As Director of Technology and Industry Research for PMPA, Miles brings 38 years of hands-on experience in areas of manufacturing, quality and steelmaking. He helps answer "HOW?","WITH WHAT?" and "REALLY?"
While manufacturing growth remains essentially level, certain sectors served by the precision machining industry grew nicely in the year ending in April 2016. Dr. Chad Moutray, chief economist at National Association of Manufacturers, has compiled and shared the data for the past year in manufacturing.
Fabricated Metal is the sector in which precision machining is classified, and this data shows a minus 3-percent growth for the period of April 2015 to April 2016. But our shops also provide engineered components for Motor Vehicles and Parts (up 4.3 percent), Miscellaneous durable goods (up 5.2 percent) and Computer and Electronic Products (up 2.9 percent).
While the actual year-over-year growth for manufacturing eked out a 0.5-percent growth rate, there were clearly winning and losing sectors, as the chart below shows.
Here is a recap of the markets typically served by our precision machining shops: Machinery, Fabricated Metal, Aerospace and Miscellaneous Transportation Equipment, and Electrical Equipment and Appliances were down, while Miscellaneous Durable Goods, Motor Vehicles and Parts, Computer and Electronic Products showed gains ranging from 2.9 to 5.2 percent.
According to Dr. Moutray, manufacturing rebounded somewhat in April, as manufacturing production grew 0.3 percent, just offsetting the 0.3 percent decline in March. In April, renewed strength in the Machinery sector (up 2.4 percent) and Motor Vehicles and Parts sectors (up 1.3 percent) were positive signs.
The PMPA Business Trends Index of Sales for April 2016 declined from the year’s March high of 131 to April’s 122. That 122 reading is up one point from the 2015 calendar year average.
While the economic news is not bubbling with enthusiastic reports of growth, we think the fact that the industry is operating even or above last year’s average is a positive story. It beats the alternative.
Certain sectors served by the precision machining industry grew nicely in the
In our shops, order of magnitude reflects the relative scale of our processes and helps us see what is and is not applicable to the problem at hand.
If you have an intermittent or periodic problem, start counting frequency of occurrence, and then figure out what the order of magnitude is compared with your process.
To solve periodic or intermittent problems in our shops, the first step after identifying the problem is collecting data about when and how often it occurs. Then, comparing it with the orders of magnitude that occur naturally in your shop can help you narrow down the likely causes.
Relative frequency can be a big help when you figure out that the frequency has some relationship or equivalence to some aspect of your process. If the frequency is about equal to two occurrences per bar, then it becomes relevant to look at bar ends first, with two ends per bar or the fact that you might get two parts out of the first bar end. This tying of frequency to an order of magnitude denominator saves a lot of thrashing about to try to identify root cause.
What are some orders of magnitude that occur in your shop that you should consider for your problem-solving efforts on intermittent or periodic problems?
Material Order of Magnitude
Your shop processes have orders of magnitude, too.
Per Machining Operation
Per stock up
Per production order
How does this work? In a prior life, I had an intermittent customer complaint for a twisted square bar product. The customer was counting bad pieces cut from bars in bundles. The frequency was extremely low, it was not at one per bar or one per 10 bars, nor one per 20 bars. It turned out to be approximately, slightly less than “one piece per bundle.” Knowing that the frequency was that low, we were able to eliminate most of our upstream of bundle process steps. They would have generated much higher frequencies – more on the order of multiple occurrences per bar.
Based on our frequency being an approximate order of magnitude of one per bundle, we focused our investigation on the product and process at and after the bundle stage, which was where our problem occurred when a single bar end was being twisted by the movement of the last strapping and clip installation as it was tightened for packaging. The balance of the bar was held securely by the prior installed straps, but the tensioning unit grabbed one corner of a bar as it secured the final band around the bars, creating a twist in the end of the bar held under the tension of the clip that locked in that last strap.
Without comparing frequency of occurrence with orders of magnitude in our process, we would probably still be trying to figure out where in our process we could twist only one 14-inch segment out of 3,260 feet of bars. We’d be in denial, and eventually lose the customer.
If you have an intermittent or periodic problem with your products, start counting frequency of occurrence, and then figure out what the order of magnitude is compared with your process.
Ryan Kutz of PMPA member company Aztalan Engineering asks, “Since a better portion of our customers have adopted lean, just-in-time (JIT) or quick-response manufacturing practices where inventory is dock to stock and stock levels are managed daily, making inventory almost none existent, is there any evidence of this in the year-to-year trend? Are sales figures becoming even closer to real time with manufacturing orders?”
Ryan, we agree with your premise that most of our industry’s customers have adopted programs such as lean, JIT, quick-response manufacturing, and other dock-to-production (as opposed to dock-to-stock) programs. These programs are designed to reduce cost of possession for the OEM. However, we see these as being essentially a blunt instrument used to beat the supplier rather than as a means to truly coordinate supply-chain effectiveness. We feel that despite these programs, our OEM customers lack valid insight into market demand, causing inventories to rise and then their orders to our shops to plunge, concurrently. Take a look at the following chart from Dr. Ken Mayland that shows total business sales versus total business inventories:
These indicators tracked closely in 2014, but not so much in 2015.
This graph shows that in the first three quarters of 2014, our customers had a great handle on their demand and their orders and inventories tracked closely.
From the fourth quarter of 2014 forward, however, the percent change in total business inventories continued to remain in the positive year over year, while the percentage change in total sales year over year plummeted through end of Q1 2015, when they “leveled off” at around -2 to -3 percent.
I think we err when we overestimate the power of lean, JIT and quick-response manufacturing in the hands of our customers. These tools seem to be a blunt instrument, at best.
In reply to Ryan’s question, “Are sales figures becoming even closer to real time with manufacturing orders,” the graph above seems to show the change in sales and in inventories are converging at the end of 2015 and 2016 year to date.
My conclusion is that it doesn’t matter how fine a resolution our customers have in their lean, JIT, or quick-response manufacturing processes and procedures, if their ability to forecast is so poor, especially when the market declines.
Lousy forecasting by some OEM customers beats lean and JIT every time, leaving the OEM’s supply chain bloated with inventory and starving for releases.
Mechanical properties of a given steel under compression compare closely with its tensile properties. An “upset” can be performed to determine how the steel will perform under compressive load.
A brittle steel under compression will ultimately fail by breaking along cleavage lines at an angle approximately 30 degrees from the axis of pressure being applied.
A more ductile steel flattens out, rather than cleaving, showing vertical cracks around the outer circumference. This ductile steel will not break, but will continue to flatten as more stress (load or force) is applied.
This compression or upset test is helpful for assuring that steel will successfully cold work. It can also be used to determine the extent of seams, laps or other surface imperfections on the surface of the bar. That’s what I used to do when we were producing drawn wire for cold-heading applications.
Mike Reader, president of Precision Plus, shares his take on PMPA’s recent two-day Capitol Hill fly-in.
On Tuesday, March 15, I flew to our nation’s capital to join almost a dozen other business leaders from our trade association, Precision Machined Products Association (PMPA), for two days of work on the Hill. The purpose of the trip was to continue our engagement with elected officials in order to keep them aware of legislative and regulatory matters impacting our ability to compete globally. As always, the pace is fast and the time passes far too quickly to accomplish all we set out to do.
For those of you who have not been to Washington, D.C. to participate in our political process, let me share a few observations. Every American citizen should make the trip at least once to experience the madness of it all. It is like a giant anthill that has just been attacked by small children. Every special interest group on the planet is there lobbying for their cause. How anyone gets anything done in the midst of the chaos is unknown to me. More than likely, not enough does get done. While I was not interested in the political process for many years, it became clear to me during the Great Recession that we must all get involved or be silent about the consequences others have imposed upon us.
Central to our conversations were these three advocacy issues:
Workforce development through training and education to ensure we maintain the most talented workforce on the planet. Our workforce is our greatest asset. However, the majority of skilled employees are aging, and public perception of manufacturing careers needs an adjustment. No longer is the world of manufacturing dark, dirty and dangerous. Today’s world-class manufacturers have state-of-the-art facilities and advanced technology. Changing these outdated stereotypes that have been decades in the making will not happen overnight, but we must start one person at a time. We and our industry partners are promoting tours of manufacturing facilities to showcase what they look like today, as well as the rewarding career opportunities that exist all around us. These are honorable, family supporting professions that helped make America great, and we need to celebrate them. Policymakers, too, must vocalize the deep need for job training reformation and the strengthening of education grants.
Tax and regulatory policies that promote domestic business investment, while maintaining good environmental standards. We must come together as a country for an honest conversation about these matters before it is too late. American businesses need a level playing field in order to compete. We are not asking for anything special, just that the 100-pound rucksack be removed so that we can truly compete with those countries that are taking our work with lower tax rates, fewer regulatory burdens, and less worker compensation.
We also brainstormed how we can energize our fellow PMPA members to get involved in the conversation, as there is so much at stake for all of us. I encourage everyone to participate in a PMPA D.C. fly-in event at least one time to see for yourselves how the process works, or not. It is our responsibility to be active and stay current on the issues that matter in our industries. Not doing so will be detrimental to our businesses, as well as our country.
Without common sense agreement on the top two items, we will continue to lose our workforce as jobs and businesses are exported in exchange for cheap taxes, labor and more global pollution. It is time to have this honest, yet respectful, conversation before it is too late.