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Taking a working break from free trade
Unfortunately, the past decade hasn't been a stellar one for job creation. If you take a look at the private jobs in the U.S. in September 2009, a little over 109.1 million, and compare that to the number in September 1999, about 109.7 million, you are left with an empty feeling. If you consider that the overall population grew 9 percent during that same time, you have an even emptier feeling.
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RIP: High-volume metal manufacturing in the U.S.
One thing is for sure, globalization hasn't slowed down with the economic slowdown. Actually, I'm kind of stunned that more migration is taking place. I thought most of the "offshoring" and "nearshoring" decisions had been made by the multinational OEMs. Anecdotal evidence suggested that many parts once made in Asia were coming back so that supply chain managers could maintain greater control. Apparently, that isn't so.
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Reworking a codependent relationship
Did you hear? The automotive biz is rockin' and rollin'. General Motors—that's right, the same GM that trudged to bankruptcy court earlier this year—reported 2009 growth of 40 percent. Heck, the industry overall reported 90 percent growth in August. Simply amazing!
Oh, I forgot to mention: You have to move to China to join the party.
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Keeping manufacturing competitive
That was the message manufacturing experts with deep knowledge of the global marketplace sent to attendees at the Competitive Manufacturing Strategies session of the Pan IIT conference, a networking event for graduates of the Indian Institute of Technology, in Schaumburg, Ill., on Oct. 10. The panelists for the session, moderated by Mike Guerin, CEO, Amada America, were Ashutosh Padhi, a partner with McKinsey & Co.; Om Nalamasu, vice president of advanced technologies, Applied Materials; and Bharat Vedak, senior vice president, intelligent solutions group, Deere & Co.
Guerin set the stage for the discussion by describing the situation most fabricators face today: trying to deliver quality parts in a just-in-time fashion as orders become more varied and volumes continue to shrink.
Padhi didn't have comforting news for manufacturers in attendance. "The biggest wave of manufacturing offshoring is yet to come," he said.
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Fertilizer for job growth?
A few days ago, my fellow blogger, Eric Lundin, wrote a post entitled " Too little, too late," in which he discussed U.S. pipe producers asking the U.S. Department of Commerce to impose duties on steel pipe imported from China.
Eric shed light on the snail's pace at which the legal process moves to address serious issues— a pace that often leads to feeble attempts to close the barn door long after the horses have trampled and chewed through many, many fields in their escape. In this case, think of each blade of grass as a job lost or domestic pipe facility closed. At least the horses deposit fertilizer to help re-grow the mangled grass.
This topic also was featured in the September issue of "Tube Talk," and subscribers shared their thoughts about recent related DOC rulings and tariffs in general. What do they think should be done?
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From buying Cristal to being cheap
It's 2005. A group of investment bankers visit a dimly lit New York club. One banker in his 20s makes more than a million a year packaging mortgages and sending them on to the big Wall Street firms. Two waiters arrive carrying four champagne bottles each with tiny sparklers. Everyone turns to look. Those bankers just ordered four bottles of Cristal at $1,000 a pop.
It's 2009. Tom Tseng, general manager of Chinese bicycle-maker Tandem Industries, tells a newspaper reporter that "China's ability to consume has reached a fairly high level … [while] in the U.S. people now only want to buy cheap things."
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A welder, waiting
It's the waiting that drags you down.
With our unemployment rate edging near 10 percent, many are waiting for companies to finally rehire. I can imagine them shaking their heads when they look at the Dow's ascent in recent weeks. Somebody's making money, but it certainly isn't them.
I'm not sure if welder Charles Salak has been paying attention to the Dow, but he's been busy with home improvement projects, occasionally working for a relative, repairing farm equipment. He isn't sitting still. In August he was laid off from Katana Summit, a wind tower manufacturer in Columbus, Neb. The company had no choice. Katana is awaiting the go-head for a 200-plus tower order. Wind energy is capital-intensive, so even today, with the promise of government help, it takes time to get the green light. If and when Katana finally gets the go-ahead for the order, Salak may get his job back. But for the past few weeks he's been waiting.
New York Times reporter David Segal visited Columbus and used Salak as the centerpiece for his article, which appeared yesterday on the front page of the business section. Segal also visited Behlen Manufacturing, a metal fabricator specializing in farm products, machine tools, and custom fabrication. Especially poignant was Segal's description of idle equipment on Behlen's plant floor. Tony Raimondos Jr., son of the company president, gave the reporter a tour of the expansive, 850,000-square-foot shop floor. (If you need space, Nebraska has it.) Riding with Raimondos on a golf cart, the reporter recalled:
"Every minute or two, you come upon a couple of guys who are galvanizing metal or fabricating tubing. Mostly, it's quiet.
"'We're hopeful,' says Tony Jr., driving past an unused ... steel punching machine. 'But it's really strange to see it look like this. The other day I looked through this window in a door to the factory floor, and it was dark. During second shift.'"
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Proximity makes a difference
On a flight to a manufacturing event last week, I read an article in BusinessWeek that got me pretty down. The headline on the magazine cover screamed, "America's Manufacturing Crisis." The topic: Why stuff's invented stateside and sent abroad for manufacturing.
"While the Japanese, Koreans, Taiwanese, and Chinese plowed billions into megaplants to churn out commodity products, America steamed ahead in more lucrative pursuits, such as software, life sciences, and financial services," the article stated. "As for companies such as Dell and Apple, they could still reap high profits by focusing on marketing and design while letting offshore contractors handle the grunge work."
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GM & Chrysler - Will you buy their cars?
The August issue of "Stamping News Brief" (SNB) featured comments from an SNB reader responding to an item in the previous month's issue about employment in the metal stamping sector. This reader said, "I am soon to be unemployed, and there are really not many prospects around here for employment as an engineer. I currently am traveling 55 miles one way to work for 25 percent less than a year ago. As more and more people here in the U.S. have to accept lower paying jobs, I really do not know where the off-shoring companies expect to find their markets. China sure is not much of a market.
"[The company I work for] is a former automotive supplier with a <10PPM, but yet all of the former Big 3 are off-shoring the parts we made. With our bailout money, they are transferring our equipment. I used to be a staunch buy-American, but I believe [domestic automakers] have lost about 150 potential automobile buyers here. I sure hope they find their market in Costa Rica."
The August SNB then described how some talk show hosts and others in the U.S. have been calling for a boycott of GM and Chrysler and asked subscribers about their car buying plans.
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A recession takes no prisoners
It seems Paul Gordon of the Peoria Journal Star hit a chord last week.
Two metal fabricators in Morton, Ill., southeast of Peoria, changed ownership on the same day: Friday, June 26. Morton Welding, previously owned by Michigan-based BHM Technologies, was brought back under local ownership by a group of small investors. Another firm—Morton Metalcraft, currently undergoing bankruptcy reorganization—was sold to a Canadian company.
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