Durable goods orders jump in July
Walter Corp. purchases Werner Schmitt
Ford abandons Oracle supply-chain solution
Atlas Copco forms joint venture with Chinese tool maker
Capital Resource Partners acquires Equipto
Singapore looks to double manufacturing
Boeing holds aviation manufacturing meeting in Vietnam
CEOs on different continents disagree on greatest concerns
Kodak to buy National Semiconductor's imaging business
Hiring, investments to increase over next year
Skills assessor ready to test-pilot production program
Leading index declines for second straight month
Metalworking plant fined for unsafe conditions

Durable goods orders jump in July
New orders for manufactured durable goods increased in July by $3.2 billion, or 1.7 percent, to $195.6 billion, according to the Department of Commerce. This followed a 1.1 percent June decrease.

Durable goods are high-cost manufactured items expected to last three or more years.

Transportation equipment had the largest increase, $3.1 billion, or 5.6 percent, to $58.9 billion, due to non-defense aircraft and parts, which increased $6.2 billion. Primary metals increased $800 million, or 5.8 percent, to $14.8 billion.

New orders for machinery increased 2.1 percent to $25 billion, and new orders for capital goods increased 5.7 percent to $77.5 billion.

"Today's numbers show that rumors that the manufacturing recovery is losing steam were in error, or at least seriously exaggerated," said National Association of Manufacturers president Jerry Jasinowski. "A doubling of non-defense aircraft orders last month contributed significantly to the overall increase, but new orders for machinery and primary metals also rose significantly. It was the third monthly increase in a row for both important sectors.

"In addition, the fact that unfilled orders, a measure of unmet demand, also increased for a third consecutive month in July signals that the manufacturing recovery is on track to grow at a healthy pace in the second half of the year," he said.

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Walter Corp. purchases Werner Schmitt
The Walter Corp. acquired Werner Schmitt, a German company specializing in diamond tools, pending approval of the German Office of Fair Trading.

Werner Schmitt will be incorporated into Walter as a legally independent subsidiary and will continue to operate under its present name. It employs approximately 70 people and posts sales in the double-digit million Euro range.

The founder and previous sole owner of the company that bears his name, Werner Schmitt, is leaving following the sale of his shares. His successor and the new managing director is Uwe Chieregato, a long-term member of the staff.

Walter chairman Peter Witteczek intends to expand the tool business, and the incorporation of Werner Schmitt represents a first important step in that direction. Werner Schmitt develops and produces PCD (polycrystalline diamond) and CBN (cubic boron nitride) tools.

"Our product range will be expanded significantly by the addition of diamond tools,” Witteczek said. “By acquiring Werner Schmitt, Walter will enlarge its product range and become a leading, single-source supplier of metal-cutting tools.”

While it is possible to machine virtually any type of metallic material with Walter's universal sintered carbide tools, Werner Schmitt’s PCD tools can machine non-ferrous metals. Characterized by close-knit grains, PCD is an extremely hard compound consisting of nature-aligned diamond crystals. It is particularly suitable for turning and milling platinum, gold, silver, titanium, copper, bronze, brass, aluminum and magnesium, along with other metals.

With the Werner Schmitt acquisition, Walter can enter new markets within the automotive industry and its suppliers, as well as the aerospace industry.

A second cutting material will also give Walter more cutting options. CBN is one of the hardest of all cutting materials. It is sintered at high temperatures and under high pressures can form blanks, which undergo further processing using erosion and grinding techniques for finished tools.

Initially, the cutting material is suitable for hardened steels from a degree 45 HRC and upwards, and for hard facing alloys, chill castings, grey cast iron, monel, inconel and stellite. Even hard blocks such as cold work steel (60 HRC) can be reliably machined with CBN.

"We can now see opportunities to develop into a leading, single-source supplier and become a key player in the market for metal-cutting tools, particularly those used by the automotive industry and its suppliers," said Witteczek.

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Ford abandons Oracle supply-chain solution
Ford Motor Co. dumped its new supply-chain software investment earlier this week, according to a report from CRM Daily. The software vendor, Oracle, and Ford are not talking about the debacle, but it is clear that Ford decided to abandon certain procurement solutions based on Oracle's 11i E-Business Suite.

Without any clear word, speculation reigns. Traditionally, supply chain software problems crop up during most, if not all, implementations.

Integrating functions under procurement, order management, enterprise resource planning, customer relationship management  and transportation management can be sketchy at best.

Gartner research analyst Karen Peterson told CRM Daily that these systems traditionally have had problems because the software is usually engineered from one frame of reference, "usually either on the CRM or supply-chain side."

However, Peterson said companies are beginning to find software that can successfully integrate these varying perspectives.

"We are starting to see real-time systems that can spot a change and then change the overall manufacturing and supply chain as a result," she said.

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Atlas Copco forms joint venture with Chinese tool maker
Atlas Copco (China) Investment Company Ltd. finalized the acquisition of the assets of air tool manufacturer Qingdao Qianshao Precision Machinery Corp.

The yearly turnover is approximately $6.6 million. The purchase price was not disclosed.

Qingdao Qianshao Precision Machinery Corporation (QQPMC), based in Qingdao, Shandong Province, China, produces pneumatic tools for the industrial market as well as for the automotive aftermarket and the aerospace industry.

The joint venture is in line with Atlas Copco's overall strategy to expand its business in Asia. The new operation will become part of the Chicago Pneumatic division within the Industrial Technique business area.

A new equity joint benture, CP Qianshao (Qingdao) Power Tools Ltd., was formed. This joint venture is owned 80 percent by Atlas Copco (China) Investment Company Ltd. and 20 percent by Qingdao Qianshao Precision Machinery Corp. The company employs approximately 80 people.

At the same time, Atlas Copco (China) Investment Company Ltd. formed a minority (25 percent) equity joint venture with Qingdao Qianshao Precision Machinery Corp. (75 percent) for power tools component manufacturing.

Atlas Copco companies develop and manufacture electric and pneumatic tools, compressed air equipment, construction and mining equipment, assembly systems, and offer related service and equipment rental. The company currently owns the brands for Milwaukee Electric Tool, Chicago Pneumatic and AEG Power Tools.

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Capital Resource Partners acquires Equipto
Boston-based private investment firm Capital Resource Partners (CRP) completed the purchase of Aurora Equipment Co. (Equipto), a manufacturer of engineered storage systems and work-area products. 

Established in 1907, Equipto is headquartered in Addison, Texas, with manufacturing facilities in Tatamy, Pa. 

Capital Resource Partners is also the principal shareholder of Adapto Inc., a manufacturer of steel shelving, computer cabinets and Clubstor golf bag storage systems.

Adapto’s headquarters and manufacturing facilities are located in Hialeah, Fla.

“We are extremely optimistic about the opportunities in the storage systems industry and are excited to be associated with these strong, longstanding brands, which provide an excellent platform from which we can develop a solid leadership position in the industry," said Robert Ammerman, managing partner of CRP.

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Singapore looks to double manufacturing
Singapore expects to double its current manufacturing output in 15 years, according to Prime Minister Lee Hsien Loong. Singapore manufacturing $23.5 billion in product last year, or about 25 percent of its total gross domestic product.

Currently, one job in five in Singapore relates to its manufacturing industry. The prime minister expects the increases to take place in high tech industries like biomedical and pharmaceuticals.

"The Economic Development Board is quite confident that in 15 years, we can double our manufacturing output," Lee said in his first major policy speed since taking office.

However, Singapore will face staunch competition from countries like China and India, where low-cost labor is the norm. Singapore hopes to use its efficiency, stability and modern infrastructure to balance the effect low-cost labor will have.

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Boeing holds aviation manufacturing meeting in Vietnam
The Boeing Co., in cooperation with the Ministry of Planning and Investment of Vietnam, hosted the first Aerospace Manufacturing Symposium in Hanoi, Vietnam.

The symposium is Boeing's first step to facilitate the exchange of ideas between its supplier/partners and Vietnamese government agencies and businesses. The goal is to help participants better understand how Vietnam can establish a viable aviation industry and create new business relationships.

Attending the symposium were approximately 200 participants, including vice ministers from the Ministry of Planning and Investment and the Ministry of Transport, and a director general within the Ministry of Industry.

Also attending were other Vietnamese government officials, business leaders, and executives from Fuji Heavy Industries, Kawasaki Heavy Industries, Mitsubishi Heavy Industries, Singapore Aerospace Manufacturing, General Electric Aircraft Engines, Pratt & Whitney and Rolls-Royce.

"Today's conference offers us a valuable opportunity to exchange views and further enhance mutual understanding to work out measures aimed at promoting bilateral economic cooperation and in civil aviation as a whole," said Nguyen Bich Dat, vice minister of Planning and Investment. "Boeing has great financial capacity, sophisticated technologies and rich experience in this field, thus enjoying high international prestige."

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CEOs on different continents disagree on greatest concerns
CEOs of Asian companies are more concerned with people issues such as stimulating innovation and acquiring top talent, while U.S. and European CEOs are focusing on sustaining top-line growth as their economies recover.

This is according to a global survey of chief executives released by The Conference Board and sponsored by Heidrick and Struggles and PeopleSoft.

Fifty-one percent of CEOs in Asia report that stimulating innovation is their greatest concern, while 47 percent say acquiring talented managers is their greatest concern. Only 34 percent of CEOs based in Europe and 28 percent of U.S. CEOs cite innovation as their top concern, while only 32 percent of European CEOs and only 22 percent of CEOs in the U.S. say availability of talented managers is their greatest concern.

“The challenges Asian firms face in gaining greater speed, flexibility and adapting to change largely arise from the lack of management bench strength and the inability of many Asian CEOs to systematically develop their organizational ranks,” said Kyung H. Yoon, vice chairman of Heidrick & Struggles. "First, the depth of innovative managers with global perspectives is relatively thin and the educational systems in Asia emphasize memorization of facts and the ability to take tests. Therefore, students do not learn to think independently and have difficulty with creativity and with innovating.

"Second, Asian cultures are risk averse as to losing face so that they are less likely to take on projects which might be out of the box. The fear of failure is a large inhibitor to risk-taking, creative thought and behavior," he said.

The survey of 539 global CEOs is from The Conference Board report, The CEO Challenge 2004. The global reach of the report, in its fifth consecutive year, is now 40 countries.

CEOs of a subset of successful companies were more likely to register employee resource challenges as a chief concern.

The report classifies 132 of the 539 companies as more or less successful based on their average return on assets. Analysis of these companies with respect to employee resources challenges reveals that employee loyalty/commitment/job satisfaction registers as a top concern: either “of greatest concern” or “among my chief concerns.”

But CEOs of more successful companies are 50 percent more likely to give employee loyalty/commitment/job satisfaction the greatest concern rating, while CEOs of less successful companies are 25 percent more likely to rate it the lower of the top two choices.

“Global leaders must drive superior levels of performance throughout their organizations,” said Mark Frost, general manager of PeopleSoft's human capital management product division. “This Conference Board report underscores the fact that good human capital management practices are leading indicators of strong operational and financial performance, no matter what industry or country you’re in.”

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Kodak to buy National Semiconductor's imaging business
Eastman Kodak Co. will purchase the imaging business of National Semiconductor Corp., which develops and manufactures complimentary metal oxide semiconductor image sensor (CIS) devices. Terms of the agreement were not disclosed.

As part of this agreement, Kodak will acquire certain assets, including intellectual property and equipment, and plans to hire approximately 50 employees currently supporting National’s imaging business.

Most of the employees are based in Santa Clara, Calif. These assets will become part of Kodak’s Image Sensor Solutions organization, which currently designs and manufactures image sensors for professional and industrial imaging markets.

Kodak designs and manufactures high-performance charged coupled device (CCD) image sensors, and has a long history of image sensor innovation in both CCD and CIS technologies. 

Through this acquisition, Kodak now adds additional resources and technologies (including advanced mixed-signal circuit design) that will further strengthen its ability to design next-generation CIS devices that promise to deliver improved image quality with complex on-chip image processing circuitry.

“The growing popularity of digital cameras, camera phones and other imaging-centric consumer electronics products has created a significant opportunity for Kodak to leverage its portfolio of CIS technologies,” said Chris McNiffe, general manager of Kodak’s Image Sensor Solutions organization and vice president of its Display & Components division. “This acquisition demonstrates Kodak’s continued commitment to CIS products, and accelerates our longer term goal of providing CIS devices that offer the image quality of CCD sensors while still taking advantage of the power, integration and cost benefits traditionally associated with CMOS technology.”

As a result of the acquisition, Kodak will open a new office for the Image Sensor Solutions organization in Sunnyvale, Calif. Staffed by the former National Semiconductor employees, this group will collaborate on CIS design and commercialization with the existing team located at Kodak’s headquarters in Rochester, N.Y.

The companies expect to close the acquisition, pending regulatory approvals, in the next few weeks.

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"Despite higher oil prices and the unsettled situation in the Middle East, executives expressed confidence about the continued strength of the economy and their company's ability to grow at a healthy pace," said Frank Brown, global leader of PricewaterhouseCoopers' advisory practice. "Most are forecasting increases in both hiring and new investments to sustain revenue growth in the months ahead."

According to the survey, 56 percent of companies plan net additions to their workforce over the next 12 months, up from 46 percent in the previous quarter. Overall, surveyed executives said they expect to add an average of 1.1 percent new hires in the 12 month period, up from 0.6 percent estimated in the prior quarter. About the same percentage of technology companies and non-tech companies expect an increase. In addition, 55 percent said they plan major new investments, averaging 7.4 percent of revenue.

The survey results marked the third consecutive quarter of high confidence among executives, who have projected annual revenue growth at more than nine percent. In other survey findings:

• Fifty-one percent reported an increase in gross margins, and 13 percent a decrease, for a net of 38 percent increasing, compared with a net of 1 percent increasing in the prior quarter.

Contrasting this upbeat picture, however, were indications of potential inflation due to higher costs and pricing:

• Forty-one percent reported higher costs and 17 percent lower costs, a net of 24 percent with increases, compared to a net of one percent with cost decreases in the prior quarter.

• Thirty-seven percent increased their prices, and 9 percent decreased them, a net of 28 percent increasing, compared to a net of 6 percent increasing in the prior quarter.

"Costs are increasing and companies are starting to pass them along to customers in order to maintain margins. That's the classic formula for inflation," Brown said.

The most prevalent concerns now are legislative and regulatory pressures, cited by 34 percent; competition from foreign markets, 26 percent; lack of qualified workers, 26 percent; pressure for increased wages, 22 percent; and the monetary exchange rate, 20 percent.

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Skills assessor ready to test production program
The Manufacturing Skill Standards Council (MSSC) and assessment vendor, the NOCTI-Raytheon Partnership (NRP), finished initial assessments for MSSC production skill standards, according to a letter from James McCaslin, MSSC chair and president and chief operating officer of Harley-Davidson Motor Corp.

The assessments are designed to help manufacturing workers receive an MSSC certification, document their skills and provide them with feedback on their performance, he said. The next step in the program is to pilot these assessments. Currently, work is underway to test the assessments in Wisconsin; the MSSC is recruiting additional sites.

"As we move closer to this goal, we would like to invite organizations to participate by serving as a pilot site to administer the production assessments," McCaslin said in his letter. "Participation in this activity will give your organization the opportunity to play an important role in the development of this national system and, in the long term, serve as a valuable partner in the administration of the assessments as the demand for MSSC certification and documentation grows."

Companies interested in serving as a pilot site can read the criteria and testing specifications. The criteria can determine if your organization can serve as a pilot site. A proposed announcement for use within companies and schools is also available. No fees will be charged by the MSSC to test-takers or the centers for participating in the pilot phase.

Please complete the pilot site criteria checklist and return to .

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Leading index declines for second straight month
The Conference Board's U.S. leading index decreased 0.3 percent in July, the second consecutive decline, with weakness considered widespread over the past two months.

Though too soon to conclude these declines will end the upward trend in the leading index underway since March 2003, the weakness slowed the annual growth rate of the leading index into the range of 1 percent to 2 percent.

Four of the 10 indicators that make up the leading index increased in July. The positive contributors, beginning with the largest positive contributor, were building permits, index of consumer expectations, average weekly manufacturing hours, and manufacturers' new orders for consumer goods and materials.

The negative contributors, beginning with the largest negative contributor, were vendor performance, interest rate spread, stock prices, average weekly initial claims for unemployment insurance (inverted), real money supply, and manufacturers' new orders for non-defense capital goods.

The leading index now stands at 116 (1996=100). Based on revised data, this index decreased 0.1 percent in June and increased 0.4 percent in May.

During the six-month span through July, the leading index increased 1 percent, with seven out of 10 components advancing.

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Metalworking plant fined for unsafe conditions
Ansonia Copper and Brass Inc. of Ansonia, Conn., faces $55,500 in fines from the Occupational Safety and Health Administration (OSHA) for failing to safeguard workers against overexposure to cadmium, inadequate respirator use and maintenance, and unguarded moving machine parts at its metal casting and extrusion plant.

The company was cited for 26 alleged serious and other-than-serious violations of the Occupational Safety and Health Act following OSHA inspections conducted between February and July.

The inspections, prompted by employee complaints, found instances where employees were exposed to excess airborne concentrations of cadmium and the company failed to adequately address the overexposures.

Cadmium, often used in metal processing, can enter the body through ingestion or inhalation. Long-term exposure can lead to kidney dysfunction or lung or prostate cancer. OSHA standards mandate steps employers must take to protect employees when they are exposed to cadmium.

OSHA's inspection found a failure to implement effective work practices and engineering controls to reduce cadmium exposure levels; inadequate cadmium exposure monitoring; an inadequate and outdated cadmium plan; unlabeled cadmium containers; training not provided to all affected employees; and a medically removed employee allowed to return to work without written doctor's permission.

Respirator hazards included failing to ensure respirator use; not inspecting or maintaining all respirators in a sanitary condition; inadequate fit-testing; not training employees in respirator use, cleaning and storage; and failing to evaluate workplace conditions to ensure the respirator program was implemented and effective.

The inspection also identified 18 instances where employees were exposed to injuries from unguarded moving machine parts, and broken or flying coils. Other hazards included inadequate safeguards to prevent the accidental startup of machines during maintenance; incomplete and uncertified hazard analyses; inadequate employee training; blocked access to an electrical disconnect, and tripping hazards. Other-than-serious hazards included failing to record all workplace injuries and illnesses, an obscured exit sign, incomplete records and missing warning signs.

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