MRO Today - Manufacturing Industry News

Manufacturing Industry News Archives:
News from the week of April 5, 2004

President nominates assistant secretary for manufacturing
UAW, Caterpillar extend contract through April 18
GE performs well during first quarter
MEP receives clear support from bipartisan coalitions
Automaker opens fourth plant to landfill-based energy
NAM praises Bush agenda for retraining workforce
Jobless claims decline in most recent week
Brady to acquire EMED Co.
Planned job cuts fall again in March
Report asks Commerce Secretary to take more active role
CEO confidence surges
Manufacturing companies see profits rise in fourth quarter
Johns Manville to build new manufacturing facility
OSHA cites furniture maker for safety/health violations
EPA signs rule governing hazardous waste burners
Unemployment inches up while jobs are created

President nominates assistant secretary for manufacturing
The Bush administration nominated Al Frink to serve as the first Assistant Secretary of Commerce for Manufacturing and Services, according to the Commerce Department.

An Hispanic-American, Frink is cofounder and executive vice president of Fabrica International, a manufacturer of carpets and rugs in Orange County, Calif. Founded in 1974, Fabrica employs more than 400 people.

"Al is a successful business leader with extensive experience in public policy," said Jerry Jasinowski, president of the National Association of Manufacturers (NAM). "He has served on the Commerce Department's Exporters' Textile Advisory Committee, and is a 2004 inductee to the Small Business Administration Hall of Fame. He will be an excellent advocate for U.S. manufacturing."

Jasinowski also welcomed the nomination of Arthur Wainwright as chairman of the new Manufacturing Council and Karen Wright to serve as vice-chair.

Wainwright is chairman and CEO of Wainwright Industries in St. Louis, recipient of the 1994 Malcolm Baldrige National Quality Award. He served as chairman of NAM in 2001-2002 and is a member of the NAM board of directors.

Wright is CEO and owner of Ariel Corp. in Mount Vernon, Ohio, which makes gas compressors for refineries, gas fields, pipeline service and gas gathering facilities. Ariel Corp. is a long-time member of the NAM.

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UAW, Caterpillar extend contract through April 18
Negotiators for the United Auto Workers (UAW) and Caterpillar agreed to extend their current contract from April 1 through April 18. The union’s former contract with the company expired at midnight, March 31.

Negotiations between UAW and Caterpillar for a new contract began last December.

“This extension will give both sides more time to carefully consider the issues that remain to be resolved,” said UAW vice president Cal Rapson. “The UAW remains committed to reaching an agreement that benefits our workers and their families, as well as the company and the communities where Caterpillar does business.”

The UAW represents more than 8,000 active workers at Caterpillar facilities, as well as more than 20,000 retirees.

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GE performs well during first quarter
Diversified international conglomerate General Electric Co. (GE) reported a first quarter 2004 revenue increase of 10 percent to $33.4 billion. The company generated earnings of $3.2 billion, up 8 percent from the prior-year period.

The consumer and industrial segment performed well during the first quarter, bringing in revenues of $3.1 billion, up from $2.9 billion during the first quarter of last year. Operating profits for the segment increased 16 percent.

The segment reported unit sales of its high-end Profile and Monogram appliances increased 20 percent and 11 percent, respectively, over the first quarter of 2003.

GE consumer and industrial was also recognized as an Energy Star Partner of the Year by the Department of Energy and the Environmental Protection Administration.

"Total industrial orders for the quarter grew 20 percent, building on our fourth-quarter momentum," said GE chairman and CEO Jeff Immelt.

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MEP receives clear support from bipartisan coalitions
Bipartisan congressional coalitions formally urged Congress and the Bush administration to restore funding to the Manufacturing Extension Partnership (MEP) over the past week. Congressional members view the program as a way to enhance American manufacturing competitiveness and maintain manufacturing jobs.

The MEP program is a national network of more than 1,500 professionals in more than 400 locations around the country and Puerto Rico. MEP provides technical assistance, support services, engineering services and business advice to small manufacturers.

One-third of the House of Representatives – 158 Democrats and Republicans – sent a letter to President Bush urging him to shift funds from other programs to MEP in fiscal 2004.

The letter, circulated by House Science Chairman Sherwood Boehlert, R-N.Y., and ranking member Bart Gordon, D-Tenn., pointed out that the existing 2004 funds of $39 million will lead to the loss of federal funding at local MEP centers and destruction of the national network of MEP centers.

If more funding is not transferred to MEP before July 1, MEP centers will reduce services and eventually close offices leaving “small manufacturers across the country without the technical and business assistance they have come to rely upon.”

Senators Olympia Snowe, R-Maine, and Joe Lieberman, D-Conn., co-chairs of the Senate Manufacturing Task Force, sponsored a Senate letter urging appropriators to restore MEP to $106.6 million next fiscal year. The Senate letter drew support from 55 Senators with both parties joining forces to support MEP.

Representatives Jack Quinn, R-N.Y., and Marty Meehan, D-Mass., co-chairs of the House Manufacturing Task Force, sponsored a similar letter in the House of Representatives and won bipartisan support from 161 colleagues.

Along with a separate letter sent by the California House delegation, a total of 196 House representatives went on record supporting $106.6 million for MEP in the fiscal 2005 appropriations bill.

Congress funded the MEP program at $106.6 million in fiscal 2003. The 2004 funding level currently stands at $39.6 million. The administration proposed phasing out the program in 2003 and 2004 with funding below $13 million, but requested a fiscal 2005 funding level of $39 million.

Senators and representatives signing the 2005 manufacturing task force letters noted: “Restoration of [MEP] funding is necessary to ensure the sustainability of our domestic small manufacturing industry and its high-quality jobs.”

“Members of Congress continue to fight for MEP – but time is running out. We must resolve MEP funding soon, or we’ll witness the deterioration of a highly effective and acclaimed federal program,” said Mike Wojcicki, president of the Modernization Forum, the trade association for the MEP centers. “Fewer professionals and MEP centers will leave small manufacturers without a key ally in their battle to remain competitive and continue to provide American workers with good, high-wage jobs.”

In addition to the letters, both chambers have pending reauthorization bills calling for an MEP program with at least $110 million in funding during the next fiscal year. Furthermore, the Senate Budget Resolution report recommended, “the Appropriations Committee consider funding the Manufacturing Extension Partnership program at the 2003 enacted level.”

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Automaker opens fourth plant to landfill-based energy
General Motors' Shreveport Assembly facility in Louisiana is the company's fourth location to utilize landfill gas as energy and is helping fulfill the company's goal to increase the use of renewable energy in its energy supply portfolio.

Three other GM facilities -- Toledo, Ohio, Powertrain; Orion, Mich., Assembly; and Fort Wayne, Ind., Assembly -- also use landfill gas to power plant boilers. A fifth project is underway at Oklahoma City Assembly.

In addition, GM's service parts operations headquarters in Grand Blanc, Mich., utilizes landfill gas by purchasing 8 million kilowatt-hours of electricity annually, generated from the Granger Energy landfill gas-to-electricity project.

According to the World Resources Institute and the Green Power Market Development Group, GM is the largest non-utility user of landfill gas in the U.S.

"GM is helping reduce coal consumption at its plants and emissions by capturing methane and using it as a source of energy," said Joseph C. Bibeau, group director of GM's energy and utility services. "All of GM's landfill gas projects have proven to save money, generating annual savings greater than $500,000 at each plant."

By driving energy conservation initiatives and using various renewable energy sources, such as methane gas, GM reduced its natural gas consumption by 21 percent since 1995 and is well on its way to achieving its 25 percent energy reduction goal by 2005. The sum of the landfill gas being utilized at the four GM plants is 1.6 trillion BTUs per year, which is equivalent to the energy needed to power more than 45,000 households.

Landfill gas is 50-percent methane and is released from waste as it decomposes in landfills. It is a principal greenhouse gas. When collected, methane is a clean-burning fuel and is a reliable energy source for the giant boilers used to heat and cool the plant environment.

The GM Shreveport Assembly plant manufactures the new Chevy Colorado and GMC Canyon mid-size pickup trucks.

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NAM praises Bush agenda for retraining workforce
The National Association of Manufacturers (NAM) applauded the Bush administration for offering a proposal to improve the educational and retraining options available to workers.

“This kind of a program is the appropriate response to a changing economy, both nationally and globally,” said NAM human resources policy vice president Sandy Boyd. “Workers need flexible options for obtaining new skills. The president’s goal of cutting red tape, reducing overhead costs by $300 million and working with local community colleges and other groups to double the number of those who can get training – or retraining – is a strong start.”

Boyd also praised the administration for its focus on the structural cost factors – such as high taxes, heavy regulation, energy costs and skyrocketing health care prices – that have made the United States an expensive place for manufacturing production even as global competition continues to push prices down.

“Lowering the cost of domestic manufacturing and helping workers who are displaced by economic change are two sides of the same coin,” Boyd said. “That coin represents the U.S. economy and the challenge of keeping it as strong as possible.”

Boyd also joined the White House in urging Congress to reauthorize the Workforce Investment Act with strong provisions for incumbent worker training as quickly as possible.

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Jobless claims decline in most recent week
New claims for unemployment insurance fell 14,000 to 328,000 for the week ended April 3, according to the Labor Department. The four-week moving average of jobless claims declined 3,250 to 336,750.

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 fell 40,000 to 3 million for the week ended March 27. Continuing claims are those older than two weeks.

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Brady to acquire EMED Co.
Brady Corp. signed a definitive agreement to acquire EMED Co. Inc. from Summit Partners in a cash transaction for $190 million.

EMED, headquartered in Buffalo, N.Y., is a direct marketer and manufacturer of identification products, including warehouse and shipping signage, first aid and protective wear, security and emergency preparedness products, and other custom signage and safety solutions. EMED had 2003 sales of $55 million.

"We will be looking to add value to EMED, Brady and Seton customers by offering each other's complementary products to meet their safety and facility identification needs," said Brady president and CEO Frank M. Jaehnert.

Brady vice president and chief financial officer David Mathieson said the company expects the acquisition to be slightly accretive to earnings per share in fiscal 2004, and 15 cents to 20 cents per share accretive in fiscal 2005.

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Planned job cuts fall again in March
Planned job cuts declined in March for the second consecutive month to 68,034, according to global outplacement firm Challenger, Gray & Christmas Inc. It is the lowest figure in nine months, since 59,715 cuts were announced in June 2003.

The March figure is 12 percent lower than the 77,250 cuts in February and is 20 percent lower than the 85,396 cuts in March a year ago.

In the first quarter, job cuts totaled 262,840, which is 28 percent lower than the fourth quarter of 2003 (364,346) and 26 percent lower than the first quarter of last year when job cuts totaled 355,795.

The 12-month moving average, which smoothes out volatility in month-to-month tabulations, fell to 95,289 in March from 96,736 in February. February was the first time the moving average was below 100,000 since June 2001.

"The heavy job cutting we have seen over the past three years appears to be trending down. However, the job market seems to be in a state of limbo, where companies are eager to hold on to the people they have but many are reluctant to create any new jobs," said Challenger, Gray & Christmas CEO John A. Challenger.

According to Challenger, several reasons have been advanced as to the reasons behind the lack of across-the-board hiring, including increased outsourcing and improved productivity.

"One explanation that has not been discussed relates to the issue of mass retirements that are facing a number of industries, automotive in particular," he said.

"To prevent a mass exodus of experienced workers, many companies may be making it very worthwhile for those nearing retirement age to stay on the job. Employers know they are far better off with a seasoned, senior staff vs. the cost of acquiring and training replacements in a period when the customer is king, yet the direction of the economy is unclear," said Challenger.

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Report asks Commerce Secretary to take more active role
A manufacturing resurgence in the U.S. requires a broad policy framework encompassing tax policy, energy infrastructure investment, overhead reduction, technology and innovation, workforce education, and trade policy, according to a report from the National Coalition for Advanced Manufacturing (NACFAM).

The report, Industry Views Towards a Comprehensive Strategy to Address the Challenges to U.S. Manufacturers, calls upon Commerce Secretary Donald Evans to take a strong personal lead in implementing these recommendations at the federal level.

"If the strategy defined in this report is strongly led and implemented, it will make the U.S. a first-tier choice for manufacturing investment, help U.S.-based manufacturers gain back market share at home and abroad, and thus improve retention of manufacturing and manufacturing-related jobs, especially for higher-skilled workers," said NACFAM CEO Leo Reddy.

For copies of the report, contact NACFAM at ext. 103. More information is also available at www.nacfam.org.

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CEO confidence surges
Chief executives’ confidence in the nation’s economy, which slipped to 66 in the final quarter of 2003, surged to 73 in the first quarter of 2004, according to the Conference Board.

This is the highest reading in 20 years, when the measure reached 74 in the final quarter of 1983. A reading of more than 50 points reflects more positive than negative responses.

The Conference Board’s quarterly measure of CEO confidence covers more than 100 CEOs in a wide variety of industries.

“Half of all CEOs surveyed anticipate an increase in hiring plans over the course of the year, suggesting labor market growth should gain momentum in the months ahead,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

Half of all CEOs anticipate an increase in employment levels in their industry, up significantly from less than 16 percent a year ago. The proportion of CEOs anticipating a decrease fell dramatically to less than 12 percent from about 47 percent in the first quarter of 2003.

Health care costs remain the major obstacle to hiring new workers. Regulation and litigation costs were of less concern, while fringe benefits and wage and salary costs remain of minimal concern to CEOs when hiring new workers.

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Manufacturing companies see profits rise in fourth quarter
After-tax profits for durable goods manufacturers were $30.2 billion in the fourth quarter of 2003, up $4.2 billion from the $26 billion recorded during the previous quarter, according to a Commerce Department report.

Fourth quarter profits were also up $27.3 billion from the $2.9 billion reported during the fourth quarter during the prior-year period.

Seasonally adjusted sales for durable goods manufacturers in the U.S. reached $575 billion during Q4 2003, not significantly different from the $574.7 billion reported during Q3 2003. However, sales in Q4 were up $14.4 billion from the fourth quarter of 2002.

Among durable goods segments, the biggest gainers included machinery, computer and electronic products, and aerospace products and parts. The biggest losers among durable goods included nonmetallic mineral products, fabricated metal products, and motor vehicles and parts.

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Johns Manville to build new manufacturing facility
Fiber glass materials and building products manufacturer Johns Manville (JM) will build a new pipe insulation manufacturing facility to restore capacity lost in a 2003 plant fire.

The world-class, fully automated facility will allow JM to produce its Micro-Lok fiber glass pipe insulation with capability to expand to meet future insulation-market needs as required.

The new plant's in-line, fully automated process will move from raw material melting to rotary glass fiberization to mandrel winding to jacketing and final packaging in one seamless operation. The resulting state-of-the-art product will be easy to install and deliver consistent insulating performance.

The new plant will include a significant investment for moldable glass wool (MGW), which is converted by JM's customers into thermal and acoustical parts for the appliance, automotive and furniture industries. Additionally, the new plant has the potential to provide additional capacity for blowing wool.

Several potential plant sites are being evaluated, including communities where JM already has facilities in place. The location of the new plant will be decided over the next couple of months and the plant is expected to be in full production in 2006.

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OSHA cites furniture maker for safety/health violations
A Chicago company is facing $84,750 in fines following an inspection by the Occupational Safety and Health Administration (OSHA) that allegedly revealed serious and willful workplace hazards.
A Chicago company is facing $84,750 in fines following an inspection by the Occupational Safety and Health Administration (OSHA) that allegedly revealed serious and willful workplace hazards.

OSHA opened its investigation at Belcino Inc. following receipt of a formal complaint. OSHA alleged serious safety violations including machine guarding issues, electrical hazards and potential fall problems. Serious workplace health violations were alleged for noise, control of wood dust and potential explosion hazards.

OSHA issued alleged willful violations for over-exposures to wood dust and deficiencies in the company's lock-out/tag-out program to ensure that machinery does not start up accidentally when workers are performing repairs or maintenance.

"Belcino Inc. has had 11 previous OSHA inspections since 1987," said OSHA area director Gary Anderson. "Continuing problems with machinery lock-out hazards and with overexposure to wood dust must be addressed at this facility to ensure the safety of the roughly 40 men and women working there."

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EPA signs rule governing hazardous waste burners
The Environmental Protection Agency (EPA) signed a proposed rule March 31 to significantly reduce air pollutant emissions from five types of combustion sources that burn hazardous waste.

This proposal could cut up to 4,000 tons of such hazardous pollutants as mercury, lead, dioxin, arsenic, soot and sulfur dioxide each year.

Hazardous air pollutants produce a wide variety of serious human health effects, including cancer, kidney damage and irritation of the lungs, skin and mucous membranes.

The five types of combustion sources are: incinerators, cement kilns, lightweight aggregate kilns, steam and heat generation boilers, and hydrochloric acid production furnaces.

EPA estimates the proposal would affect 150 facilities operating 276 existing hazardous waste-burning sources. This proposal would apply to all new and existing hazardous waste combustors, no matter what their size.

The proposed rule is authorized by Clean Air Act provisions requiring EPA to develop regulations cutting hazardous air pollution emissions from various types of industries that emit one or more of 188 designated contaminants.

These rules, including this proposal, require the use of maximum achievable pollution control technology (MACT). Under MACT, new plants must use control technology as good as any being used in the country; existing plants must use technology as good as the average of the top 12 percent of existing facilities.

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Unemployment inches up while jobs are created
The unemployment rate increased in March to 5.7 percent from 5.6 percent in February, according to the Labor Department. At the same time, 308,000 new jobs were created.

This payroll job growth was fairly widespread, as construction employment rose sharply and several major service-providing industries also added jobs.

While the number of jobs increased, unemployment also increased because there were more people who reentered the job search market in March as the economy continued to show real gains.

Manufacturing employment was unchanged in March at 14.3 million workers, while manufacturing hours fell by 0.1 hours. Declines in manufacturing employment began moderating late last summer. Employment in both durable and nondurable goods manufacturing was little changed in March.

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