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Distribution Industry News Archives:
News from the week of March 21, 2005

Machine tool consumption falls in January
Durable goods orders climb in February
Kaman Industrial Technologies reports gains in 2004
Kennametal begins construction on Chinese facility
Jackson Tool Sales joins IBC IndustrialSupplyPlus division

Machine tool consumption falls in January
January U.S. machine tool consumption totaled $217 million, down 29.1 percent from December, but up 20.8 percent from $179.6 million in January 2004, according to the American Machine Tool Distributors' Association (AMTDA) and the Association For Manufacturing Technology (AMT).

"Keeping pace with December was not going to be easy due to the end of bonus depreciation," said Ralph J. Nappi, AMTDA president. "Yet we start the year 20 percent ahead compared with January 2004, which is evidence that manufacturing still recognizes the benefits of investing in new capital equipment."

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

Northeast machine tool consumption in January stood at $26.3 million, 40.7 percent less than December's $44.4 million, but 13.9 percent ahead of January 2004.

At $42.9 million, Southern machine tool consumption in January was off 20.6 percent from December's $54.1 million, but 63.9 percent higher than the total for January a year ago.

Midwestern machine tool consumption in January totaled $74.5 million, down 35.5 percent compared to December's $115.5 million and off 0.2 percent compared to last January.

Machine tool consumption in the Central region in January stood at $43.4 million, down 16.9 percent compared to December's $52.1 million, but up 50.1 percent compared to January a year ago.

At $29.8 million, Western machine tool consumption in January was down 24.9 percent compared to December's $39.7 million, but up 11.7 percent compared to January 2004.

The United States Machine Tool Consumption (USMTC) report, jointly compiled by the two trade associations representing the production and distribution of manufacturing technology, provides regional and national U.S. consumption data of domestic and imported machine tools and related equipment.

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Durable goods orders climb in February
New orders for manufactured durable goods increased $600 million, or 0.3 percent, to $200.8 billion in February, according to the Department of Commerce. This followed a 1.1 percent January decrease.

Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders increased 0.2 percent.

Transportation equipment had the largest increase, $900 million, or 1.6 percent, to $53.6 billion, due to nondefense aircraft and parts, which increased $1.7 billion.

New orders for machinery were down 1.1 percent to $27.4 billion in February from $27.6 billion in January. February orders for capital goods increased 0.6 percent to $77.5 billion, a $500 million increase.

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Kaman Industrial Technologies reports gains in 2004
Fourth quarter operating profits for Kaman Industrial Technologies were $3 million in 2004, compared to $3.7 million in the 2003 period.

Sales were $141.6 million in the 2004 fourth quarter, compared to $133.2 million in the same period last year. With the stronger market, the company achieved margin improvement on the higher level of sales in the quarter.

Operating profits for the quarter, however, were somewhat lower because the company's stronger-than-expected results triggered increased accruals for an incentive program that rewards a wide range of branch managers and sales personnel for their achievements.

Also, while vendor incentives in the form of rebates on volume purchases were at the same approximate level for 2004 as for the previous year, they were lower in the fourth quarter. With the increase in business, rebates represented a smaller percentage of operating profits for the year than for the previous year.

Segment operating profits for the full year 2004 were $19.3 million, compared to $12.7 million the previous year. Sales in 2004 were a record $581.8 million, including $28.3 million from a fourth quarter 2003 acquisition, compared to $497.9 million, including $6.5 million from that acquisition, in 2003.

"The industrial distribution segment had an excellent year in 2004, reflecting the combined effects of an improved industrial economic environment, a full-year of benefit from a fourth quarter 2003 acquisition and market share gains," said Kaman Corp. chairman, president and CEO Paul R. Kuhn. "During the year, Kaman ramped up its new national account business with Tyco International (U.S.) Inc., Phelps Dodge, James Hardie and Quad Graphics."

He added: "During the fourth quarter of 2004, Procter & Gamble, already a major customer of the company, selected Kaman as its bearing and power transmission supplier in Canada. The company opened a new branch in Toronto to serve that account while providing a platform for expansion in the area. Kaman added further to its geographic footprint with the August 2004 acquisition of Brivsa de Mexico, a small Monterrey, Mexico, distributor that enhances the company's ability to attract and serve national account customers with operations in this important Mexican industrial center."

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Kennametal begins construction on Chinese facility
Kennametal Inc. broke ground March 15 for the firm's new Chinese manufacturing plant located in the Tianjin Economic Development Area (TEDA). Initially sized at 49,500 square feet, the facility will employ about 200 people in manufacturing and advanced engineering and design activities.

This facility could grow to 115,500 square feet and employment could reach 400 people. Estimated investment in this new plant will be between $30 million to $40 million, which is in addition to the approximately $35 million Kennametal already invested in its China business.

Kennametal, a global company headquartered in western Pennsylvania, began operations in China in 1991 via a wholly owned foreign Beijing company now named the Kennametal Xuzhou Co. Ltd.

In the ensuing 14 years, Kennametal established Kennametal Ltd., a manufacturing plant in Jinqiao Export Processing Zone in Pudong, Shanghai, and completed the purchase of what is now Kennametal Hardpoint Inc.

It is from this center that Kennametal offers world-class products, engineering, design services and training activities to a broad customer base in China.

"We are accelerating our growth in China in order to more effectively serve this rapidly developing market as well as to support our global customers in China," said Markos Tambakeras, Kennametal chairman, president, and CEO. "Our TEDA plant will support the growth inside China producing our latest products utilizing state of the art equipment, advance engineering and design. We are also very appreciative of the guidance, support and professionalism of the TEDA organization and other senior government officials. This plant will form the corner stone of our ambition to become the undisputed market leader in China by the end of this decade."

"The size and importance of this rapidly expanding market demands that we enhance our presence," said Kennametal executive vice president and chief operating officer Carlos Cardoso. "Our global and local customers expect us to be there with them, and to serve their needs with world class products and services. Our presence promotes customer intimacy, shorter lead times, global quality/local availability, and positions Kennametal well to succeed in this market."

Currently, Kennametal annual sales in China top $50 million, with more than 400 employees serving customers in many market segments, including automotive, aerospace, heavy industry, electronics, and mining and construction.

Plans for the design and construction of the new TEDA facility are underway, and Kennametal expects to begin serving customers from the new plant my mid-2006.

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Jackson Tool Sales joins IBC IndustrialSupplyPlus division
IBC added Jackson Tool Sales Inc. as a member to its IndustrialSupplyPlus division. Founded in 1955 and headquartered in Jackson, Mich., Jackson Tool is an industrial cutting tool, abrasive, gauging and general line MRO distributor serving southern Michigan, northern Indiana, and northern Ohio.

Jackson Tool also has an international division servicing customer facilities in Canada, Mexico, Korea, Spain and parts of South America. For more than 50 years, this ISO 9001:2000-certified distributor offered tailor-made solutions through consigned inventory, integrated supply and vending machines in the automotive, commercial aviation, energy and aerospace industries.

"Since 1955, Jackson Tool has provided our customers with effective solutions to their application and product needs, and now with the added power of IBC's preferred suppliers and Hispanic minority status, we are looking forward to enriching the value we provide our existing and prospective customers," said Michael L. Woods, president of Jackson Tool Sales.

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