NewsDesk: Positive ISM Report Has a Big Asterisk or Two
While the Institute for Supply Management reported that US manufacturing outdid expectations and expanded in September—after a summer slowdown—global manufacturing is contracting and could derail growth here.
That’s the conclusion of a bevy of recently released reports on global manufacturing and trade.
On Oct. 1, the Institute for Supply Management’s monthly Manufacturing Report on Business reported that the Purchasing Managers Index registered 51.5%, an increase of 1.9 percentage points from August’s reading of 49.6%, indicating a return to expansion after contracting for three consecutive months. The report is based on an ISM survey of more than 300 manufacturing companies from a variety of sectors. The reading beat generally low expectations and led to a round of positive headlines about US manufacturing returning to growth.
Importantly, the New Orders Index registered 52.3%, an increase of 5.2 percentage points from August, indicating growth in new orders after three months of contraction. The Production Index registered 49.5%, an increase of 2.3 percentage points and indicating contraction in production for the second time since May 2009. The Employment Index increased by 3.1 percentage points, registering 54.7%. The Prices Index increased 4 percentage points from its August reading to 5%.
The report reflected a mix of optimism over new orders beginning to pick up, and continued concern over soft global business conditions and an unsettled political environment.
Of the 18 manufacturing industries surveyed, 11 reported growth in September in the following order: Textile Mills; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Paper Products; Petroleum & Coal Products; Primary Metals; Fabricated Metal Products; Furniture & Related Products; and Miscellaneous Manufacturing. The six industries that reported contraction in September were: Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Machinery; Chemical Products; and Computer & Electronic Products.
The past relationship between the PMI and the overall economy indicates that the GDP grew by 3.2% from January through September.
ISM’s Non-Manufacturing ISM Report on Business, released on Oct. 3, also indicated strong US growth, registering a 55.1% in September, for the 33rd consecutive month of growth in the nonmanufacturing sector.
In an attempt to further boost growth, especially jobs, Federal Reserve Chairman Ben S. Bernanke has said it would keep interest rates close to zero through at least mid-2015 and begin a new quantitative easing program in which it would buy $40 billion in mortgage bonds a month.
“The Committee will closely monitor incoming information on economic and financial developments in coming months,” the Federal Open Market Committee said in a statement released on Sept. 13.
However, the US does not hold all the cards in trying to spur the recovery, especially for manufacturers whose businesses are codependent on a worldwide economic infrastructure. The growth in the US manufacturing sector, for example, has steadily been supported by growing levels of exports, data from the World Trade Organization shows. And a host of other manufacturing measures show weakness worldwide, especially in Europe and China. That has caused some large companies, such as FedEx, Worthington Steel and Caterpillar, to temper their outlooks and profit forecasts.
In fact, the WTO has scaled back its forecasts for the next year, citing ongoing economic problems in Europe and a slowdown in China.
The EU “represents nearly 60% of developed economies’ imports” but it has been beset with the sovereign debt crisis and double-digit levels of unemployment in several of its key countries. In fact, an estimated 18.2 million people are now jobless in the Eurozone, the highest level since records have been kept. Spain had the highest unemployment rate in August, with 25% of all adults now unemployed and 53% of those under age 25. In other words, Europeans aren’t in the buying mood right now.
China, meanwhile, has seen its growth decline over the last two-and-a-half years, the WTO notes. “China confronts mounting piles of unsold goods,” a headline in the New York Times declared in August. Export growth dropped to 2.9% and import growth fell to 2.8% in the first quarter of 2012 before rebounding slightly in the second quarter. It’s also noteworthy that the growth in imports was higher in China than the growth in exports during the second quarter. Furthermore, the WTO notes: “Available monthly data suggest that the third quarter results may be weaker still.”
“In an increasingly interdependent world, economic shocks in one region can quickly spread to others. Recently announced measures to reinforce the euro and boost growth in the United States are therefore extremely welcome,” WTO Director-General Pascal Lamy said in a statement on Sept. 21. “But more needs to be done. We need a renewed commitment to revitalize the multilateral trading system which can restore economic certainty at a time when it is badly needed. The last thing the world economy needs right now is the threat of rising protectionism.”
Bunting Magnetics Europe Ltd. (Berkhamsted, England), a manufacturing and sales operation for Bunting Magnetics Company, has announced the acquisition of E-Magnets UK Ltd. (Sheffield, England). E-Magnets UK Ltd. specializes in direct and wholesale supply of magnetic products throughout the UK and the world through its Web site e-magnetsuk.com. The acquisition by Bunting Magnetics Europe bolsters their market leadership and puts them one step closer to their strategic growth plan.
Heller Machine Tools (Troy, MI) marked its 30th year in the US with an open house last month at its Troy, MI, plant, where it promoted the launch of its MC Series of horizontal machining centers (HMCs) and a new technology for making lightweight auto engines more robust. More at http://tinyurl.com/hellermfg
GF AgieCharmilles (Lincolnshire, IL) is celebrating its 60th anniversary with the launch of several new machines. Founded in Switzerland with North American headquarters in Lincolnshire, IL, AgieCharmilles began its EDM research and development for industrial applications in 1952. That led to the company’s first die-sinking EDM machine in 1954 and the launch of the world’s first numerically controlled wire-EDM machine in 1969. The latest machines to join the company’s lineup include the FORM 20 and FORM 30 sinker EDMs.
OriginLab (Northampton, MA), a developer of graphic and data analysis software, is celebrating its 20th anniversary. Based on two decades of industry expertise, the company’s products, Origin and OriginPro, provide data analysis and graphing capabilities tailored to the needs of scientists and engineers. The products are used by more than 150,000 customers worldwide, spanning Fortune 500 companies, research institutions and colleges and universtities. Cofounded in 1992 by current CEO Dr. C.P. Yang, the company began with an instrument data analysis tool for customers of Microcal Inc., which is now part of GE Healthcare.
ASME President Marc W. Goldsmith and ASME Executive Director Thomas G. Loughlin, have been inducted into the Pan American Academy of Engineering. In a ceremony in Mexico City on Oct. 4, Goldsmith, of Boca Raton, Fla., and Loughlin, a resident of Summit, NJ, were recognized as members of the academy based on their ethical, academic, and professional merits. Each is recognized for outstanding contributions to the progress of engineering in the Pan American market. ASME, founded in 1880 as the American Society of Mechanical Engineers, helps the global engineering community develop solutions to real-world challenges.
Abakan Inc. (Miami, FL) on Oct. 4 announced that its subsidiary, MesoCoat Inc., has closed a low-interest $1 million loan under the State of Ohio’s Innovation Ohio Loan Fund, which allows MesoCoat to complete construction and equipment installation of its first full-scale clad pipe manufacturing facility in the state. Abakan expects the construction and installation to be completed in December. The facility should begin commercial production in March 2013.
Promess Inc. (Brighton, MI) has completed construction of a new, 25,000-ft² (2325 m²) manufacturing facility on its current headquarters campus in Brighton, MI. This new facility will help Promess meet its current record-setting product demands. The 28-year-old firm develops, manufacturers and markets its family of sensing devices, electronics, assembly presses and test systems on a global basis. “Construction of this project is a clear demonstration of our optimism about the future of manufacturing and our role in supporting that future with real-time assembly and functional testing technologies,” said Promess president Glenn Nausley.
Greenleaf Corp. (Saegertown, PA) continues its global sales network expansion by welcoming two new distributors in the UK. Greenleaf has added Peter Campbell (Sales) Ltd. and Matrix Tooling Services to its distribution network. Headquartered in the US with sales offices in Schimmert, The Netherlands, and Hunan Province, China, Greenleaf has been a leader in cutting tool technology since 1945. Greenleaf has distribution in over 30 countries worldwide.
2012 PLM Road Map: The rapid pace of technological change in manufacturing took center stage at CIMdata Inc.’s (Ann Arbor, MI) 2012 PLM Road Map annual conference held in Plymouth, MI, last month, focusing on new product lifecycle management (PLM) strategies for managing the manufacturing global IT and engineering enterprise. More at http://tinyurl.com/plmmfg.
IMTS: Registrations reached 100,200 at the Industrial Automation North America and International Manufacturing Trade Show, which ran from Sept. 10–15 at McCormick Place in Chicago. The event used 1.248 million ft² (116,00 m²), featured 1909 exhibiting companies and hosted visitors from 119 countries. Industrial Automation North America, which debuted at IMTS 2012 as a co-located event, was Deutsche Messe’s first-ever industrial technology event in the US and featured a range of automation products and solutions, as well as conferences and educational training.
Honeywell (Fort McMurray, Alberta, Canada) announced on Oct. 2 that it has opened a new customer training and support center in Fort McMurray, AB, Canada. The full-service facility will serve as a regional hub for Honeywell’s many industrial process and building control customers in northern Alberta and Saskatchewan. It will also provide a resource for training with the latest automation technology.
Rolled Alloys (Richburg, SC) on Oct. 1 announced its recently-opened Richburg, SC facility has reached full operating status. The 33,000-ft² (3066-m²) service center contains an extensive inventory of PRODEC® 303, PRODEC® 304L, PRODEC® 316L and 17-4 stainless steel bar stock. It features the latest technology in sawing equipment and has the capability to process round bar up to 20"
(508 mm) in diameter.
3D Systems Corp. (Rock Hill, SC) on Oct. 4 announced that it has delivered two leading production-grade additive manufacturing printers to the Youngstown, Ohio-based National Additive Manufacturing Innovation Institute (NAMII), the federal initiative to enhance the competitiveness of US industry.
The Metals Service Center Institute (Rolling Meadows, Ill), a trade organization for the metals industry, unveiled a new enhanced Web site, MSCI.org. ME
Edited by Editor in Chief Sarah A. Webster:
This article was first published in the November 2012 edition of Manufacturing Engineering magazine. Click here for PDF.
Published Date : 11/1/2012