Steelworkers reject Goodyear contract proposal
Automotive suppliers to discuss counterfeit auto parts
Dana Corp. executive challenges auto industry leaders
Second quarter productivity surges 5.7 percent
New jobless claims dive below 400,000 mark
ISM's MRO conference to take place in New Orleans
Parker Hannifin launches TV commercials
Democratic hopefuls debate before AFL-CIO delegates
Auto industry researchers to outline future business model
Manufacturing to continue investing in IT
Caterpillar, Eaton join to build electric power solutions
Democratic hopefuls vie for presidential labor endorsement
Timken to explore options for Standard Plant
Wisconsin Forward announces second of four workshops
Ideal Industries issues voluntary recall on voltage testers
ISMA's New Order Index climbs in June
ISM: Manufacturing sector grows in July
Unemployment dips to 6.2 percent in July

Steelworkers reject Goodyear contract proposal
The United Steelworkers of America (USWA) rejected the latest contract proposal from Goodyear Tire & Rubber Co., saying the contract does not adequately address heath care and job security issues, according to a Reuters report.

Contract talks recently picked up again after a lull following a June 27 deadline. The USWA said it will not sign any contract that does not address its concerns.

Meanwhile, Goodyear faces mounting pressure after posting a $1.3 billion loss for the last two years. The company said it wants to cut costs of $1 billion to $1.5 billion by 2005. It wants to recover part of those costs by getting wage and benefit concessions out of the workers.

So far, Goodyear ended 401(k) contribution matches, removed its dividend, refinanced many loans and prepared to sell its chemical businesses.

The steelworkers' union said it will quickly make a counterproposal to Goodyear. The union represents about 19,000 workers at 14 factories in the U.S. It also represents about 22,000 retired Goodyear workers.

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The Motor & Equipment Manufacturers Association (MEMA), North America's largest trade association of automotive parts manufacturers, will present a full day of speakers discussing the impact of counterfeit parts and intellectual property rights violations in the automotive industry Oct. 1 at the Dearborn Hyatt in Dearborn, Mich.

"This is a problem that affects the entire automotive supply chain: automakers, suppliers and ultimately the consumer," said MEMA director of international programs Brian Duggan. "Counterfeit parts result in lost jobs for workers, safety risks for drivers and passengers, and inferior quality parts for auto service providers."

A high profile lineup of industry experts will discuss numerous topics including:
• the impact to the automotive industry and supplier;
• safety implications of the counterfeiting issue;
• what can and should government do to help;
• what suppliers can do to protect their intellectual property; and
• what other industries have done to combat this issue.

 Speakers include:
• Brian Monks, Underwriter Laboratories, and board member of the International AntiCounterfeiting Coalition;
• Tom Strohm, ACDelco;
• Ed Wetter, Ford Motor Co.;
• Sharon Barner, Foley & Lardner;
• Mark Turnage, author of Counterfeiting Exposed: Protecting Your Brand and Customers;
• Tony Lupo, Arent Fox;
• Charles Schill, Foley & Lardner;
• Ed Zimmer, ECCO;
• Joe Pulmin, Delco Remy;
• Jason Bonin, Hella North America; and
• Jon Shackelford, Federal-Mogul.

The seminar also will include displays of non-compliant and counterfeit products.

MEMA is holding the conference in conjunction with its three market segment associations: Automotive Aftermarket Suppliers Association, Heavy Duty Manufacturers Association and Original Equipment Suppliers Association. The event is sponsored by Foley & Lardner.

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Magliochetti delivered his remarks to automotive industry leaders attending the 38th annual University of Michigan Management Briefing Seminars in Traverse City, Mich.

"The speed of change is greater today than at any time in the 100-year-plus history of the automotive industry," he said. "And yet, if you consider our industry's recent results, it's clear that we still have a great distance to travel with regard to performance."

Magliochetti said the need for change is even more pronounced from a domestic standpoint. 

"The domestic product is arguably better than it has ever been," he said. "But, the market says it's still not good enough. From an American perspective, we must all strive to rekindle the creativity, ingenuity, and enthusiasm that bred those classic American vehicles and the innovative accessories that once set the pace in our industry."

As part of his presentation, Magliochetti suggested 10 strategic changes the industry should adopt to improve today's business model.

His suggested changes were:
• work to move from a provincial viewpoint to a truly global perspective;
• acknowledge and address the global demands on suppliers;
• widen our perspective on global competition;
• accelerate the pace of change or face the consequences;
• grow industry relationships to make collective advances;
• take advantage of the power of strategic alliances and partnerships;
• sharpen focus by pursuing depth, rather than breadth, for improved performance;
• adopt global best practices to meet ever-rising demands;
• speed technology development to deliver enhanced efficiency and value; and
• embrace the modular trend to provide OEMs with comprehensive, holistic solutions.

"Our problems are not OEM problems, labor problems or supplier problems," said Magliochetti. "We all have a critical role in the success of our industry."

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Second quarter productivity surges 5.7 percent
Productivity increased 5.7 percent during the second quarter, according to the Labor Department's Bureau of Labor Statistics. The mark more than doubled the 2.1 percent increase measured during the first quarter.

In manufacturing, productivity increased 4.2 percent in the second quarter, as output fell 2.1 percent and hours of all persons declined 6.1 percent (seasonally adjusted annual rates). 

In the previous quarter, manufacturing productivity rose 4.9 percent, reflecting decreases in output and hours of 0.7 and 5.3 percent, respectively. 

In durable goods, productivity rose 3.8 percent in the second quarter as output dropped 3.1 percent and hours of all persons fell 6.7 percent. In nondurable goods, second-quarter productivity increased by 4.4 percent as output declined 1 percent and hours fell 5.2 percent. 

Hourly compensation of all manufacturing workers rose 5.4 percent during the second quarter, reflecting growth of 5.2 percent in durable goods and 5.8 percent in nondurable goods. When the increase in consumer prices is taken into account, the real hourly compensation of all manufacturing workers increased by 4.8 percent in the second quarter, after rising 3.3 percent one quarter earlier.

Unit labor costs in manufacturing grew 1.2 percent in the second quarter. In durable goods industries, unit labor costs rose 1.4 percent and in nondurable goods industries, they increased 1.3 percent. The change in unit labor costs is roughly equal to the change in hourly compensation less the change in productivity.

While an increase in productivity bodes well for the U.S. economy, it can be accomplished by asking workers to complete the same amount of work with fewer employees. Over the past 35 months, the U.S. manufacturing sector lost nearly 3 million jobs.

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New jobless claims dive below 400,000 mark
The number of new claims for unemployment insurance declined by 3,000 to 390,000 for the week ended Aug. 2, according to the Labor Department.

According to the four-week moving average, new jobless claims dropped 12,750 to 397,250 for the same week. Economists consider the four-week moving average to be the more reliable of the two because it smoothes out week-to-week fluctuations.

The four-week moving average registered its lowest level since the week of Feb. 22, when it measured 399,000.

Both marks fell below the 400,000-point, a level economists consider to be the dividing line between a weak labor market and a stable one.

Continuing claims for unemployment insurance, or those claims that have lasted more than two weeks, increased 72,000 to 3.69 million. This shows that while the labor market may be seeing a slow leveling off, those without jobs are not finding new ones easily.

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ISM's MRO conference to take place in New Orleans
Springtime in Paris, maybe not, but how about New Orleans in the fall? Plans for this year's Institute for Supply Management  Sixth Annual MRO Group Conference and Workshops are now complete.

This is the MRO Group's highlight event of the year. It features topics of interest to all purchasing professionals and brings together knowledgeable speakers and the best case studies and emerging topics ISM can find.

The two-day conference, with workshops the day before and the day after, will be held at the Hyatt Regency, Superdome, in New Orleans and attendees can earn C.P.M. credits.

The year's conference will feature case studies from organizations such as Coca-Cola, AutoNation and Florida State University. It will also present a closer look at the e-sourcing market and the procurement-to-payables process.

To find a brochure and registration information, click here.

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Parker Hannifin launches TV commercials
Parker Hannifin launched its first-ever electronic advertising campaign. The ad series, Engineers See the World Differently, debuts in the U.S. this month on national cable television networks.

The spots are part of a global advertising campaign the company launched in January 2002 covering the company's $12-million annual expenditure in electronic and print advertising running in the Americas, Europe, Australia and Asia.

The TV ads are a humorous nod to engineers as enablers of innovation, with three 30-second spots that point out how engineers are always focused on their work. To view the new ads and learn more about the products behind them, visit www.parker.com.

The campaign targets engineers who design, specify and use technology, a concept that was inspired by engineers from Parker and customers who participated in focus groups to develop the ads, said Lorrie Paul Crum, Parker's vice president of corporate communications.

"We chose humor to make the ads memorable; not a common approach with engineers," said Crum. "Sure, they like technical specs, but they also have a passion for what they do. They joke about their families complaining that wherever they go, they become easily distracted with how things work. So we created ads they can relate to and laugh with, betting they'd build brand equity for Parker."

The ads are slated to air nationally on cable programming known to draw a business-to-business audience, including CNBC, History Channel and Discovery/TLC. Links from the company's Web site and e-mail distribution will be used to extend the campaign beyond television with promotional items and stories about the real-life inspirations behind the featured Parker technologies.

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Democratic hopefuls debate before AFL-CIO delegates
Nine Democratic presidential hopefuls debated before an enormous crowd of union delegates at the AFL-CIO Working Families Presidential Forum on Aug. 5 at the Chicago Navy Pier.

The candidates included former U.S. Senator from Illinois Carol Moseley Braun; North Carolina Sen. John Edwards; Rev. Al Sharpton; Missouri Rep. Dick Gephardt; Massachusetts Sen. John Kerry; Florida Sen. Bob Graham; Vermont Gov. Howard Dean; Connecticut Sen. Joseph Lieberman; and Ohio Rep. Dennis Kucinich. The debate was moderated by National Public Radio's host of Morning Edition Bob Edwards.

The candidates answered questions from a number of union workers from across the country, from those that worked in factories, mills and power plants to those that worked in the communications industry and fire departments. The candidates also answered questions from non-union workers hoping to win the chance to organize.

The questions covered several particular subjects:
• creating jobs and rebuilding the economy;
• creating a nationwide health care plan;
• corporate reform and safeguards;
• education and state budget deficits; and
• the right to form a union.

Brown responded to a question from a United Steelworkers of America worker about saving manufacturing jobs in the U.S. She said that manufacturing is "vitally important to our country. It is the way we support our families. It creates more secondary and tertiary jobs than any other industry in the country.”

Sharpton said that the Bush administration's attempt to change overtime rules is a threat to all workers.

“We cannot open the door for this administration in any way, shape or form to change the wages of workers...people must be paid for the work they do and for the time they work," he said. "It must not be compromised.”

On the issue of national health care, each candidate that responded had a plan to bring health insurance to the uninsured. Dean said he would model a national health care plan after the one he started in Vermont. Other candidates called for health care to be the defining issue for the 2004 presidential campaign.

The debate about corporate reform centered mostly around privatization of social security and the need to reform executive compensation practices. The AFL-CIO worker asking the question was clearly against privatizing social security. Graham answered the question succinctly.

“We should secure the strength of Social Security and we should not allow privatization to throw Social Security into the situation of so many people’s 401(k) riding on the lottery of the stock market,” he said.

The candidates railed against the Bush tax cut, saying that it hurt state governments by undercutting their tax base, forcing local governments to increase taxes, thereby canceling any effect the tax cut may have.

Candidates also talked about increasing the wages of teachers. Gephardt proposed a National Teacher Corps to train teachers and repay their education loans if they agree to teach where they are most needed for five years.

Finally, all candidates spoke in favor of the right to unionize. Kucinich said he intended to use the full power of the White House to make it easier for unions to mobilize.

"I will issue an executive order that says when half the workers sign cards, it's an automatic union,” he said.

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The called the consortium The Auto Industry of the Future.

"Today's high-volume, low-profit reality suggests that strategies of the '80s and '90s are no longer effective," said CAR chairman David Cole. "Profound change in the industry's current business model is needed."

The five areas identified by CAR as needing the greatest change are: productivity, product, production, people and profitability.

"Total industry success, whether defined by unit output, economic value added or other measures is generally a combined function of these five factors," said Cole.

Productivity will be a central theme of The Auto Industry of the Future. 

"Productivity will determine the industry's ability to handle external pricing pressures, labor agreements, regulatory requirements and other business pressures while becoming an attractive investment opportunity," said Ernst & Young Global Automotive Center director Mike Hanley. "But traditional productivity measures have not accurately portrayed trends for the entire industry. One of the outcomes of this initiative is a study that will take a multifactor approach to productivity, which will include capital, and direct and indirect purchases, as well as labor."

The Auto Industry of the Future's first report, slated for November 2003, will be a white paper on the 2003 United Auto Workers contract that will analyze the short and long-term impact of the agreement on the industry. Next is the multifactor productivity study, which will examine how well the industry "system" is converting inputs to output.

Future reports, which will be released approximately every six months over the next three years, will consider other critical factors such as industry structure, technology trends, manufacturing environment, labor relations, the role of e-tools, product development, and sales and service systems. 

The program will have three major elements:
• a working discussion forum to bring stakeholders together for issue resolution;
• a multi-disciplined research program; and
• a data/survey center to provide supporting analysis and long-range forecasts.

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Manufacturing to continue investing in IT
Although the global economy has been slowing, several vertical industries continue to invest heavily in information technology (IT), creating opportunities for IT vendors. 

Ongoing IT investments by the manufacturing industry, for example, will represent a $225 billion market by 2007, according to a new report from IDC.

"The worldwide economy ended 2002 much weaker," said IDC Worldwide Vertical Markets senior analyst Anne Lu. "As a result, IT budgets were negatively impacted as the year progressed and industries struggled to manage costs and meet profit goals. However, certain vertical markets still present bright IT opportunities depending on regions and industries."

Other key findings from IDC's report include:
• The discrete manufacturing and banking sectors will be the biggest overall IT spenders, accounting for 13 percent and 12 percent, respectively, of the worldwide IT opportunity.
• The government sector will continue to offer brighter growth potential than other vertical industries and will surpass $126 billion in IT spending worldwide in 2007.
• IDC predicts that the industries spending the most on software in 2007 will be healthcare, construction and services, with $87.2 billion in combined spending.

IDC's new study, Worldwide IT Spending Forecast by Vertical Market, 2002- 2007: North America, Western Europe, Asia/Pacific, and Rest of World, focuses on IT spending patterns in four regions and anticipated spending levels and market sizes for eight IT segments across 17 vertical industries.

For more information, visit www.idc.com.

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Caterpillar, Eaton join to build electric power solutions
Caterpillar Inc. and Eaton Corporation announced a joint venture to provide a total systems approach to integrated, reliable electric power solutions for customer needs.

The joint venture combines the global resources and expertise of Caterpillar, its dealer network and Eaton’s Cutler-Hammer Group. Eaton will own 51 percent of the joint venture and Caterpillar will own 49 percent.

The joint venture will operate under the name Intelligent Switchgear Organization LLC and will be based in Alpharetta, Ga. It will capitalize on the strong reputation Caterpillar developed as a provider of advanced generator set control switchgear using PowerLynx technology and on Eaton’s strength in the electrical distribution switching market.

The product lines for the joint venture will include paralleling switchgear and automatic transfer switches used for emergency or prime power applications for a wide variety of facilities, ranging from commercial and industrial facilities to utility and generation installations.

The product line will carry the Cat brand and sell exclusively through the Caterpillar dealer network, focused initially in North America, with plans to begin expansion through the global Cat dealer network in 2004.

“Maintaining continuity of power during an outage or peak demand time is critical to our customers,” said Eaton senior vice president Randy Carson. “This total systems approach offers a single source for design, product support and customer service.”

The North American markets to be served by the joint venture are approximately $500 million, with substantial growth expected over the next several years. It is anticipated that the joint venture will capture a significant share of that market, and accordingly, the annual revenues within the next two to three years are expected to be in excess of $100 million.

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Democratic hopefuls vie for presidential labor endorsement
Democratic presidential hopefuls will hold a forum Aug. 5 at the AFL-CIO's executive council meeting, hoping to convince union leaders to endorse one of them as the 2004 Democratic nominee, according to the Associated Press.

The only candidate with a real chance to receive the AFL-CIO's endorsement is House Democrat from Missouri Dick Gephardt. Gephardt already received several labor endorsements from groups including the United Steelworkers of America, the Teamsters, the Seafarer's International Union and the American Maritime Officers.

The AFL-CIO's endorsement will be no easy prize. In order to receive it, a two-thirds majority vote from its nearly 13 million members will be required. In the past, only two presidential hopefuls have received the endorsement: Al Gore in 2000 and Walter Mondale in 1984.

The AFL-CIO asked labor groups to hold their endorsements until after its executive meeting this week. After that, official endorsements are expected to come out.

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Timken to explore options for Standard Plant
The Timken Company is exploring strategic alternatives for its Standard Plant in Torrington, Conn., including the sale of the facility.

The plant, which makes products for the aerospace industry, specifically aircraft control bearings, aircraft rod ends and aircraft track rollers, employs 277 people.

The options considered for the Standard Plant are part of the company's continuing strategy to focus its plants to be globally competitive in the product that each manufactures and to integrate its acquisition of The Torrington Company. As part of this process, Timken is reviewing all of its businesses, including the Standard Plant.

"We have taken actions over the past three years to transform The Timken Company to a global enterprise," said industrial group president Michael C. Arnold. "As part of these actions, we have focused on deploying our assets to achieve profitable growth and to maximize value for our shareholders. By evaluating the strategic options for the Standard Plant, we are continuing to pursue this direction."

Timken will continue to serve its customers and ensure continuity of supply as it explores options for the plant. When plans for the Standard Plant are finalized, an announcement will be made.

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Wisconsin Forward announces second of four workshops
The Wisconsin Forward Award invites manufacturers to attend its self-assessment workshops Aug.14 in Madison, Wis.

It's the second of several workshops offered this summer throughout the state, in conjunction with the Wisconsin Technical College System, using the Wisconsin Challenge, a Baldrige-based self-assessment tool to get manufacturers started using the WFA/Baldrige Criteria as a holistic management model.

Space is limited at each workshop, so register early to ensure participation. The remaining schedule of workshops includes:
• Aug. 14: Madison Area Technical College in Madison, contact .
• Sept. 19: Northcentral Technical College in Phillips, Wis., contact .
• Oct. 9: Waukesha County Technical College in Waukesha, Wis., contact .
• Oct. 9: Milwaukee Area Technical College in Mequon, Wis., contact .

The workshop is a formal self-assessment. It has a high diagnostic value and can tell manufacturers how well their organization is doing today, as well as how to make improvement planning possible and effective. 

The consensus decision-making process used in the Wisconsin Challenge helps enterprises identify strengths and gaps in order to improve the its systems to meet increasing business challenges. 

This one-day workshop is interactive, with teams learning about the WFA/Baldrige Criteria as a holistic management model. It will start the assessment process and attendees will develop a partial action plan before they leave.

A team approach to the trainings will optimize value for attendees. Wisconsin Forward offers a pricing incentive for several individuals from a single organization to attend. The 2003 Wisconsin Challenge workshops will provide top leaders and decision-makers with insight into and practice using self-assessment as a tool.

Registration fees are $195 for the first two participants from any single organization and $175 for each participant after that.

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Ideal Industries issues voluntary recall on voltage testers
Ideal Industries is conducting a voluntary recall of certain voltage and voltage/continuity testers sold primarily in North America.

The units recalled are tester models 61-065, 61-066, 61-067, 61-076, 61-079 and 61-080 manufactured in Sycamore, Ill., and Ajax, Ontario, from mid-November 1999 through mid-May 2002.

The recall does not involve any of the those models built prior to November 1999 or after May 2002. No other Ideal tester, meter or product is affected by the recall.

Ideal received reports of the solenoid shorting out at higher voltages without warning and blowing the faceplate off the unit.  There were two reports of users burned when using these units.

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ISMA's New Order Index climbs in June
The Industrial Supply Manufacturers Association (ISMA) reported that its New Order Index increased to 155.7 in June from 151.6 in May. During June of last year, the New Order Index was 163.0.

The Federal Reserve Board's Durable Manufacturers Index also increased, to 120.6 in June from 120.2 in May. Last year at this time, the index was 121.8.

Durable goods are defined as items with a normal life expectancy of three years or more, such as autos, furniture, appliances and mobile homes.

The Conference Board's Index of Leading Indicators rose in June to 111.8 from 111.7 in May. However, it was down from June 2002, when the index measured 112.1.

The 10 leading indicators are: building permits, average weekly initial claims for unemployment insurance (inverted), interest rate spread, real money supply, index of consumer expectations, vendor performance, stock prices, manufacturers' new orders for nondefense capital goods, manufacturers' new orders for consumer goods and materials and average weekly manufacturing hours.

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ISM: Manufacturing sector grows in July
Economic activity in the manufacturing sector grew in July, while the overall economy grew for the 21st consecutive month, according to the Institute for Supply Management's (ISM) manufacturing Report On Business.

"While the overall economy continues to improve, the manufacturing sector reversed its recent trend of contraction and grew during July for the first time in five months," said ISM Manufacturing Business Survey Committee chairman Norbert J. Ore. "The improvement in new orders continues to be very encouraging and reinforces the possibility that the economy will continue to improve during the second half of the year."

ISM's PMI (purchasing managers index) was 51.8 percent in July, an increase of 2 percentage points compared to 49.8 in June. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 42.9 percent over a period of time generally indicates an expansion of the overall economy. The July PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (49.6 percent) corresponds to a 2.5 percent increase in real gross domestic product (GDP). However, if the PMI for July (51.8 percent) turned out to be the annual average for 2003, this would correspond to a 3.3 percent increase in GDP.

"While many respondents mention that they fail to see the recovery in their businesses, others indicate a higher level of activity than they have seen in some time," said Ore. "Natural gas costs are a major concern for many companies, and others will continue to struggle due to higher oil prices. Overall, the manufacturing sector is trending positively and appears poised to continue a pattern of growth in the second half of the year."

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Unemployment dips to 6.2 percent in July
The unemployment rate was 6.2 percent in July, down from 6.4 percent in June, according to the Labor Department. The number of unemployed persons was 9.1 million.

Both measures edged down over the month, largely offsetting increases in June.

Manufacturing employment fell by 71,000 in July. Employment in this sector has declined continuously since July 2000. Most manufacturing industries posted job losses over the month.

Within durable goods manufacturing, the largest employment decline occurred in transportation equipment, where seasonal layoffs of auto workers were larger than usual.

Employment also decreased in computer and electronic products (-11,000) and in fabricated metal products (-8,000). In nondurable goods manufacturing, 9,000 apparel and 7,000 textile mill jobs were lost over the month.

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