MRO Today - Manufacturing Industry News

Manufacturing Industry News Archives:
News from the week of Jan. 31, 2004

Jobless claims plummet in recent week
Productivity slows in Q4 but continues upward mobility
Factory orders increase in December
Manufacturing workers' index climbs in January
Starrett turns 125
Union membership continues slide in 2004
NAM lays out specific trade agendas
Brady Corp. purchases Electromark
Lochinvar wins Nashville manufacturing award
ISM: PMI declines in January
Durable goods orders increase in December
Rockwell posts first quarter increases
National Manufacturing Week to move locations
Gallaher, Burmood join speaker list for LMU4 conference

Jobless claims plummet in recent week
New claims for unemployment insurance declined by 9,000 to 316,000 for the week ended Jan. 29, according to the Labor Department. The four-week moving average was 331,500, a decrease of 10,250, for the same week.

The four-week moving average is generally considered by economists to be the more reliable of the two because it smoothes out week-to-week volatility. Both rates remained below 400,000, which is the level economists use to define a weak labor market and a stable one.

Continuing claims for unemployment insurance decreased 116,000 to 2.7 million for the week ended Jan. 22. Continuing claims are those older than two weeks.

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Productivity slows in Q4 but continues upward mobility
Non-farm business productivity increased 0.8 percent in the fourth quarter, according to preliminary estimates from the Labor Department. This compares to a 1.8 percent increase in the third quarter.

For all of 2004, productivity increased 4.1 percent, compared to a 4.4 percent increase in 2003.

In the manufacturing sector, fourth quarter productivity climbed 5.6 percent and full-year productivity increased 4.9 percent. Among durable goods manufacturers, productivity increased 7.3 percent in Q4 and 6.1 percent in 2004 as a whole.

“Overall productivity has now exceeded 4 percent for three years running," said National Association of Manufacturers chief economist David Huether. "This is unprecedented. In fact, since Labor started keeping productivity records in 1947, no single decade has included more than one year of better-than-4-percent productivity growth."

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Factory orders increase in December
New orders for manufactured goods increased 0.3 percent, or $1 billion, to $379.1 billion, during December, according to the Commerce Department. Factory orders have increased for seven of the last eight months.

This was the highest level since the series was first started on the NAICS basis in 1992. It followed a 1.4 percent November increase.

Year-to-date, new orders for 2004 were 11.1 percent above the same period the year before.

New orders for manufactured durable goods increased 1.1 percent, or $2.2 billion, to $201.6 billion in December. This was revised from the previously published $1.2 billion increase and followed a 2 percent increase in November.

Computers and electronic products, up following two consecutive decreases, had the largest increase at $2.2 billion, or 6.8 percent, to $177.5 billion.

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Manufacturing workers' index climbs in January
The Hudson Employment Index for manufacturing workers rose 14.4 points in January to 105.2 from 90.8 in December. It also rose from 103.3 during January 2003.

Key factors contributing to the drastic increase in worker confidence included a fall in the percentage of workers expecting their firms to lay off staff, a decline in job security concerns, and greater job satisfaction among manufacturing workers.

Emerging as the most bullish among all workers polled, 44 percent of private-sector managers expected their firms to hire more workers in the coming months.

Simultaneously, there was a 3 percent decline (19 percent to 16 percent) in the number of workers who reported their firms are laying off workers. National hiring expectations held at the same level as December (31 percent).

Employee satisfaction rose to an unprecedented high, with three-quarters of U.S. workers claiming they are happy with their jobs. This figure is 4 percent higher than the highest satisfaction level reported all through 2004.

“The employment outlook moving into 2005 looks and feels stronger than at the beginning of last year,” said Jeff Anderson, senior vice president of Hudson Global Resources, North America. “January is the best time to be job-hunting as many companies have fresh hiring budgets and are eager to add new talent to their teams. Plus, with corporate earnings and spending on the rise, we will likely see continued hiring increases in the short-term.”

Workers’ assessments of personal financial situations also improved over last month. Forty-six percent of workers rated their personal finances as excellent or good in comparison to 43 percent in December, and 45 percent asserted that their own situation is improving vs. only 42 percent last month.

Men emerged more optimistic than women, with 49 percent rating their personal finances as excellent or good compared to 43 percent of women. Furthermore, 49 percent of men vs. 41 percent of women claimed improvement in their personal finances since last month.

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Starrett turns 125
The L.S. Starrett Company turned 125 years old with the coming of 2005, the company announced. Beginning with a single tool, Starrett has grown into a global manufacturer with a line of more than 5,000 products.

Starrett's current product line includes precision measuring tools, shop tools, saw blades, and sophisticated metrology equipment.

The company began in 1880 with Laroy Sunderland Starrett's combination square. Some 125 years later, the highly versatile and practical tool is still an important part of toolboxes worldwide.

"Today, we are as excited about our future as we are proud of our past," said company president and CEO Douglas A. Starrett. "Laroy S. Starrett created a business and philosophy that can be best articulated in his own words: 'I have believed that I could do no greater good than to help create a business that would give people employment and a chance to earn an honest living.'"

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Union membership continues slide in 2004
The number of unionized workers declined in 2004 to 12.5 percent from 12.9 percent in 2003, according to the Department of Labor. The 2004 total is down from an all-time high of 20.3 percent in 1983, which is also the first year for which comparable union data is available.

Among manufacturers, 12.9 percent of employed workers were union members in 2004, down from 13.5 percent in 2003. For durable goods manufacturers, 13.3 percent of workers were defined as union members in 2004, down from 14 percent the year before. The data also showed a decline of 376,000 manufacturing jobs in the U.S. between 2003 and 2004.

The median weekly earnings of full-time wage and salary workers reached $694 for union members in the manufacturing sector, compared to $654 for non-union workers in 2004. In 2003, union members' median weekly earnings were $689 in the manufacturing sector, compared to $626 for non-union workers.

As a percent of total workers by state, New York employed the most union members, at 24.6 percent of the workforce. North Carolina employed the fewest union members, with only 3.1 percent of the total workforce.

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NAM lays out specific trade agendas
During a morning roundtable with reporters, National Association of Manufacturers trade experts and representatives from NAM member companies laid out the NAM’s new trade agendas for 2005, including one with a specific focus on China.

The NAM’s Trade Agenda identified five countries that an extensive analysis indicates are best suited in the near-term for bilateral trade agreements with the U.S.

“These trade agendas reflect input from NAM members of all sizes and represent a balanced approach that combines both the opening of markets and tougher enforcement of trade agreements and U.S. trade laws,” said Arnold Allemang, chair of the NAM’s international economic policy committee and a member of the Dow Chemical Co.’s board of directors.

“We call on the government to fully enforce trade agreement commitments and rules with the necessary resources and the authority of applicable domestic and international trade law with a focus on seeing that U.S. trade agreements work better for small companies,” Allemang said.

All NAM members share the goal of strengthening American manufacturing and improving the competitiveness of U.S. manufacturing in the global economy, he said.

“We will also work to level the playing field by lowering trade barriers to U.S. production. We will press for successful completion of the WTO Doha round and bilateral agreements such as the Central American Free Trade Agreement (CAFTA)," said Allemang. "But we’ll also urge our trade negotiators to explore bilateral Free Trade Agreements (FTAs) now with Egypt, India, Malaysia, New Zealand and South Korea. Expanding trade with these countries will benefit American manufacturers, both large and small.”

Though not present at the morning roundtable, FMC Corporation chairman and CEO Bill Walter, who chairs the NAM’s China Policy Subcommittee and played a key role in developing its separate Trade Agenda for China, issued a statement.

“Our trading relationship with China – the fastest growing importer in the world – is both the most significant opportunity and biggest challenge that American manufacturers face,” said Walter.

He noted the NAM’s China Agenda comprises a broad range of policy initiatives to address, including:
• Chinese currency revaluation;
• protection of intellectual property rights;
• subsidization and standards issues; and,
• the need to greatly expanded U.S. export promotion efforts designed especially to help small companies benefit from China’s growth.

“NAM’s member-driven process works,” said Frank Vargo, NAM vice president for international economic affairs. "There is far more common ground among our member companies – of all sizes – than there are differences on the need to level the international playing field, enforce existing trade agreements, open new markets with additional FTAs and boost our exports. The agendas we’ve released today reflect that common ground, and we’re optimistic that the Congress and the administration will work cooperatively with us to reach our shared trade goals.”

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Brady Corp. purchases Electromark
Milwaukee-based Brady Corp. acquired Permar Systems Inc., doing business as Electromark, a manufacturer and supplier of safety and facility identification products, including custom and stock signs, tags and labels.

Terms of the transaction were not disclosed.

Electromark, headquartered in Wolcott, N.Y., supplies identification products to the utility industry. Founded in 1970, Electromark had sales of $11 million in fiscal 2004. The company employs approximately 125 people at its 80,000-square-foot factory in Wolcott. Brady plans to maintain current operations there.

"As the demand for electricity continues to increase, the utility market is expected to outpace the growth of many other industries that use safety and facility identification products. The acquisition of Electromark gives Brady a leadership position in facility and safety identification for this market, and provides us a broader product range and excellent channel partners. The expertise of the Electromark team and their excellent product line will enhance our ability to serve utility customers," said Matt Williamson, vice president of Brady Americas.

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Lochinvar wins Nashville manufacturing award
Lochinvar Corp. won the 2005 “Excellence in Manufacturing” Award from the Nashville Area Chamber of Commerce and the Nashville Business Journal.

Lochinvar, a world leader in high-efficiency boilers, water heaters and pool heaters, is headquartered 25 miles outside of Nashville, Tenn., in Lebanon, Tenn.

“Lochinvar is the finest manufacturing operation I have ever seen for a company their size,” said Edd Lancaster, former CEO of Milwaukee-based sign maker Everbright and one of the judges for this year’s manufacturing awards. “Everything about them is top-notch.”

Lochinvar won top honors in the “Mid-Sized Company” category for manufacturers with 100-400 employees. The extensive criteria for this year’s award included company history, profitability, employee focus, research and development, environmental solutions, new products and process improvements. The judges also took a tour of Lochinvar’s 360,000-square-foot manufacturing facility at its world headquarters.

“The manufacturing processes are highly automated, it’s extremely clean, and it’s climate-controlled year round, and that’s rare in a manufacturing environment,” said Lancaster.

“Every single employee at Lochinvar should be proud of this award,” said Lochinvar president Bill Vallett. “The judges were extremely thorough in evaluating our performance in the marketplace, in the engineering lab, and on the factory floor. There’s not a person here who didn’t play some part in earning this honor, so I personally want to thank each and every one of them.”

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ISM: PMI declines in January
Economic activity in the manufacturing sector grew in January for the 20th consecutive month, while the overall economy grew for the 39th consecutive month, according to the Institute for Supply Management's (ISM) Manufacturing Report On Business.

The PMI for January registered 56.4 percent, a 0.9 percent decrease compared to December's seasonally adjusted reading of 57.3 percent. A reading above 50 percent indicates the manufacturing economy is generally expanding; below 50 percent indicates tht it is generally contracting.

"January's PMI reflects continuing strength in manufacturing," said Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. "Production and employment both accelerated during the month. Prices, particularly energy prices, continue to provide a challenge to buyers. However, the rate of increase of prices continues to decelerate, raising hopes that price inflation will moderate as the year advances. Inventory growth was significant in January, while supplier deliveries do not appear to be a problem based on a decelerating index. Additionally, only one commodity is listed in short supply."

Comments from respondents this month indicate a number of positives. Stainless steel supply appears to be improving, as shortages are less of an issue. Others mentioned end-of-year issues that require transition to new products or inventory policies.

The most optimistic comments came from companies that produce capital goods, as they see that market continuing to experience strong demand both domestically and internationally.

"January sets the tone for a strong first quarter. Even though the PMI is slightly lower, the month-over-month growth is still quite strong and will provide significant momentum for the remainder of Q1," said Ore. "Demand for exports continues to be quite strong, with a number of industries reporting significant growth. Inventories have now increased during seven of the last eight months, but still do not appear to be a problem as manufacturers' customers' inventories appear to still be too low."

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Durable goods orders increase in December
New orders for manufactured durable goods increased $1.2 billion in December, or 0.6 percent, to $200.3 billion, according to the Department of Commerce. This followed a 1.8 percent November increase.

New orders for 2004 were 11.6 percent higher than orders for 2003.

Excluding transportation, orders increased 2.1 percent. Excluding defense, orders decrease 1.2 percent. Computers and electronic products, up following two consecutive decreases, had the largest increase, $2.1 billion, or 6.4 percent to $34.5 billion.

The report also showed that durable goods shipments ended 2004 on a historic high note, rising 2.1 percent in December to the record-level of $204.5 billion.

"Today's report shows that the manufacturing recovery, which finally ignited in 2004, will continue to drive the expansion," said David Huether, chief economist for the National Association of Manufacturers (NAM). "The increase in new orders last month was diffuse, ranging from primary metals, to machinery and computers to motor vehicles. Taken together, these reports are an encouraging sign that the manufacturing recovery entering 2005 is broad-based.

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Rockwell posts first quarter increases
Rockwell Automation Inc. reported fiscal 2005 first quarter net income of $133.4 million, or 71 cents per share, compared to net income of $62.2 million, or 32 cents per share, in 2004.

Sales for the first quarter were $1.2 billion, up 20 percent compared to $990.3 million in the first quarter of 2004.

"The transformation of our business model continues, and we are demonstrating our ability to support the growth of our advanced technology products and innovative services and solutions with a lower investment base and a leaner cost structure," said Keith Nosbusch, Rockwell Automation president and CEO.

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National Manufacturing Week to move locations
National Manufacturing Week is moving to the newly renovated Donald E. Stephens Convention Center in Rosemont, Ill., in 2006. The four-day educational conference begins March 20, 2006, and the exhibition dates are March 21-23.

The move promises to significantly reduce the total cost of exhibiting while greatly increasing the value of the event for U.S. manufacturers focused on succeeding in the face of intense competitive pressure.

The Donald E. Stephens Convention Center offers 840,000 square feet of exhibition space with 50 state of the art meeting rooms. The convenient suburban Rosemont location is just a five-minute free shuttle bus ride from Chicago O’Hare International airport and easy access from several interstate highways from surrounding states.

The move to Rosemont’s convention center will result in significant savings, not the least of which will be National Manufacturing Week’s ability to offer space rates inclusive of drayage and lower labor costs due to more flexible work rules. On average, an exhibitor will save 25 percent off show expenses alone with the move to Rosemont.

“This is in the best interest of our members,” said National Association of Manufacturers vice president of marketing and business development David W. Walker. “With our membership looking to reduce their operating costs while benefiting from the many advantages of participation in National Manufacturing Week’s exhibits and educational program, this move will enhance the value of the event while facilitating content, commerce and community for our membership.”

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Gallaher, Burmood join speaker list for LMU4 conference
Rex Gallaher, the former manager of the United States Postal Service's Maintenance Technical Support Center and one of the most respected people in the maintenance community, will provide a keynote address at "Lean Manufacturing University 4: Bringing Lean into Maintenance," MRO Today magazine's national "best practices in lean" conference. The event takes place May 23-25 at the Flamingo Resort in Las Vegas.

Mike Burmood, the facilities manager for the Raytheon Company's 3 million-square-foot missile systems site in Tucson, Ariz., will also speak at LMU4. Burmood will present a case study on that plant's use of agile and Six Sigma techniques in its maintenance operations.

Gallaher retired from the USPS in 2004 and currently runs an education and training company based in Washington. While with the USPS, Gallaher oversaw its Maintenance Technical Support Center, a Norman, Oklahoma-based hub that provides methods, documentation, technology and processes to optimize the field maintenance operations at all USPS processing facilities. MTSC annually has responsibility for depot repair of 150,000 assemblies.

Gallaher, the 2001 winner of the American Society of Mechanical Engineers' coveted Frederick P. Smarro Award, will speak on the importance of skills and personal development in a lean program. "Respect for people" and "the maximization of human capital" are two of the most important (and forgotten) drivers in a lean system. While many believe they actively engage in seeking solutions from their human capital, proactive thinkers such as Gallaher stress identifying the root cause of how to unleash true potential.

To learn more about him, read archived MRO Today articles by clicking on the links below:
• Zen and the art of managing maintenance
• Life, in six snapshots

Click here to learn more about Raytheon's missile system site in Tucson.

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