Testimony on behalf of Michigan’s tool and die industry

Joe Brown gave testimony before the Michigan Republican House Task Force on Jobs. While much of what he wrote applies to stampers all over, this part effected me the most. This very nearly happened to me.

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.””

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Some manufacturers find California cheaper than China

From the San Francisco Business Times:

Four Northern California companies in the past five months have reshored products from China to Wright Engineered Plastics, said President and CEO Barbara Roberts. Their reasons range from costs to vicinity to market and from quality to finance.

Chinese manufacturers, for example, won’t ship until a product is completely paid for, Roberts said, and then transportation could add another 30 days or more.

“That’s a double-whammy,” she said.

This is something I commented on already a few years back. As some jobs go to China, others come back. And I think this “onshoring” trend, if anything, is increasing recently, as health and safety concerns raise their heads.

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Steel Companies trying to raise steel prices

I was surprised to find this in my inbox today. Raising prices in this economy? Whatever are the steel mills thinking?

A very slow, very tentative recovery just might be leaving the train station in the next 3 months. Let’s do everything we can to just nip that in the bud by raising prices into a slow, painful, crippled recovery!

FROM MEPS

Major steelmakers in the US have announced a series of transaction price hikes over recent weeks for strip mill products. These are steadily being implemented. There is little import competition to prevent further increases being applied. Certainly, distributors are keen for the proposed rises to take hold as they will produce benefits in terms of stock valuation. Nevertheless, market players are concerned that the price recovery might not be sustainable if the mills prematurely restart idled facilities. Service centre business is still down by 40/50 percent with only a small percent increase in activity, most probably due to the price advances. The economy remains depressed, leading to a persistently low level of steel consumption.

Canadian transaction values have bottomed, prompting us to record a number of rises this month. The domestic mills believe that destocking may be complete.

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America Needs a National Manufacturing Policy. Now.

From the Huffington Post, Sen. Sherrod Brown:

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.

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Manufacturing Ranked No. 1 Industry for Economic Prosperity

A study announced in early June by Deloitte LLP had some interesting insights into our perceptions of manufacturing.

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.

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US to loan $5.9 bln to Ford to aid fuel efficiency

Well, this is interesting, especially when combined with a few other developments I’ll speak about after the quote.

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.

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Auto parts makers to shed 37,000 jobs this year, Conference Board forecasts

More bad news for Canadian stampers. One can expect roughly the same results south of the border, at least in proportion.

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.

Posted in auto, manufacturing, stamping | 6 Comments

Chrysler dealers left without vehicles

Here’s another amusing (well, probably not to the dealers) side of the Chrysler saga. From the (Toronto) Globe and Mail:

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.

Posted in auto, manufacturing, stamping | 1 Comment

Chrysler plants will open in weeks: Fiat

From Canadian Manufacturing News, a Rogers publication. Some tentatively good news 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.

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US Steel FAQ

The Hamilton Spectator has this handy article Questions and answers on the shutdown of the former Stelco plants

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