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US Manufacturing Replies |
rffrydr
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 Posted: Fri Oct 28, 2011 6:50 am Post subject: |
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To the bane of the ECRI, structural shifts coming from a holy alliance between an historically weak buck and the biggest, most profitable (yes, not you China) market in the world; and, a decadal inventory cycle, autos do their thing:
http://www.bloomberg.com/news/2011-10-28/let-good-times-roll-becomes-refrain-for-jobs-at-automakers-cars.html
“When an auto plant goes up in a community, that’s not a fly-by-night thing,” Lindland said. “It’s an investment that creates many direct and indirect jobs, and contributes to the economy for decades.”
GM preferreds still great value here even up 20% off "bottom."
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rffrydr
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| Posted: Sat Jul 02, 2011 12:02 am Post subject: |
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It's ticking over: sub $3.50/gal gas going into the 4th has been achieved by the Administration (even if they should have sold the Brent futures). Inventories are the first step in this tsunami mini-cycle.
From the Broker: Based on the relationship between the ISM manufacturing employment component and private payrolls, the 59.9 index reading argues for private payrolls to rise 131,000. Going back to 2009, the r-square of the
region is 0.91
DRI indicated June same store sales grew 5% to 6%, NKE had blow-out earnings, and ORCL and FDX raised guidance.
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HenryTo
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| Posted: Fri Jul 01, 2011 9:39 pm Post subject: |
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Bridgewater on today's ISM number; as well as ongoing US GDP growth:
| Quote: | | While we still only have limited data for June, so far the indications are that growth looks similar to May at roughly zero. While the headline ISM number improved in June and contributed to Friday's rally in equity prices, almost all of the bounce came from inventories, with new orders and production largely stable at May's mediocre levels. The weak composition of the national report, combined with weaker regional surveys and weak global manufacturing surveys all point to still mediocre production growth in the US. Auto sales have weakened from already depressed levels because the supply-chain disruptions caused by the earthquake in Japan are leading to shortages and higher prices. Sales weakened further in June while consensus expectations were for a modest up-tick from May's depressed level. As described in more detail in other Observations (see June 22), we expect the reversal of temporary factors such as the Japanese supply-chain distortions and energy prices to support growth in the coming months, but fiscal and monetary tightening, slower employment growth and a stabilization of the savings rate are likely to offset these supports, and we expect growth to remain mediocre. |
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rffrydr
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HenryTo
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| Posted: Sat May 07, 2011 4:24 pm Post subject: |
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Courtesy of WSJ:
--------------------------------------------------------------
Help Wanted on Factory Floor
by James R. Hagerty
Friday, May 6, 2011
U.S. manufacturing companies, long known for layoffs and shipping jobs overseas, now find themselves in a very different position: scrambling for scarce talent at home.
Large and small manufacturers of everything from machine tools to chemicals are scouring for potential hires in high schools, community colleges and the military. They are poaching from one another, retraining people who used to have white-collar jobs, and in some cases even hiring former prisoners who learned machinist skills behind bars.
Even with unemployment near 9%, manufacturers are struggling to find enough skilled workers because of a confluence of three trends.
First, after falling for more than a decade, the number of U.S. manufacturing jobs is growing modestly, with manufacturers adding 25,000 workers in April, the seventh straight month of gains, according to payroll firm Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. The Labor Department's jobs report on Friday is expected to show moderate employment growth in the overall economy.
Second, baby-boomer retirements are starting to sap factories of their most experienced workers. An estimated 2.7 million U.S. manufacturing employees, or nearly a quarter of the total, are 55 or older.
Third, the U.S. education system isn't turning out enough people with the math and science skills needed to operate and repair sophisticated computer-controlled factory equipment, jobs that often pay $50,000 to $80,000 a year, plus benefits. Manufacturers say parents and guidance counselors discourage bright kids from even considering careers in manufacturing.
"We get people coming in here all the time who say, 'I can weld,'" says Denis Gimbel, human-resources manager at Lehigh Heavy Forge Corp., of Bethlehem, Pa., whose products include parts for ships. "Well, my grandmother could weld." He needs people who understand the intricacies of $1 million lathes and other metal-shaping equipment.
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Manufacturers have anticipated for years that baby-boomer retirements would create difficulties. Among those who have tried to get ahead of the demographic curve -- with mixed success -- is Jeff Kelly, chief executive of Hamill Manufacturing Co., a family-owned company near Pittsburgh that cuts metal into parts for ships and machinery.
Hamill doesn't have any button-pushing work. The 127-employee company is constantly resetting its mills and lathes to produce small numbers of parts to meet precise and ever-changing specifications. There are no long, routine production runs.
One morning in late April, Trent Thompson, a 20-year-old Hamill apprentice wearing shredded jeans and a black baseball cap, was assigned to drill three holes in a piece of carbon steel about the size and shape of a hockey puck. To make sure he was spacing the holes exactly right, he scrawled a triangle and some trigonometric calculations on a notepad. Even a tiny error would mean wasting about $400 of metal.
In another corner of the factory, Bill Schaltenbrand, 59, was cutting bigger, more complicated parts. A computer had worked out where he should drill and cut, but Mr. Schaltenbrand, a 40-year veteran at Hamill, does his own math to double-check the plans. Computers, he says, sometimes "punch out stupid stuff." Part of Mr. Schaltenbrand's skill is reading blueprints with myriad numbers and symbols that would baffle most people.
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In its search for talent, Hamill works with nearby vocational schools -- serving on advisory boards, donating equipment and providing guest lecturers. Mr. Kelly helps organize a program called BotsIQ in which high-school students learn to build fighting robots. On a recent Saturday evening, he handed out trophies after a robot dubbed Grim Reaper 3, resembling a bathroom scale with spinning metal blades, flipped a rival called Black Mamba and left it in a smoking heap.
Through its ties to area high schools, Hamill met Walter Gasper about five years ago. Mr. Gasper, whose father is a mechanic, had good grades in high school and took college-prep courses. He says a counselor tried to discourage him from vocational courses, but he took them anyway because he liked working with machinery. Hamill signed him as an apprentice when he was 17 and let him work part time while finishing high school.
Last June, Mr. Kelly beamed as he posed for a picture with Mr. Gasper and the first-prize trophy he won in a national competition in which apprentices displayed metal-working skills.
Three months later, Mr. Gasper bolted for a new job with a Cheswick, Pa., unit of Curtiss-Wright Corp. (NYSE: CW - News), a much larger maker of pumps and generators that buys parts from Hamill. Curtiss-Wright offered him about 40% more pay than he was getting at Hamill. "I was just looking to further my career a little," says Mr. Gasper, now 21. Though he has no college degree, his annual pay tops $55,000. Unlike many young adults, he has no college debt.
Hamill's Mr. Kelly says he has raised wages 18% to 25% over the past two years or so, but still has lost about 10 workers in that period to Curtiss-Wright.
Greg Hempfling, a senior vice president at Curtiss-Wright, says he isn't poaching but merely posting job offers. The pool of skilled manufacturing labor has been "decimated" in the Pittsburgh area, he says, and that has forced Curtiss-Wright to advertise for help as far away as Detroit and Buffalo, N.Y.
Even some global giants are stretched to find enough qualified workers. At a U.S. division of Bayer AG that makes plastics and polyurethane, the average age of employees is about 52, says Gregory Babe, chief executive of the German company's U.S. business. The skill shortage "is a real issue, and it's going to get much worse," he says.
Bayer has had particular trouble filling positions in such areas as chemical-process technology at its plastics plant in Baytown, Texas, near Houston. A decade ago, Mr. Babe says, a job opening typically would attract 100 applications. "These days I get about 10," he says. After screening, Bayer often finds that only a couple are qualified. Some jobs have been open six to nine months.
"This place is five acres, and it's three stories tall," says Donny Simon, 55, who has worked in the plant since 1988. It takes time to understand how all the pipes, valves, pumps and feedstock tanks work together and how to avoid explosions or other accidents. Technicians need basic math and science for such tasks as calculating the rate at which dyes and stabilizing agents need to be added for specially ordered batches of plastics.
Because it can't find enough candidates with relevant experience, Bayer this summer will for the first time hire interns to learn how to operate machinery at the Baytown plant. It plans to offer $18 to $23 an hour -- unusually good pay for summer jobs -- and to choose among students in "process technology" at local community colleges. Those who do well are likely to be offered permanent jobs.
Manufacturers are having trouble now partly because some of them stinted on recruitment and training when it was easier to find workers. Woodward Inc. (Nasdaq: WWD - News), a maker of parts for aircraft and power-generation equipment based in Fort Collins, Colo., for decades operated its own academy to train workers, but it closed it during a late-1990s cost-cutting drive. As a result, says Keith Korasick, who supervises manufacturing at Woodward's Fort Collins plant, "we kind of lost our pipeline of skilled machinists and technicians."
Now Woodward is sponsoring two dozen students at community colleges in Fort Collins and Rockford, Ill., the company's other big U.S. manufacturing site. It pays their tuition and other costs for two-year programs in manufacturing skills. The students also are paid for 20 hours or so of work per week. To stay in the program, they need to maintain a grade-point average of at least 3.0.
Once the students finish those two-year degrees, Woodward aims to hire them for full-time manufacturing jobs starting at $25,000 to $48,000 a year.
As a high-school student in Fort Collins, Zach Wagner met Mr. Korasick and other guest lecturers from Woodward. Mr. Wagner, now 18, says he was interested in "computer stuff" and hadn't thought much about manufacturing. Most of his friends were heading for four-year universities. He considered doing the same, but he worried about running up debts. So he accepted a community-college scholarship from Woodward. He aims eventually to get a degree in engineering while working at Woodward.
Manufacturers say the U.S. education system doesn't produce enough students strong in math, science and engineering. About 5% of bachelor's degrees awarded in the U.S. are in engineering, compared with an average of about 20% in Asia, according to the U.S. National Science Foundation. In the most recent comparison of math and science test scores of 15-year-old students by the Organization for Economic Cooperation and Development, American students trailed far behind those from China, Japan, South Korea, Canada and Germany.
While community colleges and technical schools struggle to keep up with demand for skilled workers, some prisons are trying to help. At California's San Quentin prison, the machine shop offers training to prepare prisoners to pass exams demonstrating skills in such areas as operating computer-controlled lathes and mills. Some inmates get classes in calculus and trigonometry to help them work with machinery.
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Swift-Cor Aerospace, a maker of airplane parts, has hired several former prisoners for its plants near Los Angeles and Wichita, Kan., and is happy with their work, says Cecilia Mauricio, human-resources manager.
The impending retirement of boomers isn't a problem for everyone. Advanced Technology Services Inc. of Peoria, Ill., sees the trend as a huge opportunity. ATS provides maintenance and related services for manufacturers. Jeff Owens, president of the company, says he expects demand for those services to surge as manufacturers can't find enough qualified employees and need to outsource more tasks to firms like ATS.
ATS now has about 2,400 employees in the U.S. and aims to reach 2,800 by year-end. Nearly a third of the people ATS hires come from military backgrounds, often with experience in fixing tanks or airplanes. Aside from knowing how to fix machines, the military vets are good at "being on time, being clean-cut," Mr. Owens says.
ATS also helps pay for 40-week community-college training programs for some people it hopes to hire, and it funds scholarships for engineering students at universities. Two ATS managers spend nearly full time working with high schools, attending career days, conducting plant tours and meeting with guidance counselors.
"They're out there selling the idea of working in a manufacturing plant -- and trying to dispel the notion that it's dark and dirty and unsafe and boring," Mr. Owens says.
Henry Welsch, 36, is one of ATS's converts. For the first 15 years of his adult life, he worked as an insurance agent and claims adjustor and as a sales manager for a moving company. But he decided a couple of years ago that he would rather have a job that was more secure and provided steady pay rather than unpredictable commission income.
One problem: He had never worked with tools or machinery. "I was starting from just nothing," he says. He signed up for a nine-month manufacturing-skills course at Illinois Central College in East Peoria, Ill., and got a job at ATS in late 2009. That company assigned him to a Caterpillar Inc. (NYSE: CAT - News) plant, where he repairs machinery.
It was a rough transition. He had to prove himself to his new colleagues, some of whom, he says, were "a little rough around the edges." The job may lack glamour, Mr. Welsch says, but he thinks he made the right choice. "This is what I do in the daytime, and I go home and don't have to think about it." |
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rffrydr
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rffrydr
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| Posted: Wed Dec 22, 2010 12:00 pm Post subject: |
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GM attempts to defy the cycle (really the secret to the old, old GM) and embrace the new normal, debtlessness. That last sentence almost guarantees a stillbirth of this idea I'm afraid to say:
By SHARON TERLEP
| Quote: | General Motors Co.'s finance chief is engineering a radical shift in the car maker's strategy—to pay off virtually all its borrowing in a few years and keep debt at close to nothing.
Agence France-Presse/Getty Images
GM, like many industrial companies, long operated with billions of dollars in borrowed money. But its high debt was among the problems that landed the company in a U.S.-funded bankruptcy reorganization last year when car sales slumped.
Now, new managers from outside the industry are rethinking how GM operates, including its addiction to debt.
Chris Liddell, a former Microsoft Corp. chief financial officer who joined GM in January, surprised investors when pitching the company's initial public stock offering this fall by promising GM would pay off about $25 billion in debt and pension obligations. GM, he said, would hold only a token amount of debt—mainly to maintain a credit rating—for the long term.
"We want to be the masters of our own destiny" and not rely on borrowing from others, Mr. Liddell said in an interview.
View Full Image
Associated Press
The debt plan hinges in part on strong sales of new models such as the Chevrolet Cruze compact.
That would be a dramatic departure for GM, which like its Detroit rivals had long carried a large debt load to help finance the business through the industry's periodic downturns.
Many companies and the analysts who follow them consider debt a valuable business tool. Leveraging a well-run company's high credit rating by selling bonds is a long-established way to fund a business. Debt also brings certain tax benefits.
Many car makers and parts suppliers are rethinking their use of debt since the financial crisis curtailed funding. But GM is in a peculiar situation. Debt is what helped sink the company and now—as it has returned to the stock market—it needs to prove it is being run more prudently. And GM already has $45.4 billion in world-wide tax benefits from losses and other factors.
"The new GM is trying to be the new GM," said Gimme Credit analyst Kimberly Noland. Yet over the long term she sees GM needing to return to borrowing.
In 2006, Ford Motor Co. borrowed close to $25 billion to pay for its future operations. Ford looked smart after the economic crisis prompted banks to cut off auto companies. But now, Ford is faced with far more debt than GM and has been working to pay it down.
Meanwhile, a low-debt approach by Toyota Motor Corp. helped the Japanese company continue to pump money into vehicle development last year even as it faced its worst financial performance in history.
Still, GM's plan carries risks. Should the car market again fall severely, GM may not be able to keep funding new vehicles and other investments through current earnings alone.
General Motors is attempting to do what few industrial companies have ever done: run a company with almost no debt, Sharon Terlep reports.
Standard and Poor's credit analyst Robert Schulz said the goal of maintaining capital spending without debt is reasonable as long as GM continues to generate cash in its key North American business. Mr. Schulz said it is "not unrealistic" that GM would meet its goal of nearly eliminating debt in the next few years.
The fact GM can even consider a low-debt future is a byproduct of its bankruptcy, which slashed the amount it owed creditors. Before Chapter 11 GM had $45 billion in debt, which cost it over $2 billion in annual interest. Last month, it had $12 billion in debt and preferred shares, though it still owes its global pension funds $23 billion.
Bankruptcy also cut GM's cost of operations through union concessions and plant closings. That shrunk GM to the point it can make money even in this year's anemic car market.
"We are in a cyclical industry with high fixed costs," said Mr. Liddell. "Overlaying financial leverage on top of that makes no sense."
During GM's so-called road show to pitch the IPO, some potential investors questioned whether the company's aggressive debt-repayment plan would backfire by taking money away from potential investments in products and elsewhere.
Mr. Liddell said some GM executives had the same question but ultimately decided that GM has ample resources to both adequately invest and pay off debt.
In wiping out most debt, GM hopes to cut the tie between sales levels and its ability to invest in vehicles. Such cutbacks exaggerate the effect of a downturn since new vehicles typically take three to four year to develop.
"The whole idea is that we should invest in research, development and capital irrelevant to where the market is," Mr. Liddell said.
That would be a contrast to the recent economic crisis. In 2009, as sales plunged and revenue fell, GM cut capital spending by nearly 30% from the year before to $5.4 billion. That temporarily halted development of several critical vehicles, including the next line of high-profit pickup trucks.
Today, the weakened product pipeline ranks among the top concerns of GM executives. Under the new plan, GM will use its profits to pay down debt each quarter. The company plans to maintain an annual capital budget of $7 billion and commit another $7 billion to engineering costs, mainly employees to develop products.
At the same time, the auto maker expects to sell a stake in former parts arm Delphi Corp., acquired last year for $1.7 billion, and may offload shares in former finance arm GMAC, now called Ally Financial, once the bank returns to the public markets, said people familiar with the matter. GM also has $3 billion to $4 billion in noncore assets it could sell, the company has said.
All these proceeds would go to debt reduction, though GM won't pay off around $10 billion in non-U.S. pension obligations since they are funded on a pay-as-you-go basis.
GM in addition would hold off paying dividends to its new stockholders for an unspecified time, Mr. Liddell said.Mr. Liddell said GM can stick to the debt-reduction goal as long as the seasonally adjusted U.S. industry sales rate doesn't fall below the current 10 million vehicles a year and GM doesn't lose more U.S. market share.
Anticipating GM may again borrow at least some money, Barclays Capital and Goldman Sachs on Tuesday began quoting prices for credit-default swaps for GM debt, a way for investors to insure against losses in any bonds GM may issue. |
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rffrydr
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rffrydr
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| Posted: Fri Nov 05, 2010 7:44 am Post subject: |
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Obama off to India to pitch american products. Looks like he's circling the wagons around this issue as a unifying principle that can "get our focus beyond the next election and on to the next generation."
Won't be taking any strong long buck positions anytime soon.
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rffrydr
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| Posted: Wed Oct 20, 2010 8:40 pm Post subject: |
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"Manufacturing fetishists are back," writes John Kay. And I'm one. But we deserve some pushback:
| Quote: | Manufacturing fetishism is back. It is easy to understand why. People have made large amounts of money for themselves – and occasionally have claimed to be creating large amounts of wealth for society – by exchanging bits of paper. But since the financial crisis of 2007-08, the public views this process with increased scepticism. The claim that real wealth can only be achieved by making things falls on receptive ears. You can't have an economy of hairdressers, the saying goes.
Yet you can't have an economy of steelworkers either. Mao Tse Tung tried this: he encouraged the creation of backyard furnaces in which peasants melted down pots and pans to meet national targets for steel output. But the experiment is not generally regarded as a success. |
http://m.ft.com/cms/s/0/00d4874c-dbb3-11df-a1df-00144feabdc0.html?catid=127
"...the world has no shortage of hands." How much is assumed in that little chestnut? How much do our very bodies feature this division of labor? (see BBC Documentary below: The Brain)
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rffrydr
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rffrydr
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rffrydr
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rffrydr
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| Posted: Thu Aug 12, 2010 1:40 pm Post subject: |
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Andy Grove (Intel) writing for BizWeek cover story last month, "How to Manufacture an American Job."
http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
...or better filed under "Capital Vs. Labor"?
| Quote: |
Already the decline has been marked. It may be measured by way of a simple calculation—an estimate of the employment cost-effectiveness of a company. First, take the initial investment plus the investment during a company's IPO. Then divide that by the number of employees working in that company 10 years later. For Intel this worked out to be about $650 per job—$3,600 adjusted for inflation. National Semiconductor (NSM), another chip company, was even more efficient at $2,000 per job. Making the same calculations for a number of Silicon Valley companies shows that the cost of creating U.S. jobs grew from a few thousand dollars per position in the early years to a hundred thousand dollars today (figure-A). The obvious reason: Companies simply hire fewer employees as more work is done by outside contractors, usually in Asia. |
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