Good News! Manufacturing continued to expand in November, reaching its highest level of the year, according to the Institute for Supply Management’s monthly manufacturing index released today.
The PMI grew to 57.3% in November from 56.4% in October, ISM reported. Showing strong growth were both the new orders index, up 3 points to 63.6%, and the production index, up 2 percentage points to 62.8%. The employment index also rose, up to 56.5%, an increase of 3.3 percentage points and the highest reading since April 2012. A reading of greater than 50 indicates growth.
The Business Journal’s Kent Hoover has a nice story
NAM Economist Chad Moutray commented on the Shop Floor Blog “the overriding theme in this report is the strong increases in manufacturing orders and production over the past few months. It will be important for policymakers to keep the momentum going by moving on from fiscal tensions and considering pro-growth measures that will allow the sector to flourish moving forward.”
The underlying data were lower across-the-board. The index of new orders fell from 7.8 to -5.5. The percentage of respondents suggesting that their sales had increased over the past month declined from 29.6 percent to 22.5 percent, with nearly half of those taking the survey in each month saying that their orders were the same. Shipments (down from 13.1 to -0.5) and the average employee workweek (down from 3.6 to -5.3) followed suit. Meanwhile, net hiring ground to a halt (down from 3.6 to zero), with 73.7 percent of respondents noting no change in employment in November.
Despite the current weaknesses, manufacturers are mostly positive about the next six months, with the forward-looking composite index decreased only barely from 40.8 to 37.5. More importantly, just over half of survey takers anticipate higher new orders and shipments in the coming months, and other data reflect cautious optimism, as well.
The NAM/IndustryWeek Survey of Manufacturers for the third quarter of 2013 shows that concerns over rising health care costs, our nation’s long-term fiscal challenges and increasing regulatory burdens continue to hold back robust growth for manufacturers.
Small, medium and large manufacturers all noted the uncertainties surrounding implementation of the Affordable Care Act as a top concern, and many are still unaware of their premium costs for next year. Fixing the long-term federal debt ranks as the top policy fix manufacturers would like to see from Washington.
“Manufacturing leaders continue to worry about the long-term challenges confronting the nation, particularly on fiscal and monetary matters,” commented NAM Chief Economist Chad Moutray. “These uncertainties, combined with Washington’s current regulatory agenda, continue to hold back robust growth in the sector.”
The New York Federal Reserve’s index of manufacturing conditions deteriorated unexpectedly in August, official data showed on Thursday.
In a report, the Federal Reserve Bank of New York said that its general business conditions index fell to 8.2 in August from a reading of 9.5 in July. Analysts had expected the index to rise to 10.0 in August. On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
In a Bloomberg Businessweek interview former President Bill Clinton did an excellent job articulating the importance of advanced manufacturing to our economy. ”It accounts for over 80 percent of our exports and 90 percent of our patents and R&D spending.” He added “Every new manufacturing job creates an additional 4.6 jobs to support it. For high-tech manufacturing jobs, the multiplier effect rises to 16 additional jobs.” And “Our nation’s 300,000 small and medium-size manufacturers, meanwhile, account for more than 50 percent of America’s total manufacturing employment and serve as a major source of technological innovations.”
He also did a great job identifying some of the challenges the sector faces… “today just 7.1 percent of all bachelor’s degrees awarded in the U.S. go to engineering majors, compared with 18.4 percent internationally.” And “The U.S. also needs to finance and support entrepreneurs to deliver new products in key sectors..”
Now through the former president’s “Clinton Global Initiative” along with the new nonprofit Made in America Organization, together with seed support from the Stiefel Family Foundation, will launch a pilot program to identify, support, and scale 10 start up companies in advanced manufacturing industries.”
That sounds like one small but solid step toward real progress.
The Affordable Care Act remains controversial as we approach the October 1st launch of the state exchanges. Leaving aside (for the time being anyway) the employer mandate and the individual mandate one of the law’s least popular provisions reached a rather dubious milestone earlier this week. The excise tax collected by the IRS on medical devices surpassed the $1 billion mark.
The 2.3% tax went into effect on January 1, 2013.
The National Association of Manufacturing’s Emily Sternfeld, writing on the “Shopfloor” Blog points out: “The money that’s going to taxes is money medical device manufacturers would have used to invest in R&D, their facilities and most of all – new jobs.” She also points out that “this tax is not only a threat to innovation but also to the United States’ position as the global industry leader in medical devices.”
To remedy this situation the NAM is supporting the “The Protect Medication Innovation Act” legislation in the House, which currently has 253 co-sponsors, and its related Senate bill, “The Medical Device Access and Innovation Protection Act,” that was introduced on a bipartisan basis by Senators Klobuchar (D-MN.) and Hatch (R-UT) and currently has 34 co-sponsors.
The Hudson Valley is home to many medical device manufacturers and this tax is making it even more difficult to compete with firms in the EU, Japan and China.
For more than a decade the Council of Industry has been partnering with the Rochester Institute of Technology (RIT) and area Community Colleges to present lean and lean six sigma training to our member firms. We have offered courses from the very basic ”Intro to Lean” to very comprehensive “Green-Belt” training.
Pleatco’s Valerie Lartchenko discusses solutions to the the scheduling problems their company encounters during its busiest season.
“Yellow-Belt” is a 3 day program that provides tools to take the concepts of lean and six sigma and apply them to real problems. Teams of 2 – 4 individuals from a company use the tools to address a problem from their facility. It might be a quality issue, a production bottleneck, a customer service problem or even maintenance issue.
Yesterday I was present for the presentations from out Yellow-Belt training at SUNY Ulster in Kingston and the work that was done by the students was tremendous and in some cases transformational. By applying the Lean Six Sigma techniques problems were identified using data not perceptions. Possible solutions were brainstormed and then thoroughly thought through. Fixes were prioritized based on costs and benefits.
To a person students agreed that at best they found viable solutions to difficult problems facing their firms and at worst they now have a thoughtful, practical problem solving approach to apply to future issues.
Each of these students will return to their companies armed with knowledge and skills to make them even more productive contributors.
The inaugural edition of HV MFG the Council of Industry’s Magazine and Membership Directory is complete and in the mail.
Published with the help of Martinelli Custom Publishing and printed by Maar Printing Services, HV MFG is intended to raise awareness of the manufacturing sector in the Hudson Valley region. It focuses on the people and the technologies that make things in the region. It also explores some of the many issues that are of concern to manufacturers including workforce development, innovation, public policy.
A digital version will soon be available as well.
Against the backdrop of disappointing recent economic data, the Federal Reserve’s Beige Book released Wednesday provided a more upbeat picture of the economy, media outlets report. Bloomberg News (4/18, Kearns, Matthews) reports that the Federal Reserve said Wednesday that the economy continued to be “moderate,” aided by gains in housing, manufacturing and autos.
USA Today (4/18, Davidson) says that while the report showed economic growth overall, activity in some regions was curtailed due to higher payroll taxes, higher gas prices, Federal spending cuts, and unusually cold weather.
The Wall Street Journal (4/18, Sparshott, Subscription Publication) quotes the report as stating, “Labor market conditions remained unchanged or improved slightly, and reports of hiring were more widespread in the manufacturing, residential construction, information technology and professional services sectors.”
Reuters (4/18, Bull) also says that according to the Fed, “Most districts said residential and commercial real estate improved markedly since the last report.”
During the month of March the Council conducted a “Workforce Skills Needs Assessment” of our members. While the results are still being organized and tabulated here are some highlights:
- 60% of respondents reported difficulty filling current positions
- Most vacant positions are in the areas of production, assembly and customer service which require only a high school degree.
- The next level position that is very difficult to fill – and key to the success of the firms – is at the engineer level.
- 64% of respondents believe the lack of skilled labor is having a negative affect on their business. Of those 45% say that negative affect is very strong.
40% of respondents ranked “Making sure high school students are proficient in basic skills (reading, writing, math) was the most important thing the high schools could do to provide a skilled manufacturing workforce while 22% responded that internships/on-the-job training was the best way to prepare high school students.
More to come as we sort through the data.