Metals & Manufacturing Outlook for April 2019

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2 OF A SIX PART SERIES PAGE 22

PLUS

THE CREDIT MANAGER’S OUTLOOK PAGE 8

NORTH AMERICAN OUTLOOK PAGE 10

METALS OUTLOOK PAGE 12

Brought to you by

MARCH ISM PMI:

55.3%

Released April 1st -The Full Executive Summary Report On Business - Page 30

presents

2

Metals & Manufacturing Outlook / April 2019

SPECIALIZING IN LARGE & HEAVY WEIGHT FORGINGS

TOLL FREE: 800.600.9290 PHONE: 973.276.5000 INFO@STEELFORGE.COM

STEELFORGE.COM

TABLE OF CONTENTS

Publisher LEWIS A WEISS

05

Editor in Chief TIM GRADY

PUBLISHER’S STATEMENT

Creative Director CRAIG ROVERE Contributing Writers ROYCE LOWE TIM GRADY NORBERT ORE ANDREA OLSON CHRIS KUEHL MARK SHEEHAN Production Manager LINDA HOPLER Current Circulation 45,200 Advertising ADVERTISE@MFGTALKRADIO.COM Editorial Office JACKET MEDIA CO. 75 LANE ROAD FAIRFIELD, NJ 07004 (973) 808-8300

Text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast.

Open call for Contributing Writers for new and existing content. Let’s start a conversation – Contact us at editorialdept@mmoezine.com or visit mfgtalkradio.com/writer for more information. © 2019 Jacket Media Co. No part of this publication may be reproduced or used in any form without the prior written permission of the publisher.

Metals & Manufacturing Outlook is a registered trademark of Jacket Media Co.

A word from our publisher

06

17 ENERGY OUTLOOK Energy and the environment

MANUFACTURING OUTLOOK

18

08

GLOBAL PMI OUTLOOK

A global look at manufacturing

THE CREDIT MANAGER’S OUTLOOK

by Norbert Ore

by Dr. Chris Kuehl

20

10

A look at Europe

NORTH AMERICAN OUTLOOK Manufacturing in the US, Canada and Mexico

12 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

EURO OUTLOOK

21 ASIA OUTLOOK China sees little change

22 COVER STORY CNC Machining: The complete engineering guide part 2

29 SOUTH AMERICA OUTLOOK Brazil in the spotlight

30 THE MARCH ISM REPORT The Manufacturing Executive Summary Report on Business presented by the Institute of Supply Management

PUBLISHERS STATEMENT

PUBLISHER’S STATEMENT What’s Happening in Manufacturing?

You might find this interesting: Metals & Manufacturing Outlook has been around for a long time – since 1988, having morphed through different titles like MetalsWatch and Metals Outlook, and has been circulated as a newsletter, on CD, online, and for the past two years as a full-bodied digital magazine, called an ezine in the parlance of the Internet.

The content has largely been one-to-many, sending you information assembled by our writers and editors, and expanded in 2015 to include more content about manufacturing in concert with the growth of Manufacturing Talk Radio. While we hope this is helpful, it isn’t yet robust enough to fully serve the manufacturing audience and all its related upstream and downstream entities which supply and buy.

So, another expansion of Metals & Manufacturing Outlook ezine is underway to develop content from you, the reader, as you – the contributor. If you can write 500-600 words and provide two pictures to tell a story, please submit your contribution to editorialdept@mmoezine.com. You don’t need to be in the executive offices or have a Ph.D to submit an article from the ‘boots on the ground’. And, if you crank out 1000-1200 words, or you happened to have authored a White Paper that can help the manufacturing industry, please send those submissions, as well.

When we select a submission to include in Metals & Manufacturing Outlook, or add to our content pages at Manufacturing Talk Radio (www.mfgtalkradio.com), we will send you a release for signature to authorize us to use or reprint the content. We will attribute the submission to the author or company, and share it through our channels to ‘get the word out’ about another informative aspect of manufacturing. Whether it is a human interest story, a new technology, a key process improvement, a refined sourcing solution, a new plant opening, or any of the hundreds of topics that are talked about in the manufacturing stream of consciousness, if it can help others in the industry without divulging proprietary information, we’d like to help in the expansion or development of this fascinating industry from yet another channel – you, our reader.

So, as manufacturing continues to boom – and while it is booming – if you or your company has a story to tell and are willing to share with the world of manufacturing, send it our way and be part of the innovation solutions and stories that happen every day in manufacturing which largely go unnoticed by people outside the industry.

And – if you have an industry event coming up, or there was some vital content from your recent trade show that needs wider distribution, let us know. We can carry your message or content forward through interviews of your speakers or reprinting of presentation content to attract even more attendees this year or next year!

Metals & Manufacturing Outlook isn’t just our ezine – it’s yours, as well. It is a voice in the industry through which you can speak. We hope you enjoy this new content as it develops, as you read this issue of Metals & Manufacturing Outlook.

Lewis A Weiss, Publisher Contact laweiss@mfgtalkradio.com or text “RADIO” to 66866 for comments, suggestions and ideas and guest requests for MFGTALKRADIO.COM podcast.

Metals & Manufacturing Outlook / April 2019

5

MANUFACTURING OUTLOOK

APRIL 2019

MANUFACTURING OUTLOOK THE UK DIDN’T LEAVE EUROPE AT THE END OF MARCH AND STILL DOESN’T KNOW WHEN IT WILL, IF IT DOES. GLOBAL MANUFACTURING IS STAGNANT, BUT THE U.S. DID SOMEWHAT BETTER IN MARCH. GERMANY AND JAPAN STILL LOOK SHAKY. GLOBAL TRADE AND TARIFFS ARE STILL IN A STATE OF FLUX.

by ROYCE LOWE The Global Manufacturing PMI is at a 33 - month low, with the U.S. still saving the day. European and Japanese manufacturing are a little less healthy, both still in contraction. There are still many U.S. manufacturing voices decrying the Trump metal tariffs.

Nucor and U.S. Steel Corp report healthy earnings, obviously due to Trump’s tariffs. The U.S. imported 3.4 million tons of steel in January, a 20.7 percent increase year-over-year but over 83 percent higher than December 2018. Caterpillar says the tariffs are costing it billions.

The BLS jobs report for March shows the addition of 196,000 non-farm payroll jobs. The unemployment rate stayed at 3.8 percent.

Manufacturing lost 6,000 jobs in March, following a gain of 1,000 in February. Motor vehicles and parts lost 6,000 jobs in March. In the 12 months prior to February, manufacturing had added 22,000 jobs per month.

6

Metals & Manufacturing Outlook / April 2019

The Bureau of Economic Analysis recently released its ‘third’ estimate for the annual rate of Real GDP growth in the fourth quarter of 2018, putting it at 2.2 percent. The figure for the third quarter of 2018 was 3.4 percent.

The ISM PMI figure for U.S. manufacturing found its way back to 55.3 percent in March from 54.2 percent in February, representing the 31st consecutive month of growth in manufacturing.

The overall economy grew for the 119th consecutive month.

IHS Markit’s remarks on the U.S. noted that operating conditions improved modestly, with an easing in production and new orders growth rates. There was a further softening in inflationary pressures. The rate of job creation stayed solid despite broadly unchanged levels of outstanding business.

The Markit PMI moved to 52.4 percent in March, down from 53.0 percent in February.

MANUFACTURING OUTLOOK New export orders rose at the weakest rate for five months, amid global trade tensions and the impact of tariffs which had reduced export demand. Export demand has also been weakened by softer economies in Europe, the #1 trading partner of the U.S.

World crude steel production for the 64 reporting countries – which represent 99 percent of world crude steel production – for the month of February, at 137,274 MT , was up 4.1 percent yearover-year. China’s production was up 9.2 percent year-over-year. U.S. crude steel production for February 2019 was 6.896 MT, up 4.6 percent yearover-year.

Primary Global Aluminum Production in February 2019 was reported at 4.920 million tons, with production in China, at 2.780 million tons, representing 56 percent of world total. Production was 406,000 tons in GCC; 343,000 tons in the rest of Asia; 274,000 tons in Western Europe; 296,000 tons in North America and 314,000 tons in Eastern and Central Europe.

There was a solid increase in employment, with a number of firms saying there were further unfilled vacancies, but that they were having difficulty finding suitable (skilled) candidates. Companies will need to work with local county colleges, trade/tech schools and implement their own training programs to close their own skills gap because 4-year universities, and even government programs will not turn out individuals with the skills needed in manufacturing soon enough to compensate for the skills gap.

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. LIGHT VEHICLE SALES were down 3.1 percent in March.

Metals & Manufacturing Outlook / April 2019

7

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 Month after month, we seek the ever-elusive trend of the Credit Managers’ Index (CMI) going further into positive territory. One month our hopes are up and the next month they are dashed. “This was one of those months where the scores reversed again,” said NACM Economist Chris Kuehl, Ph.D. “It is not a crisis situation by any stretch as the numbers are still firmly in the expansion zone (a score above 50), but we all would like to see improvement. The challenge is that much of the other economic data is telling the same story as there is a low expectation for first quarter GDP and reductions in the readings that are coming from the Purchasing Managers’ Index as well as data from industrial output to capacity utilization.”

Maybe credit managers should be glad this month wasn’t worse.

The combined CMI score was 53.6 in March; it was at 54.9 the month prior. In January it was 53.4, so perhaps February was the little anomaly and now the numbers are back to where they should have been. The combined score for the favorable factors slipped back out of the 60s again at 59, the lowest point reached in the last 12 months (even going back to 2017). The combined score for the unfavorable factors fell as well and is back in the contraction zone under 50. It was at 49.4 in January and is now at 49.9—very close to the 50 line, but still below the level of contraction.

The details are interesting as far as identifying

8

Metals & Manufacturing Outlook / April 2019

trends. The sales numbers fell out of the 60s with a reading of 58.2, the lowest score in the past two years. These numbers have been in the 60s consistently until this year. There was also a decline in new credit applications, but they have been this low before (58.2 in January and 57.5 in December). The reading is now sitting at 57.8 after reaching 58.9 last month. The dollar collections reading slipped as well (59.1 to 56.6). That marks the lowest point since April 2018. The amount of credit extended stayed in the 60s and actually improved as it went from 62.3 to 63.5. “This may be the most interesting piece of data of all. In spite of all the down performance there was more credit extended,” Kuehl said. “That suggests good customers are asking for and likely getting more credit.” It is also important to note that even with these reversals, the favorable factors remain comfortably in the 50s.

The changes were also noticeable in the nonfavorable categories. The rejections of credit applications trended down a bit but not as much as would be expected given the drop in new applications for credit. The reading last month was 52.1 and this month it was 51.2. Kuehl noted that those applying for credit seem to be worthy enough to get much of what they are asking for.

One of the major concerns is the sharp drop in the reading for accounts placed for collection.

Last month it was at 49, close to the high point for the last 12 months. This category has not

CREDIT MANAGERS’ OUTLOOK escaped the contraction zone since September of last year when it hit 50.2. There was actually a little improvement as far as the disputes category was concerned as it rose to 49.5 after a reading of 48.5 in February; still not in the expansion zone, but getting a little closer. The reading for dollar amount beyond terms fell, but managed to remain in the expansion zone (barely) with a reading of 50 compared to the 51.3 the month prior. The dollar amount of customer deductions fell out of the expansion zone with a reading of 48.8 from last month’s 50. There was also a dip in filings for bankruptcies—meaning there were slightly more this month than last. The reading was at 53.7 after a 54.9 mark set in February.

“There is no wholesale collapse under way, but the data trended down generally, and in some sectors the decline was significant—the worst reading in the last 12 months,” Kuehl said. “The hope is that next month trends back up, but with all the other generally down data coming out of late, that doesn’t seem likely.”

Manufacturing Sector “In many respects, the manufacturing sector has been pretty healthy the last few years—its share of GDP has grown and the sector now accounts for about $2.7 trillion dollars of the total U.S. GDP. If manufacturing was an independent country, its GDP would be larger than that of India—it would be the ninth-largest country in the world,” Kuehl said. “There have been some weaker signals of late—everything from a reduced Purchasing Managers’ Index to slips in capacity utilization and capital investment. The shift is seen in the CMI data as well.”

The combined score for the manufacturing sector is 54.6, only slightly less than the reading the month before at 54.8. The combined score for the favorable factors was 60.3, very close to the reading in February when it hit 60. The combined score for the nonfavorable factors slipped slightly from 51.4 to 50.7, but it still managed to escape the contraction zone. As usual, the details tell a more complete story.

The threatened tariffs and the impending trade war has pushed a lot of advance buying and

stockpiling on the assumption that everything from commodities to intermediate parts and finished goods will be unavailable. Inventory levels are as high as they have been in some time. If the trade deal worked out in some fashion it may be very hard to reduce the size of that inventory overhang.

The sales reading slid out of the 60s with a bit of a thump. It had been at 61.7 and now sits at 58.4—the lowest point since the middle of 2017.

Kuehl noted the sluggish economy has been taking a toll on sales. The new credit applications data improved, however, from 58.6 to 61.2. “The sense is that companies are feeling some of that reduction in sales and are trying to improve the situation with more offers of credit.” The dollar collections reading slipped out of the 60s with a reading of 57.8 after being at 60.5 the month before. The amount of credit extended jumped dramatically from 59.2 to 63.9. All in all, the data for the favorable factors looked solid and even improved in some key categories.

The data for the nonfavorables was also somewhat mixed. There was almost no change as far as rejections of credit applications is concerned.

It was at 53.5 last month, 53.2 this month and 53.3 in January. The big change this month was in accounts placed for collection as it has shifted from 50.5 to 46.8, as low as this reading has been in over a year. “This is of some concern as this can be the last stage before companies start to slip into bankruptcy,” he said. In contrast, there was improvement in the disputes category as it moved from 48.7 to 50.2. The dollar amount beyond terms slipped a little, but has remained in expansion territory with a reading of 51 after one of 52.8 the previous month. The dollar amount of customer deductions also fell a little and is now a bit deeper in the contraction zone (49.3 to 48.4).

The filings for bankruptcies improved a little from 53.3 to 54.6.

“By and large, the manufacturing data was pretty solid,” Kuehl concluded. “There was no real shift in either direction this time and the numbers are still solidly in the mid-50s.”

Metals & Manufacturing Outlook / April 2019

9

NORTH AMERICAN OUTLOOK

APRIL 2019

NORTH AMERICAN OUTLOOK

by ROYCE LOWE

The Institute of Supply Management PMI figure rose to 55.3 in March from 54.2 in February.

There was growth in new orders, production and employment. Supplier deliveries increased at a slower rate, backlogs grew along with raw materials inventories; customer inventories were too low. Prices were up and imports and exports grew.

Of the 18 manufacturing industries, 16 reported growth in March, in the following order: Printing and Related Support Activities; Textile Mills; Food, Beverage and Tobacco Products; Petroleum and Coal Products; Computer and Electronic Products; Electrical Equipment, Appliances and Components; Furniture and Related Products; Chemical Products; Plastics and Rubber Products; Wood Products; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products;

10

Metals & Manufacturing Outlook / April 2019

Primary Metals; and Machinery. The two industries reporting contraction in March are: Apparel, Leather and Allied Products; and Paper Products.

Comments from the manufacturing industry continue, in general, in an optimistic vein, and there is less mention of the effects of tariffs.

Fabricated Metal Products report difficulty in finding skilled machinists and mechanics.

CANADIAN manufacturing experienced the slowest improvement in operating conditions in two-and-a-half years, with weaker production and jobs growth and new export orders falling at the fastest rate since February 2015. The PMI was down in March at 50.5 from February’s 52.6.

Input cost inflation eased but there were rising domestic raw material costs, particularly for steel.

NORTH AMERICAN OUTLOOK There was a broad-based loss of momentum, with Alberta and B.C. showing the weakest overall manufacturing performance. All regions reported a drop in export sales.

Canadian light vehicle year-over-year sales fell by 2.5 percent in March to 181,800 units, to record the thirteenth straight month of decline.

Passenger cars declined 10 percent, and light trucks, making up some 75 percent of total sales, were up 0.6 percent.

Canada produced 1.040 MT of crude steel in February, down 6.7 percent year-over-year.

MEXICO saw a weakening in its manufacturing industry in March, following February’s recovery.

There was stagnation in new orders, a slight increase in export sales and a drop in production, all leading to reductions in employment and input purchasing. The PMI fell to 49.8 in March from 52.60 in February.

Mexico produced 1.435 MT of crude steel in February, down 12.6 percent year-over-year.

ISO9100:2015 and AS9100D

Metals & Manufacturing Outlook / April 2019

11

METALS OUTLOOK

APRIL 2019

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

by ROYCE LOWE Last month we outlined Ken Iverson’s plans to operate a thin-slab casting machine in Crawfordsville, Indiana. Nucor, with its background in electric furnace steelmaking, continuous casting and rolling of steel sections was set to make it in the flat-rolled business, that one sector that represents some 50 percent of finished steel.

Testing of the C.S.P. process in Germany went sufficiently well to convince Ken Iverson and his team that all was a go and the process, with its myriad parts, and Manfred Kolakowski, the inventor of C.S.P., crossed the Atlantic and went down the St. Lawrence seaway en route to Crawfordsville, Indiana, where in the fall of 1988, workers started assembly of the plant.

The process was already being touted as labor efficient, in fact, five times as much as the Japanese steel industry that at the time set the world’s

12

Metals & Manufacturing Outlook / April 2019

standard for the ability to pump steel out of furnaces. Touting a new invention was one thing; but the process was as yet really untried and there were mountains to climb before the parts from the boat became a producer of commercially acceptable hot-rolled steel. At that time, steel behemoths Bethlehem Steel Corporation and USX Corporation were predicting - probably hoping for - failure of the process.

Nucor had set its sights on taking bundles of scrapped cars and trucks and melting them in an arc furnace, then putting them through the C.S.P. process and finally through a hot rolling mill, to make coils of hot band. And they were figuring on doing this at a cost significantly below that of Big Steel; good for Nucor and good for Wall Street.

Wall Street had a very keen eye on Nucor at the time, on Nucor and “the process.”

METALS OUTLOOK Ken Iverson had picked a motley crew to take charge of his new venture. People came from other steel mills or from farms, and many had never seen molten steel in their lives before, like the man Iverson selected for his plant manager.

The man chosen for melt shop manager was a British metallurgist who had been working as a cook. There was no degree that would fit people for this mill start-up ; it was to be apprenticeships all the way.

Their ambitions were some way from being fulfilled. Putting the plant together was one thing, melting and casting and rolling the steel another.

It was, in fact, a drama in waiting, with problems from the word go in the arc furnace, then aborted attempts to cast steel and a broken crane cable that resulted in the crane “losing” the ladle and depositing molten steel at various parts of the building. The molten steel unfortunately found water, resulting in explosions and subsequent personnel injuries.

But, the process did work. Manfred Kolakowski was a nervous wreck after three attempts to cast failed, but he and the rest of the crew working on the cast that made it through the molds cheered and frolicked unabashedly as the red hot steel slab entered the reheat furnace and went on its way through the hot mill, a fitting end to a day fraught with all that might happen in a melt shop, and in this case did.

Nucor went on to install the process known as CASTRIP, that was jointly developed by Australia’s BlueScope Steel and Japan’s IHI, becoming the first licensee of the process. Castrip goes a step further than the thin slab casting process, and allows casting of steel down to thicknesses in the range 0.035 - .060 inches (0.9 - 1.55 mm.) following casting and a single stand in-line hot roll pass. This process produces hot-rolled sheet coil that is suitable for both cold-rolled nonexposed applications and galvanized construction applications. Nucor has a plant in Crawfordsville, commissioned in 2002, to supply cut widths of 42 - 48.5 inches (1070 - 1250mm) and a subsequent plant in Blytheville, Arkansas, to supply cut widths

of 48 - 60 inches (1220 - 1525 mm.). CASTRIP is a joint venture of Nucor, (47.7%), BlueScope Steel, (47.5%) and IHI (5%.)

Nucor is presently, by far, America’s number one steel producer. It got there by risking everything on mini mills, the first of which dates from 1969, based on electric arc furnaces that melted scrap and latterly large percentages of direct-reduced iron. Its technology, particularly the thin slab and Castrip processes, were developed by SMS and by the Castrip joint venture. This technology was effectively a risk on Ken Iverson’s part at the time, and for a while it was touch and go as to whether or not the processes would work.

Ken Iverson had his own methods of managing and doing things. There were no unions in his plants, but good results begat generous bonuses.

Management was lean, people were given free rein to express themselves through their contributions to overall plant performance. A staff of 22 managed an entire multi-billion dollar corporation.

Iverson stepped down as CEO in 1996 after a 30-year run, and two years later was pushed off the board into retirement: within months his hand-picked successor as CEO, John Correnti, was forced to submit his resignation. No details are at hand to explain these moves, but the company continues from strength to strength, in spite of policies that support Trump’s steel tariffs. It is thought that Iverson would not, to put it mildly, have been in agreement with this. Ken Iverson passed away in 2002. His legacy remains.

Recent prices for flat-rolled steel see hot-rolled stable at around $695/ton, cold-rolled at around $831.

Recent price spreads for non-ferrous metals are: copper stable at $2.92 per lb up to early April; aluminum retreated from $0.95 to 0.85 in the six months to early April; nickel increased from $4.80 to $6.00 in the three months to early April and zinc went from $1.25 to $1.35 in the 30 days to early April.

Metals & Manufacturing Outlook / April 2019

13

AEROSPACE OUTLOOK

APRIL 2019

AEROSPACE OUTLOOK

by ROYCE LOWE

The big news in the aerospace industry of late is, of course, the grounding of some 370 Boeing 737 MAX 8 aircraft following a second fatal accident, of an Ethiopian Airlines flight. This follows a similar accident of a Lion Air flight last October.

The pilots on board Ethiopian Airlines Flight 302 battled the plane’s automated flight control systems for almost the entire duration of the six-minute flight, according to a preliminary report into the crash recently obtained by CNN. The captain and the first officer struggled as the Boeing 737 Max 8’s systems, designed to prevent the plane stalling, repeatedly forced the nose of the plane down. For nearly six minutes, the report shows, the pilots worked through a series of procedures to try to regain control of the plane.

The problems on board the Ethiopian Airlines jet mirror those encountered on the doomed Lion Air Flight 610 -- which operated the same 737 Max 8 model and crashed in October, in what could be a significant blow to Boeing as it struggles to get the aircraft back in service.

Evidence was found in Ethiopia that suggested a common cause for the two crashes. Boeing CEO Dennis Muilenburg says the company was “sorry for the lives lost” in the two crashes.

The crashes, still being investigated, appear to be associated with software problems that

14

Metals & Manufacturing Outlook / April 2019

Boeing states they own and know how to fix.

It is not yet known how long the planes will be grounded, nor how Boeing will suffer from these accidents. The black boxes are being examined and analyzed in France.

In the meantime, Boeing’s shares took somewhat of a beating, while its rival aircraft manufacturer Airbus picked up a $35 billion order from China for 290 A320s and 10 A350s.

Airbus recently took an order from Emirates for 40 A330s and 30 A350s worth $21.4 billion.

Taiwan’s STARLUX airline has reportedly purchased 17 A350 XWBs for $6 billion.

Elon Musk’s SpaceX, Space Exploration Technologies Corporation, recently completed an unmanned flight to the International Space Station, completing the first step towards flying people for the first time on a commercially built vehicle. SpaceX and NASA are attempting to end U.S. dependence on Russia for astronaut shuttles to the space station. NASA’s Commercial Crew program is also relying on a separate Boeing spacecraft, the CST100 Starliner, which is in preparation for an unmanned trip to the space station no earlier than April.

This is also preparation to give rides into space to those people who have the taste and the means for such an adventure.

AUTOMOTIVE OUTLOOK

APRIL 2019

AUTOMOTIVE OUTLOOK

by ROYCE LOWE

The global automobile industry is a lot about threats these days, about Trump threatening Europe and Japan and Mexico with huge tariffs on those vehicles that Americans love to drive.

Europeans and Japanese manufacturers have spent countless billions building plants in the U.S. and, yes, in Mexico. U.S. manufacturers have had guns held to their heads about plants they’ve built in Mexico. But it’s never enough, and it will come to a head when Trump and his adversaries agree on a deal. In the meantime, there is uncertainty all around.

Trump is trying to tell GM how to run their business, telling them to reopen that ‘big, beautiful plant in Lordstown’, to close a plant in China or Mexico, to ‘bring jobs home.’ GM and the union reply that they are responsible and are acting accordingly.

Volkswagen meanwhile announced a layoff of 7,000 jobs as a streamlining for production of the first model of its all-electric ID car range towards the end of this year. The company announces very strong feedback from dealers and suggests the model may be sold out before its official presentation in September. VW is committed to electric vehicles, and to becoming the world’s number one in e-mobility by 2025 ,and to selling a million battery-only vehicles by 2025.

Tesla has been negotiating for years with Chinese authorities to become the first foreign automaker to fully own a manufacturing facility in the country.

Musk has said his company plans to begin battery and Model 3 production by the end of this year. He secured loans of $521 million from Chinese banks to build the plant on ground in Shanghai that was broken in early January this year.

The Model 3 made news in Norway recently, beating its monthly sales record in its key Norwegian market by a wide margin. By late March, 3,593 Model 3s had been registered, or 65 percent more than a previous high set in March 2018 by the Nissan Leaf, Norway’s biggest seller in 2018.

Norwegians get tax breaks and free or discounted tolls, making Norway the world’s biggest market per capita for emission-free cars. Norway was Tesla’s fourth biggest market by revenue in 2018, behind the U.S., China and the Netherlands.

Next in line for Musk and Tesla is a cheaper crossover SUV, the Model Y, which will hit showrooms in fall 2020. This will give Tesla, which has had a somewhat rough year so far, a reasonably priced SUV to go with its Model 3 sedan.

Toyota, in consideration of Trump’s tweety tariff threats, is increasing its U.S. investment by $3 billion to what will be $13 billion at the end of a five-year period terminating in 2021, a move that warranted a congratulatory Trump tweet. This comes at a time when all of the big three U.S. automakers are talking layoffs and plant closures.

Toyota is to build a new hybrid for Suzuki at a plant in Wales, a country that voted heavily to leave the EU. Ford announced its plans to turn around its operations in Europe, having closed plants in the UK and continental Europe recently, including Russia.

It is aiming at electrification and will build SUVs in Romania.

Electrification of the automobile industry is a target for all major manufacturers. It is a distant target, but everybody is aiming at it.

Metals & Manufacturing Outlook / April 2019

15

ISSUES OUTLOOK

APRIL 2019

ISSUES OUTLOOK

by ROYCE LOWE

Of all the numbers and statistics being thrown around of late, some that may cause more concern than others are those relating to the economy of Europe’s largest economy, Germany.

Long recognized as an economic, manufacturing and exporting powerhouse, Germany has, for the past several months, experienced reduced exports and an attendant hit to its overall performance. It is most uncharacteristic of Germany to find itself at the bottom of the league table of the top eight manufacturing countries in the Eurozone. Heads may be scratched as we wonder why this happened. Was it just Germany, was the country a victim of world trade woes, worries and wars, or did the country’s fiscal policy play a part?

The word Brexit comes up again, as it so often does these days. A no-deal Brexit, a disaster for any country exporting to the UK, looks very unlikely but is still not beyond the realms of the possible. When and under what terms the UK will leave the EU is still not known: it was scheduled for March 29, then April 12, but a further extension, of unknown duration, is now very likely. This is an age of uncertainty, and Germany’s manufacturing economy is caught up in it.

Germany’s small- and medium-sized companies, the “Mittelstand’, make up 99 percent of German companies, and latest available official data say they employ some 61 percent of the workforce and account for around 34 percent of the total turnover of German enterprises. These small companies

16

Metals & Manufacturing Outlook / April 2019

would find themselves vulnerable in the event of an unsuitable Brexit outcome, where it has been forecast that exports to the UK would be reduced by over 50 percent, let alone that parts may normally crisscross the border to the UK two or three times under normal circumstances.

There are those in Germany and elsewhere who feel that Angela Merkel should loosen her purse strings and let people spend more. She has at times been accused of taking too great care of her nation’s money.

There are thus quite a few cards stacked against Germany at this time, not the least of which is the loosening of demand from China and the ongoing global trade uncertainty. But all countries are in the same boat, and Europe’s major economies are suffering along with Germany, though perhaps not to the same extent. But it may safely be said that as Germany’s economy goes, so does Europe’s. With Germany in contraction of late, the overall PMI in Europe is in contraction.

Not all the news is bad. The (German) Ifo Business Climate Index recently rose to 99.6, beating forecasts for 98.5, as did a gauge of executives’ expectations.

The European Central Bank (ECB) cut its growth forecast in March, but policy makers are looking for growth to recover in the second half of the year.

The world will continue to keep a watchful eye on its fourth-largest economy.

ENERGY OUTLOOK

APRIL 2019

ENERGY OUTLOOK

by ROYCE LOWE

Kilowatts, Megawatts, Gigawatts…we know they’re units of power and we know there are many ways of generating them, all the way from coal through oil through natural gas, to wind, wave and sunshine. To give some idea of what they mean, one megawatt, MW, is equivalent to 1,000 kilowatts, and is sufficient to power the instantaneous requirements of 750 - 1,000 homes, depending on the season, time of day etc. Gigawatts measure the capacity of large power plants or of many plants, and are 1,000 MW.

to replace fossil fuel-fired plants. In some cases, storage is now the cheapest option for meeting peak power demand.

In 2018, a company won a contract to build a 65MW solar and battery farm in Arizona and shortly thereafter the Saudis came out with a $200 billion plan to build the world’s biggest battery-backed solar farm by 2030: a plan that has been put on hold. Japan’s Softbank is talking of a $1.2 billion project to produce 1.8 GW. As mentioned in March’s edition, a 495 MW solar-storage site is planned for Texas’s oil patch. Looks like a race is on.

The latest competitor is NextEra Energy Inc., a renewable energy giant which is talking of building a project in Florida that will claim the title of the world’s largest solar-powered battery. The 409 MW battery will be added to an existing 74.5 MW solar plant in the state’s west coast near Tampa.

Costs are coming down and solar is threatening

The quartz (solar) roof tile project unveiled by Tesla a couple of years ago, which didn’t take off at the time as the company was experiencing more pressing problems with its cars, is being reawakened.

NextEra’s project is due to start operation in 2021, and will replace 1,638 MW of natural gas-fired generation at the site that will be retired once the battery system is in service. The average cost of a lithium-ion battery pack is down 85 percent and more projects are being developed around the world.

One of the world’s largest roofing companies, Standard Industries Inc., is offering its version of a solar roof, where panels are laid right up against the top of a house and surrounded by shingles. The company has received 200 orders for its product so far and expects to ship 2,000 this year.

Other companies are moving into the solar roof business. More companies will move into the storage battery business. Perhaps Mr. Sun will one day take his place as the provider of all energy.

Metals & Manufacturing Outlook / April 2019

17

GLOBAL PMI OUTLOOK

GLOBAL PMI OUTLOOK

by NORBERT ORE, DIRECTOR, HEAD OF INDUSTRIAL SURVEYS, STRATEGAS RESEARCH PARTNERS Globally, headwinds abound! Survey data from around the world continues to identify the weak performance, particularly among one-third of the 18 surveys that we highlight monthly.

Rather than list the underperformers, it is easier to identify the stronger players: India, Brazil, U.K., and U.S. To get on this select list, they must have a PMI for the month of 52.5 or higher.

Once again, the scatter plot below tells the story regarding the laggards.

18

Metals & Manufacturing Outlook / April 2019

Simply, below the mid-point six countries are contracting with Germany facing the toughest challenges.

More than anything, the monthly survey data continues to identify the extraordinary performance of the U.S. economy in manufacturing and non-manufacturing.

Eurozone: The Eurozone PMI (47.5, -1.8) hit a 71-month low in March as the PMI lost momentum for the eighth consecutive month. Greece (54.7, +0.5), Ireland (53.9, -0.2), Netherlands (52.5, -0.2), and Spain (50.9, +1.0) expanded while Italy (47.4, -0.4), France (49.7, -1.8), and Austria (49.9, -1.8) are experiencing mild slowdowns.

Germany: (44.1, -3.4) is experiencing a major contraction.

United Kingdom: The UK/CIPS PMI (55.1, +3.0) posted a 13-month high with a strong rebound in March.

Stocks of inputs and finished goods rose at or near record rates.

GLOBAL PMI OUTLOOK

China: China’s Official Report, the CFLP PMI (50.5, +1.3), and the Caixin Manufacturing PMI (50.8, +0.9) moved from mildly contractionary to somewhat expansionary territory ― rather weak performance in each instance.

India: India’s PMI (52.6, -1.7) decelerated while posting its 20th consecutive month in expansionary territory.

March was somewhat of a step back for Indian manufacturing as the expansion slowed to the lowest level in six months. Continued growth appears likely in 2019 as supply and demand appear balanced.

South Korea: The PMI (48.8, +1.6) has been below the 50-mark for five consecutive months. The March PMI report noted a decline in new orders, prices favoring buyers, and low business confidence.

North America: Canada’s PMI (50.5, -2.2) expanded for the 37th consecutive month. However, the PMI signaled the slowest overall expansion since September 2016.

Meanwhile, Mexico’s PMI (49.8, -2.9) fell slightly as both Canada and Mexico lag U.S. manufacturing.

PRO-ACTION EDUCATION NETWORKTM APPRENTICESHIP PROGRAM Apprenticeships offer many NJ workers the opportunity to receive an earn-whileyou-learn education. Relevant professional credentials support job performance and open the door to sustainable income.

• Pre-apprenticeship programs create future applicants for full-time, paid apprenticeship positions with NJ employers.

• Students in a pre-apprenticeship program learn skills needed for the occupation and have the opportunity to potentially bridge to a Registered Apprenticeship Program.

• Apprenticeship provides an additional option for NJ’s existing and future workforce in all industries. The Pro-Action model can be used for all industries.

CALL TODAY FOR MORE INFORMATION - 973-998-9801 WWW.NJMEP.ORG • INFO@NJMEP.ORG

Metals & Manufacturing Outlook / April 2019

19

EUROZONE OUTLOOK

GLOBAL OUTLOOK

EUROZONE

by ROYCE LOWE

IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) continued in contraction for the second consecutive month, with the March PMI slipping to 47.5 from February’s 49.3, the lowest figure since April 2013. Deterioration of manufacturing conditions was the worst for almost six years.

Both intermediate and investment goods sectors were weak, with only consumer goods showing modest growth.

Germany put in its worst performance in over 6-1/2 years, closely followed by Italy and France. Greece bucked the whole trend, cold comfort for the other major seven.

New orders in the Eurozone showed their worst performance since late 2012, and export orders were down the greatest degree since late 2012.

There were net job losses in both Germany and Italy.

Purchasing activity was adversely affected as was business optimism, at its worst in some six years. There are concerns regarding trade wars, tariffs and increasing political uncertainty; Brexit and deteriorating forecasts for the economic environment both at home and in export markets.

20

Metals & Manufacturing Outlook / April 2019

Crude steel production in Germany in February was at 3.1230 MT, down 9.4 percent year-over-year; in Italy 2.046 MT, down 2.7 percent year-over-year; in France 1.248 MT, down 0.3 percent year-over-year and in Spain 1.135 MT, up 2.5 percent year-over-year.

Car registrations in March were down 3.7 percent year-over-year at 1.64 million, with Germany down 0.5 percent, France down 2.3 percent, Italy down 9.6 percent and Spain down 4.3 percent. The UK was off 3.4 percent. For the first quarter, registrations were down 3.5 percent to 3.78 million.

Russia’s crude steel production for February was at 5.230 MT, down 4.4 percent year-over-year; Ukraine’s was 1.689 MT, up 5.0 percent year-overyear.

IHS Markit’s PMI for the UK was at a 13-month high in March, at 55.1 from 52.1 in February. Stockpiling, in the event of a no-deal Brexit, was carried out at a rate never before seen in a G7 country. There are record inventories of purchases and finished parts, and job growth is up, after two back-to-back drops at the start of the year. A marked deterioration in vendor performance is tied to stockpiling, a lack of freight availability and a strong demand for raw materials.

Goldman Sachs says Brexit uncertainty has cost the UK 600 million pounds sterling per week since the 2016 referendum.

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 0.485 MT of crude steel in February, down 14.4 percent year-over-year.

ASIA OUTLOOK

GLOBAL OUTLOOK

ASIA OUTLOOK

by ROYCE LOWE

CHINA’s operating conditions improved for the first time since November 2018. There were slightly quicker increases in production and new orders, with employment up for the first time in over 5 years. Both domestic and import orders were up. Optimism regarding the 12-month business outlook was up to a ten-month high.

March’s PMI was at 50.8, up from February’s 49.9, the highest reading since July 2018.

CHINA produced 70.988 MT of crude steel in February, up 9.2 percent year-over-year; Japan 7.743 MT, down 6.6 percent year-over-year; India 8.738 MT, up 2.3 percent year-over-year and South Korea 5.741 MT, up 1.1 percent year-over-year.

Taiwan produced 1.815 MT in February, up 22.5 percent.

INDIA saw slower growth for new orders, employment, production and input buying. The reduction in growth of new orders put production at a sixmonth low and job creation at an eight-month low.

There was a softening of inflationary pressures and a strengthening of business sentiment to a seven-month high. The PMI retreated from February’s 54.3 to 52.5 in March.

Manufacturing Laughs

China’s vehicle sales in February 2019 were down 13.8 percent year-over-year to 1.482 million units, following similar drops in December and January. Part of the decline was due to New Year celebrations. NEV sales in February, at 53,000 units, were up 54 percent year-over-year.

JAPAN saw its production fall at the fastest rate in about three years in March, amid sluggish demand in both domestic and export sectors, and subsequent clearing of backlogs. Business confidence remains among the lowest recorded.

The PMI for March rose very slightly to 49.2 from February’s 48.9.

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 / April 2019

21

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

COVER STORY

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2 OF A 6 PART SERIES:

Design For CNC Machining 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.

22

Metals & Manufacturing Outlook / April 2019

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

PART 2 DESIGN FOR CNC MACHINING - IN LESS THAN 15 MINUTES, YOU WILL LEARN ALL YOU NEED TO KNOW TO DESIGN PARTS OPTIMIZED FOR CNC MACHINING: FROM DESIGN FOR MACHINABILITY RULES TO COST REDUCTION TIPS AND FROM MATERIAL SELECTION GUIDELINES TO SURFACE FINISHING RECOMMENDATIONS.

Metals & Manufacturing Outlook / April 2019

23

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

24

Metals & Manufacturing Outlook / April 2019

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

Metals & Manufacturing Outlook / April 2019

25

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

26

Metals & Manufacturing Outlook / April 2019

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

Metals & Manufacturing Outlook / April 2019

27

CNC MACHINING: THE COMPLETE ENGINEERING GUIDE PART 2

In Next Month’s Issue: Part 3: Materials For CNC Machining 28

Metals & Manufacturing Outlook / April 2019

SOUTH AMERICAN OUTLOOK

GLOBAL OUTLOOK

SOUTH AMERICA

by ROYCE LOWE

There was a modest improvement in business optimism.

BRAZIL saw an easing in new order growth from February, but there was a slight rise in employment. Export orders were down for the fourth successive month.

There was an increase in production for the ninth successive month, and at the quickest pace in a year. The PMI in March, at 52.8, was down from February’s 53.4. Business sentiment remains positive.

Brazil’s crude steel production for the month of February was 2.662 MT, a decrease year-over-year of 1.7 percent.

The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – stays unchanged at February’s 50.6 value, to register another uninspiring improvement in operating conditions in the global manufacturing sector.

Operating conditions improved slightly in consumer and investment goods categories, the former being stronger, but there was deterioration in the intermediate goods sector for the second consecutive month.

Currently, manufacturers say skilled production jobs take an average of two months to fill according to a late 2018 report released by Deloitte and the Manufacturing Institute. More than half say productivity suffers as a result.

Overall, the skills gap could negatively impact the U.S. economy by as much as $2.5 trillion by 2028.

That’s something Gilroy, who had to lay off a small army in 2009, never wants to repeat.

The U.S. currently suffers GDP losses from the inability of manufacturers to find skilled labor.

However, manufacturing, by any measure, is going through dynamic and disruptive change to a degree that was unforeseen two decades ago, and the educational system, mired in 20th Century thinking, is now playing catch-up. Even so, educational institutions, whether trade/tech schools, county colleges, 2- or 4-year universities, will be unable to produce the precise skills needed in manufacturing. Just as in years gone by, many skills will need to be learned OJT – on-the-job, and manufacturers will have to step up their apprenticeship programs to continue to compete, both with each other and on the world stage.

There is no country more likely to rise and meet this challenge than the USA. Metals & Manufacturing Outlook / April 2019

29

SOUTH AMERICA OUTLOOK

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

ISM PMI at 55.3% for March ISM PMI for the past 5 years

2014

30

2015

Metals & Manufacturing Outlook / April 2019

2016

2017

2018

2019

ISM REPORT OUTLOOK

ISM® REPORT ON BUSINESS®

MANUFACTURING E

conomic activity in the manufacturing sector expanded in March, and the overall economy grew for the 119th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The March PMI® registered 55.3 percent. The New Orders Index registered 57.4 percent, an increase of 1.9 percentage points from the February reading of 55.5 percent.

The Production Index registered 55.8 percent, a 1-percentage point increase compared to the February reading of 54.8 percent.

The Employment Index registered 57.5 percent, an increase of 5.2 percentage points from the February reading of 52.3 percent.

The Inventories Index registered 51.8 percent, a decrease of 1.6 percentage points from the February reading of 53.4 percent.

MARCH 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 54.3 percent, a 4.9-percentage point increase from the February reading of 49.4 percent, indicating a return of increasing raw materials prices after a two-month respite. Of the 18 manufacturing industries, 16 reported growth in March, in the following order: Printing and Related Support Activities; Textile Mills; Food, Beverage and Tobacco Products; Petroleum and Coal Products; Computer and Electronic Products; Electrical Equipment, Appliances and Components; Furniture and Related Products; Chemical Products; Plastics and Rubber Products; Wood Products; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing ‡; Fabricated Metal Products; Primary Metals; and Machinery.

PMI @ 55.3% ®

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

MANUFACTURING AT A GLANCE Mar Index 55.3 57.4 55.8 57.5 54.2 51.8 42.7 54.3 50.4 51.7 51.1

Feb Index 54.2 55.5 54.8 52.3 54.9 53.4 39.0 49.4 52.3 52.8 55.3

% Point Change +1.1 +1.9 +1.0 +5.2 -0.7 -1.6 +3.7 +4.9 -1.9 -1.1 -4.2

Growing Growing Growing Growing Slowing Growing Too Low Increasing Growing Growing Growing

Rate of Change Faster Faster Faster Faster Slower Slower Slower From Decreasing Slower Slower Slower

Trend* (months) 31 39 31 30 37 15 30 1 3 37 26

OVERALL ECONOMY

Growing

Faster

119

Manufacturing Sector

Growing

Faster

31

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

Direction

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

PMI 2017

2018

2019

55.3%

50% = Manufacturing Economy Breakeven Line 42.9% = Overall Economy Breakeven Line

PMI® Manufacturing expanded in March, as the PMI® registered 55.3 percent, an increase of 1.1 percentage points from the February reading of 54.2 percent. This indicates growth in manufacturing for the 31st consecutive month. The PMI® reversed a February expansion decline primarily through improved growth in employment and, to a lesser extent, new orders. 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 Products; Copper; Copper Products; Electronic Components (8); Nickel; Oil; Scrap Metal; Steel (7); and Steel — Stainless.

Commodities Down in Price: Polypropylene; Propylene; and Steel Products (3).

Commodities in Short Supply: Aluminum Products; Electrical Components; Electronic Components (11); and Labor.

ROB

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

APRIL 2019 Metals & Manufacturing Outlook / April 2019

31

ISM Report On Business ®

®

manufacturing

March 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 57.4 percent. Fourteen of 18 industries reported growth in new orders in March, in the following order: Wood Products; Printing and Related Support Activities; Food, Beverage and Tobacco Products; Petroleum and Coal Products; Textile Mills; Primary Metals; Chemical Products; Computer and Electronic Products; Plastics and Rubber Products; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances and Components; Machinery; and Miscellaneous Manufacturing‡.

57.4% 52.5% = Census Bureau Mfg. Breakeven Line

Production (Manufacturing) 2017

2018

2019

Production ISM’s Production Index registered 55.8 percent. The nine industries reporting growth in production during the month of March — listed in order — are: Food, Beverage and Tobacco Products; Printing and Related Support Activities; Nonmetallic Mineral Products; Textile Mills; Computer and Electronic Products; Electrical Equipment, Appliances and Components; Chemical Products; Petroleum and Coal Products; and Fabricated Metal Products.

55.8%

51.7% = Federal Reserve Board Industrial Production Breakeven Line

Employment (Manufacturing) 2017

2018

2019

ISM’s Employment Index registered 57.5 percent. Thirteen of 18 manufacturing industries reported employment growth in March, in the following order: Textile Mills; Wood Products; Furniture and Related Products; Printing and Related Support Activities; Food, Beverage and Tobacco Products; Electrical Equipment, Appliances and Components; Computer and Electronic Products; Miscellaneous Manufacturing‡; Paper Products; Nonmetallic Mineral Products; Petroleum and Coal Products; Plastics and Rubber Products; and Transportation Equipment.

57.5% 50.8% = B.L.S. Mfg. Employment Breakeven Line

Supplier Deliveries (Manufacturing) 53.1% 2017

2018

Employment

2019

54.2%

Supplier Deliveries The delivery performance of suppliers to manufacturing organizations slowed in March, as the Supplier Deliveries Index registered 54.2 percent. The 10 industries reporting slower supplier deliveries in March — listed in order — are: Textile Mills; Furniture and Related Products; Computer and Electronic Products; Machinery; Fabricated Metal Products; Paper Products; Chemical Products; Food, Beverage and Tobacco Products; Miscellaneous Manufacturing‡; and Transportation Equipment.

Inventories (Manufacturing) 2017

2018

2019

51.8%

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

‡Miscellaneous

Manufacturing (products such as medical equipment and

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

32

Metals & Manufacturing Outlook / April 2019

Inventories The Inventories Index registered 51.8 percent. The seven industries reporting higher inventories in March — listed in order — are: Apparel, Leather and Allied Products; Electrical Equipment, Appliances and Components; Printing and Related Support Activities; Petroleum and Coal Products; Plastics and Rubber Products; Paper Products; and Transportation Equipment.

ISM Report On Business ®

®

manufacturing

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

Customer Inventories (Manufacturing) 2017

2018

2019

Customers’ Inventories ISM’s Customers’ Inventories Index registered 42.7 percent. The three industries reporting customers’ inventories as too high during the month of March are: Apparel, Leather and Allied Products; Electrical Equipment, Appliances and Components; and Miscellaneous Manufacturing‡.

42.7%

Prices (Manufacturing) 2017

2018

2019

Prices The Prices Index registered 54.3 percent. Seven of the 18 industries reported paying increased prices for raw materials in March, in the following order: Fabricated Metal Products; Transportation Equipment; Machinery; Food, Beverage and Tobacco Products; Petroleum and Coal Products; Miscellaneous Manufacturing‡; and Paper Products.

54.3%

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

Backlog of Orders (Manufacturing) 2017

2018

2019

Backlog of Orders

2019

New Export Orders

50.4%

ISM’s Backlog of Orders Index registered 50.4 percent. The five industries reporting growth in order backlogs in March are: Printing and Related Support Activities; Food, Beverage and Tobacco Products; Electrical Equipment, Appliances and Components; Machinery; and Chemical Products.

New Export Orders (Manufacturing) 2017

2018

51.7%

ISM’s New Export Orders Index registered 51.7 percent. The six industries reporting growth in new export orders in March — listed in order — are: Wood Products; Textile Mills; Nonmetallic Mineral Products; Food, Beverage and Tobacco Products; Chemical Products; and Miscellaneous Manufacturing‡.

Imports (Manufacturing) 2017

2018

2019

51.1%

‡Miscellaneous

Imports ISM’s Imports Index registered 51.1 percent. The 11 industries reporting growth in imports during the month of March — listed in order — are: Wood Products; Textile Mills; Plastics and Rubber Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances and Components; Fabricated Metal Products; Transportation Equipment; Food, Beverage and Tobacco Products; Miscellaneous Manufacturing‡; Chemical Products; and Machinery.

Manufacturing (products such as medical equipment and

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

Metals & Manufacturing Outlook / April 2019

33

The Manufacturing & Business Podcast Network

O U R

P O D C A S T S :

MFGTALKRADIO.COM

L I S T E N TO O U R P O D C A S T S AT:

www.jacketmediaco.com