +0.3), Austria (61.3, -3.0), and Germany (61.1, -2.2). As a measure of the strength of the expansion in the EZ, all

| February 2018

eight of the countries posted a PMI of 55.2 percent or higher in January, and they registered above the breakeven mark of 50 for the eighth consecutive month.

United Kingdom: The UK/CIPS PMI (55.3, -1.0) has painted a broad expansion of the UK manufacturing sector post-Brexit.

In January, the rate of growth moderated somewhat, but remains in a range that promotes solid economic growth.

India: Following a solid move to the upside in December, the PMI (52.4, -2.3) slowed yet still stands above India’s 2017 average of 51.4 percent. Overall, the economy is growing and the stage is set for continuing expansion.

Taiwan: Taiwan’s CIER/SMIT PMI (59.0, +1.0) continued to expand, particularly in its premier industries (Computers, Electronic, and Optical).

North America: Canada (55.9, China: China’s Official Report, the +1.3) expanded for the 23rd CFLP PMI (51.3, -0.3), continued consecutive month and order backlogs are close to record above the 51-mark for the 18th levels. Mexico’s (52.6, +0.9) rate of consecutive month while in a range topped at 52.4. The Caixin expansion accelerated somewhat, China General Manufacturing PMI staying above its 12-month average of 51.5 and looks to (51.5, unch) provides a similar rate of expansion averaging 50.9 improve with exports. for the same period.

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ISSUES OUTLOOK

BY ROYCE LOWE

NAFTA is ongoing, and will doubtless be for some little time.

Trump proposes upping the share of a typical car that must be built in the three countries from 62.5 percent to 85 percent and adding an additional requirement for 50 percent U.S. content. Canada and Mexico have dismissed these proposals, but Canada will bring ‘new thinking’ to the negotiating table. Were Trump’s proposal to go through, with all the thousands of parts in an automobile, a paperwork blockage would appear to be on the horizon.

The CEO of Magna International Inc, North America’s biggest auto parts supplier, warns that overly complex NAFTA changes could result in a situation that leaves the U.S., Mexico and Canada manufacturers vulnearable.

He states that without a functional NAFTA, one that’s too complicated, too bureaucratic, too costly that low-cost, highlabor parts are not available in the region, the whole NAFTA region will suffer. ‘’ It’s going to be lose-lose-lose.’’

Ontario-based Magna has some 48 percent of its plant and equipment located in the U.S. already, and is the top supplier to G.M., Ford and FCA and tightening the rules could make it harder for its customers to compete.

BREXIT meanwhile appears to be bogged down in ‘secret’ reports stating the negative effects on GDP of the UK leaving the EU, and scheming within the governing Conservative party to replace Prime Minister Theresa May. The knives are out. The latest from May is that she has ruled out staying in a customs union, which imposes a common external tariff on goods coming into the EU, hence stops members striking their own deals with other countries. One of the big problems is the lack of clarity on

the part of the British government, possibly the only way May feels she can keep her job these days.

There should be some significant news in the next few weeks.

Whirlpool, having been blessed with a 50 percent tariff on large imported industrial washing machines, will add 200 jobs and make broader investments in manufacturing and innovation.

Had it done this in the past it may have been able to offer the quality its customers were getting from South Korea.

Manufacturing Laughs

| February 2018

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Metals & Manufacturing Outlook

OFFICE APPRENTICESHIPS WILL SAVE MID-MARKET MANUFACTURING

BY ANDREA OLSON CEO OF PRAGMADIK

complete and requires a full-time commitment.

An intern gets work experience, but an apprentice gets more than that - it typically has classroom instruction attached to it. As we look to replace the “brain drain” that is occurring within manufacturing, the industry needs to start examining how to capture this knowledge and transfer it to the next generation through apprenticeships.

We talk a lot about apprenticeships within manufacturing, and many skilled positions require an apprenticeship prior to full time employment. Yet with many midmarket manufacturers struggling with a wave of Baby Boomer retirees and business owners making challenging decisions on who will take up the mantle when they step away from the organization, apprenticeships are more important than ever.

Apprenticeships are used across all roles and industries in Europe.

Just search for ‘office apprenticeships in the UK’ and you’ll find open, paid positions ranging from Business Administration to | February 2018

Product Management.

Here in the US, we look at these entry-level roles in the “front of the house” operations as internships. Internships and apprenticeships both give you hands on training, but that’s where the similarities end. Internships in the US are readily available for most college students through their school or university and are often generalized rather than specified for a particular trade or industry. When it comes to an internship, most people either do it for a semester or summer and then move on to the next one or get hired full-time. With an apprenticeship, it can take years to

Consider a Baby Boomer who has worked in a specific manufacturing industry for 30+ years.

They have worked in product development, and understand the historical changes in the product designs, how they function in the field, and how customers can effectively maintain and service them. They have learned the nuances. They know what the competitors have developed and where they are going next.

Enter the young, recent engineering graduate with no background in the industry. How can this ‘tribal knowledge’ be effectively transferred? Is a traditional internship sufficient, where they typically work on small, insignificant projects and only learn the basic processes and operations of the company? Or is a full-fledged, paid apprenticeship,

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apprenticeship versus other types of training is that it can be directly tied to addressing knowledge transfer instead of simply teaching tactical skillsets of low value.

This is most critical to those industries where hands-on experience is key.

where the new hire is required to capture in-depth knowledge of the industry and product history more valuable?

Anyone who has completed an internship knows you aren’t going to have too much responsibility. Yes, you’ll get to see how the marketing department works or

how customer service operates, but chances are you won’t be creating a marketing campaign or developing a new service protocol. Often internships give people college credits, a small stipend or something to add to their resume, but doesn’t add value to the employer. The difference with an

Think about those ‘softer’ areas in your organization where you have core team members that know your customers and industry inside and out - sales, marketing, customer service, product development, tech support and human resources. The difference in these individuals is their experience, not solely technical training.

Leveraging the concept of office apprenticeships will enable manufacturers to bring in more young talent to the industry, retain organizational knowledge and set the stage for long term growth in the future. So dump the internships and trade up for apprenticeships in the office.

| February 2018

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Metals & Manufacturing Outlook

ENERGY OUTLOOK

BY ROYCE LOWE

N.Y. State has committed $750 million to help build Tesla’s 1.2 million sq. ft. factory in Buffalo, which currently employs some 500 workers but will create 3,000 jobs in western N.Y., 5,000 jobs statewide. Production is underway on electricity-producing shingles that Elon Musk says will transform the rooftop solar industry. These shingles look like ordinary shingles from most angles, and allow light to pass from above and onto a standard flat solar cell.

Trump has put tariffs of up to 30 percent on solar equipment made outside the U.S., a move that threatens to handicap a $28 billion industry that relies on parts made abroad for 80 percent of its supply.

Exxon will invest $50 billion over the next five years, returning to its investment mode before the drop in the price of crude oil. Crude | February 2018

is now just over $65 per barrel and Exxon disclosed a program including the Permian basin of West Texas and New Mexico, a hotbed of U.S. shale drilling where Exxon has been actively expanding for years.

Royal Dutch Shell, meanwhile, has bought a 44 percent stake in Silicon Ranch Corp, which owns and operates some 100 solar facilities across the U.S.

Manufacturing Laughs

Metals & Manufacturing Outlook

GLOBAL OUTLOOK

BY ROYCE LOWE

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motors, fuel cells or natural gas in 2017, according to the European Automobile Manufacturers Association.

In 2017, all-electric vehicle sales were some 33,000 in Norway, some 25,000 each in France and Germany and some 13,500 in the UK. Non-conventional powering systems account for less than 10 percent of Europe’s car market.

EUROZONE IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) retreated from December’s 60.6 reading to 59.6 in January as the rates of growth in new orders and production eased from Decemeber’s near-record highs.

There was sold growth in consumer, intermediate and investment categories, with the steepest expansion rates in the latter two. Euro area manufacturing employment rose for the 41st consecutive month in January.

Crude steel production in

IHS Markit’s PMI for the UK eased off from December’s 56.2 to 55.3 in January as manufacturing growth slowed at the beginning of the year and price pressures intensified, with input cost and selling price inflation accelerating.

Germany in December was at 3.600 Mt, up 11.5 percent y-o-y; in Italy 1.783 Mt, up 0.3 percent y-o-y; in France 1.213 Mt, up 6.2 percent y-o-y and in Spain 1.052 Mt, up 11.5 percent y-o-y.

Russia’s crude steel production for December was at 5.930 Mt, down 4.2 percent y-o-y; Ukraine’s was 2.060 Mt, up 2.4 percent y-o-y.

Car sales in Western Europe were punctuated in 2017 by sales of cars powered by alternate energy, which were up 39 percent over 2016. Customers bought 953,355 autos that run on systems including batteries, electric – gasoline or – diesel

There was good demand from the export market along with a solid increase in production across the consumer, intermediate and investment goods categories, with the rates of expansion highest in investment goods.

There were reports of price increases in chemicals, food products, metals, oil, paper and plastics.

UK manufacturers are positive about the future, with over 55 percent forecasting production to be higher in one year’s time.

The UK produced 0.657 Mt of crude steel in December, down 9.8 percent y-o-y.

| February 2018

18

Metals & Manufacturing Outlook

GLOBAL OUTLOOK

BY ROYCE LOWE

ASIA

Production growth hit a 13-month high in January in CHINA, and there were increases in total new orders and new export orders. There were pressures on manufacturing capacity, with backlogs of work rising at the greatest extent since early 2011.

Companies were generally optimistic that production would rise over the next year.

The PMI for January was unchanged from December’s 51.5 value. Employment continued to decline in January, partly

Manufacturing Laughs

| February 2018

due to company downsizing policies.

CHINA produced 66.151 Mt of crude steel in December, up 2.2 percent y-o-y; Japan 8.702 Mt, up 1.0 percent y-o-y; India 8.350 Mt, up 4.2 percent y-o-y and South Korea 5.650 Mt, down 0.9 percent y-o-y. Taiwan produced 1.900 Mt in November, up 8.5 percent y-o-y.

China’s vehicle sales in 2017 were 1.4 percent up on 2016’s figures, a disappointment, particularly for some foreign manufacturers.

Beijing is now putting stress on new energy vehicles, sales of

which reached 777,000 in 2017, 53 percent up on the 2016 figure and four times the volume sold in the U.S., but still only a drop in the proverbial bucket.

In January, JAPANESE manufacturers experienced the strongest rate of production growth since February 2014, as the PMI rose to 54.8 from December’s 54.0. There were across-the-board increases in new orders, and selling prices rose amidst increasing cost pressures.

Business confidence strengthened.

Production, new orders and employment were all up, and operating capacities were tested as backlog work accumulated for the fifth consecutive month in January.

INDIA’s business conditions improved in January, but at a slower pace. The PMI in January was off from December’s 60-month high of 54.7 to 52.4.

Production, new orders and employment were all up, but at a slower pace, and there was the fastest increase in new export orders since September 2016.

Manufacturers remain positive for the coming twelve months.

Metals & Manufacturing Outlook

19

GLOBAL OUTLOOK

BY ROYCE LOWE

SOUTH AMERICA BRAZIL’s PMI eased further back in January from November’s 81-month high of 53.5, December’s 52.4, to 51.2.

Total new orders were up in January, but export orders were down and the rate of job creation softened. Sustained growth in new orders was noted in the consumer, intermediate and investment goods sectors, but the overall rate of expansion eased further from November’s 81-month peak.

Producers continued to operate below capacity as backlogs fell further; inventories of both raw materials and finished items decreased again.

Optimism was retained.

Brazil’s crude steel production for the month of December was 3.030Mt, an increase y-o-y of 15.3 percent.

The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced

by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – started 2018 very slightly below December’s near 7-year record 54.5 at 54.4.

Growth was apparent in the consumer, intermediate and investment sectors, and across almost all nations covered by the survey.

Manufacturing and operating conditions showed expansion throughout, with employment rising for all nations covered with the exception of China, Indonesia, South Korea, Russia and Thailand.

The rates of increase in input prices and output charges both accelerated in January, with selling price increases at the second-highest in 80 months, bettered only by November 2017.

ISO9001:2008 and AS9100C Dec

Jan

Global PMI

54.5

54.4

Production

55.6

55.6

New orders

55.9

55.4

New exports

53.9

54.1

Employment

53.0

53.0

Input prices

61.3

61.4

Output prices

53.6

54.1

Future Output

63.6

64.4 | February 2018

20

Metals & Manufacturing Outlook

CREDIT MANAGER’S OUTLOOK

BY CHRIS KUEHL

The following information is condensed from the NACM.org Credit Manager’s Index report.

For the full report, please visit CMI Credit Managers’ Index under News at NACM.org.

NACM’s Credit Managers’ Index (CMI) rebounded in January after December’s downshift, boosted by reports of climbing sales, new credit applications and the amount of credit trade creditors extended to their customers. Last month, there was a precipitous drop that followed a nice gain the month prior. This month, there was another rebound. “To be honest, the movements have not been all that dramatic,” said NACM Economist Chris Kuehl, Ph.D., “and the vast majority of the change has been within the favorable factors, but the inconsistency has been a little vexing.”

The combined reading for January’s CMI is back to 55.1 after falling to 54.2 in December.

There has been quite a bit of variety over the last 12 months, but numbers have stayed comfortably in the mid-50s with the lowest month being May at | February 2018

53.6. The highest reading was in November (56.6), so there really has not been enough variation to cause any alarm. The issue is trending. It would be nice to see a few months in a row with numbers heading up. The index of favorable factors perked up this month to 61.4 after falling to 59.4 last month. Just as with the combined score, the variation over the last 12 months has been relatively minor—the numbers have been very solidly in the 60s.

The lowest level with a reading under 60 for the first time in a year was last month. The highest point was reached in November of last year when it hit 65.7. The index of unfavorable factors followed the same pattern with numbers in a narrow range. This month was exactly the same as the month prior with a reading of 50.8. The low point for the year was 49.3 last May; the high point was 51.8 in September. The unfavorable numbers have been riding the line between contraction and expansion for over three years now.

The details are informative as well. The sales category rebounded nicely from December as it went from 59.2 to 63. The

same upward progress was noted in new credit applications (57.3 to 59.8), but unfortunately dollar collections did not follow the same pattern as the reading slipped from 59.1 to 58.7. There was a nice recovery from 61.8 to 64.3 in the amount of credit extended category. “In short, the gains this month offset some of the losses of the previous month,” noted Kuehl.

The rejections of credit applications improved just a little as it moved from 51.4 to 51.8. It is always good news when there has been an improvement in new credit applications. The category of accounts placed for collection climbed out of the contraction zone by moving from 49.8 to 51.7.

There was a slight retreat in the disputes category as it went from 49.7 to 49.6, but for all intents and purposes the data showed stability in this category. The dollar amount beyond terms, however, took a pretty significant dip. That is not encouraging as what often happens next is trouble in other categories. The reading last month was 49.3 and this month it fell to 47. The dollar amount of customer deductions stayed right where it was last month with a reading of 49.7. On a positive note, there was a slight improvement in the category filings for bankruptcies as it moved from 55 to 55.2.

“January was a rebound month, but not an especially strong one, and it would be premature to assert that an upward trend may be in the offing,” said Kuehl. In summary, he noted that the data coming in on the economy has been strong of late, but there are elements of that strength that may reflect some temporary reactions. “The tax cuts will

Metals & Manufacturing Outlook

show up in the data for the next several months, but as the burst is accommodated, there will be more long-term concern centered on inflation. That would affect the CMI as well as the Purchasing Managers’ Index (PMI).”

Manufacturing Sector As with the combined CMI, there was a recovery in the manufacturing sector, but it was not as robust as the overall reading. The combined score improved from last month—going from 53.9 to 54.1. The important note, as with the combined score, is that these numbers are comfortably within the mid-50s—certainly out of the danger zone. The readings for the combined favorable factors also improved from 58.8 to 60.7.

It is nice to see this data back in the 60s where it has been for all but two of the months in the last 12. The combined score for the unfavorable factors moved from 50.7 to 49.7. Not a big dip, but again, the issue is trends.

Slipping into contraction is not the preferred direction.

The sales category recovered

quite a bit, moving from 59.2 to 62.7. The category of new credit applications shifted up as well (56.5 to 57.8). The dollar collections reading slipped from 58.9 to 58.7, which is a very small adjustment, but one that concerns people a bit as this has been a category that has been all over the place all year. The issue with dollar collections is that there are many reasons for a dip, said Kuehl. “It can mean that clients are in trouble and are struggling to pay, but it may also mean that companies with leverage are forcing their creditors to essentially be their bank by holding off payment as long as possible.” The reading for amount of credit extended ramped up a bit as it moved from 60.7 to 63.4.

The bottom line is that readings are very comfortably in the high 50s and 60s.

21

shifted up a little as well— moving from 50.3 to 51.2, and more comfortably in expansion territory. The disputes readings shifted down, but very slightly (48.8 to 48.4). The dollar amount beyond terms slipped badly. This is a major concern as it is now deep in the contraction zone— falling from 50.1 to 45. “The fear here is that companies are right on the edge of a problem,” warned Kuehl, “or are anticipating something and are stretching their creditors again. This has been an issue all year.” The dollar amount of customer deductions also fell pretty hard as it moved from 49.1 to 46.6. The good news is that filings for bankruptcies perked up by moving from 54.4 to 55.3.

Manufacturing has done pretty well this year, according to Kuehl. “The numbers have been encouraging from the Purchasing The category of rejections of Managers’ Index to durable goods credit applications remained very and factory orders. The caution stable as the reading went from here is that manufacturers may 51.5 to 51.8. It is good news when be entering a more suspicious there has been an improvement place.” in the rate of applications. The accounts placed for collection | February 2018

22

Metals & Manufacturing Outlook

PLASTICS MANUFACTURING OUTLOOK

BY JASON MIDDLETON

A new survey shows that a 21% majority of plastics manufacturing customers expect to increase their plastics manufacturing activities in 2018. The results come from a survey conducted in Q4 of 2017 by thermoformer Ray Products of Ontario, Calif.

The survey was distributed to thousands of plastics manufacturing customers, representing medical device manufacturers, industrial design firms, contract manufacturing, green energy, high tech and a range of other related industries.

Respondents also represent a wide range of positions, from engineering and design to administration, purchasing and quality roles.

Ray Products began conducting the survey in 2014, and with three years of prior data, the results of this year’s survey can be used to establish clear longer-term trends in the industry. | February 2018

Plastics Manufacturing Customers Anticipate Growth

45% that expect change, a 21% majority anticipate growth in 2018.

When respondents were asked to compare their 2017 plastics manufacturing activities to their anticipated 2018 activities, 55% responded that they expect their activities to remain “about the same.” However, of the remaining

New High for U.S.-Based Plastics Manufacturing Following a clear trend for reshoring, the survey showed an all-time high in domestic plastics manufacturing since 2014. This year, respondents indicated that 68% of their plastics manufacturing activities occurred in the United States, up 14% from just four years ago.

Metals & Manufacturing Outlook

23

this and are willing to match the right process to the right project.

This change could also point toward more individual companies handling a broader part of the manufacturing process instead of specializing in a narrower niche.

The reshoring trend in plastics manufacturing is particularly strong in large-scale plastics manufacturing, where lower shipping costs combine with the quality, ease of communication and faster turnaround times often associated with U.S.-based manufacturing.

customers. In 2014, the average survey taker indicated that their company used an average of just 2.6 individual manufacturing processes. This year’s survey indicated that number had climbed 28%, and that today, the average customer uses 3.4 individual manufacturing processes.

Moderate Growth for Thermoforming, Significant Growth for Pressure Forming The survey looks closely at the plastics manufacturing processes that customers choose for their projects, placing a particular emphasis on the thermoforming segment of the market. This year, customers indicated that they expect an overall 1% growth in their thermoforming projects, but demonstrated 11% year-overyear growth in the popularity of pressure forming during 2017.

This trend recognizes that there is no “one size fits all� in manufacturing. Every process has its unique advantages and limitations, and manufacturing customers are clearly recognizing

Expanded Results More in-depth results, including an index of process popularity and the opportunity to participate in future surveys, are available at https://rayplastics.com/2016plastics-manufacturing-surveyresults/.

Jason Middleton is Vice President for Sales & Development at Ray Products, a custom heavy gauge thermoforming manufacturer founded in 1949 and located in Ontario, California.

With more than 15 years of plastics manufacturing industry experience, Jason plans and executes successful pressure forming and vacuum forming projects for clients in a wide range of industries.

Jason can be contacted by phone using the information below: Email: jasonm@rayplastics.com Phone: 909.390.9906 x223

Clear Trend Toward Manufacturing Process Diversification Finally, the survey showed a clear trend toward the diversification of manufacturing processes used by plastics manufacturing | February 2018

MANUFACTURING

MBC

BROADCASTING

CORPORATION 75 Lane Road, Fairfield, NJ 07004 Phone: 973-808-8300

MEDIA KIT

Manufacturing Talk Radio is a weekly internet talk radio show podcast for manufacturers of all sizes across North America. Show host, Lew Weiss, and co-host, Tim Grady, present breaking news and tackle business trends and economic forecasts in manufacturing for small, medium and large manufacturers across North America and the globe.

A podcast where accomplished women interview accomplished women from the shop floor to the C-suite. Women represent about 51% of the US population. They receive about 60% of all master’s degrees and they spend or influence 70% of consumer spending in the United States. Yet only about 5% of CEOs in corporate America are women. Only 26.5% of executives at C-Suite level or higher and only about 21% are on Corporate Boards in the S&P 500. For women of color, the numbers are even worse. Women And Manufacturing is looking to help change this environment for the benefit of the United States and other industrialized Nations.

Visit us online at

MFGTALKRADIO.COM AND WOMENANDMFG.COM For more information contact us at

ADVERTISE@MFGTALKRADIO.COM • 973-808-8300 ADVERTISE@WOMENANDMFG.COM • 973-808-8300

ADVERTISING MEDIA KIT

Your 6-Month Advertising Package Includes: On-the-Air: Your ad posted on both Manufacturing Talk Radio and Women And Manufacturing Online: Banner ad on our Manufacturing Talk Radio and Women And Manufacturing websites that rotate with multiple advertisers on all pages.

Manufacturing Talk Radio is a live broadcast and podcast show about major trends in the industry with over 260 shows in its reference library and over 605,000 total downloads in the last 24 months as of 2/5/18. Guests include thought leaders and executives from NAM.org, the ISM.ws, and other industry organizations along with noted economists, Congressional Members (House and Senate) and senior staff of federal, state and local government agencies.

In addition to the shows, the Manufacturing Broadcasting Corporation publishes the monthly Metals & Manufacturing Outlook eZine sent to nearly 30,000 recipients in the industry, as well as organizations and companies serving manufacturers.

Our advertising opportunities shown here are for these excellent ways for your company to reach an audience in new and creative ways to get their attention. Get into this new dynamic, creative media form now.

In Print: One half-page display ad in our monthly Metals & Manufacturing Outlook eZine (6 issues – this display ad alone is worth $1,500 a month just by itself) Email: Be part of the 30,000 email show announcements sent weekly to listeners (30,000 x 6 months = 180,000 emails) Email: Be part of the 30,000 additional emails sent each month to announce the release of the newest issue of Metals & Manufacturing Outlook to readers – your ad in each issue.

Connections: If we can help one advertiser connect with another for their respective business interests, we will make introductions between the parties – get to decision-makers faster! $9,000 Total for the entire 6-month program with nearly 400,000 potential impressions On-the-Air, Online, In-Print, In-Person, Email and Business Connections.

Corporate Annual Sponsorship Programs also available.

For complete information and pricing contact us at ADVERTISE@mfgtalkradio.com.

For more information contact us at

(973) 808-8300

ADVERTISE@MFGTALKRADIO.COM

VISIT US ONLINE AT

MFGTALKRADIO.COM

ADVERTISING MEDIA KIT

Women And Manufacturing is the broadcast voice of women from the shop floor to the C-Suite interviewed by accomplished women engaging in intellectual conversations with these bright and dedicated employees, management and business owners about their careers, their achievements and the future of careers and pathways for women in the industry.

While only 27% of the workforce in manufacturing, women represent one of the greatest resources for closing the skills gap because they are 51% of the overall population in the U.S. They are an underutilized solution that will make significant career inroads over the next 10 years across the entire spectrum of positions from executive management through research, design and engineering to supply chain, production supervision, quality control, logistics and other well-paid positions in the industry.

Demographics as of 2-5-18 * Total Downloads for 24 months for MFG Talk Radio: 605,000 Gender: Male: 63% Female: 37% Age Categories: Session by Age: 18-24 22% 18-24 15% 25-34 30% 25-34 26% 35-45 18% 35-44 25% 46-55 14% 45-54 15% 56-64 12% 55-64 16% 65+ 4% 65+ 3% Professions: CEO’s, CFO’s, COO’s Engineers Purchasing Personnel Supply Chain Professionals Manufacturing Operations Technology & Science Manufacturing Equipment Technician Students Orgs/Assoc Members Misc Manufacturing Professionals MTR Live and podcast listeners: 30,000 + per month Metals & Manufacturing Outlook Ezine (subscribers): 23,000 per month Mfg Talk Radio Website Traffic: 8,000 + per month Mfg Talk Radio & WAM Email ad campaign impressions (13 email campaigns per month): 390,000 per month Mfg Talk Radio Campaign click thru rate (CTR): 4% 15,000 per month New listeners versus repeat listeners: 82% vs. 18% U.S. listeners: 85% Canadian listeners: 5% South American listeners 5% Other listeners 5% *All STATS ARE APPROXIMATE

Hosts Hosts bio’s fo

und on the w

ebsite

For more information contact us at

(973) 808-8300

ADVERTISE@WOMENANDMFG.COM

VISIT US ONLINE AT

WOMENANDMFG.COM

MANUFACTURING

MBC

BROADCASTING

CORPORATION 75 Lane Road, Fairfield, NJ 07004 Phone: 973-808-8300 Testimonials Jay Timmons, President and CEO, National Association of Manufacturers said: “Thank you for your support of our efforts to ensure that policymakers in Washington work toward strategies that will make manufacturers more competitive…”

Ray Vaccari-Director, Advanced Manufacturing Talent Network-NJIT Adjunct Professor, Newark, New Jersey said: “Manufacturing Talk Radio does an excellent job of promoting manufacturing in New Jersey and it is much appreciated. We need to reach out to youngsters and their parents to educate them about lucrative manufacturing careers…”

Norbert Ore-Supply Chain Analyst-Director, Head of Industry Surveys-Strategas Research Partners LLC, New York, NY said: “Innovation and the sharing of ideas are the cornerstones of a great U.S. manufacturing sector. I believe a visionary idea has coalesced over the last three years and that it is facilitating communication across supply chains. Manufacturing Talk Radio, a weekly live-streamed podcast that provides in-depth interviews with a wide range of sources interested to manufacturers…”

Frank Cipolla -Wall Street Journal Radio Network, Matawan, New Jersey said: “Most people zone out when they hear the word 'manufacturing'. What I have discovered since listening to Manufacturing Talk Radio is how very important manufacturing is to the world economy…”

Thomas W. Derry, CEO, Institute of Supply Management, Tempe, Arizona said: “I have always considered Manufacturing Talk Radio to be an excellent platform. Tim and Lew have created a robust way to keep up on all of the latest trends in manufacturing…”

Judith Fleischer -Marketing and PR Consultant said: “Manufacturing Talk Radio is one of the best things that has happened to the industry. The love child of Lew Weiss, the program brings together critical thinkers in all areas relevant to manufacturers…”

Ed Youdell, President & CEO, Fabricators & Manufacturers Association (FMA) said: “Asking the questions we all want to ask, tackling the subjects that matter most to all of us in manufacturing…”

CEO Thomas Lichtenberger, Festo Didactic, Inc. (Eatontown, NJ - USA) CEO Dr. Nader Imani, Festo Didactic Ltd./Ltee. (Quebec, Canada) said: “Manufacturing Talk Radio’s coverage will support the effort of an entire industry to communicate modern technology, STEM, career paths in manufacturing, education and apprenticeship opportunities that will change the paths of many current and future employers and employees within this amazing industry…”

Show Topics that have been covered: NAFTA LA Port issues Skills Gap Apprenticeships Robotics Prison Labor Women And MFG. Augmented Reality Global MFG Economy Brexit

ExIm Bank Reshoring Additive Mfg. B2B Marketing Drones

3D Printing Exports STEM Cyber Security Internet Of Things

Workplace Violence Workforce Development Immigration & Mfg. SME Education Foundation Supply Chain Management

Some previous guests: Ed Youdell, President and CEO of Fabrication & Manufacturers Association, Dr. Adriana Sanford, Senator Sherrod Brown, (D) Ohio, Chad Moutray from National Association of Manufacturers, John Kennedy from NJMEP, Carroll Thomas from NIST, Tony Uphoff, President of ThomasNet, Brad Holcomb, Tim Fiore and Anthony Nieves from the Institute for Supply Management, Chris Young from American Small Business Chamber of Commerce, Margot Dorfman, President of the US Women’s Chamber of Commerce, Hernan Luis y Prado from Workshops for Warriors, Scott Paul, President of Alliance for American Manufacturing

Visit us online at MFGTALKRADIO.COM or WOMENANDMFG.COM For more information contact us at

ADVERTISE@WOMENANDMFG.COM • 973-808-8300 ADVERTISE@MFGTALKRADIO.COM • 973-808-8300

28

Metals & Manufacturing Outlook

REVOLUTIONIZING AUSTRALIAN MINING

BY MIKE WOMACK

Self-driving trucks may be a new concept on the roads in the United States but this technology is already revolutionizing the mining industry in Australia. One mining company has broken the mold, making use of autonomous hauling vehicles to improve their operation.

Rio Tinto has 73 of these incredible and innovative vehicles.

Hauling iron ore for 24 hours a day at four mines in the northwest corner of Australia, they’re transforming the industry. No risk of fatigue causing a tragic accident or lapse in productivity, the advantages are plentiful.

Beyond their autonomous hauling vehicles, they’re also working on creating an entirely autonomous supply chain. At a location known as West Angelas, the self-driving vehicles work alongside robotic rock drilling rigs. Rio Tinto is currently working on upgrading the locomotives that trek raw material hundreds of miles to port with the hopes of having them | February 2018

be able to drive themselves. Not only will these aspects of their supply chain be automated, they will also be able to be loaded and unloaded automatically.

A key factor which has driven Rio Tinto toward a more automated future is the diminishing costs of robotics technology paired with the increase in capabilities.

Furthermore, these autonomous trucks don’t take any breaks or have to stop for shift changes.

Additionally their movements are more predictable, especially when pulling up to load cargo. Software has a set way of performing an action and it is almost guaranteed they will follow the same route time and time again.

Unfortunately, eliminating the need for drivers is an obvious outcome. However, these systems will need constant updates and require the same kind of mechanical maintenance as traditional mining vehicles.

There is also a need to constantly monitor the autonomous systems

which opens up another avenue for employment. The teams in charge of overseeing the robots can even be employed 750 miles away from the mining operation.

This greatly expands employment opportunities as more individuals have access to work, especially if a mine is located in a remote region. Just as elevator operators are no longer a staple of New York City skyscrapers because of automatic elevators, jobs have evolved along with the technology.

“The fully automated mine has long since passed the days of concept and evolved into a reality, If the industry is to survive and grow, on this planet and elsewhere, total automation of many of the processes is the way forward.” Cole Latimer wrote in Australian Mining back in 2015.

The future is now and new technologies are revolutionizing the way company’s conduct business.

Metals & Manufacturing Outlook

29

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

ISM PMI for the past 5 years

Full Report on the next page. | February 2018

30

Metals & Manufacturing Outlook

PMI® at 59.1%

New Orders, Production, and Employment Continue Growing Supplier Deliveries Slowing at Faster Rate; Backlog Growing Raw Materials Inventories Growing, Customers’ Inventories Too Low Prices Increasing at Faster Rate

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in January, and the overall economy grew for the 105th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The January PMI® registered 59.1 percent, a decrease of 0.2 percentage point from the seasonally adjusted December reading of 59.3 percent. The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent. The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent. The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent. The Inventories Index registered 52.3 percent, an increase of 3.8 percentage points from the December reading of 48.5 percent. The Prices Index registered 72.7 percent in January, a 4.4 percentage point increase from the December reading of 68.3 percent, indicating higher raw materials prices for the 23rd consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January."

Of the 18 manufacturing industries, 14 reported growth in January in the following order: Textile Mills; Fabricated Metal Products; Plastics & Rubber Products; Primary Metals; Machinery; Transportation Equipment; Apparel, Leather & Allied Products; Chemical Products; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. Four industries reported contraction during the period: Printing & Related Support Activities; Wood Products; Furniture & Related Products; and Nonmetallic Mineral Products.

| February 2018

Metals & Manufacturing Outlook

31

WHAT RESPONDENTS ARE SAYING ...

▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

"Sales nationally and internationally are strong in Q1. We are increasing our CapEx spend by 30 percent to 40 percent over [the] previous year." (Chemical Products) "We have heard reports of additional business due to the recent reduction of tax rates." (Machinery) "Business outlook is positive on all fronts right now with our customers. Budgets are being approved for new projects, and component prices from suppliers have temporarily stabilized." (Computer & Electronic Products) "Our usual winter slowdown has not occurred, and we are very busy with new orders." (Furniture & Related Products) "Slow start to 2018; pricing on metals is heading up and quotes/orders are picking up as well." (Fabricated Metal Products) "Overall, business remains steady. With several key programs to begin ramping up in the industry, outlook looks good for calendar year 2018." (Transportation Equipment) "Employment is very tight in our area." (Food, Beverage & Tobacco Products) "Business continues to strengthen." (Paper Products) "Business is starting the new year strong. Consumer confidence seems to be driving a lot of our customers’ order requirements higher." (Plastics & Rubber Products) MANUFACTURING AT A GLANCE January 2018

Index

Serie s Inde x Jan

Serie s Inde x Dec

Percentag e Point Change

Directio n

Rate of Change

Trend* (Months )

PMI®

59.1

59.3

-0.2

Growing

Slower

17

New Orders

65.4

67.4

-2.0

Growing

Slower

25

Production

64.5

65.2

-0.7

Growing

Slower

17

Employment

54.2

58.1

-3.9

Growing

Slower

16

Supplier Deliveries

59.1

57.2

+1.9

Slowing

Faster

16

Inventories

52.3

48.5

+3.8

Growing

From Contracting

1

Customers' Inventories

45.6

42.9

+2.7

Too Low

Slower

16

| February 2018

32

Metals & Manufacturing Outlook

Prices

72.7

68.3

+4.4

Increasin g

Faster

23

Backlog of Orders

56.2

54.9

+1.3

Growing

Faster

12

New Export Orders

59.8

57.6

+2.2

Growing

Faster

23

Imports

58.4

56.5

+1.9

Growing

Faster

12

OVERALL ECONOMY

Growing

Slower

105

Manufacturing Sector

Growing

Slower

17

Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.

*Number of months moving in current direction.

Indexes reflect newly released seasonal adjustment factors.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price

Aluminum (15); Ammonia; Brass; Caustic Soda (7); Copper (3); Corrugate (16); Crude Oil; Electrical Components (2); Emulsions; Hardwood Lumber; Natural Gas; Nickel; Paper; Polycarbonate; Polyethylene; Polypropylene (5); Polyurethane; Pulp; Resins; Steel (2); Steel — Scrap (2); Steel – Cold Rolled; Steel — Galvanized; Steel — Hot Rolled (14); Stainless Steel (2); Sulfur; Sulfuric Acid; Titanium Dioxide (4); and Vitamins.

Commodities Down in Price

None.

Commodities in Short Supply

Capacitors (7); Electrical Components (2); Integrated Circuits; Memory; Resistors (3); Silicone; and Titanium Dioxide (3).

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

JANUARY 2018 MANUFACTURING INDEX SUMMARIES PMI® Manufacturing expanded in January as the PMI® registered 59.1 percent, a decrease of 0.2 percentage point from the seasonally adjusted December reading of 59.3 percent. "This indicates growth in manufacturing for the 17th consecutive month at strong levels led by continued expansion in new order and production activity, with employment growing at a slower rate and supplier deliveries continuing to struggle," says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January PMI® indicates growth for the 105th consecutive month in the overall economy and the 17th straight month of growth in the manufacturing sector. Fiore says, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January (59.1 percent) corresponds to a 4.9 percent increase in real gross domestic product (GDP) on an annualized basis."

THE LAST 12 MONTHS Month

PMI®

Month

PMI®

Jan 2018

59.1

Jul 2017

56.5

Dec 2017

59.3

Jun 2017

56.7

Nov 2017

58.2

May 2017

55.5

Oct 2017

58.5

Apr 2017

55.3

Sep 2017

60.2

Mar 2017

56.6

Aug 2017

59.3

Feb 2017

57.6

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Metals & Manufacturing Outlook

Average for 12 months – 57.7 High – 60.2 Low – 55.3

New Orders ISM®'s New Orders Index registered 65.4 percent in January, which is a decrease of 2 percentage points when compared to the 67.4 percent reported for December, indicating growth in new orders for the 25th consecutive month. "New Orders expansion continues at a strong pace, with the index at nine straight months at 60 percent or above," says Fiore. A New Orders Index above 52.4 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

Thirteen of 18 industries reported growth in new orders in January, listed in the following order: Textile Mills; Fabricated Metal Products; Apparel, Leather & Allied Products; Machinery; Primary Metals; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; Paper Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. Five industries — Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Printing & Related Support Activities; and Petroleum & Coal Products — reported a decrease in new orders in January compared to December.

New Orders

% % % Higher Same Lower

Net

Index

Jan 2018

35.2

54.3

10.5 +24.7

65.4

Dec 2017

35.3

56.5

8.1 +27.2

67.4

Nov 2017

30.0

60.9

9.1 +20.9

63.9

Oct 2017

34.0

53.1

12.9 +21.1

63.5

Production ISM®'s Production Index registered 64.5 percent in January, which is a decrease of 0.7 percentage point when compared to the 65.2 percent reported for December, indicating growth in production for the 17th consecutive month. "Production expansion continues, but due to employment and supplier delivery constraints, it could not keep up with new order input and

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customer inventory needs, resulting in higher backlogs," says Fiore. An index above 51.5 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 11 industries reporting growth in production during the month of January — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Fabricated Metal Products; Primary Metals; Chemical Products; Paper Products; Transportation Equipment; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Machinery; and Miscellaneous Manufacturing. The two industries reporting a decrease in production in January compared to December are: Nonmetallic Mineral Products; and Printing & Related Support Activities.

Production

% % % Higher Same Lower

Net

Index

Jan 2018

32.8

56.2

11.0 +21.8

64.5

Dec 2017

30.8

60.7

8.5 +22.3

65.2

Nov 2017

32.2

61.0

6.8 +25.4

64.3

Oct 2017

30.0

59.6

10.4 +19.5

61.0

Employment ISM®'s Employment Index registered 54.2 percent in January, a decrease of 3.9 percentage points when compared to the December reading of 58.1 percent. This indicates growth in employment in January for the 16th consecutive month. "Employment expansion remains strong, but difficulties across the supply chain continue to constrain production output," says Fiore. An Employment Index above 50.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the seven reporting employment growth in January — listed in order — are: Machinery; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; Nonmetallic Mineral Products; Computer & Electronic Products; and Transportation Equipment. The six industries reporting a decrease in employment in January — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.

| February 2018

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Metals & Manufacturing Outlook

Employment

% % % Higher Same Lower 11.8

Net

Index

+5.8

54.2

Jan 2018

17.6

70.6

Dec 2017

20.3

71.6

8.2 +12.1

58.1

Nov 2017

22.9

70.0

7.0 +15.9

59.2

Oct 2017

24.2

69.3

6.6 +17.6

59.8

Supplier Deliveries The delivery performance of suppliers to manufacturing organizations was slower in January, as the Supplier Deliveries Index registered 59.1 percent. This is 1.9 percentage points higher than the 57.2 percent reported for December. "This is the 16th straight month of slowing supplier deliveries. Continued delivery/performance difficulties are affecting production expansion.

During the period, gains were made to inventories in spite of these ongoing supply chain issues," says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 12 industries reporting slower supplier deliveries in January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Petroleum & Coal Products; Machinery; Nonmetallic Mineral Products; Paper Products; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Transportation Equipment. The only industry reporting faster deliveries in January compared to December is Primary Metals.

Supplier % % % Deliveries Slower Same Faster

Net

Index

Jan 2018

23.5

71.3

5.2 +18.3

59.1

Dec 2017

19.0

74.6

6.3 +12.7

57.2

Nov 2017

21.0

68.5

10.5 +10.5

56.6

Oct 2017

25.7

68.8

5.5 +20.2

60.1

Inventories*

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The Inventories Index registered 52.3 percent in January, which is an increase of 3.8 percentage points when compared to the 48.5 percent reported for December, indicating raw materials inventories grew in January. "Suppliers made progress in responding to production demand increases by expanding their customers inventory levels," says Fiore. An Inventories Index greater than 43 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The eight industries reporting higher inventories in January — listed in order — are: Textile Mills; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The eight industries reporting lower inventories in January — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Paper Products; Machinery; and Petroleum & Coal Products.

Inventories

% % % Higher Same Lower

Net

Index

Jan 2018

24.4

55.7

19.9 +4.5

52.3

Dec 2017

18.0

60.9

21.1

-3.0

48.5

Nov 2017

16.0

62.1

21.9

-5.8

47.1

Oct 2017

16.8

62.5

20.6

-3.8

48.1

Customers' Inventories* ISM®'s Customers’ Inventories Index registered 45.6 percent in January, which is 2.7 percentage points higher than the 42.9 percent reported for December, indicating that customers’ inventory levels were still considered too low in January. "Factory output made gains in improving customers’ inventory levels; however, inventory levels remain too low for the 16th consecutive month," says Fiore.

Two manufacturing industries — Furniture & Related Products; and Transportation Equipment — reported customers’ inventories as being too high during the month of January. The nine industries reporting customers’ inventories as too low during January — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Paper Products; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Computer

| February 2018

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Metals & Manufacturing Outlook

& Electronic Products; and Chemical Products. Six industries reported no change in January compared to December.

Customers' % %Too %About %Too Inventories Reporting High Right Low

Net

Index

Jan 2018

58

9.4

72.5

18.1

-8.7

45.6

Dec 2017

54

6.8

72.3

20.9

-14.1

42.9

Nov 2017

57

8.4

73.5

18.1

-9.7

45.1

Oct 2017

54

8.5

70.1

21.4

-13.0

43.5

Prices* The ISM® Prices Index registered 72.7 percent in January, an increase of 4.4 percentage points from the December level of 68.3 percent, indicating an increase in raw materials prices for the 23rd consecutive month. In January, 47 percent of respondents reported paying higher prices, 1 percent reported paying lower prices, and 52 percent of supply executives reported paying the same prices as in December. The Price index is at its highest level since May 2011, when it registered 77.9 percent. "The Business Survey Committee noted price increases continue in metals (steel, stainless, brass, aluminum, copper and scrap), intermediate chemicals, corrugate, crude oil, natural gas, various wood based products and plastic resins. There was a significant increase in items short, during the period," says Fiore. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

All 18 industries reported paying increased prices for raw materials in January, in the following order: Textile Mills; Apparel, Leather & Allied Products; Wood Products; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Chemical Products; Paper Products; Machinery; Primary Metals; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Food, Beverage & Tobacco Products; Printing & Related Support Activities; and Computer & Electronic Products.

Prices

% % % Higher Same Lower

Net

Index

Jan 2018

46.6

52.1

1.3 +45.3

72.7

Dec 2017

40.4

55.8

3.9 +36.5

68.3

| February 2018

Metals & Manufacturing Outlook

Nov 2017

35.3

58.9

5.8 +29.5

64.8

Oct 2017

42.9

50.4

6.7 +36.1

68.1

39

Backlog of Orders* ISM®'s Backlog of Orders Index registered 56.2 percent in January, an increase of 1.3 percentage points when compared to the 54.9 percent reported for December, indicating growth in order backlogs for the 12th consecutive month. "Backlog expansion continued during the period," says Fiore. Of the 89 percent of respondents who reported their backlog of orders, 28 percent reported greater backlogs, 15 percent reported smaller backlogs, and 57 percent reported no change from December.

The 12 industries reporting growth in order backlogs in January — listed in order — are: Textile Mills; Primary Metals; Apparel, Leather & Allied Products; Plastics & Rubber Products; Petroleum & Coal Products; Transportation Equipment; Machinery; Fabricated Metal Products; Paper Products; Chemical Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The five industries reporting a decrease in order backlogs during January are: Wood Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Nonmetallic Mineral Products.

Backlog of % % % % Orders Reporting Higher Same Lower

Net

Index

Jan 2018

89

27.8

56.8

15.4 +12.5

56.2

Dec 2017

89

25.6

58.6

15.9

+9.7

54.9

Nov 2017

92

23.7

61.2

15.1

+8.6

54.3

Oct 2017

88

24.2

59.3

16.5

+7.7

53.9

New Export Orders* ISM®'s New Export Orders Index registered 59.8 percent in January, an increase of 2.2 percentage points when compared to the 57.6 percent reported for December, indicating growth in new export orders for the 23rd consecutive month. Exports achieved their highest expansion since April 2011, when the index reached 63.8 percent. "All six big industry sectors, accounting for 71 percent of manufacturing GDP, continued to expand export activity during the period," says Fiore.

| February 2018

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Metals & Manufacturing Outlook

The 13 industries reporting growth in new export orders in January — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; and Paper Products. No industries reported a decrease in new export orders in January compared to December.

New Export % % % % Orders Reporting Higher Same Lower

Net

Index

Jan 2018

79

20.7

78.2

1.1 +19.6

59.8

Dec 2017

78

18.4

78.5

3.1 +15.3

57.6

Nov 2017

80

14.7

83.2

2.1 +12.6

56.3

Oct 2017

77

15.0

80.1

4.9 +10.1

55.1

Imports* ISM®'s Imports Index registered 58.4 percent in January, an increase of 1.9 percentage points when compared to the 56.5 percent reported for December, indicating that imports grew in January for the 12th consecutive month. Import expansion reached its highest level since April 2014, when the index reached the same level, 58.4 percent. "Imports expanded at noticeably greater rates during the period in order to keep pace with production demand," says Fiore.

The 12 industries reporting growth in imports during the month of January — listed in order — are: Primary Metals; Apparel, Leather & Allied Products; Machinery; Miscellaneous Manufacturing; Fabricated Metal Products; Computer & Electronic Products; Nonmetallic Mineral Products; Transportation Equipment; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; and Chemical Products.

The only industry that reported a decrease in imports during January compared to December is Printing & Related Support Activities.

Imports

% % % % Reporting Higher Same Lower

Net

Index

Jan 2018

81

22.5

71.6

5.8 +16.7

58.4

Dec 2017

83

19.3

74.4

6.3 +13.0

56.5

| February 2018

Metals & Manufacturing Outlook

Nov 2017

82

13.9

80.9

5.2

+8.6

54.3

Oct 2017

80

16.2

76.2

7.6

+8.6

54.3

41

*The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy Average commitment lead time for Capital Expenditures increased in January to 150 days from 139 days. Average lead time for Production Materials increased to 60 days from 59 days.

Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased by 2 days to 34 days. "Capital expenditure leadtime increased substantially during this period reflecting increased rates of ordering activity as the community enters 2018," says Fiore.

Percent Reporting Capital Hand30 60 90 6 1 Average Expenditures toDays Days Days Months Year+ Days Mouth Jan 2018

18

6

11

18

25

22

150

Dec 2017

19

9

11

17

25

19

139

Nov 2017

19

7

10

18

28

18

140

Oct 2017

20

5

13

18

22

22

145

Production Materials

Hand30 60 90 6 1 Average toDays Days Days Months Year+ Days Mouth

Jan 2018

11

40

25

16

6

2

60

Dec 2017

12

38

25

19

4

2

59

Nov 2017

11

37

26

19

6

1

59

Oct 2017

13

36

26

17

6

2

60

| February 2018

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Metals & Manufacturing Outlook

MRO Supplies

Hand30 60 90 6 1 Average toDays Days Days Months Year+ Days Mouth

Jan 2018

33

42

15

8

2

0

34

Dec 2017

33

41

15

8

3

0

36

Nov 2017

32

38

19

8

3

0

37

Oct 2017

34

40

19

5

2

0

33

About This Report

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of January 2018.

The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. The composition of the Manufacturing Business Survey Committee is stratified according to the North American Industry Classification System (NAICS) and each of the following NAICS-based industry’s contribution to gross domestic product (GDP): Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and

| February 2018

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supplies, jewelry, sporting goods, toys and office supplies). The data are weighted based on each industry’s contribution to GDP. Beginning in January 2018, computation of the indexes is accomplished utilizing unrounded numbers.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers’ Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed.

The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Supplier Deliveries) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 43.2 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 43.2 percent, it is generally declining. The distance from 50 percent or 43.2 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis. The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month.

ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

| February 2018

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Metals & Manufacturing Outlook

The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

Responses to Buying Policy reflect the percent reporting the current month’s lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.

ISM ROB Content The Institute for Supply Management® (“ISM”) Report On Business® (both Manufacturing and Non-Manufacturing) (“ISM ROB”) contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, datastreams, timeseries variables, fonts, icons, link buttons, wallpaper, desktop themes, on-line postcards, montages, mash-ups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

| February 2018

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You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 West Elliot Road, Suite 113, Tempe, Arizona 85284-1556, or by emailing kcahill@instituteforsupplymanagement.org, Subject: Content Request.

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About Institute for Supply Management® Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the ISM Mastery Model®. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. ET.

The next Manufacturing ISM® Report On Business® featuring February 2018 data will be released at 10:00 a.m. ET on Thursday, March 1, 2018.

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| February 2018

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