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Archive for the ‘Manufacturing’ tag

ISM manufacturing still contracting, but January improves on December

The Institute for Supply Management’s Manufacturing Index came in at 35.6 (anything under 50 means manufacturing is contracting), but that’s an improvement on the 32.8 notched in December. The index has been sub-50 for 12 months. One interesting tidbit from ISM’s release:

Commodities Up in Price

Corrugated Containers*; Electrical Components; Polypropylene*; and Steel* (2).

Commodities Down in Price

Aluminum (4); Aluminum Extrusions; Copper (6); Corrugated Containers*; Diesel Fuel (6); Gasoline (3); Natural Gas (6); Oil (2); Polyethylene (3); Polypropylene* (4); Scrap Metal (2); Stainless Steel (4); Stainless Steel Products (2); Steel* (5); and Steel — Cold Rolled.
Commodities in Short Supply

No commodities are reported in short supply.

(The asterisk is for stuff that’s going both up and down.)

One bit of borderline-positive news: inventories were not piling up in January.

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Tom Mangan posted at 7:12 am February 2nd, 2009 |

Washington Post: 8 questions on the stimulus package

A nice Washington Post overview that starts with the most obvious question: do we really need a stimulus package? Answer: a qualified yes, though taking on long-term debt for a short-term problem can hurt economic growth down the road. Also:

Where would the jobs be?

5. The Obama administration says that the vast majority — as much as 90 percent of the jobs — would be created in the private sector. The jobs would be heavily weighted to construction and manufacturing, which together would account for almost one-third of the new or saved jobs, according to the administration’s analysis. Both of those sectors have been hit hard by the economic downturn, with the construction industry shedding more than 600,000 jobs in 2008 and the nation losing nearly 800,000 manufacturing jobs in the same time period. The administration estimates that more than 600,000 of the jobs saved or created under the stimulus plan would be in retail and 500,000 would be in leisure and hospitality industries.

African Americans, Hispanics and workers with lower levels of education, who have suffered most during the downturn, would see the most substantial benefits. The Obama administration estimates that more than 40 percent of the new jobs would go to women.

Ah, jobs for women and minorities, no wonder the Republicans hate it so much (sorry, couldn’t resist).

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Tom Mangan posted at 6:53 am February 2nd, 2009 |

Fortune: How Caterpillar should adapt to the recession

Fortune goes grasping for good news in Caterpillar’s turn of bad fortune.

This is just the time for Caterpillar to fine tune its production system, which it borrowed from Toyota, to get it operating at peak efficiency.

A breather is surely needed. Like auto manufacturers, Caterpillar sells its heavy equipment through independent dealers. But unlike auto companies, Caterpillar does not disclose its monthly production, sales or inventory levels.

Still, it isn’t too difficult to imagine the consternation at those dealers today. With economic activity at a standstill, they have lots filled with acres of unsold yellow equipment that they are being forced to finance month to month. And were Caterpillar’s factories still running at full strength, the company would be pushing more and more inventory on them.

Unlike cars, a backhoe or motor grader can’t be sold with an advertising campaign or higher marketing incentives. It takes more than a push from the manufacturer to move a project along from the planning and financing stage, to make it “shovel ready” for new Caterpillar gear. The dealers were pretty much dependent on the overall level of business activity.

But if Caterpillar can successfully adapt lean production to its distribution system the way that Toyota did for its own system, then the dealers’ inventory problems should be significantly alleviated.

Frankly this story is pretty superficial but if you hear your boss talking about it, you’ll know where he got the idea.

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Tom Mangan posted at 6:46 am February 2nd, 2009 |

January recap: It was ugly out there

Financial blogger Alan Brochstein surveys the wreckage of the worst January on record and notes the following:

Industrials were weakest for large-cap, and that reflects GE, CAT and other large industrials with captive finance programs and lots of debt. I continue to think that this is one of the worst places to be and would recommend holding only companies with minimal or no debt. The group tends to sell capital equipment, which will be deferred, and it is being hit by currency headwinds, dropping global demand and tight credit all at once.

He thinks health care and utilities stocks hold much more promise.

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Tom Mangan posted at 6:36 am February 2nd, 2009 |

Caterpillar supplier in Michigan winning big wind turbine contracts in western Michigan profiles K&M Machine Fabricating, which gets most of its business from machining giant parts for Caterpillar but lately has taken an agricultural turn: wind farms. While the reporter seems to forgotten to ask the company what everybody wants to know — how it’s weathering the current downturn (this happens a lot in business reporting because companies hate to admit the truth in public) — the article does have a few interesting tidbits about what it’s like to be a small manufacturer these days.

“In our business, you can’t land an order from a customer and then go buy a machine to fill it,” Galeziewski said. “We consistently have had to buy machines and expand capacity very speculatively.”

The third-generation family owned company has made some very good guesses. It anticipated the need and had the equipment on hand as its core energy customers have required ever-larger components for new enterprises. The new equipment, for instance, enables K&M to build virtually any size hub, bedplate or gearbox in the wind industry.

The world’s largest maker of mining and construction equipment, Caterpillar Inc., is presently K&M’s largest customer. Among the parts it makes for Caterpillar are components for mining trucks so big the tires are 13 feet tall.

“One of the things that makes K&M unique is that we offer a complete vertical integration of three processes: burning, fabricating and machining,” Galeziewski said.

“We have three separate facilities: One burns metal plate into the desired shapes, secondly, those would go to the fabricating shop, where they are manually and robotically welded, third is machining. So we take responsibility for a total turnkey solution.

Alas, utterances like “total turnkey solution” have found their way to the wilds of Western Michigan. This is why your mother is so wary of the Internet’s dark powers.

All wisenheimering aside, I like to see any stories revealing that despite what you keep hearing, lots of manufacturing is still happening in the United States.

K&M’s Web site is here. Check out the company’s way-cool sculpture here.

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Tom Mangan posted at 7:55 am January 23rd, 2009 |

Cool stuff being made: forging

The National Association of Manufacturers blog takes a break from its required union bashing (sorry, membership in the Newspaper Guild has requirements, too) to offer a series of videos about various construction processes. Here’s one on forging metals:

More cool stuff videos here. has a few Caterpillar-related posts, too.

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Tom Mangan posted at 1:26 am January 17th, 2009 |