Sunday, September 20, 2009
American Axle & Manufacturing Inc. said Thursday it reached a new deal with its lenders and its largest customer, General Motors Co., that will allow the supplier to avert a bankruptcy filing.
The new deal ends months of negotiations between the Detroit-based supplier, its banks and GM after American Axle breached the terms of its loan when its debt and interest costs ran too high.
This passed me by at the time, but it's dated September 18th. A friend who lives in the effected area pointed it out to me.
The deal American Axle negotiated doesn't cut the company's debt. But it does give American Axle cash to maintain its operations through the industry's downturn, to a time when the company might be able to repay its loans.
I imagine this is good news for their suppliers and workers, but also might set a precedent (and perhaps a blueprint) for metal stampers to follow through these hard times.
Friday, September 04, 2009
Hook and loop fasteners have become commonplace features of both industry and households. However, they have one snag: they are too weak for many applications. Hook and loop fasteners made of spring steel have now been developed at the Institute of Metal Forming and Casting of the Technische Universitaet Muenchen. These fasteners are resistant to chemicals and can withstand a tensile load of up to 35 tonnes per square meter at temperatures as high as 800°C.
Spring Steel Velco, that's what we're talking about here.
Temperatures in excess of 800 °C and aggressive chemical solutions do not pose any problem for Metaklett, which also offers adhesive strength of up to 35 tonnes per square meter when tensile force is applied parallel to the fastener surface. When it is applied perpendicular to the fastener surface, Metaklett can still withstand a force of seven tonnes per square meter. Moreover, like a standard Velcro® fastener on a child’s shoe, it can be opened and closed again without the help of any tools.
You can read the original press release from TUM (Technical University of Munich) in English . A German language version is also available on that page. Use the language buttons in the upper right corner.
Sunday, August 23, 2009
Skittish banks are declining loans to many tooling suppliers since they consider anything with the terms “manufacturing” or “automotive” as red flags in the application or renewal document. How can these companies retool themselves without this? More disheartening is the devastation this has caused many long-time [...] manufacturers and suppliers who were small business owners with impeccable payment histories. In an instant, many owners’ lives turned upside down.
The following excerpt is from my interview with Michigan’s 1993 Women’s Entrepreneur of the Year and a decades-long small business owner of a MTDM supplier in Fraser, Michigan. Her name is Nina Sylvester and sadly her story is similar to many other past—and current—Michigan manufacturing shop owners:
“Bank of America called and told me that they ‘No longer find that Automotive and Manufacturing are lucrative to their business and therefore will not renew my loan and I have 90 days to find new financing.’ Keep in mind that I was never late on a payment, nor am I to this day, 10 months later. I am at the office everyday collecting what little money is left in receivables which is a job in itself. No one is paying their bills, and I hear the same story from everyone. I had in excess of $100,000.00 in bankruptcies alone since the end of last year. I called and had packages put together and interviewed with 20 different banks. They all said the same thing. One bank in particular, Huntington National Bank, I asked them what they were doing with the money that was given to them by the government and she told me that they had it in an account collecting interest and were going to acquire other banks with it.
I also contacted the SBA and was told that they have programs for new businesses but nothing for existing businesses. Meanwhile the bank is on me to pay off my loans in their entirety. They forced me to stop manufacturing and taking orders, forced me to sell off equipment that was appraised in 2006 for $683,000.00. A boring mill that I paid $210,000.00 for, sold at auction for $15,000.00, and that is just one. Tooling that cost in excess of $20,000.00 went for $25.00. Now, I have a building that I paid $470,000.00 for in 1991, they are telling me I will be lucky to get $375,000.00 for. I still owe the bank $650,000.00 and don’t have a clue as to how I’m going to pay that back.
I have been in business 24 years, and have nothing but debt to show for it now. I have worked in this industry for 35 years, and never in my wildest dreams did I ever think that this would be happening in this country. Our government is quick to help foreign countries and will not help their own people. They continue to send work overseas when large corporations here are closing left and right.”"
Friday, July 17, 2009
Not too long ago, the ticket to the middle class was straightforward. Work hard, play by the rules, and you'll have something to show for it -- a good wage, a secure job and home, and a solid pension.
Our nation -- and economy -- relied on workers around Ohio to build cars and appliances, to lay down rail lines and highways. Their work put them squarely in the middle class. Their work -- and a thriving manufacturing industry -- turned our nation into an economic superpower.
Job loss and wage stagnation figures reflect a decade's long decline in U.S. manufacturing, a decline that has shattered the American dream for millions of Americans.
Wednesday, June 24, 2009
Despite more than a year of bad news as the manufacturing sector continues to contract, a new annual index released today by Deloitte LLP and The Manufacturing Institute shows that Americans view manufacturing as the most important industry for a strong national economy. There is a wide perception gap, however, between the public's highly positive views of manufacturing's contributions to America's economic success and their negative views about pursuing a career in manufacturing.
The study goes on to observe
While Americans view manufacturing as the most important industry for a strong national economy, the index shows that they are not pursuing careers in manufacturing.
Even more alarming, These are jobs Americans want for their friends and neighbors - but not for themselves or their family members
So clearly there is some work to be done in improving the image of manufacturing.
The US government will loan 5.9 billion dollars to Ford Motor Co. and 1.6 billion dollars to Japanese automaker Nissan to invest in improving the fuel economy of their US-built vehicles, officials said Tuesday.
The loans are the first awarded out of a 25-billion-dollar program to help automakers meet upcoming fuel efficiency standards, Energy Secretary Steven Chu said at a press conference.
"These loans will help the auto industry meet and even exceed the president's tough new fuel standards while creating jobs, reducing our dependency on foreign oil and ensuring America's competitiveness."
Another 465 million dollars will be loaned to electric sports car maker Telsa.
Additional loans will be awarded to "large and small automobile manufacturers and parts suppliers up and down the production chain" over the coming months, said Chu
Ford will use the 5.9 billion dollars retool plants in five states and boost the fuel efficiency of close to two million new vehicles annually.
Nissan will use the loans to modify its Tennessee plant to produce zero-emissions electric vehicles and the lithium-ion battery packs to power them.
As I mentioned above the quotes, there is an interesting tie-in for this blog. A lot of metal stamping dies, and the original production of them, have gone off-shore.
There are a determined bunch of people in Detroit (and no doubt in other places too, but I only know about the Detroit bunch) who want to play catchup and bring their toolmaking lead time and costs down, in line with off-shore toolers, in order to keep that work onshore. I've kept in loose touch with a few of them, belong to some of their groups on LinkedIn and other places, and in general applaud what they're doing. I did, however, question their belief that they could bring 50% of the diemaking that went offshore back. I don't think those dies are coming back unless and until they need to be retooled.
This may be the retooling opportunity they're looking for/need. Retooling for greater efficiency means making better use of steel components, smarter brackets with stiffening ribs instead of using thickness to get the strength needed, use of aluminum where possible, etc. These things mean new dies, and therefore, a chance to start over again on-continent.
So this may well be a very good thing.
Thursday, June 18, 2009
From Yahoo! Canada Finance
The Conference Board of Canada says auto parts makers will cut 37,000 jobs, or about one third of their workforce in Canada, as the North American industry undergoes massive restructuring.
The sector has been shedding jobs for years, but this year's losses are expected to top the total of the last four years combined.
Ontario will be hard hit by the job losses since the province has most of the parts companies.
Chrysler Group LLC will start cranking out vehicles at seven of its North American assembly plants on June 29, but some Canadian dealers say they will be unable to restock their dealerships with new vehicles because they can't get the financing they need.
Inventories have fallen to minimal levels [...but many ...] can't order new cars and trucks because they are still waiting for financing approval from GMAC LLC
This is another example of cascade failure I spoke about earlier. Seemingly unrelated things combine to topple systems that should continue to work. If it were easy to get credit another way, these dealerships would not be having a problem. They might pay a little more for credit from someone else, but at the moment, all other sources are choked off, and this one is slow.
This is another bottleneck on the road to a recovery for stampers.
Fiat [which now controls Chrysler] announced plans to resume production at its Brampton and Windsor plants and five other North American factories at the end of June.
In addition, parts stamping, engine and transmission factories that feed those plants also will restart June 29, Chrysler said in a statement.
Monday, May 11, 2009
What if we added that not only were taxpayer funds being funneled to China, the very recipients of these taxpayer funds, (GM, Chrysler and hundred’s of Tier 1 parts manufacturers) gave the Chinese competitors to North American manufacturers a 5-9% cost advantage by paying these Chinese suppliers on far better terms than they would pay say a company in Grand rapids, Detroit or Windsor.
Monday, May 04, 2009
How is demand for manufactured goods holding up?
Here's the picture in Canada.
Real gross domestic product (GDP) declined 0.8% in the fourth quarter, weakening progressively each month. This was the sharpest quarterly decline since 1991.
Declines in the production of goods (-2.4%) were widespread as domestic and foreign demand weakened. Except for agriculture, all other goods-producing sectors receded. Manufacturing (-4.3%) led the downturn, experiencing a sixth consecutive quarterly decline.
Business investment in machinery and equipment contracted 7.5% in the fourth quarter. All categories recorded declines, notably automobiles, trucks, and industrial machinery.
From: The StatsCan web site.
OK. So how are things doing in Britain?
Picture's not much different there.
Manufacturing output decreased by 6.5 per cent in the three months to February 2009 compared with the three months to November 2008 and was 12.2 per cent lower against the same three month period a year ago.
And how about the US?
The Canadian economy contracted at an annualized rate of 3.4% in the fourth quarter, compared with a 6.2% decline in the US economy.
So, all other things being equal (lots of other things aren't), it's tough for a low-margin business like metal stamping to stay healthy in such a volume downturn.
Monday, July 21, 2008
Suddenly, it's important to the US elections to think about jobs and the auto sector. Of course, many smaller stampers make parts directly and indirectly for the auto industry.
Sen. John McCain on Friday told auto workers to have faith that alternative technology vehicles will re-energize their sagging industry and help reduce the nation's dependence on foreign oil.
'I believe that this new technology - it's more than an automobile - will create hundreds and thousands of jobs,' the Republicans' presumptive presidential nominee said at a town-hall meeting with about 500 General Motors Corp. employees. 'This breakthrough has every chance of success.'
Mr. McCain toured a facility where the struggling automaker is designing a new battery-powered hybrid vehicle, and spoke to employees while flanked by several models of GM's emerging fuel-efficient cars and trucks.
Saturday, July 12, 2008
Are jobs coming back from China?
McCain [...] reiterated that message on Friday, saying that the government should provide better worker retraining programs and incentives for companies like GM to create new jobs making environmentally sensitive products.
"The same old jobs aren't going to be there," he said. "The new jobs are here at Lordstown."[where GM makes the fuel efficient Chevrolet Cobalt]
General Motors has announced that it plans to sell a totally electric vehicle in 2010. McCain this week proposed a $300 million award to anyone inventing a radically better electric car battery.
An interesting (if a little irritating) youtube snippet. Like all things youtube, it's too short to garner context. Maybe he didn't mean it this way, I dunno. But it sure sounds weird.
JOHN MCCAIN: What we have to do is embrace this new technology, accept the fact and enjoy the fact that there's new jobs and the old jobs aren't coming back.
Also on this theme, BusinessWeek had an interesting cover story last month.
Can the U.S. Bring Jobs Back from China?
American factories and supplier networks in many industries have withered in the era of globalization, so it will take lots of time and capital before the U.S. can become a big player again. In electronics, for instance, there has been a mass migration of component makers to China in the past decade. Ditto for suppliers to Midwest heavy-equipment makers and North Carolina's furniture industry.
The global industrial landscape certainly appears to be in the early stages of a realignment. The euro's breathtaking rise against the dollar has spurred European makers of cars, steel, aircraft, and more to shift production to the U.S. Now the soaring cost of fuel is making it pricier to send goods across the Pacific.
According to ABC news, at least some jobs are coming back.
As the cost of shipping continues to soar along with fuel prices, homegrown manufacturing jobs are making a comeback after decades of decline.
Furniture designer Carol Gregg used to have her signature Chinese chests assembled in China, but such a luxury no longer seems viable, considering that some of her pieces now cost five times more to ship.
So now Gregg is having the chests made in North Carolina, simply because its cheaper.
"It's not just about labor costs anymore," says Rubin. "Distance costs money, and when you have to shift iron ore from Brazil to China and then ship it back to Pittsburgh, Pittsburgh is looking pretty good at 40 bucks an hour."
Tuesday, May 27, 2008
The soaring cost of fuel is whittling away at the cheap-labour advantage enjoyed by Asian exporters, giving Canadian firms a welcome edge in their fight to win back business from Asian competitors.
Two bank economists argue in a report released Tuesday that because of higher fuel costs, shipping a standard 40-foot container from Shanghai to the east coast of North America now costs $8,000 (U.S.), up from $3,000 in 2000 when oil was just $20 a barrel.
That higher cost is passed on to North American consumers, making goods from China and other Asian places more costly compared to the offerings of domestic North American producers.
Some Canadian manufacturers are already noticing the effect.
Jeffrey Rubin and Benjamin Tal of CIBC World Markets Inc. say higher oil prices are reversing the world-is-flat effect, in which lower trade barriers and new technologies like the Internet made it cheaper to move goods and services from developing Asia to the markets of the rich world.
“In a world of triple-digit oil prices, distance costs money,” they write. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”
Mr. Rubin and Mr. Tal say the steel sector is a prime example of the world-is-round effect.
Chinese steel exports to the United States are falling by more than 20 per cent year over year. China's costs have risen because Chinese producers have to bring in their iron ore from faraway places such as Australia and Brazil, then ship the finished steel to the United States. As a result, U.S. steel producers actually have an advantage over Chinese rivals.
“This is an environment in which shipping from the Pacific Rim may not make sense any more,” Mr. Tal said in an interview.
“If you're thinking, ‘maybe we should bring in a container from China,' you should think again.”
Monday, May 19, 2008
We often hear a lot of discussion, and rightly so, about the prices of crude oil and the agricultural commodities. Their moves over the last year have, in some cases, been parabolic. Their effect on produced gasoline and food prices are also well documented. Less talked about, but increasingly visible and important, is steel.
Steel prices are continuing to rise, with the alloy's average composite weighted price for all carbon-steel products around $1,000 per metric ton [...]
While the charts certainly look nice, you have to wonder how long companies can continue to increase prices - not only in response to demand, which could decrease, but also with regard to raw material cost, which have been rising. Will costs get so high that demand destruction will occur? Will raw material cost increase faster than companies can increase product prices, thereby reducing profit margins?
Both customers and companies are beginning to take action, but in some cases they are at the mercy of the markets. In Turkey, a number of construction companies are going on strike, protesting price increases. In India, transportation and housing projects have been put on hold. Other countries are limiting the amount of steel that can leave the country as exports, while at the same time freezing prices and reducing tariffs to increase imports. Even oil companies are beginning to worry that they cannot build or obtain the equipment they need to extract the oil that is in such high demand.
Wednesday, November 14, 2007
Canadian/American currency exchange
The drop in value of the US $ is really starting to hurt us Canadian manufacturers.
On the one hand, it's nice to get your raw materials cheaper. For instance, copper isn't hurting us nearly as much as you might think, since it's basically valued in US $ and we're buying it in Canadian.
On the other hand, exports are a big part of our economy. It's hard to say, even for an individual company, what fraction of sales are exported, because not all are direct exports. Some products, especially small metal parts, the area we're in, get combined with other things by another canadian company before being exported to the US.
But sales to the US are hurting. If we keep the US$ price, we are losing our markup. If we ask for the Canadian price, it varies from one shipment to the next, an unfamiliar situatior for most american customers, who reject the idea. Even if they don't, it prices us out of the market when compared to similarly qualified US suppliers.
It's going to be an intesting ride ...
Wednesday, September 26, 2007
Reuters via Yahoo! Canada Finance
DETROIT (Reuters) - The United Auto Workers union on Wednesday agreed a contract with General Motors Corp ending a national strike by 73,000 workers, with a deal that includes a groundbreaking health-care trust fund. Union President Ron Gettelfinger, speaking at a news conference at the union's Detroit headquarters and surrounded by cheering UAW officials, said production at GM facilities would resume on Wednesday and ratification of the agreement by GM workers would begin this week. 'We feel very confident it will be ratified,' Gettelfinger said of the tentative four-year agreement.
GM said the national agreement "paves the way for GM to significantly improve its manufacturing competitiveness" and maintain a strong production presence in the United States.
A GM spokeswoman said the automaker would not provide details of the agreement until it was presented to UAW workers for ratification.
Gettelfinger said he would not disclose details of the agreement at this time. But he did say it includes a landmark health-care deal, under which responsibility for retiree health care would shift to a new UAW-aligned trust fund known as a voluntary employee beneficiary association, or VEBA.
Wall Street analysts have said establishing a VEBA could cut GM's annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.
Tuesday, September 25, 2007
New York Times
The United Automobile Workers union wielded its most potent weapon against General Motors yesterday, sending 73,000 workers to picket lines in its first national strike at G.M. since 1970.
But what does it mean for metal stampers? If you supply GM, various industry officials say that 2 supplier jobs for every GM worker job are also in danger. That's almost 150,000 jobs in parts manufacturing.
Beyond that, if the strike goes on for any length of time, the GM steel consumption will be taken out of the steel marketplace. There's a chance that steel lead times will drop, and perhaps also steel prices.
I guess we'll have to wait and see.
Wednesday, August 01, 2007
Nucor Corp. and other U.S. steelmakers are the victims of China's illegal subsidization of exported steel, lawmakers testified Tuesday.
In the first day of a two-day hearing, dozens of lawmakers argued that the U.S. International Trade Commission should renew five-year punitive tariffs on hot-rolled flat carbon steel imported from China and 10 other countries. China was the main target.
Sunday, April 22, 2007
It's time to embrace the potential in China
Dan Cunningham, president and chief executive of Long-Stanton Manufacturing Co. in West Chester Township, knows that China is a threat and an opportunity for his 144-year-old metal-stamping company.
But rather than run from what he calls the China 'tsunami,' Cunningham has embraced it.
Over the past five years, he has made nearly two dozen trips to China, established a couple of joint ventures there and started a small metal-stamping operation in Changzhou province run by his son, Marvin. The effort has paid off, more than doubling Long-Stanton's business and increasing employment at the West Chester plant to 75 from around 60.
Friday, April 06, 2007
Manufacturing's Race for the Bottom
But I thought I'd dwell on this for a bit. What an odd bit of timing. US Baird, an innovative company with a 150 year history, goes out of business. George writes his article on how North America has lost it's manufacturing tradition. And Menu Foods poisons many hundreds, perhaps thousands of pets, by importing contaminated wheat gluten from China.
What is going on here? Why is manufacturing engaged in a giant race for the bottom?
To some extent, responding to the pressure to reduce cost is good. When you can make an equivalent product, that means, as good or better, by a simpler process, you are reducing cost in a good way. That is, you are reducing the total cost of the product.
For instance, if you find out that 5 microinches of plating is enough for the application, and you cut it down from 10, you reduce the cost. If you find a way to run the machine faster, so it produces more parts per unit time, you are reducing the cost. If you find a smarter method of assembly, so that fewer man hours are needed, you are reducing the cost. If you find a process that is less environmentally harmful, and therefore there is less environmental cleanup involved, you are reducing the cost.
But we've stopped doing that. Instead, we're merely shifting cost into someone else's back yard, into someone else's economy. Often, we are increasing the real cost of the item, measured in hours or lives or environmental damage.
Look, for instance, at chinese steel. Chinese steel costs less. There are many reasons, but most of the media attention has been focused on low wages. Low wages are a part of it, but macro economics says that, over time, that will even out. The workers will demand, and eventually get, better wages.
Large parts also have to do with unsafe working conditions, with extremely low cost-of-safety government regulations, inadequate or non-existant enforcement, inadequate compensation for maimed or dead workers, not just in the steel industry but in the other industries behind it, like coal mining.
Those factors won't ever even out. Those workers will still be dead, and their families will miss them for the rest of their natural lives.
So when the CEO of a company buys products from China, they transfer those costs, insurance, compensation for work accidents, etc, to places which attach little or not currency to those items. It's not like the number of workplace accidents go down, in fact, they generally go up. And the real human costs, measured by every moral measure, go up. Thousands of chinese mine workers die every year. China has the worst mining safety record in the world. In the world! So in fact, outsourcing to China increases the cost by every moral measure. But it decreases the dollar cost, because the chinese pay so little for a life.
The same arguments can be made for the environment. We shift environmentally substandard processes to other, under developed countries, where the dollar cost of transgression is low, even though the environmental processes are, at best, no different, and in many cases much worse. So it's not like we're harming the planet any less, it's just that we're doing it in an underdeveloped country where the cost of transgressing hasn't caught up with the first world.
In other words, we're creating human misery, suffering and environmental damage, but being asked to pay less for it, because it's happening somewhere else. Oh, and then there's the environmental damage of transporting all those products half way around the world.
In what conceivable scenario does this make sense?
Menu Foods is in Mississauga, a suburb of Toronto, Canada. Canada is a net exporter of wheat. Why is Menu Foods buying wheat gluten from China, paying shipping charges?
And now they will be paying for a class action lawsuit, for all the dead pets.
It's easy to blame Menu Foods. They bought an inferior product from far away, a place where, it seems, contaminating pet food isn't important because, I guess, pets aren't important. I've seen several reports. The gluten was contaminated with rat poison, in one report, with Melamine in another report. In any case, it's clear that someone didn't much care about this product.
But whatever happened to quality? Especially in a food. Whatever happened to being willing to pay for good ingredients, properly prepared? For your pets, or your children. Why are we buying inferior products? Why are the WalMarts of the world stocking inferior products? Why are they forcing suppliers to skimp and save and cheapen their products? Why do we as consumers buy from such stores?
Only when you find an answer to why we, as consumers, have pushed for the lowest quality product at the lowest price, will you understand why North American manufacturing is languishing and dying. The race for the bottom starts with us.