November 2008 Edition
INDUSTRY NEWS
According to information released by the National Council for
Advanced Manufacturing – NACFAM – seasonally adjusted manufacturing employment
was reported at 13.4 million by the Bureau of Labor Statistics
in September.
Manufacturing employment continued its slow decline in August
– down 61,000 – and the industry has lost 416,000 jobs, down three percent,
during the past 12 months. The previous 12 months lost 374,000 jobs or 2.6
percent.
Within durable goods, total employment declined by 55,000 in
August. During the past 12 months, production worker employment decreased by
252,000 positions, a drop of four percent, compared to a loss of 52,000 jobs, a
reduction of two percent, for non-production employment in durable goods.
Since 2004, durable goods losses have been lead by
"white-collar" job losses, a drop of 10.2 percent, as compared to "blue-collar"
jobs, which dropped 1.5 percent. Since 1998, the durable goods sector has seen a
workforce reduction of 22.8 percent in blue-collar jobs and 20.9 percent in
white-collar jobs.
In parallel with the decrease in employment, NACFAM reported
first quarter 2008 manufacturing profits fell to $240.5 billion, down 31.4
percent, as compared to record highs set in the second quarter 2007, as reported
by the Bureau of Economic Analysis in August. Total corporate profits with
inventory valuation and capital consumption adjustments were down 20.1 percent
to $1.24 trillion. Durable goods profits fell to $85.5 billion, down 32.8
percent from a year ago. Nondurable goods held relatively flat at $34.8 billion,
up 3.9 percent.
The Precision Metalforming Association, Independence, OH, and
the National Tooling and Machining Association, Fort Washington, MD, are
combining their federal government advocacy programs to promote the U.S.
government to ensure a strong manufacturing sector. The PMA and NTMA each have
an active advocacy program and will now implement a coordinated, joint federal
advocacy effort while maintaining their status as separate organizations.
Together, industries represented by PMA and NTMA employ nearly 1 million people
and have combined sales of more than $130 billion.
Key issues for the groups to address at the 111th session of
the U.S. Congress include: defeating Employee Free Choice legislation, also
known as Card Check, which denies employees of the right to a secret ballot in
determining whether or not they wish to be represented by a union; advocacy for
permanent R&D tax credit; affordable health care choices for small-middle-market
companies; corporate tax changes to build a strong manufacturing base in
America; effective federal support for education in the skilled trades;
enforcement of trade laws; access by U.S. manufacturers to globally-competitive
prices for the raw materials needed to manufacture in America; industrial
consumer standing in trade cases; and addressing the estate tax issue on a
permanent basis.
According to the Economic Policy Institute, since the
economic downturn began in December 2007, the U.S. has lost more than 600,000
jobs, and the national unemployment rate has risen to a five-year high of 6.1
percent.
States most affected are concentrated in the Pacific West,
Midwest, and South Atlantic regions, and are led by Michigan at 8.9 percent,
Rhode Island at 8.5 percent, California at 7.7 percent, and Mississippi at 7.7
percent. The color-coded map shows the unemployment rate of each state as of
August 2008.
Though 22 states increased net employment since December
2007, job growth for the majority of those states has been insufficient compared
to that of the working-age population. Consequently, the percentage of people in
the labor force actively – but unsuccessfully – looking for work has steadily
grown, even in states that saw an increase in employment.
For example, in Texas, which gained more jobs since December
than any other state, the unemployment rate rose from 4.2 percent to five
percent in nine months. The story in manufacturing is more dismal, with all but
six states shedding jobs. This follows ongoing job loss since late 2000 that
totals more than 3.5 million jobs.
July U.S. manufacturing technology consumption totaled
$303.44 million, according to the American Machine Tool Distributors’
Association and the Association For Manufacturing Technology. This total, as
reported by companies participating in the U.S. Manufacturing Technology
Consumption – USMTC – program, was down 21.5 percent from June but up 5.7
percent from the total of $287 million reported for July 2007. With a
year-to-date total of $2.66 billion, 2008 is up 15.5 percent compared with 2007.
These numbers and all data in this report are based on the
totals of actual data reported by companies participating in the USMTC program.
Despite the consecutive 1.3 percent increases in durable
goods orders for June and July, manufacturing technology orders turned down
sharply in July, with much of the downturn in fabricating and forming. However,
2008 remains stronger than both 2006 and 2007.
The 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.
U.S. manufacturing technology consumption is also reported on
a regional basis for five geographic breakdowns of the United States.
Northeast Region
Manufacturing technology consumption stood at $46.43 million
in July, down 11.8 percent when compared with June’s $52.63 million, but 13.9
percent higher than the July 2007 total. At $374.16 million, the 2008
year-to-date total is 1.8 percent less than the comparable figure for 2007.
Southern Region
July manufacturing technology consumption totaled $41.51
million, 41 percent less than June’s $70.39 million, and down 7.8 percent when
compared with the total for July a year ago. The $428.86 million year-to-date
total is up 39 percent when compared with 2007 at the same time.
Midwest Region
At $80.18 million, July manufacturing technology consumption
was down 37.3 percent when compared with June’s $127.89 million and down 14.4
percent when compared with July a year ago. With a year-to-date total of $878.43
million, 2008 is 33.4 percent ahead of the comparable figure for 2007.
Central Region
July manufacturing technology consumption rose to $100.17
million, 14.8 percent more than June’s $87.23 million, and up 34.3 percent when
compared with July 2007. The $648.8 million year-to-date total is 5.3 percent
higher than the 2007 total at the same time.
Western Region
With a July total of $35.15 million, manufacturing technology
consumption was 27.1 percent less than June’s $48.21 million, but 6.5 percent
higher than the total for last July. The $324.88 million year-to-date total is
down 2.7 percent when compared with 2007 at the same time.
GE Fanuc Intelligent Platforms, a unit of GE Enterprise
Solutions, Japan, announced its support of MTConnect, a new communication
protocol to link machine tools from varying suppliers around the world.
MTConnect was officially launched by the Association for
Manufacturing Technology at IMTS 2008.
"MTConnect will enable a host of third party solution
providers to develop software and hardware to make the entire manufacturing
enterprise more productive," John Turner, Engineering and Solutions manager
for GE Fanuc Intelligent Platforms’ CNC business, said. "MTConnect is
designing an open communication standard for interconnectability that
mirrors the success occurring in the information technology world. That is,
allowing devices, equipment, and systems to output data in an understandable
format that can be read by any other device using the same standard format
to read the data."
MTConnect is based on XML – Extensible Markup Language –
which offers widely-recognized and accepted flexible representation for
exchanging semi-structured machine-readable data. The standard will be open and
royalty-free to ensure wide acceptance and use.
It will use commercially-available technologies as its basis
and will provide royalty-free reference implementations of sample software which
can be used as-is, modified to suit special needs, reverse-engineered, or for
inclusion in software systems. This approach allows connectivity from the lowest
end of the process chain, nearest the workpiece or shop floor, to the highest
design or process planning tools [see IMTS Wrap-up on page 18 for details of
the MTConnect protocol roll-out].
Flow International Corp., Kent, WA, a developer and
manufacturer of industrial waterjet machines, executed a definitive agreement to
merge with OMAX Corp., Kent, WA. OMAX was a privately-held provider of waterjet
systems.
Flow first announced its intent to merge with OMAX in
December 2007. The companies will plan for the integration of the two companies.
The transaction is expected to close before 2009.
Representatives of both companies said the merger will bring
substantial value to a combined customer base by bringing together two industry
leaders to create an innovative waterjet partnership. Together as a single
company, a combined Flow-OMAX will strengthen the position of both firms to
provide superior products, service, and support; broaden the capabilities for
R&D and product development to advance waterjet technology; provide the market a
broader product range to reach more customers as waterjet applications
experience explosive growth; and expand the global reach of both companies.
Under the terms of the definitive agreement, Flow will pay
$75 million at closing – including $6 million already paid in connection with
the exclusive option agreement executed in December 2007 and $3 million paid at
the signing of the definitive agreement – and will issue 3.75 million shares of
Flow stock to OMAX shareholders.
OMAX shareholders will also receive up to an additional
1,733,334 shares of Flow stock or the equivalent in cash at Flow’s option, two
years after the closing if Flow stock reaches certain price targets. The
agreement calls for an adjustment of the upfront consideration if Flow’s average
stock price prior to closing is below a certain price. The original agreement
has been amended to lower the price from $9 to $8 per share.
The Dimension 3D Printing Group, Minneapolis, a business unit
of Stratasys, Inc., gave more than $400,000 to schools across the nation to
underwrite the purchase of 3D printing systems for the 2008-09 school year. More
than 40 schools received the $10,000 grants. The 3D printers build models from
CAD programs, layer by layer, using ABS plastic, users evaluate design concepts
and test 3D prints for functionality, form, and fit. The grants are a
collaborative effort with Project Lead the Way – PLTW – a not-for-profit
organization that promotes pre-engineering courses and technologies for middle
and high school students.
The patent infringement suit brought by PennEngineering &
Manufacturing Corp., Danboro, PA, against Peninsula Components, Inc., San
Carlos, CA, was settled. The original complaint was filed against Pencom on
August 17, 2007, in the U.S. District Court for the Northern District of
California for infringement of certain patents
and trademarks.
While the terms of the settlement are confidential,
representatives for PennEngineering and Pencom stated the agreement fully
addresses each of the points outlined in the complaint and answer.
Siemens PLM Software, Plano, TX, announced Space Exploration
Technologies – SpaceX – a privately-held leading space launch vehicle developer
and services provider, standardized on Siemens’ NX and Teamcenter software for
product design, simulation, and product data management.
SpaceX, Hawthorne, CA, is developing a family of launch
vehicles intended to increase the reliability of both manned and unmanned space
transportation and reduce costs by a projected factor of ten. With its Falcon
line of launch vehicles SpaceX hopes to offer light-, medium-, and heavy-lift
spacecraft capabilities from low-Earth orbit, geosynchronous orbit, to planetary
missions. SpaceX currently has 14 missions on the drawing board plus other
contracts with NASA and the U.S. Air Force.
As a winner of the NASA Commercial Orbital Transportation
Services competition, SpaceX hopes to help fill the gap when the Space Shuttle
retires in 2010. Under the existing contract, SpaceX will conduct three flights
of its Falcon 9 launch vehicle and Dragon spacecraft for NASA, culminating in
Dragon berthing with the International Space Station and returning to Earth.
NASA also has a contract option with SpaceX to provide crew services to the ISS
after Shuttle retirement. Founded in 2002, the SpaceX team numbers near 500.
NX, a project lifecycle management software application, lets
SpaceX integrate design-through-manufacturing processes, letting knowledge-based
engineering methods leverage information across the enterprise. Its simulation
functions predict product performance in the design phase, crucial for the
mission-critical space launch industry.
Teamcenter, a digital lifecycle management application,
manages design data and specifications. Teamcenter serves as the single source
of product record and collaboration while reducing development costs.
The Lincoln Electric Co., arc welding products manufacturer,
opened its Automation Center of Excellence on October 23, adjacent to its
Cleveland headquarters. The 100,000 ft2 facility showcases the
company’s robotic welding solutions. It includes two robotic welding labs,
20,000 ft2 of staging and assembly area, an applications and service
lab, classroom facilities, and an auditorium.
Lincoln’s Automation Division offers an expanded product line
with flexible automation, hard automation, and pipe-cutting solutions, as well
as fume extraction systems. The center will let Lincoln provide improved
training and service to its customers.
The company partners with FANUC Ltd., Japan, for its supply
of industrial robots.
The Modern Applications News Industrial Average – MANIA – tracks 34 publicly-traded companies in the metalworking field and compares the companies’ monthly trend to the corresponding trend of the Dow-Jones Industrial Average
The Association for Manufacturing Technology – AMT – elected
its 2008-2009 officers and directors at its 2008 Annual Meeting in Austin, TX.
The AMT Board of Directors – which represents more than 400
American manufacturers of machine tools, manufacturing machinery and related
products – elected Ronald F. Schildge as its chairman. He is the president,
Eitel Presses, Inc., Orwigsburg, PA. Schildge replaces Doug Currie, the
president and CEO, Erie Press Systems, Erie, PA. Currie will serve the
association as an ex-officio member of its board of directors.
The board re-elected Daniel D. Janka, president, MAG
Industrial Automation Systems, Americas Group, Hebron, KY, to serve as first
vice chairman.
Eugene R. Haffely, Jr., COO, Assembly & Test Worldwide, Inc.,
Dayton, OH, will serve the association as second vice chairman and treasurer
during the coming year.
Kim W. Beck, President & CEO, Automatic Feed Co., Napoleon,
OH, will continue to serve as secretary.
Newly elected to three-year terms as members of the board are
Charles N. Clark, Sr., division president, Dukane Corp., St. Charles, IL;
Krestine Corbin, chairman, president, and CEO, Sierra Machinery, Inc., Sparks,
NV.; Timothy B. Dining, president and CEO, Greenerd Press and Machine Co., Inc.,
Nashua, NH; and Richard A. Shore, Sr., president and owner, Automation & Modular
Components, Inc., Davisburg, MI.
Re-elected to a three-year term as a member of the board are
Kim W. Beck, president and CEO, Automatic Feed Co., Napoleon, OH, and Daniel D.
Janka, president, MAG Industrial Automation Systems, Americas Group, Hebron, KY.
Previously, Dining was appointed to fill an unexpired
three-month term on the board.
There may be at least three silver linings in the dark
cloud of global economic crisis, according to a Fabricators & Manufacturers
Association, Rockford, IL, economic consultant.
"For starters, the threat of inflation that dominated
discussions earlier this year has faded from consideration by most," Chris
Kuehl, Ph.D., economic analyst for the FMA, said.
Quoted in the FMA economic newsletter Fabrinomics,
Kuehl reported that the price of oil slipped by more than 50 percent
recently, and steel and copper prices are sagging. The slip in most
commodities is good for businesses. Of course, lower input costs don’t help
if demand for the finished product is off, but some cost relief doesn’t
hurt.
The second silver lining, Kuehl noted in the article, is
the fact that the labor pool is always more shallow than preferred, and when
the jobless rate is low there is a lower selection. The rise in unemployment
means a larger hiring pool to which smaller companies have access. Employees
grateful for work can lead to productivity gains.
The third positive, he is quoted as saying, will develop
as banks lick their wounds and figure out how to get re-engaged. The winners
are going to be the traditional banks that didn’t risk that much in the
weird credit markets.
