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Friday, February 27, 2015

PMA’s February Business Conditions Report

CLEVELAND, OH—February 19, 2015—According to the February 2015 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies expect a slight dip in business conditions during the next three months. Prepared monthly, the report is an economic indicator for manufacturing, sampling 119 metalforming companies in the United States and Canada.

The February report shows that only 33% of participants predict that economic activity will improve during the next three months (down from 45% in January), 59% expect that activity will remain unchanged (compared to 49% last month) and 8% believe that economic activity will decline (up from 6% in January).

Metalforming companies also anticipate a slight decline in incoming orders during the next three months, with 44% predicting an increase in orders (down from 50% in January), 48% anticipating no change (compared to 42% in January) and 8% expecting a decrease in orders (the same percentage reported last month).

However, current average daily shipping levels improved in February. Thirty-eight percent of participants report that shipping levels are above levels of three months ago (compared to 25% in January), 44% report that levels are the same as three months ago (compared to 54% last month) and only 18% report a decrease in shipping levels (compared to 21% in January).

The percentage of metalforming companies with a portion of their workforce on short time or layoff dropped to 8% in February, down from 9% in January. The February 2015 figure marks an increase from this time last year, when 6% of companies reported workers on short time or layoff.

“For the near term, business conditions for metalforming companies, especially those supplying the automotive industry, remain strong,” said William E. Gaskin, PMA president. “However, global economic concerns in much of Europe, the Soviet Union, South America and the increasing strength of the U.S. dollar globally are concerns impacting the outlook for the next three to six months. Employment levels continue to be strong but challenges recruiting skilled employees continue. The softening near-term outlook reflects concerns over the public policy failures in Washington, D.C., regarding corporate tax reform, unabated growth in the number and complexity of federal regulations affecting the manufacturing sector, and the lack of cooperation among the Senate, House of Representatives and the White House.”

Thursday, February 26, 2015

Burdensome Regs. Cost Businesses Trillions: Fight Back at the One Voice Legislative Conference

Did you know that regulatory compliance costs businesses over $2.2 trillion each year?

That number should be no surprise when it is compared to the sheer volume of regulations issued by federal regulatory bodies like EPA, OSHA, and the NLRB.  In 2014 alone, federal agencies issued 3,541 final regulations and proposed 2,375.

Now in the final two years of the Obama administration, the president and his adminstration are focused on securing his legacy and early indications show that they have their eyes fixed on environmental and workplace regulations; rules and policies that would have serious cost implications for manufacturers.

The president's FY2016 federal budget requests an additional $1.3 billion for OSHA enforcement actions.  Further, the EPA continues to move forward with a new ozone rule and a greenhouse gas rule that non-partisan power sector monitoring organizations fear will jeopardize the reliability of the electrical grid as utilities grapple with meeting unrealistic mandates.

Whether the increased regulation of carbon emissions from power plants, expanding ozone standards, or mandating that injury and incident reports be made public, many agency actions continue to pose a threat to job creators across the country – and small manufacturers face a significant and disproportionate regulatory burden that hampers companies’ ability to compete in a tough international market.

The money manufacturing companies across the country spend on regulatory compliance could be better used for purchasing equipment and creating jobs.

Join your metalforming industry peers in fighting to prevent unnecessary and ineffective regulations by pariticpating in the PMA/NMTA One Voice Legislative Conference in Washington, D.C. on April 21-22, 2015. 

This conference will be an invaluable opportunity to meet with members of Congressional and their staff who are integral to these decisions that impact both your business.  Over two days, you will have the opportunity to address issues, share your story, and work for a better manufacturing future in America.  Register today and join us in reminding Washington that of the real-world impact of regulations on manufacturers.

Wednesday, February 25, 2015

New Research on the Manufacturing Skills Gap

New research has been published by Deloitte and the Manufacturing Institute this week regarding manufacturing in the United States. The two parallel studies, The Skills Gap in U.S. Manufacturing: 2015 andBeyond and Overwhelming Support: Public Opinions on the Manufacturing Industry, observe and reflect on the fact that the skills gap in the sector has expanded in recent years and will continue to do so. What do the opinions of the American public have to do with the increase in this gap? Which factors must be addressed to adjust this trajectory? Below are three highlights from each study that manufacturers should consider.

Baby Boomer Retirement Is the Most Significant Impending Gap Factor
The anticipated mass exodus of baby boomers that will take place over the next few years has been ranked the highest in future gap expansion factors. According to data collected from manufacturing executives, 74% anticipate a significant or high impact in the amount of skilled production workers and 70% expect the same impact level in engineers, researchers, and scientists. Considering that skilled production jobs make up over 50% of the national manufacturing workforce, these retirements will likely be the biggest blow to companies.

Americans Value Manufacturing, But Don’t Put Their Faith in Its Future
When asked how important manufacturing is to maintain a strong American economy, 90% of respondents chose either “very important” or “important.” However, only 49% of respondents believe that the United States can effectively compete in the global marketplace, and 75% consider manufacturing jobs to be the first moved to other countries.

Exposure to Manufacturing Inspires Recommendation to Younger Generations
The strongest indicator of the national uncertainty mentioned above is the 63% of respondents who indicated that they were not likely to encourage their child to pursue a career in manufacturing. The silver lining to this statistic, and something to consider when recruiting, is that when the respondent had experience in or was familiar with the manufacturing industry, she was twice as likely to encourage her child to pursue manufacturing: 52% of high familiarity respondents would encourage, while only 21% of “no familiarity” respondents would.

The bottom line, according to the studies, is this: with the impending retirement of baby boomers and a lack of workers with sufficient STEM skills, the skills gap cannot be ignored any longer. It’s time for manufacturers to introduce an aggressive focus on presenting the industry as a viable and desirable career option to young people by reaching out to local schools and colleges. The studies also suggest that, along with an increase in appeal, the industry needs to improve applicant screening processes, better define competency models and skill requirements, and invest in internal training and development programs. Of course, None of these methods alone will close the skills gap, but with the input and investment of manufacturers, academia, communities, and government, a foundation can be established upon which to fill the gap.

At PMA, we work hard to fight the skills gap by addressing the recruitment and training of new manufacturing sector workers.  From sponsoring initiatives like MFG Day to working with American Jobs for America's Heroes, we're constantly striving to attract new talent.    

Tuesday, February 24, 2015

Guest Blog: Working “ON” the Business

Laurie Harbour
President and CEO  
Habour Results, Inc.
“Insanity: Doing the same thing over and over and expecting different results.”

It is so true, but far too often businesses find themselves in this predicament to avoid change or in fear of making the situation worse.

Today, there are many challenges and opportunities facing the manufacturing industry, and it is up to each company to determine how to act or react. Below are four key initiatives that will help metalforming companies improve their business and drive better results.

Strategic Planning
Many companies have a vision that is articulated by leadership as the long-term business plan. The best companies have taken that vision and turned it into actionable one-year objectives that are cascaded to all levels of the organization. Metrics are in place and drive each employee’s role and responsibility in meeting the longer-term vision.

Gather Market Intelligence
To be successful companies need to gather market intelligence not only on its type of process, but also on each and every industry it serves. Market leaders have put people in place within their organization to gather market intelligence on customers in terms of forecasts, new models, new processes and materials as well as collect industry data. Companies can no longer afford to guess or rely on “luck.” They need to attend conferences, webinars and trade shows; talk with customers and analysts; and, tap into other sources to gather data and information that allows them to be more knowledgeable about their business.

Demand Planning
Demand planning is often the most challenging aspect of most stampers and die manufacturers. Companies often say they can’t get information from the customer. While, some of that is true, many times it’s because leadership didn’t ask. The best companies are realizing that even a little bit of demand planning is driving efficiency in their business 10 fold. Those companies that use market intelligence, talk to their customers, gather third-party data and use all means possible to do demand planning have shown that they can drive throughput by 20-30 percent making profitability soar.

Manufacturing Efficiency
The last initiative is something that has been discussed for decades – manufacturing efficiency. However, today companies should look at it differently. They need to view their operations as an entire system.  Rather than just improving the efficiency of one or more machines, the organization needs to analyze the system from scheduling to each and every piece of equipment that supports making the product. Those that have done this are having the ability to manage the high mix and lower volume demand the manufacturing industry is facing today. They are managing inventory better. Changeovers are improving and machine utilization is at an all time high. 

Some companies have done one or more of the four initiatives outlined here, but those that are doing all four are seeing significant returns. This year will be a great year for many and everyone has the opportunity to get there. No need to over complicate things but rather focus on the right things and work “ON” the business.

Guest blog post by Laurie Harbour, president and CEO, Habour Results, Inc.

See Laurie Harbour at The MFG Meeting in Orlando, FL on March 4 - 7, 2015 and at the  22nd Annual Automotive Parts Suppliers Conference in Troy, MI on April 28 - 29, 2015. 

Monday, February 23, 2015

Talking Tax Reform: How You Can Participate in Decisions that Impact Your Business

The 2014 elections ushered in yet another wave of change in Congress - one that allowed Republicans to take control of the U.S. Senate and install Sen. Mitch McConnell as the new Majority Leader.

In 2015, Congress is expected to tackle some tough issues.  One item on the agenda?  Tax reform.

Purchasing and building new machines is the lifeblood of the manufacturing industry. And many PMA members depend on valuable tax benefits to keep their facilities humming.

This year, 40% of One Voice members reported using the Section 199 domestic production activities tax deduction.  At the same time, 45% reported using the R&D tax credit, 89% reported using bonus/accelerated depreciation, and a full 91% reported using Section 179 expensing.

PMA has consistently been among the leaders in Washington urging lawmakers to extend these business investment provisions.  In fact, in 2014, the PMA advocacy program was instrumental in extending several key expired tax credits.

For example, in a November briefing at the House of Representatives, PMA Member Wes Smith, President and CEO of E&E Manufacturing in Plymouth, MI, testified that companies like his rely on key tax provisions to have the resources available to make investments and hire more employees.

“We just spent $10 million on a new set of machines, but that equipment takes over two years to place into service,” Smith said.  “How can I plan and finance a two-year, $10 million project when I don’t even know what Congress will do two months from now?  We can’t just purchase a machine on December 31st by midnight based on a vote Congress took that day.” 

But the fight is far from over.  The tax provisions most relied upon by PMA members will be on the chopping block again this year as the extension passed in 2014 will only last for one year.

And, of couse, tax incentives for growth are not the only issue weighing on manufacturers' minds.

Unfortunately, some in Washington want to lower the tax rate for C-Corporations to 28%, while leaving the top 39.6% rate intact for most small businesses.  The majority of One Voice members - 61% - are pass-through businesses, paying over 40% in total federal taxes.  Under some plans being discussed, policymakers would not include these companies in tax relief.  As part of PMA's advocacy efforts, it is important to work with  members of Congress to reform the tax code for all business, regardless of structure and type.

There’s a lot at stake for manufacturers this year, and to make a difference in Washington, those who know the industry best have to participate in the process.

You can join your One Voice colleagues in bringing some common-sense solutions to Washington during the seventh-annual PMA/NTMA One Voice Legislative Conference in Washington, D.C., April 21-22, 2015.

The conference is a unique opportunity to meet with members of Congress and the integral staff members whose decisions impact your business.  In these meetings, you'll be able to address the issues most important to the industry and, even more importantly, share your own story.  It is vitally important to remind Washington of the real-world implications of manufacturing policy in facilities across the country.

Never participated in a legislative conference?  No problem!  The One Voice Washington Office will offer a pre-conference webinar on April 9 at 2:00 p.m. Eastern to brief participants on the latest policy developments and what to expect during the congressional visits.

This is your chance to have your voice heard directly by the policymakers who are creating the laws of the nation.  Register today.  

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