August 2008 Edition

INDUSTRY NEWS

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Home-grown Expansion

North American manufacturers consider the U.S. the most desirable country for expansion during the next three years, according to a survey released by the National Association of Manufacturers – NAM, The Manufacturing Institute, the Canadian Manufacturers and Exporters – CME, and Deloitte.

The largest number of North American companies – 44 percent – reported they intend to expand production in the U.S. over the next three years; 57 percent of U.S. manufacturers say they will become more globally competitive during the next five years across the supply chain from sales, marketing, and customer service to engineering and information technology.

The news, however, is not all rosy. The survey shows concerns that manufacturing companies want government to address.

Nearly 80 percent of respondents identified tax cuts for manufacturers as the key factor promoting innovation and research and development.

The survey, Made in North America, reflects the views of 321 top-tier executives in a broad range of North American manufacturing companies of all sizes. The majority of companies represented in the survey – 45 percent – are based in the U.S.

The survey is available at www.nam.org/northamericansurvey .

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In other news from the National Association of Manufacturers, association representatives said expanding America’s nuclear capacity is critical to creating essential, high-wage U.S. manufacturing jobs and will help meet the nation’s growing energy demand.

A white paper, Job Creation in the Nuclear Renaissance, examines the potential for job growth for existing and future nuclear power plants in the next decade. It was released at a joint news conference held by NAM and the Clean and Safe Energy Coalition.

"The U.S. has not built a nuclear plant in decades," John Engler, NAM president and CEO, said at the news conference. "The technical knowledge to construct and operate plants and to design and manufacture key nuclear components is retiring with the baby boomers, and America does not have the necessary skilled workers to replace them. A nuclear renaissance can not happen without robust investment in the education and training of America’s current and future workforce."

The white paper can be downloaded at www.cleansafeenergy.org.

Fuel Hikes Prompt Work Changes

Rising fuel prices are changing company work policies in order to fight gasoline and diesel prices. A mid-size manufacturer is asking its employees to shift from a five-day, eight-hour work week to a four-day, 10-hour day.

The cost of their daily commute to KRC Machine Tool Services, Independence, KY, was eating up employee paychecks. Managers decided to change the company’s work schedule to help workers deal with rising fuel costs.

The new shift arrangement helps both the employees and the company save on energy costs as well as overtime.

"It’s working out great," Kenny Booth, of KRC, said. "I get an extra day off, save gas money, and avoid two hours of travel."

Company managers said productivity has risen as well.

And the Rich Get Richer

According to the June 18 "Snapshot" by Lawrence Mischel, of the Economic Policy Institute, pay inequality in the U.S. continues to worsen. Huge gains at the top of the income scale have been fueled by, among other things, a surging inequality in wages. The ratio of the wage income of the top one percent of earners to that of the bottom 90 percent more than doubled between 1979 and 2006, increasing from a ratio of 9.4:1 to 19.9:1. In contrast there was relatively little change in the earnings disparity from 1947 to 1979, when wages at all levels of the economy grew apace.

When it comes to the wage income of the highest of the high earners, the gap has become a chasm. In 2004, the upper one-tenth of one percent earned 70.4 times as much as the average person in the bottom 90 percent of the income scale. Just 25 years earlier in 1979, the ratio was only 21:1. In 1979 it took the highest-paid earners 12.4 days to make what most other earners did in a year; by 2004 that was accomplished in 3.7 days.

Resurgence Predicted in Latin American Manufacturing

Latin America, once thought as a growth area for manufacturing but overwhelmed by competition from the Far East, will soon see a manufacturing revival, according to comments published by Chris Kuehl, Ph.D., economic analyst for the Fabricators & Manufacturers Association, International, Rockford, IL, in Fabrinomics, the FMA newsletter.

"The benefits provided by manufacturing in China, India and other Asian states are eroding," Kuehl, wrote. "The most important factor is cost of transportation, and it’s feeding what’s being referred to as ‘near shoring.’ This means hauling cargo across the ocean isn’t as cheap as it once was. It’s now more cost-effective to be closer to the U.S. market, which has sparked a wave of relocation plans.

"Chinese labor isn’t as cheap as it once was, especially in the fast-growing coastal cities."

According to Kuehl, these developments point to a return of the manufacturing sector to Mexico, Central America, South America, and even sections of the U.S.

April Manufacturing Tech Consumption Down

April U.S. manufacturing technology consumption totaled $396.47 million, according to The Association For Manufacturing Technology – AMT – and the American Machine Tool Distributors’ Association – AMTDA. The total, as reported by companies participating in the U.S. Manufacturing Technology Consumption program, was down 27.6 percent from March, but up 29.2 percent from the total of $306.86 million reported for April 2007. With a year-to-date total of $1.58 billion, 2008 is up 19.9 percent compared with 2007.

Manufacturing technology consumption was also reported on a regional basis for five geographic areas of the U.S.

Northeast

April manufacturing technology consumption in the Northeast Region stood at $46.47 million, down 35.2 percent when compared with March’s $71.70 million, and 10.1 percent less than the April total a year ago. The $221.71 million year-to-date total is 4.3 percent higher than the 2007 total at the same time.

Southern

At $49.37 million, April manufacturing technology consumption in the Southern Region was 59.8 percent less than the March total of $122.72 million but 26.8 percent higher than the April 2007 tally. Compared with 2007 at the same time, the year-to-date total of $271.61 million is up 69.6 percent.

Midwestern

Midwestern Region manufacturing technology consumption rose to $154.14 million in April, down 10.4 percent when compared with March’s $172.02 million, but 81.5 percent higher than the total for April a year ago. The 2008 year-to-date total of $534.69 million is 46.0 percent above the comparable figure a year ago.

Central

With an April total of $79.88 million, Central Region manufacturing technology consumption was down 31.7 percent from the March total of $116.92 million and 6.1 percent less than in April a year ago. The $351.00 million year-to-date total is down 5.8 percent when compared with 2007 at the same time.

Western

Western Region manufacturing technology consumption in April rose to $66.61 million, 3.4 percent higher than March’s $64.45 million, and up 44.1 percent when compared with April 2007. At $208.26 million, year-to-date 2008 is off 1.9 percent when compared with 2007 at the same time.

Company Anniversaries

Wheelabrator Group, LaGrange, GA, celebrated its 100th anniversary. It was founded in Pittsburgh in 1908. The company is a provider of surface preparation and finishing answers.

Hypertherm, Hanover, NH, a company specializing in plasma arc metal cutting technology, celebrated its 40th anniversary. The company began in 1968 when Dick Couch, then a 20-something engineering graduate, and Bob Dean, working out of a small two car garage, discovered that by radially injecting water into a plasma cutting nozzle, they could create a narrower arc. That discovery made it possible to cut metal with a speed and accuracy, nearly eliminating dross and a phenomenon called double-arcing.

CNC Software, Inc., Tolland, CT, has noted its 25th anniversary. Brothers, Mark and Jack Summers, incorporated the company in 1983 with a programming concept for CNC machine tools. They developed a PC-based CAD/CAM software package with an emphasis on the CAM side. During that time, most of the programs were more CAD-oriented and expensive.

They called the software program "Meghan", named after Mark’s eldest daughter, and then changed it within the first year to "Mastercam" as a clearer descriptive of the software’s primary function. A third brother, Brian Summers, joined the company and now serves as vice president. Jamie Summers, Mark’s wife, is chief financial officer.

Shortly after CNC Software started in Massachusetts, the company moved its base of operations to an office in Vernon, CT. After a brief move to an industrial park, CNC Software built corporate headquarters in Tolland.

Survey Says Weak Dollar Brings Work Back to the U.S.

MFG.com, Atlanta, an online marketplace for the manufacturing community, announced results of its Buyer MFGWatch survey conducted in May. More than 500 respondents completed the sourcing survey targeting buyer members of MFG.com.

The results revealed that the weakness of the dollar has affected where buyers, both nationally and internationally, have decided to source. Survey highlights include:

  • 40 percent of the participants stated the current value of the U.S. dollar had an effect on where they choose to source their business;
  • 47 percent of the buyers stated they were sourcing more business in the U.S. as a direct result of the declining value of the dollar; and
  • 41 percent responded that they source for made-to-order parts in the U.S.

Additional survey findings include:

  • 55 percent of survey respondents source solely to US suppliers;
  • 92 percent of survey participants conduct a portion of their sourcing in the US;
  • 38 percent of international buyers surveyed are currently sourcing to U.S. suppliers; and
  • 53 percent of Canadian buyers surveyed revealed they are sourcing to U.S. suppliers.
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The Modern Applications News Industrial Average – MANIA – tracks 34 publicly-traded companies in the metalworking field and compares the companies’ 30-day trend to the corresponding trend of the Dow-Jones Industrial Average

Michigan Bearings Really Dig Martian Muck

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Phoenix Mars Lander Robotic Arm being installed and tested on Lander Deck Section

Some Muskegon, MI, machining assisted the Phoenix Mars Lander scoop samples of the Martian soil. Reali-Slim thin-section bearings made by the Kaydon Corp. Bearings Division in Muskegon were part of the lander’s robotic arm built by Alliance Spacesystems, Pasadena, CA, for NASA’s Jet Propulsion Laboratory which headed the Mars exploration project.

The 7' 7" arm is attached to the deck of the lander, with a garden-sized trowel and camera mounted at the end of the arm. The arm is designed to pick up surface samples of the Martian soil and deposit them in the craft for electrochemistry and conductivity, as well as thermal analysis.

The arm has four types of motion: up-and-down, side-to-side, back-and-forth, and rotation. Three of the joints that accomplish these movements feature sets of Kaydon’s custom-engineered Reali-Slim thin-section bearings.

Industry News

Unemployment on the Upswing
The growing number of underemployed workers is painting a grim picture of the difficulties jobseekers are facing, according to the Economic Policy Institute.

Boeing and Machinists Settle Strike
Boeing Commercial Airplanes, Chicago, and striking machinists in Washington, Oregon, and Kansas voted to ratify a four-year contract that includes wages and pension agreements.

FABTECH Pulls 21,000 Visitors
In contrast to the financial news, an unprecedented number of people attended the opening day of the 2008 FABTECH International & AWS Welding Show.

Company Lawsuits Drop in 2008, but Trend Points to Increase
Following two years of reporting declines in the number of new lawsuits and regulatory proceedings – including a drop in large-dollar cases – U.S. companies now anticipate an uptick in new actions and government probes, as well as the need to hire more in-house litigation staff to help manage the expected rise in disputes, according to the 2008 Litigation Trends Survey published by international law firm Fulbright & Jaworski L.L.P.

Manufacturing Consumption Up Before Market Fell
August U.S. manufacturing technology consumption totaled $323 million, according to The Association for Manufacturing Technology and the American Machine Tool Distributors’ Association.

$350K Lunar Lander Prize Awarded
Armadillo Aerospace, Rockwall, TX, earned $350,000 in NASA prize money during the Northrop Grumman Lunar Lander Challenge in Las Cruces, NM.

Lincoln Electric Sees a Good 3rd Quarter
Lincoln Electric Holdings, Inc., Cleveland, reported a 39.1 percent increase in third quarter 2008 diluted earnings per share to $1.60 from $1.15 per diluted share in 2007.