Explore New Industries - Letter to Editor

Add comment September 5th, 2008

Today’s Letter to the Editor states two issues; one that I agree with….”Rockford is an undiscovered gem…..”

http://www.rrstar.com/opinions/letters/x1001334524/Explore-new-industries

And one that I disagree with…”city’s unemployment rate around 10% because of the foundering manufacturing sector….”

I don’t know where the author got his facts, but from those that I see, many of those unemployed are in the services and construction industries, not manufacturing.  It’s even not fair to put the Chrysler situation into the big hat of manufacturing and then say the same thing.  While Chrysler is an important contributor of employment in manufacturing, they mske up a small % of total manufacturing employment.  Facts: this region employs around 33,000 manufacturing people and has over 1,000 manufacturing companies, many employing 100 or fewer people.  Many that I know are always looking for skilled workers, many are doing very well in their sales and most are hard working, family or personally owned.  They don’t need comments such as the one from the Letter published today.

U. S. Machine Tool Consumption Up 15.3% vs 2007

Add comment September 2nd, 2008

Who says manufacturing is dying?  Take a look at this report and the chart that shows that we are investing in manufacturing technologies right here in the U. S. A.  and it’s up over 15% over 2007.  Industry analysts expect continued growth into the third quarter as manufacturers invest in the latest and greatest manufacturing technology at IMTS 2008.

http://www.imts.com/media/usmtc.pdf

Miners Seek to Cash in on Steel Industry Demand

Add comment September 2nd, 2008

 Attention all users of steel…here’s an interesting article….

By ROBERT GUY MATTHEWS
September 2, 2008

The global scramble for raw materials is changing the shape of the world’s steel industry: Iron-ore miners are becoming steelmakers, and steelmakers are becoming ore miners.

In an effort to gain independence from the mining giants that control the world’s iron ore and have raised prices more than 80% this year alone, a growing number of steelmakers are shopping for their own iron-ore mines. Meanwhile, several ore miners are seeking to cash in more directly on the world’s growing demand for steel.

Reuters

Workers at Cia. Vale do Rio Doce in Brazil, a market where the industry trend toward vertical integration is most visible.

“The main difference between now and, say, 10 years ago is that there is no excess capacity in the market,” says John Anton, a steel economist for Global Insight, an economic consulting company based in Waltham, Mass. “For one company to get what it needs, it now has to outbid another company.”

The trend toward controlling production from the raw materials to finished product, known as vertical integration, harks back to the way the steel industry operated decades ago, when it was common for steelmakers to own their own mines. In the U.S., the practice fell by the wayside in the face of competition from foreign steelmakers. The thinking was that the best way to fend off competition from abroad was to focus on steelmaking, which historically was more profitable than mining iron ore.

The swing back toward vertical integration is most evident in Brazil, which has vast reserves of iron ore that remain either untapped or up for grabs. “Brazil is the strategic place for the steel industry,” says Lakshmi Mittal, the chief executive of Luxembourg-based ArcelorMittal, the world’s largest steelmaker by production. “It has the raw materials. It has the market. It has the growth.”

In the past month, steelmakers and miners have announced major investments in Brazil’s fast-growing economy. ArcelorMittal said it would pay $810 million for the Brazilian iron-ore assets of Oslo-listed London Mining PLC and agreed to develop a port facility to ship iron ore, while a consortium of Japanese steelmakers joined the bidding fray for a collection of Brazilian mines owned by Cia. Siderúrgica Nacional. Also interested in those CSN mines are steelmakers from China, India and Russia.

Meanwhile, Brazil’s Cia. Vale do Rio Doce, the world’s largest iron-ore miner by volume, said last month that it planned to build a $5 billion steel complex. The mill, to be completed by 2013, would have about 2.5 million tons of capacity, with most of the output targeted for domestic use. Several other smaller iron-ore producers have indicated they also want to move into steel production.

Like many miners, Vale is flush with cash from historically high iron-ore prices and has been looking for new ways to deploy this capital. Vale has said it also wants to buy other mining operations as it moves to diversify away from iron ore. But even with $14 billion earmarked for that purpose, the company hasn’t had success in buying other mining operations. For instance, Vale’s proposed deal to buy smaller metals miner Xstrata PLC fell through this year over price negotiations.

In addition to the steel complex, Vale announced last month that it was building an aluminum plant in Brazil so it could feed that new plant with the bauxite from its mines. It is also investing in joint ventures with steelmakers. In April, the miner signed a memorandum of understanding with JFE Steel Corp., a large Japanese steelmaker, and Dongkuk Steel Mill Co., a South Korean-based mill, to construct a steel-slab plant in Brazil.

A Vale spokesman said that the company’s mission is to enter into joint ventures with steelmakers to build in Brazil and increase the production of steel there. Those joint ventures would naturally purchase their iron-ore needs from Vale.

Steelmakers have focused on Brazil in part because Australia’s iron-ore reserves are controlled by BHP Billiton and Rio Tinto, meaning there are almost no opportunities for a newcomer to gain a foothold in the market. Moreover, Australia’s logistics and transportation system is nearly at capacity and labor costs are higher.

Write to Robert Guy Matthews at robertguy.matthews@wsj.com

August Manufacturing Report

Add comment September 2nd, 2008

Economic activity in the manufacturing sector failed to grow in August, while the overall economy grew for the 82nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business^®.

The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementâ„¢ Manufacturing Business Survey Committee. “The PMI indicates a slight decline in manufacturing during August. This continues the 2008 trend toward negligible growth or contraction each month, but ultimately results in very little overall change in the sector. This month’s report is showing the first signs of lower prices as the Prices Index fell significantly, though still at an inflationary level. Export orders picked up additional momentum, and that is important to manufacturers as domestic demand remains soft for most industries.”

PERFORMANCE BY INDUSTRY

The five industries reporting growth in August — listed in order — are: Paper Products; Computer & Electronic Products; Miscellaneous Manufacturing; Apparel, Leather & Allied Products; and Chemical Products. The industries reporting contraction in August are: Wood Products; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; Furniture & Related Products; Machinery; and Primary Metals.

WHAT RESPONDENTS ARE SAYING …

• “Business is picking up and continues to improve for projects to be constructed in 3rd and 4th quarters 2008.” (Electrical Equipment, Appliances & Components)
• “The lower oil prices and stronger dollar are good news.” (Fabricated Metal Products)
• “We are contracting our manufacturing skills to companies involved in wind power, coal mining and other energy fields in order to ride the recessionary wave in the rust belt.” (Machinery)
• “Material prices continue to rise; however, selling prices of our products have risen as well.” (Paper Products)
• “Prices remain predictable … they keep going up.” (Food, Beverage & Tobacco Products)

Read the rest of the report….

http://www.ism.ws/ISMReport/MfgROB.cfm

Chinese Manufacturing Companies Facing Difficult Times

Add comment August 29th, 2008

While we may think China’s manufacturing sector is doing wonderfully well, this article talks about “a number of manufacturers and industries in China are facing very difficult times”.  “Though you don’t hear it reported much in the U.S., some Chinese manufacturers are operating now at a loss and many have been severely impacted”.

U.S. manufacturers need to adjust their China strategy to remain competitive….read the rest of the story…..

http://www.industryweek.com/ReadArticle.aspx?ArticleID=17030

What Recession??

Add comment August 28th, 2008

 US GDP rebounds with 3.3% growth

Tax rebates have encouraged consumers to spend more

The US economy grew at a revised 3.3% annually in the second quarter of 2008, the Commerce Department said, much higher than its first estimate of 1.9%.

The rebound was linked to strong US exports, helped by the weak dollar, while government tax rebates also boosted consumer spending.

GDP grew at a rate of 0.9% in the first quarter, after a 0.2% contraction in the last three months of 2007.

The Federal Reserve has warned the economy will remain weak this year.

“While we’re not out of the woods yet, maybe we’re beginning to see some sunlight,” said John Wilson, equity strategist at Morgan Keegan.

“At some point, the market will begin to look through the trough and gauge the strength of the coming upturn.”

‘No recession’

The data showed that exports grew at an annualised rate of 13.2%, higher than the government’s initial estimate of 9.2%.

Imports fell at a rate of 7.6% as the US economic slowdown reduced demands for goods made overseas.

The improved trade balance added 3.1 percentage points to second-quarter GDP, the biggest since 1980.

The slowdown in the housing market was evident, as builders cut back and businesses reduced their spending.

Consumer spending, boosted by the government’s $600 tax rebate payments, rose by 1.7%, slightly higher than the previous quarter’s 1.5%.

Some observers said that the figures lent support to the argument that the US was not heading for a recession.

“For a recession the economy is certainly growing very quickly,” said Avery Shenfeld, senior economist at CIBC World Markets.

“A lot of that growth is driven off exports and pessimists might say that can’t continue during slowing growth overseas.

“But I would say this happened precisely during the period of slowing growth overseas … this is still an economy that faces slow times but not a recession.”

Courtesy: BBC News.UK

McCain and Obama on Small Business Issues

Add comment August 27th, 2008

Where McCain and Obama stand on small business issues…..and where they differ…according to a poll of 400 business owners conducted by Suffolk University for turnaround specialists American Management Services.  Small business owners and their employees represen 32% of all registered voters.  See the table below….

http://www.businessweek.com/magazine/content/08_68/s0808021470964.htm

Looking Ahead to Manufacturing’s Future

Add comment August 21st, 2008

Growth in U.S. manufacturing will be led by exports, capital investment and growth abroad…

http://www.industryweek.com/ReadArticle.aspx?ArticleID=17047

Skilled Trades Seek Workers

Add comment August 19th, 2008

Even as the economy slumps and unemployment rises, strong demand for power plants, oil refineries and export goods has many manufacturers and construction contractors scrambling to find enough skilled workers to plug current and future holes.

With the shortage of welders, pipe fitters and other high-demand workers likely to get worse as more of them reach retirement age, unions, construction contractors and other businesses are trying to figure out how to attract more young people to those fields.

Their challenge: overcoming the perception that blue-collar trades offer less status, money and chance for advancement than white-collar jobs, and that college is the best investment for everyone.

Follow the rest of the story….

http://online.wsj.com/article/SB121910464115051361.html?mod=hps_us_editors_picks

Supply Management Monthly Report on Manufacturing Activity

Add comment August 5th, 2008

One of the better monthly reports on the health of the manufacturing sector is the Institute of Supply Management’s monthly reports. It is a monthly survey of purchasing managers and surveys various indicators such as new orders, production, etc. It cut across several key industries and then an index is calculated that indicates growth, unchanged or declining. It is issued the first day of each month and is available free (see below for the link). Here is the front end excerpts from the latest report issued last Friday….

“Economic activity in the manufacturing sector was unchanged in July, while the overall economy grew for the 81st consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementâ„¢ Manufacturing Business Survey Committee. “In this month’s report, manufacturers indicate no change in overall business activity when comparing July to June. This continues a trend biased toward relatively minor contraction established more than 12 months ago. Manufacturing has maintained a reasonable level of activity during a period in which other sectors of the economy have been in recession. While the PMI indicates little to no change has occurred during this period, it would be hard to convince manufacturers who are faced with higher costs and uncertain demand that there is little change taking place.”

PERFORMANCE BY INDUSTRY

The six industries reporting growth in July — listed in order — are: Computer & Electronic Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Primary Metals; Paper Products; and Chemical Products. The industries reporting contraction in July are: Plastics & Rubber Products; Wood Products; Transportation Equipment; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Machinery; Miscellaneous Manufacturing; and Fabricated Metal Products.

WHAT RESPONDENTS ARE SAYING …

• “Our company has gone to a four-day/10-hour week in an effort to curtail energy costs for the company and for employees.” (Transportation Equipment)
• “Competitive market forces are preventing companies from boosting prices high enough to recover raw material input costs.” (Plastics & Rubber Products)
• “All automotive manufacturers (especially trucks) are down significantly.” (Fabricated Metal Products)
• “It is almost impossible to keep up with the complexity of never-ending price movement.” (Chemical Products)
• “We have had two large projects cancelled that we believe are solely due to the uncertain economy.” (Machinery)

Read the rest of this latest report and see how it correlates to your business.

http://www.ism.ws/ISMReport/MfgROB.cfm