Metals & MFG Outlook Newsletter for January 2016

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Metals & MFG Outlook – January 2016

I. Cover Story: Winter Chill
II. NORTH AMERICAN PERSPECTIVE
III. U.S. FORGING INDUSTRY
IV. MANUFACTURING TALK RADIO
V. EUROZONE
VI. ASIA OUTLOOK
VII. SOUTH AMERICA
VIII. THE GLOBAL SUMMARY
IX. CREDIT MANAGERS INDEX
X. THE MANUFACTURING SCENE
XI. THE FINAL WORD

PUBLISHER’S STATEMENT

Happy New Year! 2016 is here, and for manufacturing the forecasts would predict an almost boring year with slight gains or shortfalls in industry segments but nothing spectacular in either direction for anyone. Of course, that could change.

China seems to be having real growing pains in their shift to a consumer driven economy. Their stock markets have been wild rides so far, and their currency is being used to buffer the pitches and yaws, or perhaps yin and yang. As the World Bank presses for more accurate economic data, China’s GDP projections falter, sinking from the heyday of double digit growth just a few years ago to ranges hovering around 6.5% with flux of 2% in either direction possible.

Those shifts have unsettled world markets, including the U.S. Will China ebb or flow? Like boats in the harbor, world stock markets and economic projections seem to rise or fall on the China tide at present. Projections in the U.S. for GDP between 2 and 3 percent could easily soften without the added irritation of some action by ISIS or Al Qaida. Keep in perspective regarding terrorists that there have always been some group of malcontents who wish to upset the order of things. The only question is the tools they might have at hand to do so.

The EU has shown some signs of economic recovery, which usually means a healthier manufacturing sector. Even Greece saw favorable economic expansion in December.

Of course this election year in the U.S. should help economic growth although it is a rather bizarre combination of characters. Imagine a country where the top job could be filled by: a bombastic capitalist, an ardent socialist, a former Secretary of State being investigated by the FBI, or one of a slew of questionably qualified politicians all vying for the most powerful position in the world. Did you just get a sick feeling in the pit of your stomach given those choices?

In 2015, during all the presidential debates, the word manufacturing came up less than five times and usually in passing. Yes, there are serious issues to face: a ballooning national debt, annoying terrorists, unaffordable health care for many it was supposed to help, and two parties bent on agreeing on little so the other guy doesn’t get a win in their column. At the same time, the national mood is like constant heartburn. We’re sick of the way the country is being run, and we wonder if electing anyone will actually change it.

The unpredictability of it all has manufacturing experiencing irritable bowel syndrome daily. Large, long-term capital investment is almost non-existent, with the only spark being small and short dollars flowing into technology projects to squeeze out productivity gains from existing people, plants and equipment. And the foundation of manufacturing stills has cracks that haven’t been filled in since the Great Recession, even with all the employment gains.

So hold on to your hats because there are significant headwinds as manufacturing moves into 2016. More details are included in the pages that follow, and updates are being posted at mfgtalkradio.com. Tune in!

Sincerely,

Lewis A Weiss, Publisher

I. COVER STORY: Wind Chill

by Royce Lowe

So far already this month, we’ve seen two ‘panicky’ days on China’s stock market, plus the news that the ISM PMI figure for the month of December 2015 crept a little lower, to 48.2 percent, ironically from the same level to the same level as the PMI in China.

 

Last month we spoke of manufacturing being presently digital, dynamic, diversified and demanding. There is no doubt that it is all these things, but for the time being the manufacturing industry seems to have caught a bit of a chill and is in need of a spring awakening, although December did see good news come out of Europe and Japan.

Together with all this news we can report a tremendous year for automobile sales in the U.S., Europe and the UK, with ever increasing optimism for a good 2016 for new vehicle sales in China.

The House and Senate have approved a 5-year, $350 billion transportation infrastructure bill to address the nation’s deteriorating roads and bridges. Nothing is mentioned of the water supplies nor of the electrical grid, both of which are in urgent need of work. It is estimated that about a quarter, 146,663 of 604,474 bridges in the U.S. are either structurally deficient or functionally obsolete. In short, the $350 billion is not nearly enough.

The PMI figure from the Institute of Supply Management fell from 48.6 percent in November to 48.2 percent in December, representing contraction for the second consecutive month. There was growth in the overall economy for the 79th consecutive month, although it comes from the non-manufacturing sector.

The Markit PMI for the U.S. manufacturing sector fell from November’s 52.8 figure to 51.2 in December, its lowest level since October 2012. U.S. manufacturers recorded the weakest improvement in business conditions since October 2012. A lack of growth in new orders was what dragged the index down, and Markit stated that the strong dollar is stalling growth in new export orders – contrary to an improvement in the ISM New Export Orders Index. Markit further stated that the strong dollar is helping importers, and that the lifting of the interest rate may hit consumer spending. However, ISM’s Imports Index suggests a contraction in imports for the third consecutive month.

The five ISM components are equally weighted at 20 percent each. The Markit components are weighted: 30 percent New Orders, 25 percent Production, 20 percent Employment, 15 percent Supplier Deliveries and 10 percent Raw Materials Inventories.

The Bureau of Economic Analysis came out with its ‘third’ estimate for the annual rate of Real GDP growth in the third quarter of 2015, placing it at 2.0 percent. The figure for the second quarter was 3.9 percent. The Real GDP is the value of goods and services produced by the nation’s economy, less the value of the goods and services used in production, adjusted for price changes. Basically, it is car sales pumping up the GDP, but little else.

The Dun and Bradstreet Economic Health Index for December stated that 197,000 new non-farm jobs were added to U.S. payrolls in the month, with gains in all sectors except Manufacturing. According to D and B, the Small Business Health Index fell 1.8 points in the month of December. D and B say their Overall Business Health Index rose by 0.3 percent month-on-month, to reach its highest level since the Index was first conceived in December 2010. D&B’s Index measures data from both the manufacturing and service sectors.

GALLUP’s U.S. Economic Confidence Index went through December at -11. The job creation index averaged +30 through December, slightly down from its recent high of +32.

World crude steel production for the 66 reporting countries for the month of   November 2015 was 126.83Mt, down 5.8 percent from the November 2014 figure of 134.55Mt.

U.S. crude steel production, for November 2015 was 6.09Mt, down 15.6 percent from the November 2014 figure of 7.22Mt.

Primary Global Aluminum Production in November 2015 was 4.862 million tonnes. Of this total, 2.683 million tonnes, or just over 55 percent, was produced in China. The Gulf Corporation Council (GCC) produced 420,000 tonnes, North America 369,000 tonnes.

Here are the latest figures for U.S. new car and light truck sales for ‘the big eight’ for December 2015.

The ‘Big Eight’ December ’15 December ’14 YTD % change
General Motors 290230 274483 5.7
Ford 237606 219369 8.3
Toyota 238350 215057 10.8
FCA 213665 189410 12.8
Honda 150893 137281 9.9
Nissan 139300 117318 18.7
Hyundai/Kia 117749 110094 6.9
VW 30956 34058 -9.1
Total new cars and light trucks 1643289 1507339  9

 

                    CARS                  LIGHT TRUCKS  TOTAL

 

DEC 2014    678,154                829,185                         1,507,339

 

DEC 2015    656,261                987,028                         1,643,289

 

                    -3.2%                  +19.0%                        +9.0%

 

The totals for the years 2015 and 2014:

 

                    CARS                  LIGHT TRUCKS  TOTAL

 

2014             7,918,601             8,603,399                      16,522,000

 

2015             7,7409,12             9,729,587                      17,470,499

 

                    -2.2%                  13.1%                          5.7%

 

THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at least the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month. The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

 

GDP Indl Prodn Cons prices Unemployt
United States +2.0 (qtr) -1.2 (Nov) +0.5 (Nov) 5.0 (Nov)
Canada +2.3 (qtr) – 4.0 (Oct) +1.4 (Nov) 7.1 (Nov)
China +7.4 (qtr) +6.2 (Nov) +1.5 (Nov) 4.1 (Qtr 3)
Japan +1.0 (qtr) +1.6 (Nov) +0.3 (Nov) 3.3 (Nov)
Britain +1.8 (qtr) +1.7 (Oct) +0.1 (Nov) 5.2 (Sept)
Euro Area +1.2 (qtr) +1.9 (Oct) +0.2 (Nov) 10.7 (Oct)
France +1.0 (qtr) +3.6 (Oct) nil (Nov) 10.8 (Oct)
Germany +1.3 (qtr) +0.2 (Oct) +0.4 (Nov) 6.3 (Nov)
Spain +3.2 (qtr) -0.3 (Oct) -0.3 (Nov) 21.6 (Oct)
India + 11.9 (qtr) +9.8 (Oct) + 5.4(Nov) 4.9 (2013)
Brazil – 6.7 (qtr) -11.3 (Oct) + 10.5 (Nov) 7.5 (Nov)
Taiwan – 1.2 (qtr) – 4.9 (Nov) + 0.5 (Nov) 3.8 (Nov)
Mexico +3.0 (qtr) + 0.5(Oct) +2.2(Nov) 4.1(Nov)

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II. NORTH AMERICAN PERSPECTIVE

by Royce Lowe

The Institute of Supply Management PMI figure registered 48.2 percent in December, down 0.4 percentage points from November’s 48.6 reading, representing the second consecutive month of contraction in manufacturing but growth in the overall economy for the 79th consecutive month, bolstered by the services sector. Of the 18 manufacturing industries, six are reporting growth in December in the following order: Printing & Related Support Activities; Textile Mills; Paper Products; Miscellaneous Manufacturing; Chemical Products; and Food, Beverage & Tobacco Products. The 10 industries reporting contraction in December — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Primary Metals; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; and Nonmetallic Mineral Products.

Food, Beverage & Tobacco Products respondents say their customers are tightening inventories for the year end, thus impacting sales and shipments. Fabricated Metal Products personnel say business is slow due to oil prices. Chemical Products respondents say month-on-month sales were down but that profitability was up. Computer & Electronic Product respondents say December revenues are flat compared to November’s. Textile Mills say they are targeting reduced raw materials inventories by year end. Transportation Equipment personnel say deflation in many commodities is helping with product savings and that sales are strong with a backlog. Miscellaneous Manufacturing reports that medical device business continues to be strong, both in the U.S. and abroad, while Apparel, Leather & Allied Products report that sales have dropped and continue to be soft, resulting in reduced employment. Plastics & Rubber Products say business is going well, with low fuel prices keeping full-size SUV and truck sales at high volumes.

Finally, Petroleum & Coal Products are saying that low oil prices are negatively impacting oil and gas exploration activities. They state that low oil prices are generally positive for the petrochemical industry.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.

  1. The ISM New Orders Index for December, at 49.2 percent, was up 0.3 percentage points on November’s 48.9 percent reading, indicating contraction in new orders for the second consecutive month. The seven industries reporting growth in new orders in December — listed in order — are: Textile Mills; Printing & Related Support Activities; Miscellaneous Manufacturing; Petroleum & Coal Products; Primary Metals; Paper Products; and Chemical Products. The 11 industries reporting a decrease in new orders during December — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products.
  2. The ISM Production Index is at 49.8 percent in December, up 0.6 percentage points from November’s 49.2 percent reading, representing contraction in production for the second consecutive month. Seven industries reported growth in production during the month of December — listed in order — Printing & Related Support Activities; Textile Mills; Miscellaneous Manufacturing; Paper Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products. The nine industries reporting a decrease in production during December — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Transportation Equipment; Machinery; Computer & Electronic Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Primary Metals; and Fabricated Metal Products.
  3. The ISM Employment Index for December, at 48.1percent, is down 3.2 percentage points on November’s 51.3 reading, representing a return to contraction in the Employment Index following one month of growth. It is noteworthy that November’s reading represented a 3.7 percent increase on October’s, whereas December’s reading represents a 3.2 percent decrease on November’s. Seven of the 18 manufacturing industries reported employment growth in December— in order — Textile Mills; Printing & Related Support Activities; Paper Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Chemical Products; and Miscellaneous Manufacturing. Nine industries reported a decrease in employment in December — listed in order — Apparel, Leather & Allied Products; Petroleum & Coal Products; Primary Metals; Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; Plastics & Rubber Products; Machinery; and Food, Beverage & Tobacco Products.

Editors Note: Keep a watchful eye on Employment. Thought to be a lagging indicator, it is actually a leading indicator. Employment in manufacturing is closely tied to production of new orders and backlog (existing orders). If new orders remain in contraction, then production will burn off backlog. As they look forward 6 to 9 months, manufacturers will cease hiring and begin to reduce head count because there is insufficient new orders or backlog to support current employment levels.

  1. The ISM Supplier Deliveries Index indicates that the delivery performance of suppliers to manufacturing organizations was slower in December as the Supplier Deliveries Index registered 50.3 percent, which is 0.3 percentage points lower than the 50.6 percent reported in November. This is the fifth month of slower supplier deliveries, following two consecutive months of faster supplier deliveries. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries. The three industries reporting slower supplier deliveries in December are: Food, Beverage & Tobacco Products; Transportation Equipment; and Electrical Equipment, Appliances & Components. The five industries reporting faster supplier deliveries during December are: Plastics & Rubber Products; Machinery; Chemical Products; Fabricated Metal Products; and Computer & Electronic Products. Ten industries reported no change in supplier deliveries in December compared to November.
  2. The ISM Inventories Index, at 43.5 percent for December, is 0.5 percentage points above November’s 43.0 percent reading, indicating a contraction of raw materials inventories in December for the sixth consecutive month. The five industries reporting higher inventories in December are: Petroleum & Coal Products; Furniture & Related Products; Plastics & Rubber Products; Computer & Electronic Products; and Chemical Products. The eight industries reporting lower inventories in December — listed in order — are: Primary Metals; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Machinery; Fabricated Metal Products; Miscellaneous Manufacturing; Paper Products; and Transportation Equipment.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

  1. The ISM Customers’ Inventories Index registered 51.5 percent in December, 1.0 percentage points higher than November’s 50.5 reading, meaning that customers’ inventories are considered to be too high for the fifth consecutive month. The seven manufacturing industries reporting customers’ inventories as being too high during the month of December — listed in order — are: Wood Products; Nonmetallic Mineral Products; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Food, Beverage & Tobacco Products. The four industries reporting customers’ inventories as too low during December are: Petroleum & Coal Products; Miscellaneous Manufacturing; Machinery; and Chemical Products. Six industries reported no change in customer inventories in December compared to November.
  2. The ISM Prices Index registered 33.5 percent in December, 2.0 percentage points lower than in November, indicating a decrease in raw material prices for the 14th consecutive month. In December 4 percent of respondents reported paying higher prices, 37 percent lower and 59 percent the same prices as in November. Of the 18 manufacturing industries, no industry reported paying increased prices for their raw materials in December. The 13 industries reporting paying lower prices during the month of December — listed in order — are: Primary Metals; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Machinery; Fabricated Metal Products; Apparel, Leather & Allied Products; Paper Products; Transportation Equipment; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Chemical Products; Plastics & Rubber Products; and Computer & Electronic Products.

Up in Price in December were: Dairy. Down in Price in November were: Aluminum (13); Brass; Copper (2); Copper Products; Crude Oil; Diesel; Gasoline; HDPE Resin; Nickel (6); Oil; Petrochemicals; Polyethlene Resin; Steel (6); Steel — #1 Busheling Scrap (3); Steel — Cold Rolled (3); Steel — Hot Rolled (3); Stainless Steel (14); and Steel Products. In Short Supply in November: none

Note: The number of consecutive months the commodity is listed is     indicated after each item.

  1. The ISM Backlog of Orders Index was at 41.0 percent in December, 2.0 percentage points lower than November’s reading of 43.0 percent. Of the 88 percent of respondents who measure their backlogs, 12 percent reported greater backlogs, 30 percent smaller backlogs and 58 percent no change from November. Four industries reporting an increase in order backlogs in December: Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components. The 13 industries reporting a decrease in order backlogs during December — listed in order — are: Primary Metals; Wood Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Paper Products; Computer & Electronic Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Machinery; and Chemical Products.
  2. The ISM New Export Orders Index was at 51.0 percent for December, 3.5 percentage points higher than November’s reading. This represents a return to growth in new export orders following six consecutive months of contraction. The eight industries reporting growth in new export orders in December — listed in order — are: Textile Mills; Printing & Related Support Activities; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; and Paper Products. The four industries reporting a decrease in new export orders during December are: Transportation Equipment; Computer & Electronic Products; Plastics & Rubber Products; and Primary Metals. Six industries reported no change in new export orders in December compared to November.
  3. The ISM Imports Index, is at 45.5 percent in December, or 3.5 percentage points lower than November’s 49.0 reading. This represents contraction in imports for the third consecutive month. Only two industries reported growth in imports during the month of December: Plastics & Rubber Products; and Computer & Electronic Products. The 11 industries reporting a decrease in imports during December — listed in order — are: Primary Metals; Apparel, Leather & Allied Products; Fabricated Metal Products; Miscellaneous Manufacturing; Furniture & Related Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; Chemical Products; and Nonmetallic Mineral Products.

World merchandise trade is up just 1 percent through the end of 2015. But, U.S. businesses are bullish on trade over the next six months, citing new trade pacts and momentum in the U.S. economy. According to the latest findings from the U.S. HSBC Global Connections Trade Forecast, 77 percent of U.S. business leaders expect trade volumes to increase in the short-term, with 30 percent seeing Asia as the best market for trade growth – down from 49 percent six months ago – 21 percent Europe – up from 13 percent, and 13 percent latin America. U.S. exports to China are forecast to increase by 9 percent per annum in the decade to 2030, by the end of which period China will surpass Mexico as the second largest market for U.S. exports, Canada of course being number one. Machinery and Transport Equipment will play the biggest role in long-term growth, accounting for almost 45 percent of the projected increase up to 2013, with chemicals accounting for 13 percent.

Reshoring is said to be increasing with large manufacturers. The Boston Consulting Group says manufacturers producing for the domestic market are increasingly more likely to add capacity in the U.S. than in any other country. Of companies expecting to increase capacity over the next five years, 31 percent say they will do it in the U.S., 20 percent in China: two years ago 30 percent said China, 26 percent the U.S.

News on the aerospace front sees GE Aviation working towards engine certification for its GE9X engines which were specifically designed for Boeing’s 777 -8X/9X aircraft. Certification is expected in 2018 for this engine, for which GE Aviation has received orders for 700 units since 2013. Lockheed Martin ends its year with a contract for 43 C-130J cargo aircraft of various shapes and breeds for the U.S. Government, all part of a $5.3 bn multiyear contract.

And Alcoa, never much out of the news these days, has just pulled in $2.5 bn in long-term supply contracts for Boeing. This will involve supply of multi-material forged fastening systems for each of Boeing’s aircraft programs. This represents Alcoa’s largest ever fastener deal. Alcoa will also supply ‘ready-to-install’ titanium seat-track assemblies for the three variations of Boeing’s 787 Dreamliner series. A further contract will see Alcoa Fastening Systems and Rings supply titanium, stainless steel, alloy steel, aluminum and nickel-based super alloy fastening systems for Boeing aircraft.

U.S. Lawmakers are to extend tax credits for solar and wind power projects for another five years. This will add an extra 20 gigawatts of solar power, more than every panel ever installed in the U.S. prior to 2015. Wind power will add another 19 gigawatts over five years, and combined these extensions will spur more than $73 bn of investment and will supply enough electricity to power 8 million U.S. homes.

Faraday Future, another electric car company, says it will build a $1 bn auto manufacturing plant in North Las Vegas. The plant will be 3 million sq.ft., create 4,500 jobs and be backed by a Chinese entrepreneur. Tesla’s deliveries meanwhile rang alarm bells on Wall Street and its shares dropped almost 8 percent, apparently because it didn’t surpass its delivery predictions, merely met them. It forecast 17,000-19,000 deliveries in the fourth quarter and delivered 17,400; it forecast 50,000-52,000 for the full year and delivered 50,580.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI saw its fifth consecutive month below the 50 mark, with December’s 47.5 percent a significant drop from November’s 48.6 figure. New orders and production fell with the latest deterioration in overall conditions the worst since October 2010, when data collection on this survey began. Companies are lowering inventories, discounting prices and, for the sixth consecutive month, cutting back on staff.

It appears that Canada will confirm its recession at the end of January with two consecutive quarters of negative GDP. A recession is a normal part of the business cycle. What is odd is that Canada usually mirrors U.S. business cycles, which is why a recession in Canada is also of concern. There was a slight improvement in export orders, both from the U.S. and further afield, probably due to the weak loonie (the one dollar Canadian coin that bears an image of a loon on its obverse).

However, exports were not enough to offset what is ‘happening at home.’ Again it is Alberta and BC who are suffering the most, who are in fact responsible for Canada’s below-par performance. Ontario continues to buck the Canadian trend, recording a sustained rise in manufacturing output.

Canada produced 0.91Mt of crude steel in November, down 5.3 percent y-o-y. Preliminary figures suggest another record year for new vehicle sales in Canada, with a total 1.898 mn vehicles being driven off the lots. FCC saw a sales increase of 1.1 percent to 293,061 vehicles, Ford’s figures declined 4.6 percent to 278,437 and GM recorded a 5.4 percent increase to 263,335 vehicles. Sales of light trucks – which include SUVs, minivans and pickup trucks – were up 8.8 percent, cars down 6.3 percent.

MEXICO saw its December PMI fall slightly from November’s 53.0 reading to 52.4 percent. Manufacturing conditions improved in December but at the slowest pace for three months. There was a solid increase in new order volumes, with the rate of growth in production back to a three-month low. Employment rose at the slowest pace since June. All in all, there is an air of optimism around the Mexican manufacturing scene.

Mexico’s domestic auto sales are headed for a record this year, with almost 120,000 units having been sold in the year’s first 11 months, for an almost 20 percent y-o-y gain. Even VW is doing well, with a 10 percent sales gain through November (Mexico has been producing VWs since 1967). As we know, Mexico is big in the automotive business, and improved domestic sales are icing on their cake. Mexico produced 1.31 Mt of crude steel in November 2015, down 9.5 percent y-o-y.

In Short Supply in November: None
  1. The ISM Backlog of Orders Index was at 43.0 percent in November, 0.5 percentage point up on October’s reading of 42.5 percent. Of the 89 percent of respondents who measure their backlogs, 15 percent reported greater backlogs, 29 percent smaller backlogs and 56 percent no change from October. The only industry reporting an increase in order backlogs in November is Textile Mills. The 12 industries reporting a decrease in order backlogs during November — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Paper Products; Miscellaneous Manufacturing; Machinery; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; Plastics & Rubber Products; Transportation Equipment; and Fabricated Metal Products.
  2. The ISM New Export Orders Index was at 47.5 percent for November, the same reading as for October. This is the sixth consecutive month of decrease in new export orders. The five industries reporting growth in new export orders in November are: Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Machinery; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The eight industries reporting a decrease in new export orders during November — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Non-metallic Mineral Products.
  3. The ISM Imports Index, is at 49 percent in November, or 2.0 percentage points higher than October’s 47.0 reading. This represents contraction in imports for the second consecutive month. The seven industries reporting growth in imports during the month of November — listed in order — are: Textile Mills; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; Chemical Products; Plastics & Rubber Products; and Fabricated Metal Products. The six industries reporting a decrease in imports during November — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Machinery.

The MAPI foundation recently brought out reports forecasting, for the next three years, an inflation-adjusted GDP expansion of 2.0 percent in 2016, 2.7 for 2017 and 2.5 in 2018. Manufacturing production is expected to overtake 2015’s growth rate of 1.8 percent, with 2.6 percent in 2016, 3.0 in 2017 and 2.8 in 2018.

Cutting tool consumption by U.S. Manufacturers was at $170.8 million in September, down 1.3 percent from August and down 11.7 percent from September 2014.

Kansas City, Missouri has seen 11 suppliers to Ford and GM set up shop in the area, providing 1,795 jobs that pay $74.1 million, taking up over 2.2 million ft2 of industrial real estate. The area is the second-largest auto hub in the U.S. and is lauded for the quality of its workforces and of its educational institutions. Ford produces its F-150 and its Transit full-size van in the area, which is home to some of the world’s largest auto-supply companies.

News on the aerospace front again sees Boeing picking up contracts around the world. TAP, Portugal’s flagship, is in for 53 long and medium-haul neo-jets with a catalog value of $8.5 billion. Boeing will supply India’s Jet Airways, the country’s second-largest airline, with 25 new 737 MAX8 aircraft, with options for 50 more. The price tag for these fuel-efficient carriers is in the order of $8 billion. Boeing forecasts a demand for some 3,000 jets worth $350 billion by 2034 in Latin America and the Caribbean.

GE Aviation, for its part, picked up a maintenance contract from Emirates for its fleet of 150 Boeing 777s. The MRO on the GE9X engines for 12 years is worth $16 billion.

And Pratt & Whitney’s new PW 1900G Pure Power Geared Turbofan (GTF) engines went on their first test flight at the Mirabel Flight Test Center near Montreal. The engines are for Brazil’s Embraer for its E2 jet series.

General Motors will, after all, sell Chinese-made SUVs in the U.S. The Buick Envision, made in China, will join the Encore, built in South Korea and the Enclave, built in Michigan, in the U.S. Market.

The automotive news wouldn’t be complete these days without mention of Tesla, who recently announced a third-quarter loss of $230 million on revenues of $937 million. But news of progress with upcoming models was sufficient to send their share price up 9 percent. In the third quarter they produced 13,091 vehicles and delivered 11,603. They estimate total production for 2015 of 50 to 52,000 vehicles, with global orders for the S model increasing, over 50 percent of which are sold to China. It’s not all good news though: all model S cars sold since 2012 will be recalled for a security problem with front seatbelts which failed to fasten correctly. No accidents have been reported.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI saw its fourth consecutive month below the 50 mark, with November’s 48.6 percent reading up from October’s 48.0 figure. November saw a slightly slower downturn in overall business conditions than the low seen in October. There was a moderation in manufacturing production cuts in November, with the latest decrease in output the least marked for three months.

New business levels decreased at a sharper pace than in October, and there were continuing efforts to adjust employment levels and inventories. There was a slight improvement in new export sales in November. Ontario put in the best performance in the month, and showed the fastest rise in export sales since March 2011. Alberta and British Columbia were again ‘in trouble.’

Overall manufacturing employment fell for the fifth consecutive month. Canada produced 1.03Mt of crude steel in October, down 7.7 percent y-o-y. Again, in spite of a slow economy, Canadians bought 145,426 new vehicles in November, up 4.7 percent y-o-y. This represents the highest November sales on record, along with an annual figure estimated to reach 1.94 million units.

Quebec put its second cash injection in a month into manufacturer Bombardier. The company gave up a stake in its rail unit for the funding to get its C-series jetliner flying. The Caisse de depot et placement du Quebec (CDPQ), which is Canada’s second-largest pension fund, will put $1.5 bn into Bombardier in exchange for a 30 percent stake in its rail subsidiary Bombardier Transport.   Bombardier Transport would be spun off into a separate entity registered in Britain, with its headquarters remaining in Berlin. The Bombardier rail unit employs 39,700 people worldwide and has, according to the company, a $30 bn order backlog.

MEXICO’s PMI for November was at 53.0, unchanged from October’s 53.0 reading.  Production and New Orders picked up in November and growth accelerated to its fastest since April. New export orders were up only slightly. Mexico’s manufacturing sector remains on track to put in a good performance for the rest of the year. Mexico produced 1.75 Mt of crude steel in October 2015, up 8.0 percent y-o-y.

III.  U.S. FORGING INDUSTRY

by Royce Lowe

FORGING MAGAZINE has recently published their 2016 Business Outlook Survey, involving respondents whose operations perform all major types of forging, from open- and closed-die forging to impact extrusion, as well as ring rolling. The scale of their production activities during 2015 shows a range of shipments, from less than $1 million/year (25.5% of respondents) to over $100 million in shipments (14.5%.)

The survey went further than shipments, taking into consideration what might be termed capacity utilization. Just 19.6% of respondents indicated their operations having been active at 80-100% of installed capacity; 43.5% of all respondents indicated their operations having been active at less than 70% of capacity.

In line with these data, the 2016 Business Outlook Survey respondents are almost evenly split in their assessment of their current business conditions: 33.3% of all respondents are confident their 2015 shipment volumes will rise over the 2014 record, 30.3% indicated their shipment totals will be down year-on-year; and 36.4% stated they expect results that are “about the same” as 2014.   For comparison, the Forging Industry Association reported the industry’s total 2014 shipments rose 10.8% in value from 2013, to $11,918.8 million.

No single metal or alloy is singled out in the positive evaluations of respondents’ assessments of 2015 shipments, but impression-die forgers appear most confident that their 2015 shipments will improve on last year’s results. Among the major production classes, ring rollers appear least confident about their 2015 results.

Taking the same approach to the 2016 prospects, we can detect a slight bias toward the positive outlook (49.2%) over the “about the same” crowd (41.5%). Aluminum forgers (61.1%) and impression-die forgers (62.5%) are the most likely to expect rising shipments in 2016. In general, the differences between those predicting increased shipments in 2016 and those predicting shipments to remain steady with 2015, are distributed fairly evenly across the various metal and alloy categories.

IV. MANUFACTURING TALK RADIO

by Tim Grady

In December, two leading voices from WeiserMazars LLP, Partner Vince Paolucci and Senior Tax Associate Gianluca Carrabs, unpacked the benefits of the Section 179 Tax Deduction before the end-of-year deadline for filing closed the door on deductions. At the time of airing on the 1st, the deduction still was in limbo in Congress making it nearly impossible for any company to use. However, it has since been made permanent in the $1.1 trillion spending bill passed by Congress on December 18, 2015. WeiserMazars LLP is a client-centered, full-service accounting, tax and advisory firm with over 100 partners and 700 professionals in ten U.S. offices.

PrintWeiserMazars is the independent U.S. member firm of Mazars Group – a prominent international accounting, audit, tax and advisory services organization with nearly 15,000 professionals in more than 70 countries.  For more information on Section 179 or other related topics, please contact Vincent Paolucci via email at Vincent.Paolucci@WeiserMazars.com or via phone at 516.282.7267.

 

Also on December 1st, Brad Holcomb, chair of the ISM’s Manufacturing Report on Business® committee, explained the detail within the report. On December 8, Tony Nieves, chair of the ISM’s Non- Manufacturing Report on Business® committee, joined Brad on the show to present the ISM’s annual forecast for 2016, which is fairly positive.

With us on December 15th was Daniel J. Meckstroth, Ph.D., Vice President and Chief Economist for MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation, and Bruce McDuffee, Executive Director of the Manufacturing Marketing Institute.  Dan discussed the latest MAPI quarterly economic forecast for manufacturing sectors. Hear the podcast on how the next three months could roll out and what the key takeaways are for manufacturers in the U.S. and around the globe. Then at 1:30pm we discussed why marketing matters for manufacturers with Bruce McDuffee.  How can manufacturers effectively address the unique challenges they face?  Learn about strategies, tactics and skills that will move your marketing efforts from cost to value, enabling engagement with your customers at every stage of the buying cycle.

On Tuesday, December 23, Senior Correspondent Norbert Ore, Director and Head of Industry Surveys for Strategas Research Partners provided insight into the 18 global business surveys he follows on PMI indices around the world. The Adam Clark, Chief Strategy Officer of Tangible Solutions discussed how additive manufacturing, often called 3D printing, is fundamentally changing the design, production and distribution of goods in the 4th Industrial Revolution.

Finally, on December 30, talk show co-hosts Lew Weiss and Tim Grady reviewed the stories of 2015: what was hot, what was not, and where things look to be going in 2016. All of these shows can be heard at www.mfgtalkradio.com

V. EUROZONE

by Royce Lowe
eurozone

Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for December was 53.2, its highest since April 2014, thus ending the year on a high note. The month saw increases in rates of growth of production, new orders and new export orders. The average PMI for the year’s final quarter, at 52.8, was the best growth showing since the first quarter of 2014, and an average for 2015 as a whole better than those for the previous three years. Even Greece was back on track, above the 50 mark, and France posted a 21-month high. This is an improvement, but Eurozone manufacturing is still some 9 percent below its pre-crisis peak.

PMI High/low
Italy 55.6 (54.9) 57-month high
Ireland 54.2 (53.3) 5-month high
Netherlands 53.4 (53.5) 3-month low
Germany 53.2 (52.9) 4-month high
Spain 53.0 (53.1) 2-month low
France 51.4 (50.6) 21-month high
Austria 50.6 (51.4) 4-month low
Greece 50.2 (48.1) 19-month high

VW – That’s it then…now we’re looking at a small group of culpable engineers, dating back to 2005. The Group’s sales, including all 12 brands, were down 2.2 percent in November. Bentley Group sales were up 20.6 percent.

Siemens, apparently not at all deterred by China’s economic slowdown, will open a R&D Innovation Center in that country, and its 300 future employees will develop new ‘digitalization solutions’ for both Chinese and international markets.

Airbus aimed to deliver its first A320neo aircraft by year end. This is the model that boasts a 15 percent fuel saving.

Germany is looking to set a new record for exports in 2016. The weak euro, it estimates, will set it on its way to a rise in exports to 1.191 trillion euros ($1.3 trillion.) Germany’s new car registrations were up 7.7 percent y-o-y in December to 247,000 units; France up 13 percent to 183,726; Italy up 19 percent to 103,395 and Spain, still benefitting from a scrappage program that has been extended to mid-year, up 21 percent to 88,609 units.

Crude steel production in Germany in November 2015 was at 3.48Mt, down 3.1 percent y-o-y; in Italy 1.86Mt unchanged y-o-y; in France 1.18Mt, down 14.7 percent y-o-y and in Spain 1.21Mt, down 3.0 percent y-o-y.

Russia’s crude steel production for November 2015 was at 5.71Mt, down 3.1 percent y-o-y, Ukraine’s was 1.88Mt, up 3 percent y-o-y.

Production and new order growth slowed further as The UK’s PMI figure dropped to 51.9 in December from November’s 52.5 reading. The UK produced 0.668Mt of crude steel in November, down 33 percent y-o-y. They seem to have stopped making steel in the UK.  The UK saw registration of 2.63 new vehicles in 2015. This is up around 6 percent on 2014 and is the fourth consecutive year of growth. December 2015 registrations are thought to be the highest on record.

The year 2015 overall was below that of 2014, with the average indices for production, new orders and employment below those achieved in 2014. The consumer goods sector was again the engine of production and new order growth, with employment rising for the 30th time in the past 32 months. There was an increase in demand from the U.S., Singapore, China and Europe.

The JP Morgan Global Manufacturing PMI – a composite index produced by JPMorgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – was down in December to 50.9 from 51.2 in November. The global manufacturing sector saw a disappointing end to the year, with rates of expansion in production and new orders both slowing in December. The average PMI in 2015 was less than those seen in both of the preceding two years. A weaker expansion at investment and intermediate goods producers was partly offset by a slight increase at the consumer goods level. There was a continuation of the downturn in emerging markets manufacturing, with indices for China, India, Brazil, Russia, Indonesia and Malaysia all in contraction. On the plus side, global manufacturing employment rose for the third straight month, with job creation noted at consumer and intermediate goods producers.

VI. ASIA OUTLOOK

by Royce Lowe
china

CHINA produced 63.32Mt of crude steel in November 2015, down 1.6 percent   y-o-y; Japan 8.75Mt down 4.7 percent y-o-y; India 7.14Mt, unchanged y-o-y and South Korea 5.89Mt, unchanged y-o-y. Taiwan produced 1.62Mt in November, down 23.0 percent y-o-y.

The Caixin China manufacturing PMI for December, seasonally adjusted, was down slightly to 48.2 percent from November’s 48.6. Production declined for the seventh time in the past eight months, amidst a further fall in new orders. Business conditions have deteriorated in China for the past ten months, but the latest was ‘modest overall.’ Relatively weak market conditions and reduced client demand prompted firms to cut production.

Chinese y-o-y vehicle sales growth is forecast to hit 3 percent for this full year, with a higher increase expected in 2016. November saw sales of 2.51 mn vehicles, 12.9 percent up on October, with an eleven-month total of 21.79 mn, representing a 3.3 percent y-o-y increase.

China General Nuclear Power Corporation (CGNPC, or CGN) will invest €1.6 bn ($1.7 bn) in the French firm Inovia Concept Développement (ICD), a company in the business of developing photovoltaic panels for solar power, to produce a minimum of 1 gigawatt over 5 years.

JAPAN’s manufacturing sector saw a continuation of the improvement noted in the month of November, with significant upturns in the rate of increase of new orders and production. Employment was also up, at a faster rate than the 2015 average. All data indicate a sustained marked improvement in operating conditions at Japanese manufacturers.

The Nikkei manufacturing PMI was unchanged from November’s 52.6, the highest reading in 20 months. This is the strongest quarterly average (52.5) since the first quarter of 2014 (55.3). Growth in new orders was attributed to new product launches and advertising campaigns. Consumer and investment goods sectors showed marked growth in new orders. Exports were up for the third consecutive month due, some companies say, to increased business with Taiwan and Southeast Asian countries.

Japanese car sales for the year 2015 were down 9.3 percent y-o-y, due mostly to reduced sales of their ‘mini-cars,’ cars with a 600 cc engine.

Japan has sold a ‘bullet train’ to India, along with a loan for $8 bn. The train will run from Mumbai to Ahmedabad, will cost $15 billion in total, and will cut the journey time from 8 hours to 2 hours. Last year India finally got a train to do 100 m.p.h., about half the speed the Japanese train will do.

It may be interesting to note here that the world speed record for a steam locomotive is still held by ‘Mallard’ in England – they gave trains names in those days – which hit 125.88 m. p. h. (202.58 k.p.h.) back in July 1938, taking the title away from Germany.

In INDIA, the Nikkei PMI reading fell from 50.3 in November to 49.1 in December. This reading represents a PMI below 50 for the first time since October 2013, the date since which new orders last contracted. Consumer goods new orders and production rose, but there was a fall in intermediate and investment goods sectors.

Total manufacturing fell in December after increasing for 25 consecutive months, with the rate of contraction the most severe in almost seven years. Incessant rain and flooding in Chennai have been named as major factors in the manufacturing decline. In spite of all this, additional workers were hired in December, based on expectations of improved near-term domestic demand.

India’s Bharat Forge has signed a long-term agreement with Rolls-Royce whereby the forge will supply critical, high quality forged and machined parts for certain Rolls-Royce engines. Bharat Forge has undergone the necessary stringent quality and process approvals.

Amway, a behemoth U.S. Corporation, in the beauty, personal care and home care business, is to open a plant in India, which will immediately create 500 direct jobs and 1,000 indirect jobs. All products then sold in India will have been manufactured in India. Amway already has plants in China and Vietnam.

UN Secretary General Banki – Moon recently chaired a summit of the Global Geothermal Alliance Initiative, attended by 36 countries, where it was deemed that by 2030 there will be a six-fold increase in supply of geothermal energy, which is presently increasing at 3-4 percent per year and generating 12 gigawatts annually. There is a potential of 100 gigawatts. The process involves drilling into hot rock and using the heated water to generate electricity. ‘Thermal hotspots’ have so far been found in Africa, SE Asia and Latin America.

VII.  SOUTH AMERICA

by Royce Lowe

Brazil’s crude steel production for the month of October 2015 was 2.55Mt, a 4.5 percent y-o-y decrease. Brazil’s manufacturing performance deteriorated further in December, with production and new orders down for the 11th consecutive month. In spite of a slight increase in the PMI to 45.6, December production and new orders fell at rates that although slower than those of November were nonetheless significant. Employment fell along with all this. The only bright spot was a modest increase in new export orders.

It seems that Brazil has problems with much more than its manufacturing sector, including a very unhappy, and some say very incompetent, president.

Embraer Commercial Aviation of Brazil begins deliveries of its $1.1 billion contract to China’s Tianjin Airlines, delivering the first two of its 20E195 jets of its order for 20 20E195 and 20E 190 aircraft.

VIII. GLOBAL PMIs SUGGEST SLUGGISH GLOBAL GROWTH

by Norbert Ore

The December 2015 business survey insights show that global growth slipped slightly in December, but still remained positive overall. Of the 18 global surveys, nine are growing and nine are declining. The nine that are growing combine for an average PMI of 52.4, while the nine in decline average 47.4 percent.

The JP Morgan Chase Global PMI (50.9, -0.3) which combines reports from 24 countries tells a similar story. Overall, the Eurozone edged higher (53.2, +0.4) and is growing for the 30th consecutive month, the strongest reading since April 2014. Eurozone manufacturing has strengthened as the U.S. has weakened and the stronger USD has helped their recovery.

Germany (53.2, +0.3) continued positive with its 13th consecutive month of growth. The remaining seven Eurozone countries average 52.6 percent and were again led by Italy (55.6, +0.7) and Ireland (54.2, +0.9). Note: This paragraph usually starts “With the exception of Greece, the Eurozone is growing,” however, this month Greece (50.2, +2.1) made it to the topside of the mid-point signaling that they have hit a bottom and eked out a small amount of growth.

The UK (51.9, -0.6) registered its 33rd consecutive month above the 50 mark. While the rate of expansion slowed, the UK manufacturing sector continues to benefit from the demand for consumer goods.

As for North America, Canada (47.5, -1.1) failed to grow for the fifth consecutive month. Mexico (52.4, -0.6) expanded at a pace slightly below its six month average of 52.6.

The official data for China, the CFLP PMI (49.7, +0.1) continues to offer insight to a lack of change as it averaged 49.9 percent for the year. However, the Caixin China General Manufacturing PMI (48.3, -0.3) registered a rate of contraction slightly below 48.7 percent that is the average for the year. One indicates no relative change and the other indicates a slow decline – the latter of the two seems more plausible. (Note: The Caixin China General Manufacturing PMI was formerly the HSBC survey).

IX. CREDIT MANAGER’S INDEX

by Chris Kuehl

Dr. Chris Kuehl

This has not been the greatest start to a year – regardless of what happens from this point 2016 will be seen as a year that began with a lot of angst over everything from the price of oil to the state of the Chinese economy. It I a good idea to take a slightly longer look and consider what we knew as 2015 came to a close. As the year came to an end there were two ways the Credit Managers’ Index could go – there was always the distinct possibility it would trend in the same negative direction it showed in November and then there was the opportunity to show some positive movement. There was no expectation of dramatic movement in either direction. The latest numbers are a little better than November’s and the bulk of the change seems to be due to the retail sector and its response to the consumer.

The overall CMI score eased upward ever so slightly from 52.6 to 52.8; for all intents and purposes a flat reading. The good news is that the numbers did not dip as some had expected. The other good news is that most of the stability was in the unfavorable categories and that is slightly more encouraging as far as the future is concerned. The favorable index went down a bit – from 57.7 to 56.6 but overall the favorable categories remain comfortably in the middle 50s and clearly in expansion territory. The unfavorable index emerged from the contraction zone as it went from 49.2 to 50.3. Granted this is a razor thin margin and no reason for wild celebration but the reading this month is still better than it has been since August.

There may have been some good news in the overall CMI but that good news was not shared in the manufacturing sector. The overall score deteriorated from 52.3 to 51.6 – hanging on to the expansion zone by the thinnest of margins. The big changes were in the favorable sectors as the overall score fell from 56.8 to 54.1. There was also some movement in the unfavorable sector but not all that dramatic as it went from 49.4 to 49.9. That is a very slight improvement and essentially flat but at least it is not still trending down any further than it was.

The news that has been emerging thus far this year has not been all that encouraging as the Purchasing Managers’ Index has now trended in the contraction zone for two months in a row. The biggest concerns involve the collapse of the energy sector and the slowdown in export volume.

  X. THE MANUFACTURING SCENE : CROSSING BRIDGES

by Royce Lowe

Cast iron has been traced to China in the 5th century BC, when examination of the microstructure of artifacts proved that such was the case. We started using it in the West in the 15th century, and in fact Henry VIII was the first to declare its use for armaments.

Cast iron as such is a very brittle material, and it wasn’t until 1943 that an American by the name of Keith Millis invented what came to be known as ductile iron or nodular iron. He and two colleagues were awarded a patent in 1949, for the production of ductile iron by magnesium treatment.

‘Normal’ cast iron contains graphite flakes and is extremely brittle, reading about 0.5 percent on the elongation scale. Ductile iron contains spheroidal graphite and reads about 20 percent elongation. Apart from cooking utensils, cast iron was used for bridges in the eighteenth and nineteenth centuries in England, several of which met rather disastrous ends due to overloading and subsequent collapse. This article will not be a dissertation on the properties of cast iron, rather it will be the story of two bridges.

The first one, now a historical monument, was built in Shropshire in England over the River Severn and was opened in 1781. It was the world’s first cast iron arch bridge and at the time this fact was greatly celebrated. The bridge had a span of about 100 feet and some 385 tonnes of cast iron were used in its construction. The bridge served its purpose for some time, allowing transport of iron-making materials over the Severn gorge, with occasional changes in maximum allowable loads and toll rates. But cracks appeared, as they were wont to do when graphite flakes were involved, and after closing the bridge to vehicular traffic in 1934 and subsequently collecting tolls from pedestrians for a few years, the bridge was finally closed to any kind of traffic in 1950. Repairs were carried out and the bridge was the subject of many TV documentaries and, with the advent of digital photography, a delight to the general public.

If we fast forward a few decades we get to hear about a manufacturing technique called 3D Printing, or Additive Manufacturing. The process involves the formation of successive layers of material under computer control to create a three-dimensional object. Most of us are relatively new to this, and it seems to have been around for only a few years. It actually started, in a small but sophisticated way, in 1985, in Japan, and was quickly taken up in North America. Thanks to numerous individuals and teams spending countless hours on the processes, we have arrived at a stage where additive manufacturing is taking a more and more advanced place in the whole manufacturing scene. It is not, not yet in any event, at the point where it will replace what we have come to know as mass production, or at the present time, just normal ‘subtractive’ manufacturing.

You might imagine the volumes that have already been ‘written’ on 3D printing, and the forecasts for its use between today and say, 2020. (If you google 3D printing you get 82 million results in 0.50 seconds.) We’ll need to wait and see, but one thing is for sure: 3D Printing is here to stay. Witness a project underway in the Netherlands, where a Dutch start-up, MX3D, has unveiled plans to build the world’s first 3D-printed bridge across an Amsterdam canal, a technique that could become standard on future construction sites.

The company plans to print a (pedestrian) bridge over water in the centre of Amsterdam, involving the use of robotic arm printers ‘walking’ across the canal as it slides along the bridge’s edges, essentially printing its own support structure out of thin air as it moves along. Specially-designed robotic arms will heat the metal to 1,500ºC (2,700ºF) to painstakingly weld the structure drop-by-drop, using a computer program to plot the sophisticated design. The underlying principle is quoted as being ‘very simple’ by Joris Laarman, the bridge’s designer. It involves connection of an advanced welding machine to an industrial robot arm.

“We now use our own intelligent software to operate these machines so they can print very complex metal shapes which can differ each time,” Laarman said of the project, which also involves the Heijmans construction company and Autodesk software.

So there we have it……from the industrial revolution era of Iron Bridge, with its heat and dirt and smoke, to the bridge over the Amsterdam canal, planned to be made by a printing process that will deposit successive steel nodules: like the Iron Bridge, a testimony to man’s mastery of technology

XI. THE FINAL WORD

final wordby Royce Lowe

What can be said following all that has gone before in the past month or so? There seems, on the face of it, to be none too much room for optimism, but optimistic we must be. We have been in worse places before and come through them; we have to hope that our basic ingenuity will bring us through them again.

 

 

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