Metalformers predict stability in next three months
Report: Steel prices should decline over next year
Many companies revising variable pay plans
Industrial production increases in October
AMTDA directory now available on CD-ROM
Federal agencies collaborate with manufacturing sector

Metalformers predict stability in next three months
Metalforming companies are not expecting much change in current and near-term business conditions, according to the November Precision Metalforming Association (PMA) Business Conditions Report.

Conducted monthly, the report is an economic indicator for manufacturing, sampling 172 metalforming companies in the United States and Canada.

When asked whether they anticipated general economic activity would increase, decrease or remain the same over the next three months, 29 percent of respondents reported they expect business conditions to improve (up from 27 percent in October), 52 percent said that activity would remain the same, and 19 percent thought it would decrease (compared to 20 percent last month).

According to the report, expectations for incoming orders for the next three months were down slightly, with only 35 percent anticipating orders would rise (down from 38 percent in October), 32 percent predicting no change (down from 37 percent last month) and 33 percent indicating that orders would decrease over the next three months (up from 25 percent).

Current average daily shipping levels increased in November for just 39 percent of reporting companies, compared to 44 percent in October. Thirty-four percent reported no change in shipment levels (up from 30 percent last month), while 27 percent said their shipping levels decreased (compared to 26 percent in October).

This spike in workers on short time or layoff as well as the slight decrease in expected orders and lower shipping levels may be largely attributed to fourth quarter cutbacks in the automotive market and the fact that companies are entering the year-end holiday period where business is typically slower than usual.

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Report: Steel prices should decline over next year
The Manufacturers Alliance/MAPI new economic report, The Steel Price Situation and Outlook, tracks recent trends in steel prices and offers an outlook regarding future pricing.

Daniel J. Meckstroth, report author and chief economist for the Manufacturers Alliance/MAPI, wrote that steel prices, as well as virtually all commodity prices, have risen and this should come as no surprise. It is a classic case of fundamental supply and demand.

World manufacturing demand increased more than 8 percent from August 2003 to August 2004, a pace of growth that was much faster than the ability to expand supply.

Conversely, the return to more historical price levels will result from better balance between production and consumption as a sense of equilibrium returns to the system. This will be due, in part, to a deceleration in manufacturing production in 2005 caused by factors such as higher energy prices, higher interest rates, and a tempering of growth in China.

There are recent signs that the current record high steel prices are beginning to fall as evidenced by lower scrap prices. In addition, foreign mills are offering more steel to the marketplace, thus allowing an incentive for U.S. steel consumers to source foreign steel, and thereby increasing competition in the U.S. steel market.

Meckstroth concluded the consensus among economists is the steel price bubble will deflate next year.

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Many companies revising variable pay plans
Many U.S. employers revised their variable pay plans for non-executive workers in the past 12 months or plan to do so next year, according to the results of a new survey by Watson Wyatt, a human capital consulting firm.

The changes come at a time when employers continue to hold the line on merit increases and place greater demands on workers to perform at higher levels.

The Watson Wyatt survey found that 49 percent of respondents with variable pay plans revised them in the past year. Of the changes made, the most common was revising the performance measures on which bonuses are based (68 percent), followed by increasing goals employees are expected to achieve to earn an award (46 percent). Twenty-seven percent increased the size of target awards employees receive for achieving goals.

“Employers are trying to better link variable pay programs with organizational and individual performance,” said Laura Sejen, director of strategic rewards consulting at Watson Wyatt. “Clearly, employers are raising the bar for employees. As variable pay becomes more prominent, companies are realizing they need to carefully distinguish reward allocations to recognize outstanding employee performance if they are going to attract and retain top talent.”

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Industrial production increases in October
Industrial production rose 0.7 percent in October after having edged up 0.1 percent in September, according to the Federal Reserve. At 117.6 percent of its 1997 average, the October index was 5.2 percent higher than its year-ago level.

Part of the increase in production appears to reflect a partial bounceback from the restraining effects of the recent hurricanes, although the exact magnitude of the contribution is difficult to estimate. The rate of capacity utilization for total industry rose 0.4 percentage point, to 77.7 percent, a level 3.4 percentage points below its 1972-2003 average.

The index for durable consumer goods rose 1.6 percent, thereby reversing most of the previous month's decline. Gains were posted in all major categories, most notably home electronics and automotive products.

The index for business equipment increased 0.5 percent in October. The production indexes for transit equipment, information processing equipment, and industrial and other equipment all moved up for the second consecutive month. The production of defense and space equipment edged down but remained 5.2 percent above its year-ago level.

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AMTDA directory now available on CD-ROM
The American Machine Tool Distributor's Association's (AMTDA) 2004-2005 Membership Directory is now available, for the first time on CD-ROM.

This interactive, searchable reference of AMTDA members and the builders they represent is a valuable resource for anyone involved in the machine tool industry. It includes key personnel contact information with active links to their direct e-mail addresses and company Web site.

The directory also includes a comprehensive, searchable listing of Certified Machine Tool Sales Engineers (CMTSEs), individuals with proven knowledge and technical expertise in machine tool sales, plus an active link to AMTDA's annual calendar of industry events ranging from regional education programs to international machine tool shows.

To order, visit www.AMTDA.org. 

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Federal agencies collaborate with manufacturing sector
The Environmental Protection Agency (EPA) and the Department of Commerce met with several pharmaceutical and healthcare companies Nov. 18 to promote their involvement in a program designed to increase productivity, reduce waste, boost profitability and improve environmental performance.

The program, Green Suppliers Network, is an innovative collaboration between industry in various manufacturing sectors and government, aimed at working with all levels of the manufacturing supply chain to achieve environmental and economic benefits.

Pfizer Inc., one of the leaders in promoting the Green Suppliers Network in Puerto Rico, hosted the meeting.

Abbott Laboratories, Baxter International, Bristol-Myers Squibb, Johnson & Johnson, Roche and Wyeth, among others, are also actively engaged in the program and helped sponsor the meeting. 

More information about the Green Suppliers Network is available at: http://www.epa.gov/p2/programs/gsn.htm.

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