http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm The fabricator blog publishes commentary (containing links to more information) about timely topics of interest to the metal manufacturing community from editors of The FABRICATOR®, its sister publications, and thefabricator.com. Other recent blog topics include health care costs, skilled labor, education, the automotive supplier outlook, layoffs, and recaps of recent industry events. Check out the blog, read the commentary, and share your thoughts about these important topics. Add The Fabricator Blog to your news aggregator, and you'll see our editors' latest musings as they're posted. en-us Fri, 20 Nov 2009 15:58:23 -0600 Fri, 20 Nov 2009 07:42:00 -0600 BlogCFC http://blogs.law.harvard.edu/tech/rss http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/20/Renewed-hope-for-US-manufacturing In 1939 manufacturing provided about 30 percent of the jobs in the U.S. By November of 1943, it provided 38.8 percent of U.S. jobs. Shortly after World War II ended, the manufacturing portion was back to its prewar level. Except for a few expansions along the way, probably associated with producing military goods for the conflicts in Korea and Vietnam, it has been dwindling more or less steadily ever since. In August it slipped below 9 percent. Looking at the number of manufacturing jobs reveals a different picture. The total number of manufacturing jobs actually peaked in July 1979, at 19.6 million. For many decades, from 1965 to 2000, it never fell below 16 million. It had its ups and downs throughout those 35 years, but it seemed always to bounce back. After the recession of 2001, it didn't bounce back; the U.S. lost about 3 million manufacturing jobs in short order, and those jobs didn't come back when the recession ended. Then again, the U.S. still has a tremendous output; by some estimates, the U.S. provides more than 20 percent of the world's output of manufactured goods. This is from a country with 4.5 percent of the world's population. And judging by the results of the forming and fabricating industry's biggest annual tradeshow, FABTECH® International & AWS Welding Show, including METALFORM, many in this industry are confident that 2010 is going to be a good year for manufacturing. Although the attendance was lower than it was the last time FABTECH was in Chicago (2007), one editor that I know had a little trouble getting to every appointment because the aisles were crowded with attendees. Also, the expo organizers were extremely pleased to report that the number of exhibitors increased since the 2007 expo (1,043 exhibitors in 2009 versus 1,007 in 2007), and one exhibitor reported selling more than 20 machines. Not bad for four days of exhibiting. Looking forward, 75 percent of the show floor space for the 2010 expo (in Atlanta, Nov. 2-4) has been sold. Back to the manufacturing employment situation. Manufacturing jobs are hard to find now, but in time we'll be back to worrying about the skills shortage in this country. Do we have evidence that people want manufacturing careers? Glad you asked and yes, we do. The Fabricators & Manufacturers Association International® (FMA), one of the co-organizers, hosted dozens of educational conferences and forecast 320 conference attendees; it netted 327. More than 10 percent of those, 45 in all, were people who signed up on the spot. Separately, FMA commissioned a nationwide study and found that 56 percent of adults with kids would recommend their children pursue a manufacturing or technical career. Furthermore, the conference organizers invited students from Chicago-area high schools to attend, and more than 300 turned out. Of course, we don't have to reach 300 people at a time. Even small, one-on-one interactions can reap benefits. When leaving the expo one evening, I struck up a conversation with the cab driver, mainly because he wanted to know when to return to the expo the following day to pick up some fares. We got to talking about manufacturing and careers, and he said, "What about someone like me, who knows nothing about it?" I gave him my business card. He's already made it over a huge hurdle, getting out of Somalia (no kidding), so getting through a vocational program should be a piece of cake. What can you do? I recommend shooting a little bit of video of something that will dazzle teenagers, including an explanation of the process and the results, and posting it at www.youtube.com. By showing that these jobs aren't dirty and dangerous, I am confident that we can win people over and reduce the skills gap, one student (or one Somali cab driver) at a time. Work Force Development Fri, 20 Nov 2009 07:42:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/20/Renewed-hope-for-US-manufacturing http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/19/FABTECH-exceeded-our-expectations Economically speaking, it's been a grim year. Few industries have escaped the repercussions of the downturn, and ours—metal manufacturing—is among the hardest hit. It was under a heavy cloud of concern that a stressed, worried industry came together at the 2009 FABTECH® International & AWS Welding Show, including METALFORM earlier this week. Exhibitors wondered if attendees would come. Would companies that are making drastic cutbacks spring for the cost of sending people to the show? Would those who came buy? They came, they saw, and they bought. (TRUMPF sold four machines the first day.) FABTECH 2009 exceeded exhibitors'—and editors'—expectations. [More] Welding R&D Economy Fabricating FABTECH International Thu, 19 Nov 2009 14:03:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/19/FABTECH-exceeded-our-expectations http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/14/Lean-manufacturing-meets-health-care The coverage on health care reform has been driving me crazy lately. As the saying goes, there are two things that are good to have, but you don't want to know how they're made: laws and sausages. For weeks, article after newspaper article has described the art of sausage-making. But one report in recent days didnt cover so much sausage-making. In The New York Times Magazine, David Lenhardt wrote an in-depth expose, not on which lobbying group cut this or that deal with that lawmaker, but on practices that actually might improve the health system. Not surprisingly, the ideas aren't part of any of the health care bills floating around the Capitol. Many special interests are blocking any big changes to the systemagain, sausage-making I dont like reading about. Instead of lingering outside congressional offices, Lenhardt went to Intermountain Medical Center. For years doctors at the Salt Lake City hospital did something novel for the health care profession. Starting with a trial for treating acute respiratory distress syndrome (ARDS), doctors have written detailed protocols on how to carry out treatment. [More] Innovation Sat, 14 Nov 2009 17:51:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/14/Lean-manufacturing-meets-health-care http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/13/Taking-a-working-break-from-free-trade My two fellow bloggers have written about jobs, and I can't disagree with their points. Job creation is important both to the electorate and those they elect. 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. [More] Global Competition Fri, 13 Nov 2009 09:03:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/13/Taking-a-working-break-from-free-trade http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/11/No-layoffs-except-for-Congress Yes, Tim, it truly is about jobs. Congress can debate health care reform, bail out banks, extend unemployment benefits, work to develop a climate bill, increase the legislative budget, and do whatever else it does until the cows come home, but we need jobs—lots of good jobs—for the economy to improve. Jobs and a healthy economy are analogous to the chicken and the egg. You can't have one without the other. And without jobs and a healthy economy, the U.S. can't afford the flood of money Congress is spending these days. The current situation is a mindboggling conundrum—a mess. I don't have the answers, but I believe employers and employees can work together to mitigate job loss—just as the companies mentioned in my colleague's blog post did. Fabricating Update readers think so too. [More] Article Feedback Skilled Labor Employment Wages Business Management Economy Wed, 11 Nov 2009 09:36:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/11/No-layoffs-except-for-Congress http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/10/Its-about-jobs It's now one in 10, probably more. Take a walk and glance around. You'll probably see someone in need of a job. Within two blocks of my house, I know four who are unemployed—and those are just the neighbors I know. The Labor Department's release, which pegged October's unemployment rate at 10.2 percent, caught many off guard Friday. Most thought the rate would reach that point someday, but not so soon. During the past year, durable goods manufacturing unemployment more than doubled, from 5.9 percent to 12.9, the highest rate of any sector the labor department tracks. Break it down a bit more and the picture doesn't look quite as dire. In September 2008 the fabricated metal products sector employed 1.280 million; in October 2009 it was 1.275. And get this: Employment related to motor vehicles and parts actually increased by more than 4 percent. Could the sector finally be bouncing back? I know I'm hunting for diamonds in the rough here. Heck, I'd be pleased with cubic zirconium at this point. [More] Manufacturing Employment Business Management Economy Fabricating Innovation Tue, 10 Nov 2009 21:43:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/10/Its-about-jobs http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/6/Lean-adventures-continue I think I recently experienced one of those "Ah-ha!" moments that metal fabricators undertaking lean initiatives have pretty frequently. I was attending a meeting where the subject was improving communication between our ad sales team and our magazine production team. Incomplete and incorrect information was coming from the sales team, and the production team was not being prompt in responding to simple questions, which would delay the sales team's prompt replies to clients' requests. To be honest, personnel changes within our own organization have exacerbated this situation, but we are working through it as best as we can. Well, the moment of clarity hit me when we began talking about the forms the sales team uses. Each sales person had his or her own version of them. We're talking about five different sales people each with a unique version of an insertion order, which is the permission slip to run an ad, and an ad change form to designate typographical and style changes to existing ads. Our production manager had to search through these many different forms to find the most basic information. Needless to say, she doesn't look at the whole process as an efficient one. [More] Manufacturing Fri, 06 Nov 2009 10:14:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/6/Lean-adventures-continue http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/5/How-can-a-homebuyers-tax-credit-hurt-you If you agree that the government should get involved more or less directly in running the economy, you probably agree that the American Recovery and Reinvestment Act of 2009 is a pretty good idea. All told, it provides more than $500 billion in spending on infrastructure, health care, education, energy, homeland security, and law enforcement, and $275 billion in tax cuts. It's no secret that it included a provision to cut a home-buyer's federal tax bill by $8,000. According to www.federalhousingtaxcredit.com, "The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009, and before December 1, 2009." This might come as a shock, but this legislation has some drawbacks. How is it intended to work? It's not necessarily about getting people into homes. It's about getting people to crack open their wallets for related expenses. Indirectly propping up home sales is like throwing a rock into a pond; both send ripples out in every direction. Purchasing a home often leads to many expendituresrenting a moving van, buying a new appliance or two, purchasing some new furniture, maybe picking up a few gallons of paint to fix up the new place. That doesn't seem like a bad idea, does it? Well, on the surface it isn't a bad idea, but the bill itself was written badly. This might come as another shock, but it seems that our 100 senators and 435 representatives didn't think this one through. As pointed out by the editorial staff of The Boston Herald, in a column under the tongue-in-cheek title "'Stimulating' tax fraud," no home purchase documentation is required. Of those who have filed, 19,000 hadn't bought homes yet; 74,000 had owned homes previously; and one was four years old. It gets better. As noted in The Wall Street Journal article "Home-buyer credit tempts tax cheats," 53 of the illegal or inappropriate claims for the credit came from Internal Revenue Service (IRS) employees. Now that's moxie! Back to the economics of the situation. Here come the drawbacks. First, it probably boosted home prices by several thousand dollars because buyers suddenly had $8,000 more to work with, and sellers knew it. Second, it is a transfer program, the bane of economics. It doesn't create something of value; it simply moves money around from one group of people to another. Tax-paying homeowners and rentersand businesses such as yourscan do nothing but watch as first-time home buyers benefit from this subsidy. Third, it's too concentrated; it's too much money in too few hands. Sure, they'll spend some of it, but many argue that the spending won't amount to much. It might turn into a few ripples, but it's not likely to create big waves surging through the economy. Last, we really don't know how the money will get spent. A new appliance or two, or some new furniture? Maybe. I'd guess much more will be spent on plasma screen televisions, DVD players, and other fancy electronic gadgets, few of which are made in the U.S. In short, individuals and businesses likely will pay more in taxes to fund this program but won't get much benefit from them. If you're a manufacturer, it might end up hurting you more than helping you. Economy Thu, 05 Nov 2009 06:58:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/5/How-can-a-homebuyers-tax-credit-hurt-you http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/4/A-mostfitting-memorial-to-911 It's been eight years since the 9/11 attacks that destroyed the World Trade Center and killed almost 3,000 innocent prople— enough time for two presidential elections; U.S. military involvement in Afghanistan and Iraq; the fall of a dictatorship; the battle of New Orleans versus Katrina; the Great Recession; and countless other famous and infamous news-making events. However, none have supplanted the memory of that tragic morning when horrified Americans and our neighbors across the world watched the devastation unfold. Throughout these eight years, many 9/11 memorials have been suggested. Some have been realized, some scrapped, and some are in development. Perhaps the most fitting to date, the USS New York, steamed into New York harbor Nov. 2 as firefighters, bagpipers, and those who lost loved ones on 9/11 watched. As reported on CNN.com, the new Navy assault ship's bow was fabricated using seven and a half tons of steel recovered from the wreckage of the WTC. [More] Steel Current Events Fabricating History Recycling Wed, 04 Nov 2009 08:30:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/4/A-mostfitting-memorial-to-911 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/3/The-economy-It-could-be-worse The status of Cummins perhaps best sums up the manufacturing economy at large. We may be on the rebound, but all of the unemployed aren't heading back to work tomorrow. Last week the engine maker reported third quarter profits that exceeded expectations. Like so many, they got there by cutting jobs and inventory. According to a Bloomberg report, the company "cut about 7,500 workers, including fill-time and temporary employees, from late 2008 through June, and has since recalled about 900." About 900? That's good & I guess. [More] Skilled Labor Work Force Development Manufacturing Employment Business Expansion Economy Tue, 03 Nov 2009 07:23:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/11/3/The-economy-It-could-be-worse http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/30/RIP-Highvolume-metal-manufacturing-in-the-US On the day that everyone was rejoicing about the GDP growth in the third quarter of this year, I'm still thinking about an announcement that Swedish appliance giant Electrolux made earlier this week. Somehow, that doesn't strike me as being great news, particularly for Iowa residents and those metal fabricators and other suppliers that supply those factories. 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. [More] Global Competition Fri, 30 Oct 2009 10:12:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/30/RIP-Highvolume-metal-manufacturing-in-the-US http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/29/How-can-a-homebuyers-tax-credit-help-you Whether it's a good idea or a bad one is a matter of perspective. It's a tax credit related to a mortgage, and it can put up to $8,000 into the pocket of first-time home buyers. A quick look at housing start permits reveals the sad state of the residential construction industry. In January 2006, approximately 152,600 permits were issued for new-home construction. In January 2007, just 114,100 permits were issued. In January 2008, it was a mere 77,400. That's a 50 percent drop in two years. According to www.federalhousingtaxcredit.com, "The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009, and before December 1, 2009." What's the government's goal here? To encourage people to purchase real estate? Not necessarily. It wants to keep people employed. Building a new house creates jobs related to constructionwork for architects, builders, plumbers, and electriciansand unleashes a buying spree for furnishings and appliances. This, in turn, supports jobs in retail sales, transportation, and manufacturing. I suppose a cynic would say that people with jobs pay taxes, and therefore the government's goal is to sustain itself, but that's a debate for another day. Has this tax credit helped? Apparently. First, let's switch to a more sophisticated way to measure the data so we can gauge permit-issuing activity from one month to the next. Many activities are influenced by the seasons; statisticians work over the data for the year to come up with the seasonal influence, then run the numbers out for 12 months. The result is a figure that is seasonally adjusted at an annual rate. Again, using home construction permits as an indicator, we see that the industry was doing well in January 2006 (2,212,000 permits issued); faltering in 2007 (1,626,000 permits issued in January), and foundering by 2008 (1,102,000 permits in January). By January 2009 it hit bottom when 531,000 permits were issued, seasonally adjusted at an annual rate. So now let's get back to that question: Did the tax incentive work? Housing permits climbed unsteadily in 2009, reaching 580,000 in August. That's a 10 percent climb in seven months. Also, the end of the tax incentive program is looming (it expires Nov. 30), and the housing industry is feeling the effects. The rate of permit issuance fell to 575,000 in September. Will Congress extend the plan? It appears as though it will. One likely scenario is to extend the entire tax benefit into 2010, then phase it out quarter by quarter. Will extending it help fabricators? Probably. Last year wasn't a very good year for appliance manufacturing (employment held steady at 72,000 employees) and 2009 was worse. In August it was down to 63,800. In the furniture industry, the situation was grim; it fell from 328,900 employees in January 2008 to 239,300 in August 2009. Whether these trends change direction remains to be seen. I'll keep an eye on them and let you know in a future blog post. Construction Thu, 29 Oct 2009 12:01:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/29/How-can-a-homebuyers-tax-credit-help-you http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/28/Lack-of-help-for-small-business-is-obscene Fox News—most people either love it or hate it. I'm indifferent about it, preferring to look at it as I do most media: Take what I hear with a grain of salt and watch out for bias. Just yesterday, host Greta Van Susteren chatted with David Cho, financial reporter for the "Washington Post" about how small businesses are doing. Cho authored an article in the "Post" Oct. 22 entitled "Rescue efforts shift to small business." The crux of that effort is getting affordable credit into the hands of small businesses. Fabricating Update subscribers are in businesses that could benefit most from these efforts, provided they are handled properly and in a timely manner. Some subscribers welcome the focus on small businesses, some clearly think properly and timely are not in the government's lexicon, and some think the government should stay the heck out of business altogether. [More] Manufacturing's Image Industry Assistance Article Feedback Economy Wed, 28 Oct 2009 09:53:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/28/Lack-of-help-for-small-business-is-obscene http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/27/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. [More] Global Competition Automotive Industry Manufacturing Outsourcing China Economy Tue, 27 Oct 2009 09:33:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/27/Reworking-a-codependent-relationship http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/22/A-big-slice-of-humble-pie I was wrong. I said it. I admit it. Wrong! Wrong, wrong, wrong. Totally wrong. No two ways about it. Wrong. GM filed for bankruptcy June 1, and nearly every editor, reporter, and blogger seemed to want to jump on the bandwagon and jump all over GM's executives for decades of mismanagement. I didn't think that was fair, and I said so in a blog on June 4. Boy, was I wrong! Everyone knows that U.S. automakers ain't what they used to be. At one time GM had nearly 50 percent of the U.S. market. Its sheer size made it an unwieldy beast. Over the years many automakers rolled out an increasing number of models (expensive!) and found themselves beset with encroaching union demands, increasing foreign competition, growing legacy costs, and so on. Did the folks in GM's executive suite address these issues, or simply blame them? In an article titled "The auto bailout: How we did it," Steven Rattner provides his perspective on the troubles that befell the automotive industry and, in the cases of GM and Chrysler, their executives' reactions. Of all the people involved in the automotive bailout plan, Rattner had perhaps the best view of all: That of a person with no automotive industry experience. A graduate of Brown University who has worked as a journalist (an economics correspondent for the New York Times), financier, and private equity investor, he was appointed by President Obama to the Treasury Department to be the head of the Presidential Task Force on the Auto Industry. Certainly GM executives enjoy generous salaries and substantial perks. I won't ruin the suspense by quoting too much from the article, but by his description, many execs didn't put forth much effort; quite a few just went along for the ride. Oh, and guess what? Rick Wagoner, GM's CEO at the time, blamed the financial crisis, oil prices, the dollar-yen exchange rate, and the UAW for any and all problems. And I had such high hopes for him. He really let me down. According to Rattner, even during the bankruptcy, GM's executives couldn't be bothered to put much thought into running the company. "Under the previous administration's loan agreements, Treasury was to approve every GM transaction of more than $100 million that was outside of the normal course. From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures." I prowled around the Internet recently, looking for news on the current state of the U.S. automakers. You need a machete to cut through the thicket of not-so-important stories these daysballoon boy this, Rosie O'Donnell thatbut I did find a handful of tidbits. First, the capacity utilization in the automotive industry, which is often in the high 70s to low 80s, fell to less than 37.5 in June. It was 51.2 in September. The industry is still in terrible shape, but it's not as bad as it once was. Apparently it's too early to talk much about revenues or profitability, but I did find some other news regarding the two that slipped into, and emerged from, bankruptcy earlier this year: •October 19: Chrysler restarts PT Cruiser production "Chrysler Group LLC on Monday resumed production of its PT Cruiser for the first time since early August &" •October 20: General Motors bringing jobs, money to Marion Referring to a plant in Marion, Ind., "General Motors announced that it is investing $364 million in the plant expansion." •October 21: GM commits $202 million for Chevy Volt engine plant "General Motors Co. will spend $202 million to renovate its Flint Engine South factory to build 1.4-liter four-cylinder engines for the highly anticipated Chevrolet Voltand for a small car that likely will be even more crucial to Chevy's future success, the Cruze." Are these moves based on sound business planning or business as usual? Time will tell. Automotive Industry Thu, 22 Oct 2009 11:08:00 -0600 http://www.thefabricator.com/Fabricator-Blog/blog/client/index.cfm/2009/10/22/A-big-slice-of-humble-pie