MRO Today - Manufacturing Industry News

Manufacturing Industry News Archives:
News from the week of Aug. 9, 2004

Productivity climbs in second quarter
Commerce Department cancels MEP recompetition
Ford showcases flexible manufacturing in Chicago plant
OSHA cites pesticide maker for failures in plant safety
Jobless claims continue downward trend
Machine tool consumption rises in June
EPA launches international best practice Web site
Brady acquires ID Technologies Pte Ltd.
NAM forms WTO Action Group
Automakers cite rising health costs as greatest challenge
July unemployment data proves disappointing
Chrysler Group to implement supplier co-location in Ohio

Productivity climbs in second quarter
Productivity increased 2.9 percent in the during the second quarter of 2004, as output increased 3.8 percent and hours of all persons rose 0.8 percent, according to the Labor Department.

Output per hour grew at a 3.7 percent annual rate in the first quarter of 2004, as output increased 5.7 percent and hours increased 2 percent.

Productivity increased 7.5 percent in manufacturing, as output grew 6.6 percent and hours of all persons declined 0.9 percent. In the previous quarter, productivity rose 2.8 percent, reflecting increases in output and hours of 6.2 percent and 3.3 percent, respectively.

In durable goods, productivity rose 5.7 percent in the second quarter as output grew 6.4 percent and hours of all persons rose 0.7 percent.

Hourly compensation of all manufacturing workers rose 5.2 percent during the second quarter, reflecting growth of 4.7 percent in durable goods industries.

When the increase in consumer prices is taken into account, the real hourly compensation of all manufacturing workers increased by 0.5 percent in the second quarter, after rising 1.2 percent one quarter earlier.

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Commerce Department cancels MEP recompetition
The U.S. Department of Commerce cancelled the recompetition of the National Institute of Standards and Technology's Manufacturing Extension Partnership (MEP) program Aug. 9.

The system-wide recompetition was supposed to be completed by the end of the year. Undersecretary of Technology Phillip J. Bond said MEP stakeholders believed the proposed recompetition would be too disruptive and untimely.

The recompetition was proposed by the Commerce Department in January.

"This is not the right time for a system-wide recompetition," said Bond. "Recompetition was always a means to institute reforms. We believe there are more efficient ways to make those reforms. So, today, we can assure you that we will not have a year-end, system-wide recompetition. Instead, we will work with the MEP centers on a process that includes systematic reviews and a reapplication process that does a better job instituting the kinds of reform and modernization we believe can make the network even more effective and efficient and do so in more seamless, less disruptive manner."

MEP is a nationwide network of not-for-profit centers in more than 400 locations, whose sole purpose is to provide small and medium-sized manufacturers with the help they need to succeed. Each center works directly with area manufacturers to provide expertise and services tailored to their most critical needs, which range from process improvements and worker training to business practices and applications of information technology.

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Ford showcases flexible manufacturing in Chicago plant
After a major investment in renovation and retooling, Ford Motor Co.'s Chicago Assembly Plant unveiled its new flexible manufacturing system with the production of three distinct models built off one vehicle platform.

Opened in 1924, Chicago Assembly is Ford's oldest operating plant in the world. Today, it uses the industry's latest technology in machine tooling and processes to build the all-new 2005 Ford Five Hundred, Ford Freestyle and Mercury Montego.

With its flexible body shop and final assembly area, the plant can employ the new flexible tooling to quickly change over and build up to eight different models off two vehicle platforms.

The nearby Chicago Manufacturing Campus also marked its official opening. It is the industry's largest in size and scope. Twelve suppliers, totaling 1.5 million square feet of manufacturing and office space, are producing parts and providing logistics support at the 155-acre site, just 1/2 mile from the plant.

"Chicago Assembly sets a new standard in today's fiercely competitive market," said Greg Smith, Ford executive vice president. "The flexible manufacturing system installed here means we can respond quickly to changes in customer demand and do so efficiently. And our supplier manufacturing campus supports our flexible manufacturing system with quick customer response time as well as lower inventory and shipping costs."

Approximately $800 million was invested by Ford and its suppliers in the assembly plant, the supplier manufacturing site and Chicago Stamping Plant, which provides stampings for Chicago Assembly.

The Mayor's Office of Work Force Development recruited and trained some 600 new employees of the Chicago Manufacturing Campus. Total employment at Ford's two Chicago plants and the supplier campus is 5,600.

"This shows what can happen when business, government and labor work together," said Chicago Mayor Richard M. Daley. "We're creating jobs for the hard-working people of Chicago, improving the environment, restoring abandoned land to productive use and solidifying Chicago's position as the nation's number-one manufacturing center."

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OSHA cites pesticide maker for failures in plant safety
The Occupational Safety and Health Administration (OSHA) cited HPI Products Inc. for failing to protect workers from health and safety hazards at its Damascus, Ga., plant.

The agency is proposing $69,200 in penalties against the pesticide manufacturer.

"Employees at this facility were exposed to hazards that can lead to falls, amputations and electrocutions," said John Deifer, OSHA's area director in Savannah, Ga. "The citations and proposed penalties in this case should send a strong message that such conditions will not be tolerated."

OSHA issued six repeat citations to the company, with proposed penalties of $31,200, for:
• failing to assess workplace health hazards;
• not providing employees with personal protective equipment, such as gloves and coveralls; and,
• failure to have a written respirator protection program, including medical evaluations and fit-testing for employees required to wear respirators in areas containing high concentrations of pesticide dust.

The agency also issued 20 serious citations, with proposed penalties of $38,000, for:
• exposing workers to fall hazards from unguarded open-sided floors, tanks and stairways;
• failure to provide electrical and machine guards to protect workers from burns, shocks and "caught-by" injuries; and,
• failure to have a lock-out/tag-out program that would render equipment, such as augers and feed hoppers, inoperable during maintenance and repair.

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Jobless claims continue downward trend
New claims for unemployment insurance fell 4,000 to 333,000 for the week ended Aug. 7, according to the Labor Department. The four-week moving average declined 4,250 to 339,250 during the same period.

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 5,000 to 2.9 million for the week ended July 31. Continuing claims are those older than two weeks.

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Machine tool consumption rises in June
June U.S. machine tool consumption totaled $236.9 million, up 19.5 percent from May and up 0.9 percent from $234.8 million reported for June 2003, according to the Association for Manufacturing Technology (AMT) and the American Machine Tool Distributors' Association (AMTDA).

With a first-half total of $1.2 billion, 2004 is up 31.9 percent compared with 2003.

"June's machine tool orders capped a strong first half as manufacturers scrambled to get equipment in place before the 50 percent expensing allowance expires on Dec. 31," said AMT president John B. Byrd III. "Next month's International Manufacturing Technology Show in Chicago may be their last shot at ordering machines to beat that deadline, unless Congress acts this fall to assure that the manufacturing recovery continues by extending the provision."

U.S. machine tool consumption is also reported on a regional basis for five geographic break-downs of the United States.

At $36.6 million, Northeast region machine tool consumption in June was up 25.8 percent compared to May's $29.1 million and up 33.5 percent compared to June a year ago. The first-half total of $182.9 million is 57 percent higher than the comparable figure for 2003.

Southern machine tool consumption in June totaled $47.4 million, up 91.9 percent from May's $24.7 million, but 43.3 percent lower than the total for June 2003. With a first-half total of $189.6 million, 2004 lags 15.9 percent behind 2003 at the same time.

June machine tool consumption in the Midwest totaled $85.8 million, 2.1 percent higher than May's $84.1 million and 7.7 percent higher than the total for the previous June. At $500.1 million the first-half consumption total is 36.6 percent higher than the total at the same time in 2003.

Reaching $40.9 million, June machine tool consumption in the Central region was up 5.5 percent compared to May's $38.8 million and up 52.9 percent compared to June a year ago. The $228.3 million first-half total is 52.5 percent above the comparable figure for 2003.

With a total of $26.2 million, Western machine tool consumption in June was up 20.9 percent compared to the $21.7 million tallied in May and 51.4 percent higher than last June's total. At $148.7 million, first-half 2004 is running 65.5 percent ahead of 2003 at the same time.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the United States Machine Tool Consumption (USMTC) program.

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EPA launches international best practice Web site
A new Environmental Protection Agency Web site offers environmental policies and best practices from countries around the world including Germany, the Netherlands, Sweden and Australia.

The online global library provides links to journals, databases, guidelines, programs and case studies involving innovations in air, toxics, waste and water issues, as well as multimedia approaches, such as Environmental Management Systems, sustainable transport, smart growth and industrial ecology.

The site provides examples of state and local partnerships with other countries and regions that have resulted in creative environmental solutions in the United States such as:
• constructed wetlands to treat wastewater;
• green buildings and renewable energy to address climate and air pollution;
• industrial ecology to support pollution prevention and brownfields revitalization;
• a list of fellowships for group and individual exchanges; and,
• a number of resources on evaluating international initiatives.

The library will help state and local governments, federal agencies, non-governmental organizations, as well as other countries learn from these experiments.

For more information, visit the Web site at http://www.epa.gov/innovation/international.

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Brady acquires ID Technologies Pte Ltd.
Brady Corporation acquired ID Technologies Pte Ltd., a Singapore-based manufacturer and supplier of pressure-sensitive, die-cut components and labeling products. Terms of the transaction were not disclosed.

ID Technologies, founded in 1990, is a manufacturer for the electronics and hard-disk drive industries and sells direct to customers in Singapore, China, Malaysia, Europe and the United States. The company had fiscal 2004 sales of approximately $24 million and employs about 150 people in Singapore and Shanghai. Brady expects the acquisition to add approximately 5 cents to earnings per diluted share in fiscal 2005.

"The electronics industry continues to offer significant opportunities for us, given the explosive growth of hard disk drives used in laptops and other mobile applications such as digital cameras, set top boxes, MP3 players and other devices. This acquisition will enhance our position as a leading supplier to this industry and further strengthen our presence in Asia," said Frank Jaehnert, Brady president and CEO.

Brady's global die-cut business currently has manufacturing operations in the United States, China, Singapore, Malaysia, Brazil and Germany. Its products include custom die-cut and precision specialty materials for use in a wide range of devices such as computers, disk drives, two-way radios, cellular phones, and consumer electronic equipment. It has globally networked systems and operations aligned to support worldwide design centers while providing local service and delivery.

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NAM forms WTO Action Group
The National Association of Manufacturers (NAM) created a special World Trade Organization (WTO) Action Group to promote, advocate and achieve manufacturers’ trade liberalization goals as the WTO’s Doha Round of trade negotiations continues.

“The recent breakthrough agreement on a negotiating framework shows that a successful WTO negotiation is now a real possibility, and America’s manufacturers need to be organized to convert that possibility into opportunity,” said Arnold Allemang, executive vice president of the Dow Chemical Co. and chairman of the NAM’s International Economic Policy Committee. “This initiative reflects the newly-heightened interest of manufacturers in the Doha Round of trade negotiations.”

Allemang explained that the NAM’s WTO Action Group will be part of its International Economic Policy Committee structure and work with Congress and the Bush administration to focus attention on manufacturing’s trade-related priorities across the entire spectrum of industrial interests during the Doha Round.

These interests include a sharp tariff-cutting formula, non-tariff barrier negotiations, trade and customs facilitation negotiations, and other trade-liberalization initiatives. The action group will also work with counterpart manufacturing associations in both industrial and developing countries to generate increased global pressure for industrial trade liberalization.

“Manufactured goods comprise three-quarters of all world merchandise trade,” said Michael Baroody, the NAM’s executive vice president. “For the Doha Round to be ultimately considered a success, it must result in a truly significant liberalization for these goods.”

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Automakers cite rising health costs as greatest challenge
General Motors executives outlined the biggest immediate and upcoming challenges automakers will face now and in the future at the auto industry's summer meeting in Traverse City, Mich.

Declining market share, extreme global competition, slim margins on zero-percent financing, rising interest rates and a critical shortage of skilled workers made the list of challenges. But rising health care costs eclipsed them all.

"We have a serious competitive disadvantage that we have to deal with," said General Motors vice chairman John Devine. "It translates into costing U.S. jobs, and it drives people increasingly to be uninsured."

General Motors spent $4.8 billion on health care in 2003, and the company expects those costs to double by 2010. Each of the Big Three automakers is searching for solutions to this troubling problem. In some cases the automakers are working together to rein in costs.

Ford Motor Co. and General Motors are jointly inventing and manufacturing power transmissions to be used by both companies. The automakers are spending $500 million on the project.

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July unemployment data proves disappointing
The unemployment rate slipped marginally in July to 5.5 percent from 5.6 percent in June, according to the Labor Department. Employers added 32,000 jobs, which did little to satisfy analysts who predicted as many as 215,000 added jobs during the month.

Employment levels in most of the major industry sectors were little changed over the month.

In the goods-producing sector, manufacturing employment edged up by 10,000 in July. Since its most recent low in January of this year, manufacturing employment has risen by 91,000, almost entirely in its durable goods component.

In July, there were job gains in computer and electronic products, machinery, furniture, and paper and paper products. Employment growth in these and other manufacturing industries was partly offset by a decline of 21,000 in transportation equipment manufacturing, reflecting larger-than-usual shutdowns of auto parts and assembly plants for annual retooling.

"The shockingly low numbers in Friday's government jobs report proves employers are still not as convinced as Wall Street that the economy is firing on all pistons," said Rick Cobb, executive vice president for global outplacement firm Challenger, Gray & Christmas Inc. "Worse, payroll growth in May and June was revised lower by a cumulative 61,000, further adding to the evidence that this job market is not recovering very well."

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Chrysler Group to implement supplier co-location in Ohio
The Chrysler Group will pursue an innovative manufacturing project in Toledo, Ohio, that will feature the most advanced use of supplier co-location yet in North America.

Part of a $2.1 billion total program investment, the project will be located on the company’s existing manufacturing complex on the city’s north side and will produce a family of future vehicles for sale worldwide.

In the Chrysler Group’s co-location project, three suppliers will build and manage key manufacturing process facilities for body, paint and chassis operations within the plant footprint. The companies chosen for this supplier co-location project, pending final negotiation of purchase agreements, are The Kuka Group (body shop operations), Durr Industries (paint shop operations) and Hyundai Mobis (chassis assembly).

Tom LaSorda, Chrysler Group chief operating officer, called the concept an alternative to the traditional greenfield site approach to new manufacturing facilities employed by many automakers.

“At the Chrysler Group, we love to defy conventional wisdom,” said LaSorda. “That’s why, today, 23 of our 24 major manufacturing facilities are still in urban locations and are still part of the economic lifeblood of their communities.”

Chrysler Group is able to accomplish similar savings to greenfield concepts because supplier investment in the project will equate to an approximate $300 million savings, “enough to pay for one additional derivative product,” said LaSorda. Total capital investment for the Toledo project is projected to be $900 million.

But the uniqueness of the project doesn’t stop there, added Frank Ewasyshyn, executive vice president of Manufacturing.

“This is a true collaborative partnership with the [United Auto Workers], as well,” said Ewasyshyn. “We had to look long and hard at what kind of innovative work practices would allow an investment like this to happen in an operation like Toledo, the oldest existing manufacturing facility in America.”

Chrysler Group and the UAW signed an unprecedented, eight-year agreement last December for Toledo Jeep employees that paved the way for this partnership.

“The UAW recognized that having suppliers based in our facility could open new opportunities; it just meant looking at it from a different direction,” said Ewasyshyn.

In the case of chassis builder Hyundai Mobis, for example, it meant attracting a new supplier to the Midwest. Hyundai Mobis plans to open a facility in Alabama and currently operates primarily in China and Korea.

“This project keeps approximately 3,800 jobs right here in Toledo; it enables us to implement new ways to become competitive in a rapidly changing time for our industry,” said Lloyd Mahaffey, UAW regional director in Toledo.

A collaborative effort between Ohio, Toledo and the Toledo-Lucas County Port Authority resulted in proposed support for the manufacturing project, which is currently pending final government approvals. Support is expected to include tax incentives, abatements, land, traffic-related infrastructure changes, training funds and others.

"This project helps secure great jobs in Toledo both now and into the future," said Ohio Governor Bob Taft. "It represents the great relationship between Ohio and Chrysler Group, and the commitment by both to keep Toledo the home of Jeep."

Construction of the new facilities is tentatively scheduled to begin this fall, with vehicle production slated for 2006.

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