Metals & Manufacturing Outlook for February 2019

THE CREDIT MANAGER’S OUTLOOK PAGE 8

NORTH AMERICAN OUTLOOK PAGE 10

METALS OUTLOOK PAGE 12

CUDA

INTRODUCING

THE 3D PRINTED UNDERWATER JETPACK PAGE 18 PAGE 26

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JANUARY ISM PMI:

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Released February 1st -The Full Report On Page 29

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TABLE OF CONTENTS

Publisher LEWIS A WEISS Editor in Chief TIM GRADY Creative Director CRAIG ROVERE Contributing Writers ROYCE LOWE TIM GRADY NORBERT ORE ANDREA OLSON CHRIS KUEHL Production Manager LINDA HOPLER Current Circulation 45,200

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PUBLISHER’S STATEMENT

GLOBAL PMI OUTLOOK

A word from our publisher

06 MANUFACTURING OUTLOOK A global look at manufacturing

08 THE CREDIT MANAGER’S OUTLOOK

by Chris Kuehl

10 NORTH AMERICAN OUTLOOK Manufacturing in the US, Canada and Mexico

12 METALS OUTLOOK

by Norbert Ore

22 ISSUES OUTLOOK The Global MFG PMI

23 THE MANY FACETS OF MANUFACTURING

By Andrea Olson

24 EURO OUTLOOK A look at Europe

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The cost, making and treating of metals

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ASIA OUTLOOK

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China sees little change

Editorial Office MANUFACTURING BROADCASTING CORPORATION 75 LANE ROAD FAIRFIELD, NJ 07004 (973) 808-8300

AEROSPACE OUTLOOK

Open call for Contributing Writers for new and existing content. Let’s start a conversation – Contact us at editorialdept@mmoezine.com or visit mfgtalkradio.com/writer for more information. © 2019 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.

Trouble for Rolls Royce

15 AUTOMOTIVE OUTLOOK

26 WOMEN’S AMERICA OUTLOOK

By Tim Grady

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EV’s everywhere

SOUTH AMERICA OUTLOOK

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Brazil in the spotlight

ENERGY OUTLOOK

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Energy and the environment

THE JANUARY ISM REPORT

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The Manufacturing ROB

COVER STORY The CUDA Underwater Jetpack

PUBLISHERS STATEMENT

PUBLISHER’S STATEMENT

If you have been listening to Manufacturing Talk Radio’s interviews of the committee chairs from the ISM’s Manufacturing and Non-Manufacturing Report on Business®, then you have been hearing very good news. In addition, noted economists interviewed on the show speak of 2019 being a strong expansion year for GDP, with forecasts in the mid-2’s. As you may know, manufacturing needs a GDP of better than 2.0 to invest in capital projects. Between 1.0 and 2.0, manufacturing is just running existing capacity and maintaining equipment. Below 1.0, manufacturing hunkers down, thins its employee ranks, watches its order books intently, but braces for recession.

The Federal Reserve raised interest rates 4 times in 2018, and recently lowered their GDP forecast from 2.5 to 2.3 percent. If they boost rates in 2019, it will be one of the ‘unless’ moments, where a strong recovery was cut short by an overly cautious or overzealous Fed. Another interest rate hike would be bad news for manufacturing, not because it makes borrowing more expensive but because it takes the steam out of the economic engine. It would be easy for GDP to slip to 2.0 or less where manufacturers will hold back, consumers will hold back, and the economy will slip into the doldrums. So far, talks of further rate hikes are not in discussion, but this long-winded economy could be prematurely stunted by such a move.

Thus, we carefully watch the Institute for Supply Management’s Purchasing Managers Index (PMI) Manufacturing Report on Business® very closely. It is the canary in the coal mine.

One area of interest in new technology is 3D Printing, aka Additive Manufacturing, particularly in prototyping. This month’s cover story is an example of an exciting new product that could be tested without the high costs of tooling molds to produce component parts. You can move through the water with ease with the world’s first underwater backpack jetpack, and with a well-fitted snorkeling mask, skim along a coral reef to watch the great diversity of life or pause for a closer look using the handheld accelerator. Look inside for the full article from 3D Hubs.

There are many products than can be brought to market where the market isn’t vast but the need or want is there for a reasonably-priced product that previously could not be achieved without a massive product run. In particular, the 3D Hubs network of printers allows parts or products to be printed in any of the materials available for 3D printing, especially various plastics and metals. And new technology that makes it possible to reproduce hyper-accurate parts is being developed by researchers at Purdue University and the University of Southern California.

The past two years have been excellent in manufacturing, and major industries continue to build new plants in the U.S., including Foxconn Technology Group, Airbus, Mazda, Toyota, Volvo, Nucor, and dozens upon dozens of other small to mid-size manufacturers whom the National Association of Manufacturers has highlighted for their expansions in the works. As always, we look forward to another excellent year in manufacturing with a jaded eye towards the federal government that has proven quite capable of screwing almost anything up, including the longest period of economic expansion since World War II. We also strive to bring you more than just facts and figures in the following pages and hope you will enjoy this issue of Metals & Manufacturing Outlook, our digital monthly ezine.

Lewis A Weiss, Publisher Contact laweiss@gmail.com for comments, suggestions and ideas.

Metals & Manufacturing Outlook / February 2019

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MANUFACTURING OUTLOOK

FEBRUARY 2019

MANUFACTURING OUTLOOK All chaos on the Brexit front, as the UK and Europe still at loggerheads. The U.S. is being ‘governed’ again, at least for a while. U.S. manufacturing does an about, upward turn, effectively propping up that of most of the rest of the world. There is still much trade uncertainty.

by ROYCE LOWE Deadlines are creeping up on us, with the UK due to leave the EU on March 29, under conditions that have not yet been finally decided. A ‘deal’ has not yet been made, and much of it hinges on the island of Ireland, and the type of border that might exist between the north and the south.

To say that what is happening is affecting the manufacturing and financial scenarios in both Europe and the UK would be an understatement.

In fact, one third of UK manufacturers, from a poll of 1,200, are mulling a move out of the country 90 percent to Europe - in the event of no deal.

Trade is in tangles everywhere, with efforts continuing to put some kind of order in conflicts between the U.S. and China, and the U.S. and Europe. There’s still a ways to go. And USMCA

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Metals & Manufacturing Outlook / February 2019

won’t be ratified or signed for a couple of months, if it is.

The BLS jobs report for January shows the addition of 304,000 non-farm payroll jobs. The unemployment rate rose to 4.0 percent. This was the 100th consecutive month of job growth in the U.S., with 52,000 jobs added in construction, for a total over the year of 338,000 jobs and 13,000 jobs added in manufacturing, for a total over the year of 261,000 jobs - with an increase of 20,000 jobs in durable goods and a loss of 7,000 jobs in nondurable goods.

The Bureau of Economic Analysis recently released its ‘third’ estimate for the annual rate of Real GDP growth in the third quarter of 2018, putting it

MANUFACTURING OUTLOOK -0.1 percent down from the second estimate - at 3.4 percent. The figure for the second quarter of 2018 was 4.2 percent. Due to the government shutdown there are no recent figures for the month of January.

The ISM PMI figure for U.S. manufacturing jumped back to 56.6 percent in January from December’s 54.1 percent, representing the 29th consecutive month of growth in manufacturing. The overall economy grew for the 117th consecutive month.

IHS Markit’s remarks on the U.S. noted that growth in production moved to a four-month high in January, with new orders also up at a faster rate. There were increased input costs due to steel and aluminum tariffs, but lower oil prices helped partially offset this. Input price inflation was at a one-year low, but still strong The IHS PMI was up at 54.9 percent in January from 53.8 percent in December. New export orders grew at a faster pace in December.

In spite of all that good news, business confidence is at its lowest level in over two years.

Steel production is still increasing. World crude steel production for the 64 reporting countries – which represent 99 percent of world crude steel production – for the month of December continues to rise and was 147,084MT, up 4.2 percent year-over-year.

Primary Global Aluminum Production in December 2018 was reported at 5.501 million tons, with production in China, at 3.143 million tons, representing 57 percent of world total.

Production was 449,000 tons in GCC; 381,000 tons in the rest of Asia; 307,000 tons in Western Europe; 329,000 tons in North America and 344,000 tons in Eastern and Central Europe.

U.S. LIGHT VEHICLE SALES: Government shutdown and super-cold weather are thought to be responsible for the drop in January light vehicle sales. The SAAR for January fell to 16.9 million from 17.22 in January 2018. Car sales were down 4.0 percent, truck sales rose just 0.3 percent.

THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the 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 consumer price increases represent year-over-year changes. The unemployment figures, %, are for the month as noted.

U.S. crude steel production for December 2018 was 7.568MT, up 12.4 percent year-over-year.

Metals & Manufacturing Outlook / February 2019

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CREDIT MANAGER’S OUTLOOK

CREDIT MANAGERS’ OUTLOOK

by DR. CHRISTOPHER KUEHL MANAGING DIRECTOR OF ARMADA CORPORATE INTELLIGENCE

Combined Sectors January’s Credit Managers’ Index (CMI) was characterized by a slight downturn from December 2018. As 2019 started, there was a great deal of conversation regarding how the year would progress in comparison to 2018. The sense was that 2018 was a “pull out all the stops” year and 2019 would not likely feature that kind of encouragement. There will be no big tax cut in 2019 and there will be no low interest rate environment as had been provided by the Federal Reserve. There was not even the momentum in terms of growth that carried over from the end of 2017. “The first sets of data coming in have shown there was good reason to be worried.

The Purchasing Managers’ Index trended lower and so did the December CMI,” said NACM Economist Chris Kuehl, Ph.D. “Now that January is in, there was still more decline although nothing precipitous. The optimists are asserting this is just a ‘breather.’ They expect recovery in the second half of the year. The more pessimistic assert this will be just the start and conditions will steadily worsen through the year.”

This month’s data is not a lot different than it was the month prior, but the trend has been down. That has created some concern regarding the rest of the year, and it will take some good news to force the index to start trending in the opposite direction. The combined index fell a bit from 54.2 to 53.4. The index remains in expansion

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Metals & Manufacturing Outlook / February 2019

territory (a reading above 50) where it has been for the majority of the year. The bad news is this is the lowest reading seen in the last 12 months, hardly the direction preferred. The change was extremely slight as far as the favorable factors are concerned and, in fact, they went up (59.4 to 59.5). The bad news is these last two months have been the only two below 60 in the last year.

Even more concerning is the index of unfavorable factors as this reading slumped into contraction territory with a reading of 49.4 compared to the 50.8 notched in December. Kuehl noted the last time these numbers were that low was in April of 2018. Up to this point, the decline in the CMI data was felt primarily in the favorable categories, while the unfavorable stayed relatively stable. Now there are some new signs of real distress among creditors.

It was only a month or two ago that the four categories included in the favorable sector were all reading in the 60s. Now only one remains in that classification. The others are all still in the high 50s, which certainly continues to signal growth, but the pace has slowed a little. The sales category improved slightly from 59 to 59.7, getting close to the 60 line again. The new credit applications also moved back up a little, but the category stayed under the 60 line as it went from 57.5 to 58.2. The all-important dollar collections number dropped a bit, from 59.3 to 59. The amount of credit extended also dropped, but stayed in the

CREDIT MANAGERS’ OUTLOOK 60s with a reading of 61.2 as compared to 61.9 in December.

There was a slight improvement in the rejections of credit applications number—51.4 to 51.8, which is good news given the applications for credit category has been a little weak. The decline in accounts placed for collection is a bit more worrisome. It was at 49.7 and is now at 48.2. The disputes category sank as well (49.6 to 47.1). There was a similar drop in dollar amount beyond terms as it shifted from 49.3 to 47.4. The downward trend continues with the dollar amount of customer deductions which fell from 49.7 to 48.

The filings for bankruptcy sagged, but stayed in the expansion category by going from 55 to 53.8.

“The message is loud and clear: Companies are having issues, and this has started to affect their ability to keep pace with their obligations,” said Kuehl. “There has been enough of a slowdown in some sectors to impact the data. The numbers are still in the high 40s and not all that far from expansion, but the trend is not in the preferred direction and is likely to get worse as the year progresses.”

Manufacturing Sector The manufacturing sector has been a subject of intense interest for most of this year. Kuehl noted that the U.S. economy is still very dependent on its service sector for jobs and the total GDP. All by itself, the GDP of manufacturing in the U.S. is as large as the eighth-biggest country in the world.

“The sector is often seen as a kind of symbol for the overall success of the U.S. economy,” he said.

“The numbers look a bit weaker in December, which is a bit worrying for the coming year.”

The combined score for the whole index slipped from 55.6 to 54.1, taking the reading back to where it was in October. The index of favorable factors fell out of the 60s for the first time since December 2017. It is now at 58.9; whereas it was 63.2 the month before. The sub-index numbers showed the same kind of retreat. The sales numbers went from 64.2 to 59, while the new credit applications data shifted from 61.7 to 56.8—a number that has not been seen since December 2017. The dollar collections number fell from 61.6 to 59 and the amount of credit extended remained in the 60s, but only by a hair

as it went from 65.4 to 60.9. “The general sense is there was a slowdown in the manufacturing sector at the end of this year, but as these numbers are similar to what they were in 2017, this is also a seasonal reaction,” Kuehl explained. “The retail community may come to life at the end of the year, but the manufacturing community slows as the holidays tend to chew into productivity.”

The combined score for the nonfavorables improved very slightly from what it had been the month before, moving from 50.5 to 50.7. The sub-index numbers showed a bit more variety.

The rejections of credit applications slipped from 53.1 to 51.6, but at least managed to stay in the expansion zone. The accounts placed for collection improved and entered expansion territory by a small margin, going from 49.2 to 50.3. The disputes category sagged a little, with a reading of 48.6 compared to the 49.6 reading the month before.

The dollar amount beyond terms stayed very close to what it had been the month prior with a reading of 50 compared to 50.3. The best news here is the category stayed out of the contraction zone, albeit by the slightest margin. The dollar amount of customer deductions improved a bit, but remained in contraction territory with a reading of 49.1 compared to 48.6. The filings for bankruptcies reading improved slightly, as it went from 52.2 to 54.4.

Source: National Association of Credit Management

Manufacturing Laughs

All cartoons in our publication are intended for ‘comic relief’ and not to reflect a particular political point of view or bias.

Metals & Manufacturing Outlook / February 2019

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NORTH AMERICAN OUTLOOK

FEBRUARY 2019

NORTH AMERICAN OUTLOOK

by ROYCE LOWE

The Institute of Supply Management PMI figure jumped back to 56.6 in January from 54.1 in December. There were significant increases in the production and new orders indexes.

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

The only industry reporting contraction in January is Nonmetallic Mineral Products.

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Metals & Manufacturing Outlook / February 2019

Comments from the manufacturing industry are somewhat more optimistic than those seen in December, although there is still concern in some quarters. Fabricated Metal Products are quite bullish however, with no mention made of tariffs.

Commodities Up in Price Electronic Components (6); Freight (2); Nylon Polymer; Printed Circuit Board Assemblies; Printed Circuit Boards (2); Steel* (5); Steel — Hot Rolled*; Steel — Stainless*; Steel Products* (9); Sulfuric Acid; and Valves.

Commodities Down in Price Aluminum (4); Base Oils; Caustic Soda (4); Copper; Diesel; Gasoline (2); Memory; Polyethylene; Polypropylene; Steel* (5); Steel — Carbon; Steel — Hot Rolled* (5); Steel — Stainless*; Steel Products*; and Steel Scrap.

NORTH AMERICAN OUTLOOK Commodities in Short Supply Capacitors (19); Electrical Components; Electronic Components (9); Integrated Circuits; Nylon Polymer; and Resistors (15).

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

The complete ISM Report on Business® may be found at the end of Metals & Manufacturing Outlook.

CANADIAN manufacturers experienced the slowest production growth since December 2016, and the slowest increase in new orders for over two years. There was some moderation in input price inflation, and there was good, strong job creation.

The Canada PMI continued in expansion in January, at 53.0, from December’s 53.6. Backlogs were up for the fourth consecutive month, from capacity pressures and longer supplier lead times.

Strong employment growth came from hopes of a rebound in demand through 2019.

There was broad-based manufacturing growth

across Canada, with Quebec recording the fastest improvement in business conditions, but a continuing loss of momentum in Alberta and B.C. Business confidence was at a solid level.

Canada produced 1.150 MT of crude steel in December, up 1.1 percent year-over-year.

Canadian light vehicle sales fell in January, for what is now the eleventh straight month of decline, with sales of 111,225 units versus 117,5757 in January 2018. Passenger car sales were down 14 percent, light truck sales down 5 percent.

MEXICO saw stronger growth of new orders, primarily domestic and renewed job creation in January, and an increase in PMI from 49.7 in December to 50.9 in January. Fuel shortages and currency devaluation led to a drastic drop in business confidence. Mexico produced 1.550 MT of crude steel in December, down 4.2 percent year-over-year.

ISO9100:2015 and AS9100D

Metals & Manufacturing Outlook / February 2019

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METALS OUTLOOK

FEBRUARY 2019

METALS OUTLOOK THE COST, MAKING, TREATING AND APPLICATIONS OF METALS

by ROYCE LOWE Hot-rolled steel coil in the U.S. was recently priced at just under $36 per cwt. Pricing on hot-rolled coil in 2019 will depend to a large extent upon increased U.S. steel capacity, and demand in the oil and gas, construction and automobile sectors.

Copper increased from $2.67 per lb to $2.77 from early January to early February, and eased from $2.80 to $2.77 in the past six months; aluminum from $0.848 to 0.855 in the same monthly period, from $0.95 to 0.855 in the past six months; nickel increased from $5.00 to $5.80 and from $6.40 to

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Metals & Manufacturing Outlook / February 2019

$5.86 and zinc from $1.17 to $1.27 and from $1.20 to $1.27.

When Donald Trump made his campaign promises about bringing back jobs to the U.S., he doubtless had the steel industry in mind. He was thinking about, tweeting about and speaking about all the steel plants that had been made idle because of cheap imports and worldwide overcapacity.

He was talking about an industry of which the U.S. was once King, of the U.S. Steel, Bethlehem, Republic and Armco plants that ruled the roost when the steel industries in China, India and South Korea were in their relative infancy. In 1996, for example, steel production in China was a mere 90

METALS OUTLOOK

by far the largest U.S. steel company. It is the only U.S. steel company in the world’s top-twenty listing, producing some 25 million tons of steel in 2017. Iverson was there and innovating while his competitors were sleeping. Iverson would have abhorred Trump’s tariffs.

Since Trump imposed his tariffs, companies have made decisions to either reopen idled capacity, expand existing capacity or install new capacity.

There are plans to increase flat-rolled capacity by some 16.5 million (short) tons in the next two to three years. In the meantime, mills have profited from the tariff imposition and both production and earnings are up. There are no figures out on the number of jobs created by these moves. There was excess capacity before there were tariffs, and the same number of workers can make more steel with this same capacity. million tons., in 1978 - when the then Soviet Union was by far the world’s largest steel producer - a relatively minuscule 32 million tons.

The guard has changed in the U.S. steel industry.

The old giants are no longer giants. Their place has been taken over by Nucor, that once fledging company that was hardly a factor in the early nineties. Its founder, Ken Iverson, decided to go with mini-mills, where the steel was made in electric furnaces from scrap, later from prereduced iron ore, and rolled into bar stock. The company got together with Germany’s SMS and became one of the pioneers of thin slab casting. It got into the flat-rolled steel business, and is today

There is no doubt that the U.S. steel industry is in better shape than it was a year ago. Its future health will depend to a large extent on the global economy and the strength of this economy’s manufacturing sector. The year 2019 is still a big question mark.

The recent (iron ore tailings) dam tragedy in Brazil has had an impact on the price of iron ore, as the mine’s owner, Vale, will have to reduce its output by ten percent. Vale had a similar accident some three years ago and is facing charges, has had $3 billion in assets frozen, and may lose its mining license, which would push the price of iron ore up further than the recent increase it underwent.

Metals & Manufacturing Outlook / February 2019

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AEROSPACE OUTLOOK

FEBRUARY 2019

AEROSPACE OUTLOOK

by ROYCE LOWE

It’s annual tot-up time in the commercial aircraft business, when companies report their sales and order figures for the preceding year, with a footnote as to how much profit they’ve made.

The Boeing Co. reported its first year with sales over $100 billion in its 102-year history; at $101.1 billion to be precise. Production problems slowed deliveries of the company’s biggest profit maker, the 737, but the defense division’s sterling fourthquarter performance made up for this. Boeing sold more aircraft than it delivered in 2018, taking in orders for 893 aircraft with a value of $143.7 billion and delivering 806. There were parts shortages during the year.

Boeing got a definite OK from the Brazilian government for a $4.2 billion transfer of the Embraer Commercial Aviation business to a ‘strategic partnership’ controlled by Boeing, whereby Embraer will sell its commercial aircraft division to a new joint venture with Boeing. The venture will be 80 percent controlled by Boeing, 20 percent by Embraer. The partnership will produce

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Metals & Manufacturing Outlook / February 2019

mid-capacity aircraft, 70-150 passenger planes.

For Boeing, the addition of the Embraer business will serve to counter the Airbus consolidation of Bombardier’s C-series medium-range aircraft.

Airbus, meanwhile, made 800 commercial deliveries in 2018, up 11 percent on 2017. This is a new record for annual deliveries. The total includes 20 of its new A220 regional aircraft, the former Bombardier C-series. The Airbus order backlog currently stands at 7,577 aircraft. Delta Air Lines, Jet Blue and (start-up) Moxy have confirmed orders for 135 A220s.

Airbus recently broke ground at its Mobile complex for creation of its new A220 aircraft manufacturing facility. The new assembly line will be adjacent to the A320 range production line, and will assemble A220-100 and A220-300 aircraft for U.S. customers. Production start is scheduled for the third quarter of 2019.

And Space X, having warned last year of fewer launches in 2019 will let go some 10 percent of its 6,000 employees in Hawthorne, California.

Those affected include production managers, avionics technicians, machinists and propulsion technicians.

AUTOMOTIVE OUTLOOK

FEBRUARY 2019

AUTOMOTIVE OUTLOOK

by ROYCE LOWE

When new in her job as GM’s CEO, Mary Barra GM is looking to good times as a result of its recent decision to restructure its business. It forecasts that its planned concentration on SUVs and trucks, coupled with what it feels will be a continuing strong U.S. auto market, augurs well for future sales and profits. Cold comfort, perhaps, for those salaried employees about to lose their jobs, but the company recently stated that of the 2,800 hourly employees affected, only about 100 will lose their jobs.

Good news seems to be peculiar to GM. Other automotive companies are reporting struggles.

Particularly Nissan, which is planning to cut up to 700 workers at one of its U.S. factories, and is adding slower truck and van sales to the list of troubles for a company suffering through a leadership crisis. Its erstwhile ‘leader,’ Carlos Ghosn, the man who put the Renault SA, Nissan Motor Co and Mitsubishi Motors Corp. group together, is accused of ‘financial crimes’ and is spending time in jail. Jose Munoz, the chief performance officer and top executive for North America, recently resigned.

Nissan sees overcapacity in the U.S., economic and political problems in Europe, and falling sales in China. Can it at all be helped by scandals involving its chief and accompanying resignations?

Ford Motor Company employs 54,000 workers

in Europe, mostly in the UK, Germany and Spain.

It will reportedly shed thousands of jobs on the back of technology and environmental regulations issues, not to mention trade tensions and Brexit.

Its Russian joint venture is being questioned. Ford might be said to be in quite a bit of trouble, and will struggle through the next couple of years hoping that its $11 billion overall restructuring package will at least bear some fruit by 2020. Ford is even thinking of making some kind of deal with VW, whereby the German automaker would make cars for Ford to sell in Europe. Jaguar Land Rover (JLR), which belonged to Ford and is now part of Tata Motors Ltd., is planning to cut up to 5,000 jobs in the UK. Brexit is an issue here, too.

FCA is the second auto manufacturer to be fined by the U.S. for exceeding allowable diesel emissions. It will cost the company $800 million.

VW retained its sales crown as the world’s number one, with 10.8 million sales, beating out Toyota with 10.6 million - from whom it took the crown in 2016. Its number one position owes much to its sales in the Chinese market. German automakers are prepared for headwinds in 2019. VW will produce EVs in Chattanooga, Tennessee , starting in 2022, under an investment of $800 million that will create 1,000 jobs.

It’s more than likely that the year 2019 will see further serious changes in the global automotive industry. There will be progress, for sure, but there may be casualties, even mergers.

Metals & Manufacturing Outlook / February 2019

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ENERGY OUTLOOK

FEBRUARY 2019

ENERGY OUTLOOK

by ROYCE LOWE The U.S. Department of Energy estimated, in mid-2018, that by the year 2050 the country would generate 404 gigawatts (GW) of wind energy, up from around 89 GW today. It forecasts this energy fulfilling over one third of the country’s needs. Texas alone, with 22.6 GW installed, ranks as the world’s sixth largest producer, in other words there are only five other countries ahead of Texas.

Wind power is not coming on stream everywhere in the U.S. Vast areas have missed out. Compared to Texas, only Oklahoma, Kansas, Illinois, Iowa and California count between 4,000 and 7,500 megawatts.

Arkansas, Louisiana, Kentucky, Virginia, Mississippi Alabama, Georgia, South Carolina and Florida have no installed capacity.

It is evident that the major reason for this disparity is the amount of wind available at 80 meters (262 feet), the height that matters for most commercial wind turbines. The Great Plains states have the fastest wind speeds and therefore the most wind energy available; the Southeast has a lot less wind. Power from a wind turbine has a cubic relationship to wind speed, so doubling of wind speed equates to eight times more power. Thus, evidently, it makes sense to put turbines where there is the most wind. But Idaho, less breezy, has 973 MW of capacity. So why is the Southeast so lacking?

It’s policies, maybe politics, but there are both federal and state incentives that serve to persuade states to invest in wind energy, even if they don’t have that much wind power. In some cases, states will opt for more solar energy, since solar panels cost so much less than wind turbines. In other cases, one state might buy wind energy from another state that has much more wind power.

The installed price for wind energy has dropped by more than 90 percent since the 1980s and continues to do so. States like Georgia are also investigating the potential for offshore wind power.

And the turbines are growing to impressive heights. GE has developed one for offshore use at 853 feet tall. Larger turbines are able to harness the wind in less gusty areas, increasing capacity factors. So as size goes up, costs come down and as utilities learn more about how to deploy wind energy, turbine use will spread further. It is safe to say though, that due to lack of wind and money, wind turbines will probably never be evenly spread across the country. But put wind and sun together and who knows how much renewable energy will be available in a few decades.

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Metals & Manufacturing Outlook / February 2019

3rd Annual Event ENERGY OUTLOOK

This exclusive event only for manufacturers, STEM firms and Legislators encourages collaboration and partnerships, providing a forum to discuss the issues most important in the industry.

Monday, March 25, 2019

The Trenton War Memorial The George Washington Ballroom 1 Memorial Drive, Trenton, NJ 08608 8:00 AM to 2:00 PM Made In New Jersey Showcase

Friday, March 29, 2018 County College of Morris (CCM) Davidson Rooms in the Student Community Center 214 Center Grove Road Randolph, NJ 07869 8:00 AM to 2:00 PM Apprenticeships & Workforce Development Showcase

Register Today at www.njmep.org/state-statemanufacturing-2019

Metals & Manufacturing Outlook / February 2019

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COVER STORY: THE CUDA UNDERWATER JETPACK

THIS STUDENT USED 3D PRINTING TO CREATE THE WORLD’S FIRST UNDERWATER JETPACK

by GEORGE FISHER-WILSON

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Metals & Manufacturing Outlook / February 2019

COVER STORY: THE CUDA UNDERWATER JETPACK When Archie O’Brien first saw the Seabob promotional videos he was sold. It was only when he saw the price of around $17,000 that he realized how inaccessible the technology truly was. Using 3D printing and working with 3D Hubs Archie designed and built an affordable alternative instead called the CUDA. A jetpack that the user wears like a backpack which gives you a hands-free experience as you glide through the water. What first started out as a student project only a year ago now has potential future applications for water rescue and goes into production next year.

For Archie, it all started with the idea of flying through converging tectonic plates in the crystal waters of Iceland or being accepted into a pod of dolphins in Bora Bora. As an product design student at Loughborough University, Archie decided he would take it upon himself to make underwater jet propulsion affordable. The first step was research, reading “Numerical Analysis of a Waterjet Propulsion System” cover to cover. This led to Archie realizing that water propulsion is harder than anticipated but he wasn’t deterred. The original idea was to shrink down a jet ski engine into a jetpack. After reading and researching it became clear that a better idea was to come up with a new propulsion system that better suited the backpack configuration.

As soon as the designs were finished the first prototype was built. The manufacturing of the first working version used a blend of manufacturing technologies including CNC machining, turning and 3D printing. The predominant technology used was 3D printing, apart from the drive shaft which was turned and the heatsink which was milled. The impressive part of the project is that most of the components used FDM technology and PLA. Both FDM and PLA are the most commonly and easily accessible materials and technologies respectively due to their low cost.

Through 3D Hubs, SLS was used to create the impeller which ordinarily would have been machined but Archie used carbon fiber infused powder which gave extreme stiffness needed for such parts. In short 3D printing allowed Archie to create a functional and robust prototype that previously wouldn’t have been possible with other manufacturing technologies for the same price or turnaround time.

Using 3D printing comes with its challenges when being used in water. Archie uses a few extra materials

The CUDA Underwater Jetpack

to keep the CUDA running when submerged. Firstly all the 3D printed parts are coated with a thin layer of epoxy resin which is then slow-dried. Finally, the doors for easy access to the batteries and electronics have silicone seals to keep the water out.

So far the CUDA has been tested in swimming pools and open water. The 3D printed parts have not yet had any issues with leakage or deterioration. This included leaving parts in water for months and in close to freezing conditions. Of course, this isn’t a scientific test but shows the sturdiness of this early functional product.

The CUDA can be assembled in under 10 minutes and is made of roughly 45 3D printed parts. Once assembled the operation is intuitive. The harness holds the pack 90 degrees to your shoulders, so the user simply points their body in the desired direction.

Steering is similar to an airplane, as you need a certain amount of speed before you can effectively turn. To control the speed the user currently holds a hand held trigger system for variable speed.

The quick replacement of batteries also allows for continuous use at remote locations.

The CUDA currently has a patent pending for its propulsion system and its first production models with being launched in Q2 2019. The next step after production will be Archie taking the CUDA around the world to fulfill his dream of gliding through those tectonic plates and jetting alongside sealife. The CUDA’s propulsion system has implications beyond watersports as well, its uses could include sea rescue and emergency beachside response. The speed means responders get on the scene and to those in need faster than current affordable solutions.

Metals & Manufacturing Outlook / February 2019

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GLOBAL PMI OUTLOOK

GLOBAL PMI OUTLOOK

by NORBERT ORE, DIRECTOR, HEAD OF INDUSTRIAL SURVEYS, STRATEGAS RESEARCH PARTNERS We are seeing further evidence of a soft landing in this month’s global surveys. China continued to weaken and that appears to be a problem for its other than U.S. trading partners – Japan, Taiwan, and South Korea.

The Eurozone appears to be flat lined with negligible growth for the past nine quarters. While 2018 ended with a whimper in many countries, the U.S. continued to lead the way with its significant rate of growth. 2019 appears to be off to a good start with strength in U.S. orders, output, employment, and investment.

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Metals & Manufacturing Outlook / February 2019

Eurozone: The Eurozone PMI (50.5, -0.9) hit a 31-month low in January as the PMI weakened for the sixth consecutive month. France (51.2, +1.5) and Spain (52.4, +1.3) were the only countries to expand during January. The remaining six countries lost an average of 1.4 pp from their PMI. Notably, Germany (49.7, -1.8) fell below the 50-mark for the first time since Nov’14 when it registered 49.5, while Italy (47.8, -1.4) was the mid-point for the fourth consecutive month. These reports align with the EA’s meager GDP growth for the last several quarters.

United Kingdom: The UK/CIPS PMI (52.8, -1.4) posted a three-month low in January. The uncertainty of BREXIT continues to weigh heavily on prospects for significant economic gains.

China: China’s Official Report, the CFLP PMI (49.5, +0.1), and the Caixin Manufacturing PMI (48.3, -1.4)

GLOBAL PMI OUTLOOK

was in contractionary territory again. China is very dependent upon trade with Taiwan, Japan, and South Korea which currently average 48.8 (+0.1) percent. These significant Chinese trading partners help explain the depth & breadth of the decline in China’s manufacturing and are good proxies for actual conditions in China.

India: India’s PMI (53.9, +0.7) accelerated slightly while posting its 18th consecutive month in expansionary territory. Continued growth appears likely in 2019. In January, India supply chains saw the fastest growth of new orders since Dec’17.

South Korea: The PMI (48.3, -1.5) fell below the 50-mark for the third consecutive month. Business confidence remains historically low. New orders, production, exports and confidence are all markedly lower.

Taiwan: Taiwan’s CIER-SMIT PMI (47.9, +3.1) was contractionary for a third month after 33 consecutive months of expansion. The Export (42.8, +4.1) and Import (43.0, +4.0) indexes somewhat reversed their rapid decline, but still have need of improvement to help the economy which has five of six major sectors in decline – only Food & Textiles is growing.

North America: Canada’s PMI (53.0, -0.6) expanded for the 35th consecutive month while remaining well positioned for continuing growth.

Meanwhile, Mexico’s PMI (50.9, +1.2) reversed direction on improved new orders and employment, inching closer to its 2018 average (51.3).

The ISM PMI®(56.6, +2.3) bounced to a level that supports significant continuing expansion in January. Though still faced with numerous challenges, U.S. manufacturing appears to be on very solid footing with improvements in new orders and output after a short-term correction in December. According to the ISM press release: “The past relationship between the PMI® and the overall economy indicates that the PMI® for January (56.6 percent) corresponds to a 4.0 percent increase in real gross domestic product (GDP) on an annualized basis.” It is also worth noting – a PMI® above 43.2 percent, over time, generally indicates an expansion of the overall economy. Therefore, the January PMI® indicates growth for the 117th consecutive month in the overall economy and the 29th straight month of growth in the manufacturing sector. Basically, the manufacturing economy continues to perform ably in a chaotic environment.

Metals & Manufacturing Outlook / February 2019

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ISSUES OUTLOOK

FEBRUARY 2019

ISSUES OUTLOOK

by ROYCE LOWE

Disgraced former Nissan chairman Carlos Ghosn

The Nissan Motor Company, recently rocked by a scandal relating to its ex-chairman, Carlos Ghosn, has decided to pull production of a new SUV model out of Sunderland, in the UK, an area that voted heavily in favor of Brexit, or the UK leaving the European Union.

At some point, not too long after the referendum vote, Nissan said it had had ‘reassurances’ from the British government and that no production would leave the UK. It has since changed its mind, and will move production of the new model to Japan.

automotive) parts from the UK to the EU and back.

The proverbial clock is ticking, and we will know only at the eleventh hour what the UK parliament and the other 27 members of the EU have decided on what they agree will be the best for all concerned.

Nissan speaks of Brexit uncertainty, and it certainly has a point. Britain is scheduled to leave the EU on March 29, but as yet there is no deal under which to leave. And there is little time left to seal a deal that will satisfy all parties involved in negotiations.

It will probably arrive at the last minute, if it does, if it overcomes the sticking point regarding the Irish border question, the ‘Backstop’, that will guarantee that this border - between Northern Ireland in the UK and the Republic of Ireland which is in Europe - stays open, regardless of the outcome of trade negotiations on the future UK-EU relationship, which have yet to begin.

Customers for Chinese goods brought forward their deliveries in efforts to miss out on the extra duties expected at year-end. This was chaos from the trade war, again an uncertainty that is causing people to make decisions based on things that may happen, instead of on things they know have or will happen.

Nissan is not on its own. Banks have been moving personnel from London to Europe for months, and many manufacturers have bowed to the uncertainty that threatens just-in-time movement of (mostly

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Metals & Manufacturing Outlook / February 2019

Meanwhile, at the other end of the planet, the equivalent of some 900,000 20-foot containers were moving through the port of Los Angeles in December, making this the busiest December on record.

The trade wars, and there are no other words to describe them, are an ongoing uncertainty that, unless resolved, will continue to disrupt trade in China, the U.S. and Europe, not to mention the poorer parts of the world, whose economies are likely to suffer more. March 1 is the deadline, barring an agreement, for Trump’s increase on tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent, a move that the UN Conference on Trade and Development (Unctad) has warned will cost dearly, particularly to the poorer east Asian nations.

THE MANY FACETS OF MANUFACTURING

THE MANY FACETS OF MANUFACTURING

by ANDREA OLSON CEO OF PRAGMADIK, CO-HOST OF RIVETING EXCHANGES AND HOST OF THE CUSTOMER MISSION PODCASTS

Often times, the perception of manufacturing is oversimplified. While a company might make widgets, this isn’t the only thing that makes a manufacturer.

Manufacturers face the same challenges of any other business or industry, whether it is better understanding their customers, helping their employees achieve a worklife balance, or increasing diversity within their workforce to compete.

In the most recent Women And Manufacturing Podcast Series, our hosts speak to all of these issues. Andrea Olson, in The Customer Mission Podcast, discusses how manufacturers are unintentionally sabotaging their customers by making it hard to do business with them. Amy Nicklaus, with the Full-Time Podcast, brings marketing coach and consultant Elizabeth Barry to the discussion on how to achieve your goals while maintaining a healthy life balance. In the Riveting Exchanges Podcast, Desiree Grace and Andrea Olson interview Michelle Murphy, Chief Diversity Officer with Ingersoll Rand, on how diversity has helped the organization grow and better compete for talent.

As the business climate has changed, so has manufacturing. Over the last decade, the biggest emphasis has been placed on “Lean Operations”, finding ways to streamline processes, eliminate defects, and remove excess. In the last few years, that focus has shifted to front-of-the-house operations, where manufacturers are starting to examine how they can leverage talent, communications, and customers to more effectively differentiate. This has been mainly driven by the advent of technology, where software, consultants, and equipment is more easily accessible to smaller,

mid-market companies. When in the past, robotics was something only a Fortune 50 company could attain, a 50-person shop can purchase almost off the shelf for a reasonable price.

With the technology playing field leveling, it’s now becoming the era of “business strategy” - where manufacturers who had the talent for inventing and making products, need to examine how to more strategically run the business-side of their organization.

Factors including a low unemployment rate, have left the industry desperately competing for talent. Today’s manufacturer will need to re-tool their operation in an entirely new way - providing advancement, education, flexibility, and competitive pay for workers. Today’s manufacturer will need to embrace marketing, social media, and communications like never before. Today’s manufacturer will need to examine and address how to create strategies to build and retain a profitable customer base, and serve them in new ways beyond simply “on-time delivery.”

These areas are nothing new to companies which serve other industries, but regrettably, it is to manufacturing.

As an industry, we must embrace “steady change” - the concept that daily, incremental change is the key to our growth and sustainability. Unlike the past, where an agreement by handshake kept a manufacturer humming for a 10-year run, today’s environment is riddled with contracts, consolidation, cost control, and competition.

The key to success will be having the right people on board to help you be a smarter, more nimble and more strategic “business” - not simply just a “manufacturer”.

Metals & Manufacturing Outlook / February 2019

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EUROZONE OUTLOOK

GLOBAL OUTLOOK

EUROZONE

by ROYCE LOWE

IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) eased almost to stagnation in January to 50.5 - the lowest since November 2014 - from December’s 51.4.

Production was up slightly, but the sharpest fall in new orders since April 2013 was recorded. Growth was sustained by a reduction of backlogs and the most rapid inventory accumulation in the survey’s history. IHS Markit’s PMI for the UK was down from December’s 54.2, to 52.8 in January. Production and new orders growth slowed and employment fell for only the second time in the past two-and-a-half years.

There was again solid growth in the consumer goods sector, but a weakening of operating conditions for both the intermediate and investment goods sectors. Business confidence improved over December’s six-year low, but stayed below recent trends. Through all this, there are worries about Brexit and the effects on the automotive industries of anti-pollution regulations and the uncertainty of possible trade wars.

Crude steel production in Germany in December was at 3.230 MT, down 2.3 percent year-over-year; in Italy 1.655 MT, down 7.4 percent year-over-year;

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Metals & Manufacturing Outlook / February 2019

in France 1.132 MT, down 6.7 percent year-over-year, and in Spain 1.085 MT, up 6.3 percent year-overyear. Russia’s crude steel production for December was at 5.870 MT, down 5.9 percent year-over-year; Ukraine’s was 1.885 MT, down 0.6 percent year-overyear. The UK produced 0.800 MT of crude steel in December, up 25 percent year-over-year.

The European auto market was down very slightly, by 0.04 percent year-over-year to 15.62 million units, with Spain up 7 percent, France up 3 percent, UK down 6.8, Italy 3.1, and Germany 0.2 percent.

Companies reported that Brexit preparations led to increases in both purchasing activity and stockpiling of inputs at warehouses. New orders for consumer goods showed solid growth, but there were decreases in new orders for intermediate and investment goods. Business sentiment was at a 30-month low, although 46 percent of companies feel the next twelve months will be better.

ASIA OUTLOOK

GLOBAL OUTLOOK

ASIA OUTLOOK

by ROYCE LOWE

CHINA’s PMI slipped a little further into contraction in January, easing from 49.7 in December to 48.3.

Production and total new orders were both slightly down, and overall operating conditions softened.

There was a slight renewal in export orders. On the positive side, employment fell at the weakest rate in nine months and business confidence was at its highest since May 2018. Job creation was sustained, but at a modest pace. CHINA produced 76.121MT of crude steel in December, up 8.2 percent year-over-year; Japan 8.467 MT, down 2.9 percent year-over-year; India 9.010 MT, down 0.6 percent year-over-year and South Korea 6.162 MT, up 1.5 percent year-over-year. Taiwan produced 2.020 MT in December, up 6.7 percent.

Chinese total vehicle sales for 2018, at 28,081,000 units, were down 2.8 percent year-over-year, with passenger vehicle sales down 4.1 percent, at 23,710,000 units and commercial vehicle sales up 5.1 percent at 4,371,000 units. NEV sales were up 61.7 percent at 1,256,000 units.

JAPAN saw its production fall for the first time in two-and-a-half years, and its PMI at a 29-month low. New exports dropped at the fastest rate since July 2016, and business confidence fell for the eighth consecutive month. The PMI fell from 52.6 in December to 50.3 in January. There was lower demand from both China and the U.S.

INDIA saw a significant production increase and the fastest rise in new order growth since December 2017. Input buying growth picked up along with an increase in employment. Inflation was relatively low. The PMI increased from December’s 53.2 to January’s 53.9 figure. Export sales continued to flourish. Investment goods were the strongest in both production and new orders. Price increases were reported for paper, textiles, steel and synthetic rubber; decreases for aluminum, copper, oil and plastics. Increasing backlogs are posing capacity challenges. Business sentiment is improving.

Manufacturing Laughs

All cartoons in our publication are intended for ‘comic relief’ and not to reflect a particular political point of view or bias.

Metals & Manufacturing Outlook / February 2019

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WOMEN’S OUTLOOK

MARCH 8, 2019:

INTERNATIONAL WOMEN’S DAY MARCH 2019:

WOMEN’S HISTORY MONTH

by TIM GRADY Metals & Manufacturing Outlook, along with Manufacturing Talk Radio, Women And Manufacturing, and everyone at the Manufacturing Broadcasting Corporation has focused on women in business since before the launch of the podcast, Women And Manufacturing (WAM).

It becomes more apparent with each passing day that women are under-represented in business and industry, yet provide an excellent solution to the burgeoning Skills Gap that is expanding across the manufacturing universe. Gender is no longer any more or less relevant in manufacturing or business than race, religion, or ethnicity, although it clearly created a glass ceiling for females up through and even into the 21st Century. However, like the Berlin Wall, erected to keep a population within, gender barriers are falling and the glass ceiling is cracking – and, it’s way past due.

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Metals & Manufacturing Outlook / February 2019

Our Women And Manufacturing Podcast is available at WOMENANDMFG.COM

In recognition of the impact of women in all roles of society is International Women’s Day on March 8, 2019 with the theme #BalanceforBetter: better the balance, better the world. March is also Women’s History Month, and there are thousands of untold stories about the accomplishments of women across the entire spectrum of business and industry. Here are just a few:

Mary Dixon Kies

The first woman to receive a U.S. patent in 1809 for a process to weave straw with silk.

Unfortunately the patent was destroyed in the great Patent Office fire in 1836. Until 1840, only 20 other patents were issued to women.

Margaret Knight

Born in Maine in 1838 and received 26 patents during her lifetime, including one for the flat bottom paper bag used in grocery stores and retail outlets to this day.

Valerie Thomas

Began working for NASA in 1964 as a data analyst. She received a patent in 1980 for inventing an illusion transmitter (think Star Trek hollow deck) for projecting 3D images as though they are right in front of you.

Grace Murray Hopper Developed a common language with which computers could communicate, called COBOL. It was never patented because it pre-dated a time when computer software technology was even considered a ‘patentable’ field. She also rose to the rank of Rear Admiral in the U.S. Navy.

Hedy Lamarr

The screen actress was the coinventor of a spread spectrum secret communications system used to prevent classified messages from being intercepted by enemy personnel, a technology that was the precursor for cell phones.

Julie Newmar

Known for her role as Catwoman and other roles in Hollywood and television, patented ultra-sheer, ultra-snug pantyhose.

Stephanie Louise Kwolek Her research in high performance chemical compounds for DuPont led to her patent of Kevlar, now used in bulletproof vests, underwater cables, brake linings, space vehicles, boats, parachutes, skis and building materials.

Katharine Burr Blodgett

The first female scientist hired

by General Electric’s Research Laboratory in Schenectady, New York, working on monomolecular coatings and thin film coatings that resulted in the world’s first 100% transparent or invisible glass. Thin film coatings and the process for applying them have been used to limit distortion in eyeglasses, microscopes, telescopes, camera lenses and many other applications.

History is overflowing with examples of the contributions of women, some well known and many, many others largely unsung. Now, in the 21st Century, the world has the unlimited potential and possibilities to add the uniqueness of the female mind to the development of humans on Earth, from their very creation to contributing their lives and lifestyles each and every day.

We encourage our readers to research the contributions of women and add this incredible talent pool at all levels within every organization with sincere, rapid and intense conviction.

Tim Grady is Editor-in-Chief of Metals & Manufacturing Outlook ezine, co-host of Manufacturing Talk Radio, an Executive Producer at the Manufacturing Broadcasting Corporation.

Metals & Manufacturing Outlook / February 2019

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SOUTH AMERICA OUTLOOK

GLOBAL OUTLOOK

SOUTH AMERICA

by ROYCE LOWE

BRAZIL saw a further significant improvement in new orders, production and employment.

Business confidence is way up. The PMI in January, at 52.7, was very slightly up from December’s 52.6. Things are looking better in Brazil than they have in some long while. All three major sectors are up, with investment goods strongest, but there is growth in the other two groups. Brazil’s crude steel production for the month of November was 2.644 MT, a decrease year-over-year of 6.3 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) – sinks to near a two-anda-half year low in January, at 50.7, down from December’s (adjusted) 51.4. The U.S. is presently keeping the Global PMI’s head above water.

The consumer goods sector was still the strongest performer, with the PMI for intermediate goods at 50.0 and that for investment goods showing a slight contraction. On the positive side, employment levels are up for the 29th consecutive month, and optimism for the year ahead is at a four-month high.

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Metals & Manufacturing Outlook / February 2019

Manufacturing Laughs

All cartoons in our publication are intended for ‘comic relief’ and not to reflect a particular political point of view or bias.

ISM REPORT OUTLOOK

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

ISM PMI at 56.6% ISM PMI for the past 5 years

2014

2015

2016

2017

2018

Metals & Manufacturing Outlook / February 2019

2019

29

ISM REPORT OUTLOOK

ISM® REPORT ON BUSINESS®

MANUFACTURING E

conomic activity in the manufacturing sector expanded in January, and the overall economy grew for the 117th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

This report reflects the recently completed annual adjustments to the seasonal factors used to calculate the indexes. The January PMI® registered 56.6 percent. The New Orders Index registered 58.2 percent, an increase of 6.9 percentage points from the December reading of 51.3 percent. The Production Index registered 60.5 percent, 6.4-percentage point increase compared to the December reading of 54.1 percent. The Employment Index registered 55.5 percent, a decrease of 0.5 percentage point from the December reading of 56 percent. The Supplier Deliveries Index

JANUARY 2019 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® Manufacturing Business Survey Committee

registered 56.2 percent, a 2.8 percentage point decrease from the December reading of 59 percent. The Prices Index registered 49.6 percent, a 5.3-percentage point decrease from the December reading of 54.9 percent, indicating lower raw materials prices for the first time in nearly three years.

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

PMI @ 56.6% ®

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

MANUFACTURING AT A GLANCE Jan Index 56.6 58.2 60.5 55.5 56.2 52.8 42.8 49.6 50.3 51.8 53.8

Dec Index 54.3 51.3 54.1 56.0 59.0 51.2 41.7 54.9 50.0 52.8 52.7

% Point Change +2.3 +6.9 +6.4 -0.5 -2.8 +1.6 +1.1 -5.3 +0.3 -1.0 +1.1

Growing Growing Growing Growing Slowing Growing Too Low Decreasing Growing Growing Growing

Rate of Change Faster Faster Faster Slower Slower Faster Slower From Increasing From Unchanged Slower Faster

Trend* (months) 29 37 29 28 35 13 28 1 1 35 24

OVERALL ECONOMY

Growing

Faster

117

Manufacturing Sector

Growing

Faster

29

Index PMI® New Orders Production Employment Supplier Deliveries Inventories Customers’ Inventories Prices Backlog of Orders New Export Orders Imports

Direction

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

PMI 2017

2018

2019

56.6%

50% = Manufacturing Economy Breakeven Line

PMI® Manufacturing expanded in January, as the PMI® registered 56.6 percent, an increase of 2.3 percentage points from the December reading of 54.3 percent. This indicates growth in manufacturing for the 29th consecutive month. The PMI® reversed a December decline in expansion primarily through gains in New Orders and Production.

A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

42.9% = Overall Economy Breakeven Line

COMMODITIES REPORTED Commodities Up in Price: Electronic Components (6); Freight (2); Nylon Polymer; Printed Circuit Board Assemblies; Printed Circuit Boards (2); Steel* (5); Steel — Hot Rolled*; Steel — Stainless*; Steel Products*(9); Sulfuric Acid; and Valves.

Commodities Down in Price: Aluminum (4); Base Oils; Caustic Soda (4); Copper; Diesel; Gasoline (2); Memory; Polyethylene; Polypropylene; Steel* (5); Steel — Carbon; Steel — Hot Rolled* (5); Steel — Stainless*; Steel Products*; and Steel Scrap.

Commodities in Short Supply: Capacitors (19); Electrical Components; Electronic Components (9); Integrated Circuits; Nylon Polymer; and Resistors (15).

12

30

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

JANUARY | FEBRUARY 2019 Metals & Manufacturing Outlook / February 2019

ISM Report On Business ®

®

manufacturing

January 2019 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

New Orders (Manufacturing) 2017

2018

2019

New Orders ISM’s New Orders Index registered 58.2 percent. Eleven of 18 industries reported growth in new orders in January, in the following order: Apparel, Leather and Allied Products; Printing & Related Support Activities; Miscellaneous Manufacturing‡; Plastics & Rubber Products; Primary Metals; Electrical Equipment, Appliances & Components; Petroleum and Coal Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products.

58.2% 52.5% = Census Bureau Mfg. Breakeven Line

Production (Manufacturing) 2017

2018

2019

Production ISM’s Production Index registered 60.5 percent. The 14 industries reporting growth in production during the month of January — listed in order — are: Wood Products; Printing & Related Support Activities; Furniture & Related Products; Fabricated Metal Products; Plastics & Rubber Products; Miscellaneous Manufacturing‡; Paper Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; Transportation Equipment; and Machinery.

60.5%

51.7% = Federal Reserve Board Industrial Production Breakeven Line

Employment (Manufacturing) 2017

2018

2019

ISM’s Employment Index registered 55.5 percent. Nine of 18 manufacturing industries reported employment growth in January in the following order: Textile Mills; Computer & Electronic Products; Primary Metals; Transportation Equipment; Machinery; Paper Products; Electrical Equipment, Appliances & Components; Chemical Products; and Plastic & Related Products.

55.5% 50.8% = B.L.S. Mfg. Employment Breakeven Line

Supplier Deliveries (Manufacturing) 53.1% 2017

2018

Employment

2019

Supplier Deliveries The delivery performance of suppliers to manufacturing organizations slowed in January, as the Supplier Deliveries Index registered 56.2 percent. The 11 industries reporting slower supplier deliveries in January — listed in order — are: Textile Mills; Printing & Related Support Activities; Computer & Electronic Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Machinery; Transportation Equipment; Chemical Products; Fabricated Metal Products; and Miscellaneous Manufacturing‡.

56.2%

Inventories (Manufacturing) 2017

2018

2019

52.8%

44.3% = B.E.A. Overall Mfg. Inventories Breakeven Line

‡Miscellaneous

Inventories The Inventories Index registered 52.8 percent. The 10 industries reporting higher inventories in January — listed in order — are: Furniture & Related Products; Textile Mills; Computer & Electronic Products; Miscellaneous Manufacturing‡; Transportation Equipment; Primary Metals; Chemical Products; Plastics & Rubber Products; Machinery; and Food, Beverage & Tobacco Products.

Manufacturing (products such as medical equipment and

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

Metals & Manufacturing Outlook / February 2019

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ISM Report On Business ®

®

manufacturing

January 2019 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management ® Manufacturing Business Survey Committee

Customer Inventories (Manufacturing) 2017

2018

2019

Customers’ Inventories ISM’s Customers’ Inventories Index registered 42.8 percent in January, which is 1.1 percentage points higher than the 41.7 percent reported for December, indicating that customers’ inventory levels were considered too low. The only industry reporting customers’ inventories as too high during the month of January is Nonmetallic Mineral Products.

42.8%

Prices (Manufacturing) 2017

2018

2019

Prices The Prices Index registered 49.6 percent. Seven of the 18 industries reported paying increased prices for raw materials in January, in the following order: Textile Mills; Printing & Related Support Activities; Paper Products; Transportation Equipment; Miscellaneous Manufacturing‡; Computer & Electronic Products; and Food, Beverage & Tobacco Products.

49.6% 52.5% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line

Backlog of Orders (Manufacturing) 2017

2018

2019

Backlog of Orders

2019

New Export Orders

50.3%

ISM’s Backlog of Orders Index registered 50.3 percent. The seven industries reporting growth in order backlogs in January — listed in order — are: Textile Mills; Plastics & Rubber Products; Chemical Products; Electrical Equipment, Appliances & Components; Primary Metals; Food, Beverage & Tobacco Products; and Machinery.

New Export Orders (Manufacturing) 2017

2018

ISM’s New Export Orders Index registered 51.8 percent. The eight industries reporting growth in new export orders in January — listed in order — are: Furniture & Related Products; Miscellaneous Manufacturing‡; Plastics & Rubber Products; Chemical Products; Fabricated Metal Products; Machinery; Computer & Electronic Products; and Food, Beverage & Tobacco Products.

51.8%

Imports (Manufacturing) 2017

2018

2019

53.8%

‡Miscellaneous

Manufacturing (products such as medical equipment and

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

32

Metals & Manufacturing Outlook / February 2019

Imports ISM’s Imports Index registered 53.8 percent. The 11 industries reporting growth in imports during the month of January — listed in order — are: Wood Products; Furniture & Related Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Textile Mills; Miscellaneous Manufacturing‡; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; and Machinery.

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