Archive for June, 2008
June 30th, 2008
Excerpt from today’s Wall Street Journal……a growing trend??
“HONGHE, China — As a sign over its main boulevard proclaims, Honghe is “China’s Famous Town for Sweaters.” But the economy of sweater town is unraveling, providing an early sign that China’s manufacturing sector may be entering middle age.
Over the past two decades, this city about 90 minutes’ drive from Shanghai built a comfortable niche in the global economy. At the industry’s height in recent years, more than half of Honghe’s 100,000 residents worked in 100 factories and 8,000 shops that knitted, dyed, packaged and shipped some 200 million sweaters a year. The local government says the enterprises brought in $650 million a year in revenue.
Now many exporters and workshops here have shut their doors. Others, their work floors partly idle, are cutting costs. Some of the migrant workers who came here for jobs are returning home.
Manufacturers say their profits have dwindled as they pay out more for raw materials and energy. China’s strengthening currency has made Honghe’s products more expensive for important markets such as the U.S., where the price of Chinese goods surged a record 4.6% in May from the previous year, according to the U.S. Commerce Department. Foreign buyers, used to inexpensive Chinese products and nervous about economic weakness at home, are often refusing to pay more.
Beijing, too, has contributed to the squeeze: Companies say the government’s tougher protection for workers and the environment has made it more expensive to do business. Foreign buyers say tighter visa policies have made it harder for them to visit Chinese factories or attend trade shows.
These pressures are felt by enterprises across China. But none have been hit harder than the companies that feed the vast global appetite for inexpensive goods such as toys, household goods, shoes and clothes. Manufacturers of low-cost products have been a key engine of China’s economic miracle, helping to turn the country into the world’s No. 2 exporter after Germany. For years, these companies continued to grow by expanding their volumes and trimming margins to undercut the competition. As material and labor costs rise and China’s currency strengthens, these manufacturers are among the least able to absorb the costs.
The transformation is most apparent in the boomtowns that tied their fortunes to making one product cheaply, from Guangdong province in the south to Honghe’s environs in the Yangtze River Delta. Many of these manufacturing centers have seen hundreds if not thousands of factories and workshops close in recent months, industry executives say. In Shengzhou, a city near Shanghai that claims to make one-third of the world’s neckties, manufacturers are trying to hold a united front to boost prices. Dongguan, in Guangdong, is seeing makers of toys, shoes and brushes close shop.”
June 27th, 2008
It’s IMTS time again from September 8th - 13th. There will be several local activities being planned including students from our high schools being taken to the show and a local manufacturers Hospitality event. More on these later. Here are some highlights from the initial IMTS Newsletter….
“Expect to see quite a few very large machine tools at this show, especially horizontal boring mills and flatbed lathes with large spindle bores. Activity in the energy, oilfield and power generation markets is a key factor driving interest in these machines. (Machines to handle large aerospace components will also be conspicuous but no more so than at the last IMTS.) In addition to new, over-sized models from familiar builders, you’ll find some exhibitors, new to IMTS, with machines for giant wind turbine parts and the like.
The combination of a weak dollar, strong pressure on wages in China and the surge in oil prices has wiped out much of the advantage of producing large, heavy components off shore. High oil prices have a double effect—they are spurring domestic oil operations and making it prohibitively expensive to transport heavy goods long distances.
A lot of attention will be directed to features that help a shop avoid re-fixturing or need extra setups. Moving big, heavy workpieces is a major consideration for users of these machines.
Interestingly, tolerances on large workpieces are tight and getting tighter because high accuracy is linked to efficiencies and energy savings in end products. Big pistons, turbine components and valve bodies are a few examples where we see this happening. So machine tool builders will be touting advanced feedback systems, anti-vibration provisions and thermal control. Measuring large parts is also an issue. Look for portable, laser-based systems to be prominently displayed.”
Over the next 2 months, we’ll have more to report on this event taking place in Chicago and how we local manufacturers can participate and benefit.
June 26th, 2008
Goodwill Abilities Center has operated a number of training and community placement programs since its inception in 1936. Our TECHWORKS facility on 15th Avenue has an excellent reputation for providing a variety of training opportunities for individuals as well as meeting the training needs of local manufacturers.
One of our most successful programs is our “Fast-Track” training course. Students receive 72 hours of manufacturing training over an eight-week period. Our goal is to place the students in a full time position with a local manufacturer after graduating from the class. Fast-Track students receive training in blue print reading, calibration, “soft skills” and actual time on CNC machines. Goodwill Abilities Center staff then work to place the graduates in a full time position.
One element that is currently missing from the program is the follow-up and encouragement that new employees often need to succeed in their new jobs. We are therefore looking for volunteers who could devote approximately 10 hours, spread over a two-three month period, to assist the student in transitioning from the class room to full time employment.
Mentors would be asked to:
1. Meet the student half way through training period to get acquainted with their prospective students.
2. At the conclusion of training, consult with the Fast-Track trainers to determine the strengths and weaknesses of the student.
3. Work with Goodwill Abilities Center staff to secure permission from the hiring company to serve in the mentoring capacity at the company’s facility/plant.
4. Meet with the student once per week during the first month of employment. Gradually conclude the process once it is determined that the employee is performing at a level to succeed.
We believe this valuable contribution of a volunteer’s time will go a long way towards ensuring a successful career for our students.
If you know of someone, please let him/her know about this.
Persons interested in serving as a mentor can contact:
Courtney Geiger, Workforce Development Manger
Goodwill Abilities Center
1907 Kishwaukee Street, Rockford, IL 61104
cgeiger@abilitiescenter.org
815-965-3795
June 25th, 2008
Did you catch this story on ABC News last night? It seems to me that I’m hearing more of these stories and it’s good news for us all. You’ll have watch a 15 second commercial first though.
http://abcnews.go.com/Video/playerIndex?id=5238179
June 25th, 2008
As I mentioned in my recent blog, I am trying to find an agent or distributor to sell my products in China (see link)
http://blogs.e-rockford.com/manufacturing/2008/06/18/export-to-china/
Well, I just received a response to my e-mail that I sent to several potential agents located in China. They were provided to me via the State of Illinois Office of Trade. We are now quoting several products for price, delivery and payment terms. One new experience is that I had to find a software that could open the files he sent, but fortunately, they existed here. Thanks also to Jill at Ingersoll Production Systems for her insight on this small problem that we quickly overcame.
Here’s hoping I can compete and win some new business!! More later.
June 25th, 2008
A story about upcoming steel prices from the WSJ yesterday:
“After months of negotiating with China’s top steel makers, mining giants Rio Tinto PLC and BHP Billiton Ltd. on Monday won an 85% increase in the benchmark price for iron ore, a key ingredient in steel production. The rise indicates that steel prices world-wide are likely to stay high, further fanning inflation concerns. The increase is retroactive to April 1. That means steelmakers that have purchased iron ore from BHP and Rio since then will have to write checks for the difference. Contract prices for iron ore with this new increase would be in the range of about $140 a metric ton, up from $85 a ton.
There are just three major mining companies. Iron ore will account for 65% of the raw material costs.”
June 23rd, 2008
Techworks is embarking on new initiatives to increase the availability of training for the manufacturing community. As part of this initiative, we would like to have mentoring for these students. What a better way for a retiree from the manufacturing community to assist in the effort. If you have some spare time, we’d like you be a part of this program.
For further details, please contact Sam Schmitz, President, Abilities Center at 815-965-3795 or e-mail at sam@abilitiescenter.org
We look forward to hearing from you!
June 22nd, 2008
This would seem to be a good time for an American manufacturing renaissance! I’ve heard that even Caterpillar is shifting work from Europe back to the U.S. Our efforts to attract manufacturing back to Rockford is right on target.
http://www.businessweek.com/print/magazine/content/08_26/b4090038429655.htm
June 20th, 2008
Recent talks with Patrick Hope and Bryan Davis led us into discussions regarding the impact on local manufacturers as suppliers to 2 leading industries. While we could recognize several of the obvious suppliers to the oil drilling and airplane industries, we wonder how many of our local manufacturers supply components or perform manufacturing operations for these producers of airplanes or oil drilling equipment.
Example, my company supplies cylinders to Ingersoll Machine Tools; they make large machines that perform machining on airplane wings for Boeing. Indirectly then, I benefit from the increase in airplane production. Guess which country will buy the most airplanes in the next 20 years?
Similarly, I know of another local company that sell products to the offshore drilling industry.
So when the U.S. wants to get back into off-shore drilling for oil or when Boeing sells more airplanes to say, China, we benefit.
I wonder how many local manufacturers can point to these 2 industries and say…”me too”?
Would like to hear from you.
June 19th, 2008
As I mentioned yesterday, I attended the China Matchmaking event conducted by RAEDC. Follow Thomas Bona’s article for a good rundown.
http://www.businessrockford.com/biznews/x1470888204/Chinese-delegation-visits-Rockford-today
So why was this important for a local manufacturer?
I learned that this group was on a US mission visiting cities like Los Angeles, St. Louis, Chicago, Boston among others. So by stopping in Rockford, we had a chance to explain the advantages of locating their business here. If they are going to locate in the US, why not in the Rockford area with all the benefits that we have to offer. Better us than LA, St. Louis or another city. And of course, bring jobs and wealth to the region.
What most of us don’t realize is that Illinois is the #1 state in the Midwest for Foreign Direct Investment with over 1,600 foreign firms located in over 5,000 Illinois locations employing almost 300,000 employees and exporting almost $50 billion.
If this China business opportunity is coming, why not at least see what’s involved and how your company could get on the train and benefit?
That’s my plan!
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