PLUS
CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1 OF A SIX PART SERIES PAGE 26
THE CREDIT MANAGER’S OUTLOOK PAGE 8
NORTH AMERICAN OUTLOOK PAGE 10
METALS OUTLOOK PAGE 12
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TABLE OF CONTENTS
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18
PUBLISHER’S STATEMENT
COVER STORY
A word from our publisher
06 MANUFACTURING OUTLOOK
22
08
GLOBAL PMI OUTLOOK
A global look at manufacturing
THE CREDIT MANAGER’S OUTLOOK
24
10
A look at Europe
NORTH AMERICAN OUTLOOK
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Drones: How they are made, lift capacity and modifications for drone delivery
Manufacturing in the US, Canada and Mexico
METALS OUTLOOK The cost, making and treating of metals
14 AEROSPACE OUTLOOK The aerospace industry
15 AUTOMOTIVE OUTLOOK Auto industry news
16 ISSUES OUTLOOK The Global MFG PMI
17 ENERGY OUTLOOK Energy and the environment
EURO OUTLOOK
25 ASIA OUTLOOK China sees little change
26 COVER STORY CNC Machining: The complete engineering guide part 1
32 SOUTH AMERICA OUTLOOK Brazil in the spotlight
33 THE FEBRUARY ISM REPORT The Manufacturing ROB
PUBLISHERS STATEMENT
PUBLISHER’S STATEMENT Manufacturing continues to move in expansion territory and in June 2019 will become the longest up cycle since World War II, exceeding the 120-month cycle from March of 1991 through March of 2001. Since the early 1980’s, economic expansions have averaged 100 months with brief recessions in between. Even the Great Recession of 2007-2009, although precipitous, was just 18 months long and largely brought on by Wall Street and the housing bubble, and not a decline in manufacturing as the precursor. So, now what? What does the next 12-18 months look like for the economy? The talk in the current administration is that there is no reason for an economic expansion to fall into recession – unless, it is driven there by forces not having to do with manufacturing. In 2018, the Fed began raising interest rates to stave off inflation that never happened, but it did clip about a half point off of GDP. If the Fed holds steady, this expansion could continue through 2019 into 2020. As long as employment remains steady, consumer confidence will remain steady. The February jobs number of just 20,000 may be a reflection of two things: we are at 3.8% unemployment already, and employers cannot find the skills they need for the positions they have, which is why there is so much energy around solving the Skills Gap. That aside, the roll-up of the ISM numbers each month remain above 50 with some monthly movement up and down in the sub-indices. The February 54.2 is still a growth indicator, even though New Orders, Production, Employment and Supplier Deliveries were down for the month. You can learn more in-depth information by listening to Manufacturing Talk Radio when Tim Fiore, the committee chair for the ISM’s Manufacturing Report on Business® discusses this in great detail. The Non-Manufacturing Report on Business® was even more impressive for February when presented by Anthony Nieves, the committee chair for that ISM report. The mainstream media may be reporting otherwise because doom and gloom is their stock-in-trade, but the smart money is on continued expansion in 2019. The bugaboo? Tariffs! Fortunately, reasonable minds in Congress – yes, there are a few – are tying the approval of USMCA to the removal of metal tariffs on Mexico and Canada. It’s about time! Tariffs have never worked in favor of the country that imposed them, and always punish the generators of jobs – read: local businesses – in the country that imposed the tariffs. While there is some inkling of favorable progress with China, that resolution is months away from the ink drying. One other soapbox topic – the Export-Import Bank, which still does not have a quorum and cannot do deals greater than $10 million. Partisan politicians each have their handful of ‘facts’ which often ignore reality. One reality is that foreign governments require bidders on contracts in their country to be backed by an export credit agency, an institution that offers financing for domestic companies’ international export operations and other activities. The limitations on the U.S. export credit agency, known as the ExIm Bank, hinders U.S. manufacturing exports. Exports are 15% of the U.S. economy. The ExIm Bank is profitable and contributes money back to the Treasury each year. The ExIm Bank loan default rate is 1/10th that of the U.S. banking industry. The claims of ‘crony capitalism’ is such a hollow reed that it brings into question the veracity of the politician who utters it – if one can use ‘veracity’ and ‘politician’ in the same sentence, since political lying has become the national pastime. But before I devolve into political dysentery, delve into the content of this month’s Metals & Manufacturing Outlook ezine and let us know what you like or don’t like about it. Comments welcomed. Lewis A Weiss, Publisher Contact laweiss@gmail.com or text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast.
Metals & Manufacturing Outlook / March 2019
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MANUFACTURING OUTLOOK
MARCH 2019
MANUFACTURING OUTLOOK THE UK IS DUE TO LEAVE EUROPE AT THE
END OF MARCH: IT MAY OR MAY NOT DO THIS. U.S. MANUFACTURING IS STILL SOLID. MANUFACTURING IN THE EU IS LOOKING SHAKY AT THE MOMENT, WITH GERMANY A CAUSE FOR SOME CONCERN. GLOBAL TRADE AND TARIFFS ARE STILL IN A STATE OF FLUX.
by ROYCE LOWE The Global Manufacturing PMI is at a 32-month low, with the U.S., in spite of its recent readings, again saving the day. European and Japanese manufacturing are a little less healthy, both falling into contraction. There are still many U.S. manufacturing voices decrying the Trump tariffs. Despite ongoing efforts to secure an eleventhhour agreement, at time of writing there is no deal for Brexit, nor is there any total assurance that the UK will leave the EU on the stipulated March 29 date. The people have spoken, and their decision risks putting manufacturing in the UK, hence Europe, in some kind of disarray. We won’t know until we know. A couple of car manufacturers are pulling out of the UK, possibly because of Brexit (See Automotive Outlook.) Trump may have to lift tariffs on steel and aluminum if he wants his new North American trade deal - USMCA - to pass. US lawmakers and business groups are allying with Canada and Mexico to push Trump to lift the section 232 levies on these two nations as a condition of enacting the deal Trump signed at the end of November.
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Metals & Manufacturing Outlook / March 2019
Robert Lighthizer, the U.S. trade representative, says that if USMCA doesn’t pass, ‘it would be a catastrophe across the country.’ The U.S. trade gap rose to $621 billion in 2018, the highest in a decade, as the annual deficit in goods and services increased by 12.5 percent to $68.8 billion in December, also a ten-year high. The merchandise trade gap with China hit a record $419.2 billion in 2018. The Bureau Of Labor Statistics jobs report for February shows the addition of 20,000 non-farm payroll jobs. The unemployment rate decreased to 3.8 percent. This was the 101st consecutive month of job growth in the U.S. Vicious weather and a slowing global economy are said to be responsible for the low job figures. The Bureau of Economic Analysis recently released its ‘initial’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2018, putting it at 2.6 percent. The figure for the third quarter of 2018 was 3.4 percent.
MANUFACTURING OUTLOOK The ISM PMI figure for U.S. manufacturing rolled up to 54.2 percent in February, softening from January’s 56.6 percent, representing the 30th consecutive month of growth in manufacturing. The overall economy grew for the 118th consecutive month.
production in China, at 2.969 million tons, representing 56 percent of world total. Production was 453,000 tons in GCC; 372,000 tons in the rest of Asia; 306,000 tons in Western Europe; 326,000 tons in North America and 345,000 tons in Eastern and Central Europe.
IHS Markit’s remarks on the U.S. noted that operating conditions improved at the slowest pace since August 2017, with softening in the rates of production and new order growth. Inflationary pressures eased. Although conditions softened, they were still solid and there was an improvement in operating conditions across the U.S. manufacturing sector.
U.S. LIGHT VEHICLE SALES……..Light vehicle sales were down 2.9 percent in February, somewhat more than envisaged. Cold weather and lower tax refunds are held largely responsible, but forecasts for the year are less than bullish. Total light vehicle sales came in at 1.27 million, down 2.9 percent year-over-year, for an SAAR figure of 16.61 million, the lowest since February 2015. Ford joined GM in reporting only every three months
The Market PMI moved to its lowest level since August 2017, and was at 53.0 percent in February, down from 54.9 percent in January. There was a marginal increase in export sales from January, a solid increase in employment and a still positive outlook for the next twelve months. 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 January, continues to rise and was 146 705 MT, up 1.0 percent year-over-year. STEEL DEMAND IN CHINA, according to Arcelor Mittal, was up 3.5 percent, year-over-year, in 2018, and is forecast to fall by 0.5 - 1.5 percent in 2019.
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 January 2019 was 7.647 MT, up 11.0 percent year-over-year. Primary Global Aluminum Production in January 2019 was reported at 5.304 million tons, with
Metals & Manufacturing Outlook / March 2019
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CREDIT MANAGER’S OUTLOOK
CREDIT MANAGERS’ OUTLOOK by DR. CHRISTOPHER KUEHL MANAGING DIRECTOR OF ARMADA CORPORATE INTELLIGENCE THIS REPORT REPRINTED COURTESY OF THE NATIONAL ASSOCIATION OF CREDIT MANAGERS (NACM.ORG) WHERE MORE IN-DEPTH INFORMATION CAN BE FOUND.
Combined Sectors After a somewhat rocky beginning there has been a welcome correction as far as economic data is concerned. Now the question is which of these trends will really take hold through the remainder of 2019? There is some evidence to support both optimism and pessimism. As a matter of fact, these contradictory indications have become quite the topic among economists. The Purchasing Managers’ Index tumbled dramatically at the end of the year but then bounced back in February. There were similar performances seen in everything from capacity utilization to capital expenditures, durable goods orders and other markers of the economy. The worrisome part shows up with higher commodity prices and the impact of a global economic slowdown. This month’s CMI follows some of that same pattern. The overall reading for February’s CMI regained some ground with a score of 54.9 – up from the 53.4 notched the month before. This takes the number back to the levels seen last November when it hit 55.8. The even better performance was noted in the index of favorable factors as it hit 60.7 after falling to 59.5. The only months where this score has been under 60 was December of last year and January of this year – all the rest of the last twelve months have been in the 60s. The index of unfavorable factors also reached a nice milestone as the index escaped the contraction zone with a reading of 51.0. In the last twelve
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months this index has been in contraction only three times and the February score is the highest seen in the past year. As is generally the case the details provide some better insights. As mentioned, the index of favorable factors returned to the 60s with a reading of 60.7. Two of the sub-index categories remain in the high 50s and two are solidly in the 60s again. The “sales” category had fallen to 59.7 and is now at 62.6. This is higher than it has been for the last couple of months but not back to the 64.5 level reached last November. The “new credit applications” sub-index remained in the 50s but improved from 58.2 to 58.9 while the “dollar collections” reading stayed almost the same as last month with a reading of 59.1 compared to the 59.0 in January. The “amount of credit extended” number went from 61.2 in January to 62.3 this month and that is higher than it was in December or January. There was some significant movement in the sub-index readings for the unfavorable factors as well. The “rejections of credit applications” shifted up again and now stand at 52.1, the highest score notched since August of last year when it hit 52.2. The “accounts placed for collection” also moved up from 48.2 to 49.0 although this remains in contraction territory. The “disputes” category likewise moved up slightly but remains in the contraction zone with a reading of 48.5
CREDIT MANAGERS’ OUTLOOK as compared to the 47.1 noted in January. The reading for “dollar amount beyond terms” escaped the contraction zone by hitting 51.3 after languishing at 47.4 the month prior. This is a substantial jump and in a critical area as slow pays are often the start of bigger issues down the road. The “dollar amount of customer deductions” also jumped back into the expansion zone by the narrowest of margins as it hit an even 50.0 after tracking at 48.0 in January. The “filings for bankruptcies” numbers improved as well and the reading remained strongly in the md-50s with a 54.9 as compared to 53.8 the month before. The combination of improved performance in the favorable factors and a real recovery in the unfavorable index casts a different light on the start of 2019. It is not that the concerns voiced at the start of the year are not valid – there is plenty to worry about as far as inflation is concerned and the issues of trade and tariff war will be biting sooner than later. What this does seem to show is continued resilience in many businesses and that would suggest they could survive a bit of downturn this year. Manufacturing Sector Manufacturing has been growing rapidly in the U.S. over the last few years and for a variety of reasons. At the top of the list has been the advantage brought by the heavier use of technology and robotics. There have also been some advantages created by cheaper commodities costs and improved options as far as transportation. Global demand has played a major role as well. These are all factors that are in some jeopardy now. The dollar has gained value and that hurts exports, tariffs have added to commodity costs, trade wars inhibit market opportunity and there are chronic issues like labor shortage and productivity decline as fewer trained people are available for hire. These factors seemed to be weighing on the sector the last few months but the latest readings from the CMI indicate there is still strength. The overall index rose from 53.1 to 54.8 and that is taking the readings back to levels seen last November. The index of favorable factors moved back into the 60s after having dipped into
the 50s in December and January. The index of unfavorable factors moved out of the contraction zone with a nice jump to 51.4 – marking the highest reading since May of last year. This data is consistent with the various manufacturing readings that have come from the Purchasing Managers’ Index as well as data on industrial production, durable goods orders and factory orders. As is often the case there are some unusual factors at work that may not extend that far into 2019 and some could even reverse by year’s end. The “sales” numbers improved and are back in the 60s again with a reading of 61.7 – still a far cry from the 68.2 that was notched in September of last year. The “new credit applications” reading also improved but fell a little short of the 60s at 58.6 as compared to the 53.3 the index noted the month before. The “dollar collections” data jumped back into the 60s with a reading of 60.5 after hitting 58.4 the month before. There was a little dip in the “amount of credit extended” category as it went from 60.3 to 59.2. There seems to be a little more frugality showing up in terms of what kind of credit is asked for and for what kind of purchasing. The “rejections of credit applications” stayed almost the same as it was the month before -moving from 53.3 to 53.5 and that is good news when twinned with the numbers of new credit applications. The “accounts placed for collection” category slipped back into expansion territory by the narrowest of margins – hitting 50.5 after last month’s 49.7. The category of “disputes” improved a bit but stayed in the contraction zone at 48.7. Still, this was an improvement over the 46.8 that was noted the month before. The “dollar amount beyond terms” also jumped out of contraction territory into the expansion zone with a reading of 52.8 following the 49.1 from January. The “dollar amount of customer deductions” stayed in contraction territory but improved over the month before. It was at 46.7 and is now at 49.3. The reading last month had been the lowest number seen since June of last year and now it is back to semi-respectability. The “filings for bankruptcies” slipped slightly but has remained in the expansion zone with a reading of 53.3 as compared to 54.0 last month. Metals & Manufacturing Outlook / March 2019
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NORTH AMERICAN OUTLOOK
MARCH 2019
NORTH AMERICAN OUTLOOK by ROYCE LOWE
The Institute of Supply Management PMI figure softened to 54.2 in February from 56.6 in January. Of the 18 manufacturing industries, 16 reported growth in February, in the following order: Printing & Related Support Activities; Textile Mills; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Paper Products; Wood Products; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Transportation Equipment; Machinery; Furniture & Related Products; and Plastics & Rubber Products. The only industry reporting contraction in February is Nonmetallic Mineral Products. Comments from the manufacturing industry continue, in general, in an optimistic vein, and
there is less mention of the effects of tariffs. Optimism is, however, slightly tempered. Commodities Up in Price Aluminum*; Electronic Components (7); PaperBased Products; Plastic Components; Printed Circuit Board Assemblies (2); Steel* (6); Steel — Hot Rolled* (2); and Steel Products* (10). Commodities Down in Price Aluminum* (5); Caustic Soda (5); Memory (2); Oil; Steel* (6); Steel — Hot Rolled* (6); and Steel Products* (2). Commodities in Short Supply Capacitors (20); Electronic Components (10); and Resistors (16). The number of consecutive months the commodity is listed is indicated after each item. *Indicates both up and down in price.
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Metals & Manufacturing Outlook / March 2019
NORTH AMERICAN OUTLOOK CANADIAN manufacturers experienced softer job growth, which offset slight rebounds in new orders and a moderate upturn in production. The PMI for Canada in February, at 52.6, was slightly less than January’s 53.0, meaning the economy was growing but slightly slower. 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. Ontario showed the strongest improvement in business conditions, Alberta and B.C. the weakest. There was strong demand from the U.S. Canadian light vehicle year-over-year sales fell in February, for what is now the twelfth straight month of decline, down 3.7 percent to 120,891 units. Passenger cars declined 16 percent, and light trucks, making up 75.1 percent of total sales, were up 1.2 percent. Canada produced 1.150 MT of crude steel in January, up 0.9 percent year-over-year.
MEXICO saw the strongest new order growth for 15 months, and a PMI at a 13-month high, at 52.6 in February from 50.9 in January. There was a new boost in export sales. There was a cooling of cost inflation; and production, new orders, employment and purchase inventories all showed stronger performance in February. Some 40 percent of manufacturers expect production to be higher in twelve months time, while less than seven percent are looking for contraction. There is a general positive sentiment in Mexico. Mexico produced 1.660 MT of crude steel in January, down 3.2 percent year-over-year. Hot-rolled steel coil in the U.S. was recently priced at effectively $35 per cwt; and cold-rolled coil at $41.50 per cwt. Hot-rolled steel coil in the U.S. was recently priced at effectively $35 per cwt; and cold-rolled coil at $41.50 per cwt.
ISO9100:2015 and AS9100D
Metals & Manufacturing Outlook / March 2019
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METALS OUTLOOK
MARCH 2019
METALS OUTLOOK THE COST, MAKING, TREATING AND APPLICATIONS OF METALS
by ROYCE LOWE Back in 1991, Nucor was the tenth largest steel company in the U.S., and its Chairman and CEO, Ken Iverson, was on the verge of installing a gigantic experimental machine for making sheet steel, in Crawfordsville, Indiana. The machine was to be fabricated in West Germany, and would consist of about a million parts. It would be shipped by freighter to the U.S. No one knew if it would work, because nothing like it had ever been built before. Ken Iverson had a pretty good idea his project could be made to work; one million square feet of building and a unique process for manufacturing sheet steel. The process would involve casting a very thin slab, 2 inches thick and 52 inches wide
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that would be rolled down into a sheet in one continuous process. This would be a compactstrip-production facility, a CSP machine, a commercially-unproven German invention, 1177 feet long or approximately four football fields, with an initially projected annual capacity of 820,000 tons of steel, all melted from scrap, using just 400 workers. It was to cost around a quarter of a billion dollars. BIG STEEL had a one-inch-thick report explaining why it wouldn’t work, and that in any event it couldn’t be built for less than 400 million dollars. But Big Steel knew next to nothing about the project and none too much about Ken Iverson, his philosophy and his team.
METALS OUTLOOK steel casting, and along with this would seal Nucor’s status as one of the world’s most progressive steel companies. Ken Iverson heard of what Herr Kolakowski had done and he wanted in. After several meetings of the hush-hush variety and lots of thinking and planning by Iverson and his key players, it was time to visit SMS to witness trials of what they had to offer. Between 1977 and 1987, 50 million tons of annual steelmaking capacity were stripped from American Industry. There was suffering and discontent among U.S. steelmakers, and Ken Iverson was determined that it be put right. So he came up with a plan and a team and a trip to Germany to see if the process could really work. There were to be exciting times for both Nucor and SMS and a few people were going to learn an awful lot about what it was like to work for and with Ken Iverson. Stay tuned to read the conclusion of Nucor’s trials and tribulations with thin slab casting. Hot-rolled steel coil in the U.S. was recently priced at effectively $35 per cwt; and cold-rolled coil at $41.50 per cwt.
Scientists and engineers around the world had tried for well over a century to cast thin sections of steel through rollers in an effort to make it come out in a continuous length. Sir Henry Bessemer, the inventor of the first pneumatic steelmaking process, tried on a number of occasions in the middle of the nineteenth century. Germans, Japanese and Americans all gave it scores of shots, for about 130 years, without success. But on March 18, 1983, Manfred Kolakowski, an employee of West Germany’s SMS SchloemannSiemag AG, had an idea that would revolutionize
Recent price spreads for non-ferrous metals are: copper increased from $2.78 per lb to $2.95 from early February to early March; aluminum eased from $0.857 to 0.845 in the same monthly period; nickel increased from $5.90 to $6.20 and zinc was unchanged at $1.27.
Metals & Manufacturing Outlook / March 2019
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AEROSPACE OUTLOOK
MARCH 2019
AEROSPACE OUTLOOK by ROYCE LOWE
It seemed as though it was coming at some point, but it still came as a bit of a shock: the announcement by Airbus SE that it would stop production of the A380 jumbo that could carry up to 800 passengers. Emirates, the biggest customer for the aircraft, recently reduced its order for the A380 from 53 to 14 units. Production will cease in 2021, putting up to 3,500 jobs at stake. The aircraft was effectively just too big, and airlines had difficulty filling it. Boeing decided against going this route, stuck to its 777s and 787s, smaller, more flexible, after the 747 bowed out with 1,500 aircraft sold. Airbus will continue with its A350 and A 330, together with its single-aisle A320 models, the ones it does best. Boeing Commercial Airplanes has, in fact, just signed a deal with International Airlines Group, the parent of British Airways, for 42 new 777X aircraft, worth around $18.6 billion. The 777 will seat just over 400 passengers, a much more comfortable number than that of the A380. Rolls-Royce Holdings Plc, better known as Rolls Royce, went through rough times with engine
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Metals & Manufacturing Outlook / March 2019
problems in the past couple of years, on both Airbus and Boeing aircraft. It will come out of it, at a cost, after technical input from outside sources. The company is offering to build an aircraft assembly line in China, and is in fact looking to make a deal to supply turbines for China’s first wide-body passenger jet, according to people ‘familiar with the matter.’ Rolls Royce is competing with GE to supply engines for the CR929 wide-body plane being developed by Commercial Aircraft Corporation of China Ltd - Comac - which is looking for commercial sales of the CR929 around 2025. Such a factory would also be able to make engines for Airbus SE’s A330neo jet, which the European aircraft company is keen to get into the Chinese market. Comac is aiming to deliver 2,000 CR929s by 2035, a relatively small but significant part of China’s requirement of new aircraft, 7,690, over the next twenty years, a total that equates to around $1.2 trillion.
AUTOMOTIVE OUTLOOK
MARCH 2019
AUTOMOTIVE OUTLOOK by ROYCE LOWE
What a strange month it has been in the automotive industry. Mary Barra moves from strength to strength as GM’s latest earnings figures exceed analysts’ expectations, and she modestly takes her kudos back to the boardroom. She is simultaneously considering the possibility of closing operations in South America. Overall vehicle sales in the U.S. were down almost 3 percent year-over-year in February, and they continue to fall in the world’s largest auto market, China. Ford is to invest $1 billion in its Chicago Assembly and Stamping plant for the production of three new SUVs, creating 500 full-time jobs. Ford, along with other companies in the UK, are threatening ‘action’ in the event of a no-deal Brexit. The same company has heard from France’s president Macron, who has pledged to force Ford to help create new jobs on a site the automaker plans to close in southwestern France. This was a gearbox plant near Bordeaux where 800 workers will lose their jobs: Ford refused what they said is an unconvincing offer from a Belgian company. Ford will close operations in Brazil, with 2,800 job losses. Meanwhile, in the UK, Brexit or no Brexit, the auto industry is in chaos, with Nissan and Honda pulling production out with appreciable job losses, and Toyota threatening. Investment in the British Auto
Industry almost halved in 2018, to $761 million, its lowest since the global financial crisis. Trump’s Commerce Secretary, Wilbur Ross, prepared a report for the president outlining the possible risk to national security of imported cars, SUVs, light trucks and auto parts, in the light of Trump’s threatened 25 percent tariffs. Trump had ninety days to act on this. Companies and governments from Europe to Asia are warning of harm to the U.S. economy and of disruptions to the global auto industry. Estimates by American sources put cost increases of $2,270 on U.S. -built cars and $6,875 on imported cars and trucks in the event of a 25 percent tariff. Electric Cars It’s all systems go on auto electrification, with VW and Hyundai forecasting huge amounts of money and in VW’s case, green energy to boot, for the production of electrified vehicles and technology. There’s also a company in Vancouver, BC, called Electra Meccanica, that’s in the business of manufacturing a one-seater electric vehicle that costs around $15,000 and is reputed to be popular in Los Angeles. They have an order book for around 70,000 units for this vehicle that might serve as a second car, or a pizza delivery machine. So far it has a range of around 100 miles and a top speed of 82 mph - imagine that.
Metals & Manufacturing Outlook / March 2019
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ISSUES OUTLOOK
MARCH 2019
ISSUES OUTLOOK by ROYCE LOWE
The word Apprenticeship comes up quite often when people speak of manufacturing, particularly as it applies to a German, Swiss or Austrian company: even to companies in the UK, or at least to UK subsidiaries of German, Swiss or Austrian companies. The word also comes up often in the U.S., again as applied to, say, German companies. It’s even reached higher echelons, such as presidents - not any one in particular - who have made speeches about, promised money for, apprenticeship schemes, all for the good of U.S. companies and their employees. But these schemes never seem to get too far off the ground. We’ve talked about the subject from time to time in these pages, referring mostly to U.S. subsidiaries, usually lauding the success of the programs and the individual successes of the programs’ participants. It’s not really rocket science. It may be hard work for a while, juggling theory and practice in a manufacturing environment, but the rewards are numerous, not least the understanding of what one is actually doing. Why is this steel hard and so why is it difficult to machine - why doesn’t this forging meet specification? One of the reasons given for the lack of popularity of apprenticeship schemes is the tendency on the part of parents to wish their children into college, university, where they’ll pay serious money for a few years and come out with a qualification that may or may not get them the job they wish for, together with the balance of a loan to pay off. There’s nothing new here: it’s been going on for decades, in many cases to the detriment of the students involved, many of whom end up going back to live with their parents. So what is the answer to this dilemma? Is it that complicated? Let’s listen to Arnd Herwig, who is VP Engineering at Brose North America, a subsidiary
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Metals & Manufacturing Outlook / March 2019
of Brose Fahrzeugteile in Germany, whose U.S. headquarters are in Detroit. The company manufactures components and systems for vehicle doors, seats and bodies at 62 locations in 23 countries. Herwig says his company reaches out to students in the area to tell the story of the current state of manufacturing, that it’s a high-tech industry that’s innovative, pays well and is a great place to build a career. The company offers a three-year program of classroom and on-the-job training. Arnd Herwig believes the manufacturing industry needs to get the ‘manufacturing message’ out ; that it’s a good place to develop skills and innovations. He will take his message to the Manufacturing and Technology Conference and Expo to be held at the David L Lawrence Convention Center this coming April 1-3. Lockheed Martin’s CEO, Marilyn Hewson, pledged in July 2018 that the company would create 8,000 new apprenticeship opportunities. The company will invest $5 million in vocational and trade programs over the next five years, coupled with $50 million in STEM and $100 million to expand employee training and educational opportunities over the next five years. Hewson pointed to a shortage of skilled manufacturing workers to fill critical jobs. There is a need to get the message out there. One place that happens with regularity is on Manufacturing Talk Radio (www.mfgtalkradio. com) hosted by two guys who have been around manufacturing for a combined 80+ years, hosts Lew Weiss and Tim Grady. With over 300 episodes available on the website, there is good reference content for almost anyone in manufacturing and every aspect of it.
3rd Annual Event ENERGY OUTLOOK
MARCH 2019
ENERGY OUTLOOK by ROYCE LOWE
Big Oil needs power in the fossil fuels-rich Permian Basin of Texas and New Mexico. A real energy turnaround looks set for a demand for renewable energy. Texas’s power grid operator has stressed the need for more electricity resources in the region to power oil and gas drilling operations. This might call for the world’s largest battery, that may soon be storing solar energy right in Texas oil country. This would involve building a 495-megawatt storage system in tandem with a solar farm of the same size in Texas’s Borden County. Most of the state’s grid is operated by The Electric Reliability Council of Texas Inc. ERCOT posted details on a chart showing the state’s battery storage will go up over sixfold to 584 megawatts upon project completion in 2021. Vistra Energy Corp. just completed what is now the largest battery storage facility in Texas, a 10 megawatt system connected to a solar farm. They are planning the world’s biggest at Moss Landing power plant in California, which will store 300 megawatts for up to four hours when completed in 2020. Quite a compromise: storing solar energy to pump oil.
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 / March 2019
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COVER STORY: DRONES: HOW THEY ARE MADE, LIFT CAPACITY, AND MODIFICATIONS FOR DRONE DELIVERY
DRONES: HOW THEY ARE MADE LIFT CAPACITY, AND MODIFICATIONS FOR DRONE DELIVERY by MARK SHEEHAN
Drones have been making a bigger and bigger impact on society in the last few years, and their future impact will be determined largely by the technological innovations made by manufacturers to further the abilities of these machines. One use that is clearly on the horizon is drone deliveries. Right now, the hindrances to more widespread deliveries involves regulations and technological modifications. This article describes how drones are manufactured, drone lift capacity, and the modifications that will be needed for drone delivery to take off. Let’s get started: How are drones made? Making a drone requires creating a design, choosing the materials, assembling the components, and adding any desired innovations.
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Metals & Manufacturing Outlook / March 2019
Design A good drone design takes into consideration the aerodynamics, weight, and noise caused by the drone when flying. A popular design is the vertical take-off and landing (VTOL) quadcopter. Materials Strong, lightweight materials are used for drones that include plastics, carbon fiber, complex composites, and other engineered materials. Efficient use of materials involves balancing weight and durability of the aircraft. Components Drones have two main components, the drone itself and the controller. The controller may be a standalone remote control or it may be operated by a smartphone.
COVER STORY: DRONES: HOW THEY ARE MADE, LIFT CAPACITY, AND MODIFICATIONS FOR DRONE DELIVERY Here is a list of the parts that make up these components: Props (also called rotor blades or propellers): Prop design affects how well and how fast a drone will fly. Brushless Motor(s): These work better and quieter than brush motors do. Motor Mount: This mount can either be fitted to be a part of the landing struts or part of the frame. Landing Gear: The landing gear can be a fixed length, retractable, or have leg extenders. Booms: Each boom connects to the body. A shorter boom increases maneuverability. A longer one increases stability. Central Hub: This is the main drone body part where the booms radiate outwards, like the center of a wheel. Electronic Speed Controller: This regulates the speed of the motor, which, in turn, controls how fast the drone flies. Flight Controller: This device takes in all the signals from the drone and satellite navigation and then sends out commands to the receiver on the drone. It contains circuit boards, a radio transmitter, and an antenna. It has control levers, buttons, and a display screen (or a place to connect a smartphone). GPS Module: The GPS module communicates with satellites as part of a drone’s navigation system. Receiver: This is the radio receiver on the drone that gets signals from the controller. Video Broadcaster: This unit on the drone sends the video stream back to the controller or it may be used to send the video to a virtual reality (VR) headset/goggles worn by the operator to have a first-person view (FPV) of the
drone flying. Antenna: This allows the receiver to capture and to broadcast a stronger signal. Battery with Charger: Lithium-ion batteries are used for drones to increase flight times and for easier and faster charging. Gimbal: This is a camera mount that can be controlled to turn the camera in every direction. Camera: There are many kind of cameras that can be used with a drone to capture high-resolution still images or high-definition video footage. Gyroscopes: These provide flying stability. Innovative Technology Drone technology continues to improve dramatically. For many quality drones, there are optional extras and features that include: Sensors: Drones can carry all kinds of compact sensors. For example, some sensors have the ability to detect toxic materials, radiation, or natural gas leaks. Infrared Cameras: These are used for hunting and surveillance. Metals & Manufacturing Outlook / March 2019
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Obstacle Detection: These systems are based on radar, lidar, infrared (heat detection), visual analysis, ultrasonics, time of flight (ToF), or monocular vision. They may combine two or more detection methods to achieve better accuracy. Navigation: A very helpful feature for drone flying is satellite positioning using a Global Navigation Satellite System (GNSS) such as GPS and GLONASS. Assembly A drone may come fully assembled and ready-tofly, when taken out of the shipping box, after the batteries are charged. Other types may come as a kit that needs to be assembled. Testing and Quality Control The best drone manufacturers fully assemble their drones and fly them on a test flight before shipping them out to customers. Quality control for drones may be a problem with some manufacturers, as well as getting replacement
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Metals & Manufacturing Outlook / March 2019
parts if the manufacturer is located in another country, which can take a long time. Many hobby drone fliers become DIY drone-makers to be able to more easily repair them. Lift Capacity Lift capacity for a drone is limited by the strength of its motor and the aerodynamics of the rotor blades. Lift is created by air being pushing down from the rotor blades. A stronger motor can rotate the blades faster. This results in more air being pushed down from the blades to lift the drone upwards. Most drones, when bought as a standard model, have a limited lifting capacity. They are usually designed to be able to fly with the weight of the drone and the weight of the equipment that they carry. They may be able to carry a bit more weight to allow a purchaser to add some options that they might buy, such as rotor guards. A drone’s flight time is affected by the drone’s weight and battery capacity. When a drone has a lower weight, this increases flight time. A strong lifting-capacity can be achieved by making modifications or buying a drone specifically designed for lifting purposes. Small drones may be only able to
carry up to 200 grams (about 7 oz.). Other drones can carry up to 2 kilograms (2.2 lbs.). Commercial drones, which are designed for lifting and carrying things, are rated for lifting capacity. The newest heavy-duty drones for industrial purposes, which are designed to work in shipyards, are capable of lifting several hundred pounds. There are four ways to increase drone lifting capacity: 1) reduce the weight of the drone by removing unnecessary parts or changing to lighter parts; 2) use stronger batteries or more batteries; 3) use betterdesigned rotor blades, which create more lift due to their shape and; 4) modify the drone to use a more powerful motor or motors. In some situations, it may be possible to use more than one drone to lift a heavy object by having the drones work together. It may be possible to fly the drones as a team using programmable commands with a navigation system to control a synchronized flight path. This was recently on display during the SuperBowl LIII half-time show. FAA Registration Drones that weigh less than 55 lbs. and more than 250 grams (0.55 lbs.), which includes the drone’s weight along with the maximum load of its carrying weight, must be registered with the Federal Aviation Administration (FAA) online at the FAAdronezone.ffa.gov. If the drone will carry more than is allowed under this limit, it needs to be registered with the FAA by using a paper application that is filled out, signed, has the signature notarized, and then the form is mailed to the FAA. Modifications for Drone Delivery A delivery drone that takes a bottle of champagne to a yacht anchored offshore has different requirements than a delivery drone taking emergency medical supplies across sub-Saharan Africa or a burrito delivery made in the outback of Australia.
Modifications needed for drone delivery may include: More Carry Weight: Increasing the weight limit that the drone can carry. Amazon reports that 86% of its delivery packages weigh under five lbs. Add a Temperature-Controlled Area: A place to keep delivery items hot or cold while en route may be required. Improved Non-Visual Flying: Ability for the operator to accurately use flight controls when the drone is out of visual range. Programmable Flight Controls: Ability to fly as a team with other drones and stay in predetermined flight corridors using a navigation system. Summary Drone technology is improving rapidly. The examples mentioned of drone delivery to yachts, medicine in Africa, and burritos to the Australian outback are already occurring. The main thing slowing down the deployment of drone delivery services are the regulatory restrictions. The slow advancement in drone deliveries now is more of a legislative problem than a technological problem. About The Author Mark Sheehan started My Drone Authority to share his knowledge and help people get the most out of this amazing hobby and profession.
Metals & Manufacturing Outlook / March 2019
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GLOBAL PMI OUTLOOK
GLOBAL PMI OUTLOOK
by NORBERT ORE, DIRECTOR, HEAD OF INDUSTRIAL SURVEYS, STRATEGAS RESEARCH PARTNERS
February’s global survey data looks soft, especially when compared to 2017-2018. While the U.S., India, and Australia continue to be in strong expansion mode, the rest of the globe has slipped to levels that generate sparse amounts of growth. With trade, tariffs, and politics still throttling potential expansion, we see an array of possible outcomes shaping 2019. A quick look at the positioning of the major summary indexes paints a rather bleak picture (excluding the
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Metals & Manufacturing Outlook / March 2019
U.S.): the JP Morgan Global PMI (50.6) hit a 33- month low; Eurozone PMI (49.3) posted a 68-month low; China, South Korea, Japan, and Taiwan Mfg averaged (48.3); ASEAN Mfg PMI (49.6) was the lowest since July 2017; and U.S. Mfg and Non-Mfg combined (57.0, +0.3) hit a 3-month high. Overall, 11 of the 18 indexes that we follow decelerated an average of 1.1 pp and 7 accelerated an average of 2.4 pp during February. The question at this point is “does the U.S. help raise the weak performers, or do they pull the U.S. down?” Eurozone: The Eurozone PMI (49.3, -1.2) hit a 68-month low in February as the PMI weakened for the seventh consecutive month. Greece (54.2, +0.5), Ireland (54.0, +1.4), Netherlands (52.7, -2.4), France (51.5, +0.3) and Austria (51.8, -0.9) expanded in February, while Spain (49.9, -2.5), Italy (47.7, -0.1), and Germany (47.6, -2.1) contracted. Germany’s performance is at a 74-month low as export sales markedly declined.
GLOBAL PMI OUTLOOK
United Kingdom: The UK/CIPS PMI (52.0, -0.6) posted a four-month low in February. The uncertainty of BREXIT (one month away) continues to weigh heavily on prospects for significant economic gains. China: China’s Official Report, the CFLP PMI (49.2, -0.3) and the Caixin Manufacturing PMI (49.9, +1.6) were in mildly contractionary territory for the third consecutive month. India: The PMI (54.3, +0.4) accelerated while posting its 19th consecutive month in expansionary territory. Continued growth appears likely in 2019 as manufacturing can make a larger contribution to GDP. South Korea The PMI (47.2, -1.1) fell below the 50-mark for the fourth consecutive month. The February PMI is the lowest in 44 months. Business confidence remains historically low. New Export Orders fell at the fastest rate in 66 months. North America: Canada’s PMI (52.6, -0.3) expanded for the 36th consecutive month. However, the PMI signaled the slowest overall expansion in the sector since December 2016. Meanwhile, Mexico’s PMI (52.6, +1.8) improved for a second month following two months of contraction. Given the weaker reports on U.S. Manufacturing, soft reports from Canada and Mexico come as no surprise. Metals & Manufacturing Outlook / March 2019
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EUROZONE OUTLOOK
GLOBAL OUTLOOK
EUROZONE by ROYCE LOWE
IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) found itself, for the first time since June 2013, in contraction. On the back of decreases in both production and new orders, the February PMI fell to 49.3 from January’s 50.5. Price pressures continued to ease. Weakness was most evident in the intermediate and investment goods sectors: consumer goods stayed in expansion but at a fairly modest pace. There was the sharpest fall in new orders since April 2013, and a continuation for the fifth successive month, and to the greatest degree, for over six years. Crude steel production in Germany in January was at 3.410 MT, down 7.2 percent year-over-year; in Italy 1.959 MT, down 3.6 percent year-over-year; in France 1.238 MT, down 9.7 percent year-over-year and in Spain 1.180 MT, up 5.9 percent year-over-year. Car registrations in February were down 1.6 percent year-over-year, but the annualized selling rate was up to 14.9 million units per year from 14.4 million in January. Registrations for the first two months were down 3.3 percent, but a forecast for 2019 suggests a slight overall increase of 0.6 percent. Germany, France and the UK improved in February, Spain and Italy were down.
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Russia’s crude steel production for January was at 5.790 MT, down 4.5 percent year-over-year; Ukraine’s was 1.850 MT, down 4.9 percent year-overyear. IHS Markit’s PMI for the UK was down from January’s 52.8 to 52.0 in February. Stocks of inputs and finished goods were on a sharp increase. The rate of job losses was at a six-year high as optimism hits a series low. Employment was reduced across the consumer, intermediate and investment sectors and at small, medium and large companies. Brexit has brought, among other things, exchangerate volatility as witnessed by a pound that has seesawed through the last almost three years. There has also been slower global economic growth. The UK produced 0.520 MT of crude steel in January, down 11.2 percent year-over-year.
ASIA OUTLOOK
GLOBAL OUTLOOK
ASIA OUTLOOK
by ROYCE LOWE
CHINA’s production and total new orders expanded slightly in February, despite export sales slipping back into contraction. There was pressure on capacity associated with this and attendant backlog increases. February’s PMI eased back up to 49.9 from January’s 48.3. Vendor performance deteriorated for the second successive month and lead times increased to the greatest extent in eight months. CHINA produced 75.013 MT of crude steel in January, up 4.3 percent year-over-year; Japan 8.141 MT, down 9.8 percent year-over-year; India 9.180 MT, down 1.9 percent year-over-year and South Korea 6.211 MT, down 1.5 percent year-over-year. Taiwan produced 2.010 MT in January, up 10.4 percent.
Through all this, employment was up , particularly due to recruitment of trainees. Work backlogs fell at the quickest pace in 32 months. INDIA saw its PMI rise to a 14-month high, through strengthening of new orders, production and employment. The improvement in business conditions was the strongest since December 2017, as new orders showed their quickest pace increase in 28 months. There were accompanying faster increases in production and employment and a marked upturn in new export orders. The PMI increased from January’s 53.9 figure to 54.3 in February.
Manufacturing Laughs
China’s vehicle sales in January 2019 were down 15.8 percent year-over-year to 2.37 million units, following similar drops December and November. NEV sales in January, at 95,700 units, were up 140 percent year-over-year. JAPAN saw its production fall at the fastest rate since May 2016, and the PMI in contraction for the first time since August 2016. New export sales continued to fall amid lower sales to China. The Japan PMI for February fell to 48.9 from 50.3 in January.
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 / March 2019
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CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1
COVER STORY
CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1 OF A 6 PART SERIES by 3D HUBS 3D Hubs make on-demand manufacturing easy, from prototyping to production. Their online service provides readily available production capacity for the fastest lead times and most price-competitive parts. Simply upload your designs to get instant quotes for 3D printing, CNC machining, and Injection Molding. Our automated Design for Manufacturing (DFM) analysis detects any potential issues before production begins. Taking the risk out of manufacturing. Founded in 2013, 3D Hubs has since produced more than 2,000,000 parts, serving engineering companies big and small.
CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1 What is CNC machining? What are the different types of CNC machines? How do they work? In this section, we answer all these questions and we compare CNC machining to other manufacturing technologies to help you find the best solution for your application. What is CNC machining? CNC (Computer Numerical Control) machining is a subtractive manufacturing technology: parts are created by removing material from a solid block (called the blank or the workpiece) using a variety of cutting tools.
A brief history of CNC machining The earliest machined object ever discovered was a bowl found in Italy and made in 700 B.C. using a lathe. Attempts to automate machining started in the 18th century. These machines were purely mechanical and powered by steam. The first programmable machine was developed in the late 40’s in MIT. It used punched cards to encode each movement. The proliferation of computers in the 50’s and 60’s added the “C” in CNC and radically changed the manufacturing industry. Today, CNC machines are advanced robotic systems with multi-axis and multi-tooling capabilities.
This is a fundamentally different way of manufacturing compared to additive (3D printing) or formative (Injection Molding) technologies. The material removal mechanisms have significant implications on the benefits, limitations and design restrictions of CNC. More on this below. CNC machining is a digital manufacturing technology: it produces high-accuracy parts with excellent physical properties directly from a CAD file. Due to the high level of automation, CNC is price-competitive for both one-off custom parts and medium-volume productions. Almost every material can be CNC machined. The most common examples include metals (aluminum and steel alloys, brass etc) and plastics (ABS, Delrin, Nylon etc). Foam, composites and wood can also be machined. The basic CNC process can be broken down into 3 steps. The engineer first designs the CAD model of the part. The machinist then turns the CAD file into a CNC program (G-code) and sets up the machine. Finally, the CNC system executes all machining operations with little supervision, removing material and creating the part.
An early CNC machine: the Milwaukee-Matic-II was first machine with a tool changer
Types of CNC machines In this guide, we will focus on CNC machines that remove material using cutting tools. These are the most common and have the widest range of applications. Other CNC machines include laser cutters, plasma cutters and EDM machines. CNC machine types 3-axis CNC machines CNC milling and CNC turning machines are examples of 3-axis CNC systems. These “basic” machines allow the movement of the cutting tool in three linear axes relative to the workpiece (left-right, back-forth and up-down).
Metals & Manufacturing Outlook / March 2019
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CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1
CNC milling The workpiece is held stationary directly on the machine bed or in a vice. Material is removed from the workpiece using cutting tools or drills that rotate at high speed. The tools are attached to a spindle, which can move along three linear axis. 3-axis CNC milling machine in action 3-axis CNC milling machines are very common, as they can be used to produce most common geometries. They relatively easy to program and operate, so start-up machining costs are relatively low.
CNC lathes are extensively used, because they can produce parts at a much higher rate and at a lower cost per unit than CNC mills. This is especially relevant for larger volumes. The main design restriction of CNC lathes is that they can only produce parts with a cylindrical profile (think screws or washers). To overcome this limitation, features of the part are often CNC milled in a separate machining step. Alternatively, 5-axis mill-turning CNC centers can be used to produce the same geometry in one step. 5-axis CNC machining
Tool access can be a design restriction in CNC milling. As there are only three axes to work with, certain areas might be impossible to reach. This is not a big issue if the workpiece needs to be rotated just once, but if multiple rotations are needed the labor and machining costs increase fast.
CNC turning (lathes) The workpiece is held on the spindle while rotating at high speed. A cutting tool or center drill traces the outer or inner perimeter of the part, forming the geometry. The tool does not rotate and moves along polar directions (radially and lengthwise).
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Metals & Manufacturing Outlook / March 2019
Multi-axis CNC machining centers come in three variations: 5-axis indexed CNC milling, continuous 5-axis CNC milling and mill-turning centers with live tooling. These systems are essentially milling machines or lathes enhanced with additional degrees of freedom. For example, 5-axis CNC milling centers allow the rotation of the machine bed or the toolhead (or both) in addition to the three linear axes of movement. The advanced capabilities of these machines come at an increased cost. They require both
CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1
specialized machinery and also operators with expert knowledge. For highly complex or topology optimized metal parts, 3D printing is usually a more suitable option though.
Continuous 5-axis CNC milling The cutting tool can move along three linear and two rotational axes relative to the workpiece.
Indexed 5-axis CNC milling
All five axes can move at the same during all machining operations. Continuous 5-axis CNC milling systems have a similar machine architecture to indexed 5-axis CNC milling machines. They allow, however, for the movement of all five axes at the same time during all machining operations. This way, it is possible to produce parts with complex, ‘organic’ geometries that cannot be manufactured at the achieved level of accuracy with any other technology. These advanced capabilities come of course at a high cost, as both expensive machinery and highly-trained machinists are needed.
During machining the cutting tool can only move along three linear axis.
Mill-turning CNC centers The workpiece is attached to a spindle that can either rotate at high speed (like a lathe) or position it at a precise angle (like a 5-axis CNC mill).
Between operations, the bed and the toolhead can rotate, giving access to the workpiece from a different angle.
Lathe and milling cutting tools are used to remove material from the workpiece, forming the part.
Indexed 5-axis CNC milling systems are also known as 3+2 CNC milling machines, since they are using the two additional degrees of freedom only between machining operations to rotate the workpiece.
Mill-turning CNC centers are essentially CNC lathe machines equipped with CNC milling tools. A variation of the mill-turning centers are swiss-style lathes, which have typically higher precession.
The key benefit of these systems is that they eliminate the need of manually repositioning the workpiece. This way parts with more complex geometries can be manufactured faster and at higher accuracy than in a 3-axis CNC mill. They lack though the true freeform capabilities of continuous 5-axis CNC machines.
Mill-turning systems take advantage of both the high productivity of CNC turning and the geometric flexibility of CNC milling. They are ideal for manufacturing parts with ‘loose’ rotational symmetry (think camshafts and centrifugal impellers) at a much lower cost than other 5-axis CNC machining systems. Metals & Manufacturing Outlook / March 2019
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CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1
To summarize 3-axis CNC milling machines manufacture parts with relatively simple geometries with excellent accuracy and at a low cost. CNC lathes have the lowest cost per unit, but are only suitable for part geometries with rotational symmetry. Indexed 5-axis CNC milling machines manufacture parts with features that do not align with one of the main axes quickly and with very high accuracy. Continuous 5-axis CNC milling machines manufacture parts with highly complex, ‘organic’ geometries and smooth contours, but at a high cost. Mill-turning CNC centers combine the benefits of CNC turning and CNC milling into a single system to manufacture complex parts at a lower cost than other 5-axis CNC systems. Use the table below for a rough estimate of the cost per hour of the different CNC machines. The cost is presented relative to that of a 3-axis CNC milling machine, which is typically $75 per hour. CNC machine type
Machining cost
CNC milling (3-axis)
$75 (Baseline for comparison)
CNC turning (lathe)
$65 ( - 15% )
Indexed 5-axis CNC milling
$120 ( + 60% )
Continuous 5-axis CNC milling $150 ( + 100% ) Mill-turning CNC centers
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$95 ( + 25% )
Metals & Manufacturing Outlook / March 2019
Benefits & Limitations of CNC machining Here’s a list of the key strengths and limitations of CNC machining. Use them to help you decide whether it is the right technology for your application. Benefits of CNC machining Highly accurate parts with tight tolerances Excellent material properties Quick turnaround times One-off custom parts & prototypes Limitations of CNC machining Relatively high start-up costs Geometric complexity has a high cost Tool access and workholding restrictions Applications of CNC machining CNC machining vs. 3D printing Both CNC machining and 3D printing are exceptional tools in the arsenal of an engineer. Their unique benefits make each more suitable for different situations though. When choosing between CNC machining and 3D printing, there are a few simple guidelines that you can apply to the decision making process. As a general rule of thumb parts with relatively simple geometries, that can be manufactured with limited effort through a subtractive process, should generally be CNC machined, especially when producing metal parts.
CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 1 Choosing 3D printing over CNC machining makes sense when you need: • A low-cost plastic prototype • Parts with very complex geometry • A turnaround time of 2-5 days • Speciality materials
To summarize: CNC offers greater dimensional accuracy and produces parts with better mechanical properties than 3D printing, but this usually comes at a higher cost for low volumes and with more design restrictions.
Scaling up production If high volumes are needed (1,000’s or more), neither CNC machining nor 3D printing are likely to be suitable options. In these cases, forming technologies, such as investment casting or injection molding, are more economically viable due to the mechanisms of economies of scale. For quick reference, use the table below. In this simplification, it is assumed that all technologies are able to produce the geometry of the part in question. When this is not the case, 3D printing is generally the preferred method of manufacturing.
In Next Month’s Issue: Part 2: Designing For CNC Machining Metals & Manufacturing Outlook / March 2019
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SOUTH AMERICA OUTLOOK
GLOBAL OUTLOOK
SOUTH AMERICA by ROYCE LOWE
BRAZIL saw a further significant improvement in production and a joint-quickest expansion in new orders in eleven months, along with the sharpest increase in jobs since April 2010. Export orders, however, were down for the third successive month. The PMI in February, at 53.4, was up from January’s 52.7.
for the sixth straight month. Employment levels continued at a growth rate similar to that of January. Business optimism fell to its secondlowest level in series history in February.
Business sentiment remains upbeat thanks to new business, improvements in Brazil’s economy, and the expectation of encouraging government tax policies. Brazil’s crude steel production for the month of November was 2.933 MT, an increase year-overyear of 2.3 percent.
Manufacturing Laughs
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 a 32-month low in February, at 50.6, very slightly down from January’s 50.7. Operating conditions improved in consumer and investment goods categories, but there was further deterioration in the intermediate goods sector. The trend in international trade was weak in February, with a contraction in export business
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Metals & Manufacturing Outlook / March 2019
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 54.2% for February ISM PMI for the past 5 years
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Metals & Manufacturing Outlook / March 2019
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ISM REPORT OUTLOOK
ISM® REPORT ON BUSINESS®
MANUFACTURING E
conomic activity in the manufacturing sector expanded in February, and the overall economy grew for the 118th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The February PMI® registered 54.2 percent. The New Orders Index registered 55.5 percent, a decrease of 2.7 percentage points from the January reading of 58.2 percent. The Production Index registered 54.8 percent, 5.7-percentage point decrease compared to the January reading of 60.5 percent. The Employment Index registered 52.3 percent, a decrease of 3.2 percentage points from the January reading of 55.5 percent. The Inventories Index registered 53.4 percent, an increase of 0.6 percentage point from the January reading of 52.8 percent.
FEBRUARY 2019 Analysis by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® Manufacturing Business Survey Committee
The Prices Index registered 49.4 percent, a 0.2-percentage point decrease from the January reading of 49.6 percent, indicating lower raw materials prices for the second straight month after nearly three years of increases. Of the 18 manufacturing industries, 16 reported growth in February, in the following order: Printing & Related Support Activities; Textile Mills; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Paper Products; Wood Products; Primary Metals; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing ‡; Petroleum & Coal Products; Transportation Equipment; Machinery; Furniture & Related Products; and Plastics & Rubber Products.
PMI @ 54.2% ®
‡Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).
MANUFACTURING AT A GLANCE Index PMI® New Orders Production Employment Supplier Deliveries Inventories Customers’ Inventories Prices Backlog of Orders New Export Orders Imports
Feb Index 54.2 55.5 54.8 52.3 54.9 53.4 39.0 49.4 52.3 52.8 55.3
Jan Index 56.6 58.2 60.5 55.5 56.2 52.8 42.8 49.6 50.3 51.8 53.8
% Point Change -2.4 -2.7 -5.7 -3.2 -1.3 +0.6 -3.8 -0.2 +2.0 +1.0 +1.5
Direction Growing Growing Growing Growing Slowing Growing Too Low Decreasing Growing Growing Growing
Rate of Change Slower Slower Slower Slower Slower Faster Faster Faster Faster Faster Faster
Trend* (months) 30 38 30 29 36 14 29 2 2 36 25 118
OVERALL ECONOMY
Growing
Slower
Manufacturing Sector
Growing
Slower
30
*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
54.2%
50% = Manufacturing Economy Breakeven Line 42.9% = Overall Economy Breakeven Line
PMI® Manufacturing expanded in February, as the PMI® registered 54.2 percent, a decrease of 2.4 percentage points from the January reading of 56.6 percent. This indicates growth in manufacturing for the 30th consecutive month. The PMI® reversed a January increase in expansion primarily through an expansion softening of a combined 8.9 points in production and employment. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
COMMODITIES REPORTED Commodities Up in Price: Aluminum*; Electronic Components (7); Paper-Based Products; Plastic Components; Printed Circuit Board Assemblies (2); Steel* (6); Steel — Hot Rolled* (2); and Steel Products* (10). Commodities Down in Price: Aluminum* (5); Caustic Soda (5); Memory (2); Oil; Steel* (6); Steel — Hot Rolled* (6); and Steel Products* (2). Commodities in Short Supply: Capacitors (20); Electronic Components (10); and Resistors (16).
12
34
Note: The number of consecutive months the commodity is listed is indicated after each item. *Reported as both up and down in price.
MARCH 2019
Metals & Manufacturing Outlook / March 2019
ISM REPORT OUTLOOK
ISM Report On Business ®
®
manufacturing
February 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 55.5 percent. Thirteen of 18 industries reported growth in new orders in February, in the following order: Wood Products; Computer & Electronic Products; Printing & Related Support Activities; Fabricated Metal Products; Primary Metals; Furniture & Related Products; Plastics & Rubber Products; Chemical Products; Miscellaneous Manufacturing‡; Paper Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Machinery.
55.5% 52.5% = Census Bureau Mfg. Breakeven Line
Production (Manufacturing) 2017
2018
2019
Production ISM’s Production Index registered 54.8 percent. The 12 industries reporting growth in production during the month of February — listed in order — are: Printing & Related Support Activities; Chemical Products; Miscellaneous Manufacturing‡; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Petroleum & Coal Products; Fabricated Metal Products; Primary Metals; Paper Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Machinery.
54.8%
51.7% = Federal Reserve Board Industrial Production Breakeven Line
Employment (Manufacturing) 2017
2018
2019
ISM’s Employment Index registered 52.3 percent. Ten of 18 manufacturing industries reported employment growth in February in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Primary Metals; Computer & Electronic Products; Machinery; Transportation Equipment; and Chemical Products.
52.3% 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 February, as the Supplier Deliveries Index registered 54.9 percent. The 12 industries reporting slower supplier deliveries in February — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing‡; Food, Beverage & Tobacco Products; Machinery; Chemical Products; and Computer & Electronic Products.
54.9%
Inventories (Manufacturing) 2017
2018
2019
53.4%
44.3% = B.E.A. Overall Mfg. Inventories Breakeven Line
‡Miscellaneous
Inventories The Inventories Index registered 53.4 percent. The 10 industries reporting higher inventories in February — listed in order — are: Textile Mills; Wood Products; Printing & Related Support Activities; Paper Products; Furniture & Related Products; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Fabricated Metal Products.
Manufacturing (products such as medical equipment and
supplies, jewelry, sporting goods, toys and office supplies).
Metals & Manufacturing Outlook / March 2019
35
ISM REPORT OUTLOOK
ISM Report On Business ®
®
manufacturing
February 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 39 percent in February, which is 3.8 percentage points lower than the 42.8 percent reported for January, indicating that customers’ inventory levels were considered too low. The only industry reporting customers’ inventories as too high during the month of February is Apparel, Leather and Allied Products.
39%
Prices (Manufacturing) 2017
2018
2019
Prices The ISM Prices Index registered 49.4 percent. Six of the 18 industries reported paying increased prices for raw materials in February, in the following order: Printing & Related Support Activities; Textile Mills; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing‡; and Machinery.
49.4% 52.5% = B.L.S. Producer Prices Index for Intermediate Materials Breakeven Line
Backlog of Orders (Manufacturing) 2017
2019
Backlog of Orders
2019
New Export Orders
2018
52.3%
ISM’s Backlog of Orders Index registered 52.3 percent. The nine industries reporting growth in order backlogs in February — listed in order — are: Wood Products; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Transportation Equipment; Miscellaneous Manufacturing‡; and Machinery.
New Export Orders (Manufacturing) 2017
2018
ISM’s New Export Orders Index registered 52.8 percent. The seven industries reporting growth in new export orders in February — listed in order — are: Wood Products; Furniture & Related Products; Miscellaneous Manufacturing‡; Chemical Products; Food, Beverage & Tobacco Products; Machinery; and Plastics & Rubber Products.
52.8%
Imports (Manufacturing) 2017
2018
2019
55.3%
‡Miscellaneous
Manufacturing (products such as medical equipment and
supplies, jewelry, sporting goods, toys and office supplies).
36
Metals & Manufacturing Outlook / March 2019
Imports ISM’s Imports Index registered 55.3 percent. The 13 industries reporting growth in imports during the month of February — listed in order — are: Wood Products; Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Plastics & Rubber Products; Miscellaneous Manufacturing‡; Machinery; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Fabricated Metal Products.
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