Factory orders increase in June
Timken raises prices on tool steel
Jobless claims fall in recent week
Wisconsin leads swing states in added factory jobs
Report: Auto suppliers must recognize foreign advantages
Timken raises prices on specialty steel
Survey: Industrial manufacturers' optimism rises
CNH to recycle shuttered tractor plant
Job-cut announcements increase in July
Institute for Supply Management's PMI increases in July

Factory orders increase in June
New orders for manufactured goods increased $2.7 billion, or 0.7 percent, in June to $363.2 billion, according to the Commerce Department. This followed a 0.4 percent increase in May.

New orders for manufactured durable goods increased $1.8 billion, or 0.9 percent, in June to $192 billion, revised upward from the previously published $1.4 billion increase.

Durable goods are costly manufactured products designed to last three or more years.

Transportation equipment, up three of the last five months, had the largest increase, $2.4 billion, or 4.4 percent, to $55.7 billion. This was due in large part to defense aircraft and parts, which increased $2.2 billion. Fabricated metal products increased $800 million, or 3.4 percent, to $23.3 billion.

“Today’s report buttresses other recent indicators, as well as the general mood of our membership, that the manufacturing recovery remains on-track,” said National Association of Manufacturers executive vice president Michael Baroody. “This should offer some solace to those who fear that our economy is losing steam.”

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Timken raises prices on tool steel
Timken Latrobe Steel, a subsidiary of The Timken Co., will increase prices by 5 percent on tool steel and alloy products. The price change is effective with shipments beginning Aug. 8. Raw material surcharges will remain in effect.

"Continued rising operational costs and other key factors are reasons for this price increase," said David A. Murray, vice president of sales and marketing for Timken Latrobe Steel. "We are continuing with our efforts to try to offset these costs."

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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 34,000 to 2.9 million for the week ended July 24. Continuing claims are those older than two weeks.

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Wisconsin leads swing states in added factory jobs
The state of Wisconsin added more manufacturing jobs than any other "swing state" so far in 2004, according to preliminary federal data. The state added 13,100 manufacturing jobs since December, an increase of 2.6 percent.

Among 19 swing states for this fall's presidential election, Wisconsin ranks first among manufacturing jobs gained. While this may appear to benefit President George W. Bush, similar data indicate that Wisconsin still has some 69,000 fewer manufacturing jobs than it did before the recession of 2001.

Overall, there are 1.1 million fewer U.S. jobs today compared to when Bush took office in 2001. There are also 2.7 million fewer manufacturing jobs in the U.S. today, compared to when the president first took office, a decline of 15.9 percent.

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Report: Auto suppliers must recognize foreign advantages
Many North American automotive suppliers continue to ignore manufacturing skill and efficiency as a competitive advantage, a mistake in today's hyper-competitive industry.

Suppliers must stop denying that their customers will go anywhere in the world to find competitively priced, high quality parts, according to Harbour Consulting.

"Too many North American suppliers, and even some of the automakers, fail to view manufacturing as a competitive advantage, but they should if they want to grow during the next several years," said Laurie Felax, vice president of Harbour Consulting. "The best companies in the global auto industry optimize product design, process design and manufacturing to make parts faster, better and cheaper. There is still plenty of room for improvement in efficiency and further cost savings in North America."

Felax's comments were made during the Manufacturing Competitiveness Forum, taking place in Traverse City, Mich., as part of the 2004 Management Briefing Seminars. Felax served as co-chairperson of the forum, which featured a panel of political and industrial leaders and explored strategies for world-class manufacturing competitiveness.

Felax offered several points of advice to auto suppliers for ramping up their overall level of competitiveness.

• To grow, suppliers must continue to make performance gains in cost and quality to continue attracting business from Japanese and Korean automakers, which are expected to capture 37 percent of the North American market by 2008.

• Suppliers counting on significant sales gains through the Big Three automakers are treading a slippery slope of continued sales market share declines during the next few years.

• OEMs must understand that suppliers can better manage costs and pricing requirements, as well as customer expectations, by forging more collaborative relationships early in product development. In most instances, leading automakers begin working with preferred suppliers up to three years from the launch of a new product.

• Suppliers will remain on the preferred lists of automakers and Tier I integrators by developing unique, innovative technologies and manufacturing processes that reduce reliance on price competition. Labor-intensive activities and generic technologies will increasingly be shipped overseas.

"Suppliers can't expect the automakers to care about all the challenges they currently face," Felax said. "It's easy to rationalize the situation and gripe about off-shoring and other so-called competitive imbalances, but it's time for suppliers to address the real issues and become more efficient and productive in their manufacturing."

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Timken raises prices on specialty steel
Timken Latrobe Steel, a subsidiary of The Timken Co., increased base prices by 3 percent to 10 percent on all remelted aerospace alloy steel grades. The price change is effective with all new orders received.

Timken Latrobe Steel also increased base prices on all air melt stainless alloys by 5 percent to 10 percent. This price change is effective with all new orders and shipments scheduled after Aug. 1. Raw material surcharges will remain in effect.

"Increased operational costs and other key factors have made these price increases necessary," said Richard H. Brown, vice president of business development and sales for Timken Latrobe Steel. "Our efforts continue to focus on ways to offset these costs."

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Survey: Industrial manufacturers' optimism rises
U.S. manufacturing executives forecast increases in economic growth, new investments and hiring in the next 12 months, according to the Q2 2004 PricewaterhouseCoopers Manufacturing Barometer survey.

Ninety-four percent of industrial manufacturing executives reported the U.S. economy grew in the second quarter. Looking ahead, 84 percent of manufacturers are optimistic about the economy's prospects over the next 12 months, up from 79 percent in the prior quarter.

However, barriers to growth, including foreign market competition, monetary exchange rates and lack of qualified workers, remain a concern.

The barometer also compares the views between the manufacturing industry and a cross section of other business sectors. In past barometers, the manufacturing industry trailed the general consensus in most areas. However, manufacturers turned markedly more upbeat in the second quarter, matching the consensus economic outlook for all large businesses. However, manufacturers are forecasting more conservative plans for new revenue growth and hiring.

Additional highlights from the Q2 2004 Manufacturing Barometer include the following.

• New hiring plans showed a strong net gain; a majority, 52 percent, expects to add workers over the next 12 months. Analysis by worker categories shows the most interest in hiring production workers and technicians over the next 12 months.

• Companies planning major new investments over the next 12 months increased from 46 percent to 52 percent but continue to slightly lag the consensus of 55 percent. However, 53 percent of manufacturers expect to increase budgets for new product or service introductions and 36 percent for research and development. These are better than the consensus levels of 47 percent and 26 percent, respectively.

• Optimism about the world economy also increased sharply, from 65 percent in the prior quarter to 73 percent, surpassing the all-industry consensus of 69 percent.

• Net margins for manufacturers were close to the consensus level, as were costs. Prices were increased by 44 percent of industrial manufacturers, but lowered by 12 percent, for a net of plus 32 percent. This was better performance than the all-industry benchmark of plus 28 percent.

"Industrial manufacturers have clearly become more upbeat on revenue growth, new hiring and economic optimism," said Jorge Milo, U.S. leader of PricewaterhouseCoopers' industrial manufacturing practice. "In this environment of growth with underlying concerns about inflation, it is a very positive sign that manufacturers are in the forefront with their pricing power."

Despite this optimism, the Manufacturing Barometer does cite some barriers to growth that will be monitored closely in the upcoming quarters.

Thirty-eight percent of manufacturers view foreign market competition as a potential barrier to growth, and 30 percent think monetary exchange rates will be, as well. In addition, there is a potential drawback from the increase in hiring plans. Twenty-five percent of manufacturers forecast a lack of qualified workers as a hurdle for growth over the next 12 months.

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CNH to recycle shuttered tractor plant
CNH Global N.V. announced an agreement with Champion Environmental Services for the removal of the company's empty manufacturing facilities overlooking Lake Michigan. Encompassing 100 acres, and situated on a bluff overlooking the lake, the CNH site is the largest single lakefront parcel available for development between Milwaukee and Chicago.

"In addition to job creation and retention, a primary objective of Racine County's economic development plan is the enhancement of the county's tax base," said Gordy KaCala, executive director of the Racine County Economic Development Commission. "CNH's lakefront property provides a unique opportunity to create a substantial new development that would blend well with nearby residential, open space and public uses. With proper planning, the property could be a key component in the future development of the Village of Mount Pleasant."

Champion will recycle nearly 98 percent of the steel, brick, wood and concrete contained in the tractor plant, foundry and power plant located on the site. Vintage brick used in the exterior walls of the 91-year-old tractor plant will be reused in custom residential construction, concrete will be used as aggregate fill, while steel, copper wiring, and infrastructure equipment will be sold in secondary markets. The demolition is expected to be completed within 18 months.

Built in 1913, the Racine Tractor Plant is the former manufacturing home of the company's legendary Case tractor family, producing 920,000 tractors in its 89 years of operation. CNH closed the facility in 2002, moving U.S. production of Case IH and New Holland tractors into the company's expanded manufacturing operations four miles to the west.

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Job-cut announcements increase in July
An expected summer decline in corporate downsizing did not take hold as job-cut announcements jumped 8 percent to 69,572 in July from 64,343 in June, according to the job-cut report released by global outplacement firm Challenger, Gray & Christmas Inc.

Meanwhile, hiring announcements declined for the second consecutive month, falling by 30 percent in July after a 31 percent drop in June.

July job cuts were 18 percent lower than the 85,117 cuts announced in the same month a year ago. It was the fifth time this year the monthly total was lower than the year-ago figure.

Since January, employers announced 542,307 job cuts, 24 percent fewer than the 715,649 cuts announced in the first seven months of 2003.

The financial sector led all industries in July and for the year. Financial job cuts in 2004 are nearly twice the number recorded after seven months of 2003.

According to the Challenger report, which began tracking hiring in May, employers in July announced plans to add 26,880 jobs, down 30 percent from 38,377 last month. In May employers announced 55,307 job openings.

"There may be more hiring going on than our numbers suggest, since hiring announcements are not as common as job-cut announcements. However, the decline in hiring that we are seeing, combined with continued downsizing, indicates that the job market is still struggling to gain momentum," said Rick Cobb, executive vice president of Challenger, Gray & Christmas.

"Some employers may be waiting to see how the election plays out before going ahead with hiring plans," he said. "In fact, in our recent survey, a surprisingly high 43 percent of human resource executives said their hiring plans could be altered based on the election's outcome."

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Institute for Supply Management's PMI increases in July
Economic activity in the manufacturing sector grew in July for the 14th consecutive month, while the overall economy grew for the 33rd consecutive month, according to the Manufacturing Report On Business from the Institute for Supply Management (ISM).

"The manufacturing sector continues to grow at a rapid rate as the PMI has now been above 60 percent for nine consecutive months," said Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. "This is the longest period of growth above 60 percent since the 12-month period of July 1972 through June 1973, when the index was over 60 percent each month and reached a high of 72.1 percent in January 1973."

The PMI indicates the manufacturing economy grew in July for the 14th consecutive month. The PMI for July registered 62 percent, an increase of 0.9 percentage point compared to the June reading of 61.1 percent.

Comments from respondents indicate that many consider their business to be "strong" with a number indicating significant year-over-year improvement. Others continue to indicate only minor improvement.

Energy prices remain a major concern for purchasers, as prices are at or near record highs. It appears the steel supply situation improved as there are fewer mentions of shortages.

"July represents a good start for the third quarter, and the outlook continues to be very encouraging as new orders and production accelerated during the month," said Ore.

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