Manufacturing sector grows, but at slower rate
Metalformers report stable business climate
NAM elects new leadership
Manufacturers pass health care costs to employees
Jobless claims continue to climb
Pentair tools group sale gets regulatory clearance
Fuel cell makers see revenues climb
Conference Board's leading index declines in August
General Motors great place to work for working mothers
Durable goods orders retreat in August
Rockwell Automation helps manufacturers maximize RFID
Emerson Bearing launches online diagnostic program
Walter completes Werner Schmitt acquisition
Workplace fatalities level off in 2003

Manufacturing sector grows, but at slower rate
Economic activity in the manufacturing sector grew in September for the 16th consecutive month, while the overall economy grew for the 35th consecutive month, according to the Institute for Supply Management's (ISM) Manufacturing Report On Business.

ISM's PMI registered 58.5 percent in September, a decrease of 0.5 percentage point compared to 59 percent in August. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

"The manufacturing sector continued to grow during September, but at a slightly slower rate," said Norbert J. Ore, chair of ISM's Manufacturing Business Survey Committee. "Both new orders and production remain strong, and employment growth accelerated."

The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (61.5 percent) corresponds to a 6.8 percent increase in real gross domestic product (GDP). In addition, if the PMI for September (58.5 percent) is annualized, this corresponds to a 5.7 percent increase in GDP.

"September was surprisingly strong given the recent slowing of growth in new orders. Production and employment were particularly encouraging as both indexes increased when compared to August. Any concern over inventory growth would seem to be offset by the decline in customer inventories," said Ore.

Comments from respondents this month were typical of a growing manufacturing sector. Concerns ranged from problems with product launches to seasonal issues and strikes. The hurricanes caused problems for some businesses while others saw a pickup in demand. The employment picture is improving, according to respondents who mention blue-collar and white-collar new hires. The growth in inventories appears to be voluntary as companies build inventories for "stocking of finished goods for resale," for "hedging against price increases," and, as one member responded simply, "more business, more inventory."

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Metalformers report stable business climate
Metalforming companies reported little change in current and near-term business conditions, according to the Sept. 1 Precision Metalforming Association (PMA) Business Conditions Report.

Conducted monthly, the report is an economic indicator for manufacturing, sampling 183 metalforming companies in the U.S. and Canada.

When asked whether they anticipated general economic activity would increase, decrease or remain the same over the next three months, 38 percent of respondents reported they expect business conditions to improve, a slight increase from 36 percent in August. Forty-seven percent said activity would remain the same, and 15 percent thought it would decrease, up from 13 percent last month.

According to the report, expectations for incoming orders for the next three months were nearly identical to the expectations reported in August, with 42 percent expecting orders to rise, up from 41 percent; 37 percent predicting no change, down from 38 percent; and 21 percent indicating orders would decrease, the same percentage reported in August.

Fifteen percent of responding companies currently have a portion of their workforce on short time or layoff, up slightly from 14 percent in August, but much improved from September 2003, at which time 21 percent reported workforce on short time or layoff.

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NAM elects new leadership
The National Association of Manufacturers (NAM) elected new leadership to champion U.S. manufacturing and advocate pro-growth policies as it mobilizes to get out the vote in November.

Convening Sept. 28-30 in Washington, D.C., the NAM board of directors elected MeadWestvaco Corp. chairman and CEO John A. Luke Jr. as 2004-2005 NAM chairman.

The board also elected former three-term Michigan Governor John Engler as the association’s first new president since 1990. Engler will succeed Jerry Jasinowski, who is retiring after 15 years as chief of the nation’s largest industrial trade association.

“Our first, long-term challenge is to ensure that policymakers and voters understand that manufacturing matters greatly to our future as a nation. Very simply, we are in the early stage of a new world order, marked by global markets, fierce competition and serious trade policy challenges,” said Luke. “My central message for the next 12 months will be our nation’s pressing need to meet the challenges of unprecedented global competition."

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Manufacturers pass health care costs to employees
Manufacturer health care costs increased by 14.9 percent in 2004, according to the 2004 Salary and Benefits Survey conducted by Compdata Surveys.

To deal with this spike, the majority of manufacturers (50.9 percent) increased the employee portion of the premium. The following chart details other solutions manufacturers put in place.

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Jobless claims continue to climb
New claims for unemployment insurance jumped 18,000 to 369,000 for the week ended Sept. 25, according to the Labor Department. The four-week moving average for jobless claims was 343,500, an increase of 2,250 over last week's revised average.

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 3,000 to 2.9 million for the week ended Sept. 18. Continuing claims are those older than two weeks.

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Pentair tools group sale gets regulatory clearance
The sale of Pentair Inc.'s tools group to The Black & Decker Corp. will go through, the company reported. Mandatory regulatory clearance was received or antitrust waiting periods expired.

Pentair expects to complete the $775 million transaction to Towson, Md.-based Black & Decker in early October.

"Black & Decker is a recognized leader in the power tool industry and we are very confident that we are placing our tools group in the hands of a company that can further build the business to benefit its customers, suppliers and employees," said Randall J. Hogan, Pentair chairman and CEO.

Pentair said the proceeds from the sale will be used to pay down debt associated with Pentair's July 31 acquisition of WICOR Industries. The WICOR acquisition transformed the $2.7 billion Pentair into a diversified manufacturer led by a $2 billion water business. Although the water group will be Pentair's largest business, the company says it will increase its diverse business mix by growing its enclosures group.

Pentair's tools group consisted of the brands Porter-Cable, Delta, DeVilbiss Air Power, Oldham Saw and FLEX, among others. The group employs about 4,200 people at facilities in North America, Europe and Asia.

The tools group's sales and operating profit for 2003 were $1.1 billion and $82 million, respectively.

"We are pleased to have received regulatory clearance," said Nolan D. Archibald, Black & Decker chairman and CEO. "By adding the tools group's well-respected brands and products, we expand our offerings where we have relatively low market share. Further, we are enhancing our distribution network, particularly in the industrial and construction channel. The acquisition of Pentair's tools group is a great strategic fit with our DeWalt division and will nearly double our North American professional business."

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Fuel cell makers see revenues climb
Public companies in the fuel cell sector enjoyed a 20 percent increase in revenues in 2003, up to $243 million from $203 million in 2002.

For the first time in more than three years, revenues exceeded research and development (R&D) spending, which dropped 11 percent to $204 million.

According to the PricewaterhouseCoopers (PwC) 2004 Fuel Cell Industry Survey, the sector continued to experience operating losses, R&D spending, and technical, marketing and financing challenges. The findings were released in conjunction with the Hydrogen and Fuel Cells 2004 Conference in Toronto.

The 2004 Fuel Cell Industry Survey focused on the 2003 year-over-year financial results of the world's 18 publicly-traded companies whose primary business is in the areas of fuel cell production, system integration and related fueling infrastructure. 

None of the companies surveyed were profitable. Net losses decreased slightly to $367 million from $384 million in 2002.

"While the financial results for the fuel cell sector were mixed for 2003, there are encouraging signs that the industry may soon find its feet," says John Webster, leader of PwC Canada's fuel cell practice. "The next two or three years are critical for the sector to launch successful products as micro fuel cells begin to trickle into the marketplace to meet the increasing power demands of portable and hand-held electronic devices, largely driven by consumer demand for greater functionality. This includes cell phones, lap tops, PDAs and cameras."

The majority of the companies surveyed by PwC were focused on developing proton exchange membrane (PEM) fuel cell technology and related fueling infrastructure. Primarily designed for use in the transportation market, PEM-powered products are expected to reach large-scale commercial production after portable and stationary applications.

Environmental and economic factors continue to drive the need to develop fuel cells, including the price of oil, energy security, climate change and air quality. The growing energy demands of developing nations such as China and India, conflicts in oil-producing regions, and governments' desire to protect their citizens from the polluting effects of industrial development all play a role in the fuel cell sector's evolution.

"We are seeing investment in fuel cells by large, well-funded multi-nationals on all continents, with strong government support in Canada, the United States, Japan and a number of European Union countries," said Webster. "With this public and private support, progress toward commercially viable technical solutions will continue and fuel cells should become more competitive with incumbent technologies."

Click here for a copy of the full survey.

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Conference Board's leading index declines in August
The Conference Board's leading index decreased 0.3 percent in August, the third consecutive decline, and the weakness in the last three months has become more widespread.

Three of the 10 indicators that make up the leading index increased in August. The positive contributors – beginning with the largest positive contributor – were manufacturers’ new orders for consumer goods and materials, real money supply, and average weekly initial claims for unemployment insurance (inverted).

The negative contributors – beginning with the largest negative contributor – were interest rate spread, building permits, index of consumer expectations, manufacturers’ new orders for nondefense capital goods, vendor performance and stock prices.

The leading index now stands at 115.7 (1996=100). Based on revised data, this index decreased 0.3 percent in August and decreased 0.3 percent in July. During the six-month span through August, the leading index increased 0.7 percent, with six out of 10 components advancing.

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General Motors great place to work for working mothers
Working Mother Magazine named General Motors for the 12th time to the publication's list of "100 Best Companies for Working Mothers."

"In today's working environment, as a working mother, I know the importance of an employer providing its employees with services that benefit not only our employees, but their families as well," said Kathleen S. Barclay, vice president in charge of GM global human resources.

GM rated above average in the area of Time Off for Caring Parenting and rated above average in the area of Child Care-Primary Services. One out of four employees who use the GM Resource and Referral Program do so for child care services, while 27 percent take advantage of the company's elder-care services. According to the survey, 94 percent of GM employees who take advantage of the GM Work Life Resource and Referral Program report less stress and worry as a result of using the program.

The advancement of women at GM rated above average compared to other companies. Women account for 24 percent of managers and professionals, as well as 19 percent of executives.

Women executives at GM are leading areas from environmental to design to manufacturing. GM also supports Affinity Groups to help foster professional development opportunities and to serve as an information resource. The GM Affinity Group for Women with more than 2,000 members strives to attract, involve and retain great women employees throughout the company.

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Durable goods orders retreat in August
New orders for manufacturing durable goods decreased $900 million, or 0.5 percent, in August to $195.4 billion, according to preliminary data from the Commerce Department. This followed a 1.8 percent increase in July.

Excluding transportation, new orders increased 2.3 percent. Excluding defense, new order decreased 0.6 percent. Year-to-date, new orders for 2004 were 12.4 percent above the same period a year ago.

“The August advanced report on durable goods orders shows that the manufacturing expansion is progressing, but not without high volatility in individual sectors,” said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. “Aerospace orders surged in July and retreated in August, motor vehicles and parts fell sharply in July and rebounded in August, and in most non-transportation industries, except machinery, orders were strong in August.

“Despite the month-to-month volatility, the industrial expansion is generally progressing at a brisk pace,” he said. “In the three months ending in August 2004, durable goods orders are 12 percent above the same period one year ago. Manufacturing continues to grow faster than the general economy.”

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Rockwell Automation helps manufacturers maximize RFID
Rockwell Automation is offering a white paper that educates manufacturers on how to maximize their investment in RFID technology throughout their enterprise and supply chains.

The paper, "RFID in Manufacturing," provides a practical guide to extracting measurable value from RFID implementations in plant and warehousing operations and may be downloaded free at www.rockwellautomation.com/services.

"When manufacturers view RFID simply in terms of compliance, they are overlooking the opportunity to tap into a wealth of information that can be used to make better business decisions," said Sujeet Chand, vice president of advanced technology and chief technical officer for Rockwell Automation. "As RFID moves upstream from the supply chain to manufacturing operations, there is great value that can be gained from integrating RFID technology into existing automation controls and information systems."

The paper outlines a four-step methodology that guides manufacturers from piloting to full-scale implementation of RFID in their plants.

Employing the methodology can help manufacturers design and execute a sound strategy that provides sustainable value over the life of their RFID investment.

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Emerson Bearing launches online diagnostic program
Bearing distributor Emerson Bearing unveiled its online “Failure Analysis” diagnostic program for bearing failure. 

Bearing failure analysis, typically left to outside vendors, can be performed by visiting Emerson Bearing’s Web site and clicking on the “Failure Analysis” link.

Bearings play an enormous role in the smooth operation of many machines. A bearing may often be the culprit when a machine breaks down. Accurate diagnosis of bearing failure is key to swift problem resolution and prevention of repeated breakdowns.

Emerson Bearing’s program identifies common bearing failures. From contamination, which is one of the leading causes of premature bearing failure to overheating, loose fit and other failures, Emerson Bearing provides close-up visuals of problematic bearings, graphic representations, and definitions and causes of each type of bearing failure.

“Our online program is designed to save our customers both time and money,” says Steve Katz, CEO of Emerson Bearing. “In just moments, a customer can search our comprehensive Failure Analysis menu to quickly identify the type of problem they are having with their bearing or exactly why it has failed. They are then able to determine whether or not they need to call in an outside vendor or call us for replacement bearings.”

If manufacturers are unable to read the numbers on an old bearing, Emerson’s online “Bearing Detective” enable an Emerson specialist to track down the bearing required. Within one business day of submitting the online form, the Emerson specialist will get back to the customer with an answer. Just visit www.emersonbearing.com and click on the Bearing Detective logo.

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Walter completes Werner Schmitt acquisition
Walter AG completed the acquisition of Werner Schmitt PKD-Werkzeug AG on Sept. 14. Anti-trust authorities approved the acquisition agreement, which was signed by both companies Aug. 5.

With a workforce of about 70, Werner Schmitt PKD-Werkzeug AG generates sales in the double-digit million Euro range. They develop and manufacture PCD (polycristalline diamond) and PCB (cubic boron nitride) tools, which helps Walter further extend its tool range. 

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Workplace fatalities level off in 2003
A total of 5,559 fatal work injuries were recorded in the U.S. in 2003, a small increase from the revised total of 5,534 fatal work injuries reported for 2002, according to the Census of Fatal Occupational Injuries conducted by the Bureau of Labor Statistics.

Despite the increase, fatal work injuries for both 2003 and 2002 were the lowest ever recorded by the fatality census, which has been conducted each year since 1992. The rate at which fatal work injuries occurred in 2003 was four fatalities per 100,000 workers, unchanged from the 2002 rate.

Manufacturing reported 416 worker fatalities in 2003 out of a total of 5,559 overall fatalities, putting it in sixth place on the list of industries with the most fatalities.

Within the manufacturing industry, the most deaths occurred among food manufacturers (58), followed by nonmetallic mineral product manufacturing (46) and fabricated metal product manufacturing (43).

Among production occupations, there were 282 deaths, or 5 percent of the total. For clearly defined production occupations, metal workers and plastic workers faced the greatest likelihood of death, followed by assemblers and fabricators, and plant and system operators.

"We have said many times before that even one workplace fatality is one too many, and we will continue to do everything we can to make sure workers are safe through strong, fair and effective enforcement; outreach, education and compliance assistance; and partnerships and cooperative programs," said Occupational Health and Safety Administration assistant secretary of labor John Henshaw.

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