Year: 2011

ISM Forecast: US Manufacturers Seen Leading Growth Next Year.

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U.S. manufacturers are more optimistic about sales, spending and hiring for next year than service companies, a sign factories will remain at the forefront of the economic expansion, according to the Institute for Supply Management.

Purchasing managers at factories anticipate sales will grow 5.5 percent next year and capital investment will increase 1.9 percent, the Tempe, Arizona-based group’s semiannual forecast showed today. Revenue and spending will increase at a slower pace among service providers, which account for about 90 percent of the economy.

“Manufacturing has demonstrated its resilience throughout this challenging economic recovery period, with consistent growth dating back to August of 2009,” Bradley Holcomb, chairman of the group’s factory survey, said in a statement. Manufacturers “expect to see continued growth in 2012.

”The increase in factory demand next year may fall short of the improvement in 2011. The projected gain in 2012 sales compares with a 7 percent increase for this year. For the services industry, revenue is forecast to be stronger than the 1.5 percent gain in 2011.
Factory employment is projected to increase 1.3 percent in 2012, compared with a 1.1 percent projected rise at non- manufacturing companies. Sales in the services industry will increase 3.1 percent next year and investment spending will rise 0.1 percent.

ISM Factory Gauge

The factory gauge has averaged 55.4 so far this year, reaching a 2011 low of 50.6 in August and since rising to 52.7 last month. The service index has averaged 54.6 in 2011. It dropped last month to 52, its lowest since January 2010.

Growth in emerging markets is helping sustain demand for U.S.-produced goods. Deere & Co. (DE), the world’s largest farm- equipment maker, on Nov. 23 reported fiscal fourth-quarter profit and forecast 2012 earnings that topped analysts’ estimates.

“We expect sound farmer confidence and strong equipment demand,” investor communications manager Susan Karlix said on a conference call. “Globally, coming off 2011’s high levels, the 2012 industry outlook is for stable commodity prices and farm income.”

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Platinum: The Rock Star of Precious Metals

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Platinum Grill

Anybody who has shopped for jewelry in the last 15 years or so knows that Platinum is the “go-to” metal for high-end jewelry, especially jewelry involving diamond settings. And yet, even 20 years ago, it was still overshadowed by gold. I know this because about 20 years ago was the first time I shopped for wedding rings. The word “platinum” never came up. 15 years later, when I was once again in the market for a big fat engagement ring, trends in the jewelry world had changed significantly and there was really no question that it “had” to be platinum. Gold had become downright gaudy in comparison.

So what explains the meteoric rise of platinum from a relatively unknown and unused precious metal to its current state as the undisputed ruler of the jewelry kingdom? Platinum is the most rare of all precious metals. Although its first discovered use was for the lining of a sarcophagus around 700 BC in Egypt, a real demand for platinum didn’t occur until about 20 years ago. Since then it has soared to astronomical proportions, with its price tag also rising to staggering heights. Japan actually accounts for nearly half of platinum jewelry sales worldwide, with the US and China battling for 2nd place.

The use of platinum in modern-day jewelry-making didn’t actually gain any real ground until 1900, when none other than the fabled Louis Cartier started working with it. Because it is so much stronger than gold, it has since become the preferred setting for diamonds. However, jewelry only accounts for about 40% of platinum’s uses. 50% of its uses are for industrial purposes. A full 20% of all consumer goods use platinum in their production. Half of the annual production of platinum is actually destroyed by industrial uses. This is the real reason that the price of platinum has soared over the last 2 decades: its price is an index of the rate of industrial progress in developing countries such as China.

Add to that the incredible scarcity of platinum on this planet: annually, only 130 tons (less than 1% of global silver production) are mined, with 80% of all platinum mining, and 88% of all platinum reserves, limited exclusively to the country of South Africa. The cumulative total of all platinum ever mined throughout history could fit inside a cube of less than 25 feet in diameter. Add to that the minor detail that for every ounce of pure platinum, 10 tons of ore are mined – in some cases, nearly a mile under the earth at extraordinarily high temperature – and that it takes 6 months to extract the platinum, and you have a very rare precious metal indeed.

You want my prediction? Platinum is simply too rare to be sustainable for the long haul. Just like in the rock star universe, where “it’s better to burn out than to fade away”, platinum will sink from the jewelry horizon in the next few years, where it will be eclipsed by the much cheaper but just as manageable and strikingly beautiful palladium. What, palladium isn’t ringing any bells for you? By the time you’re shopping for an engagement ring for Wife #3, chances are that it will be.

PRO50 Rolling Coil

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  • Machine body manufactured of st-52 special steel
  • Built in accordance with EU norms
  • 3 driven rolls
  • Rolls and shafts are made of special steel – induction hardened and grinded
  • Top roll is moveable up and down hydraulically
  • Main motor with brake
  • Vertical and horizontal working possibility
  • Guide rolls adjustment manually to one direction
  • One set of standard rolls
  • Independent hydraulical up and down movement of the bottom rolls
  • Portable control panel with foot pedal in order to control material from required locations
  • Manual lubrication
  • Detailed instruction manual

And you thought you had problems…

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On my never-ending quest for interesting news relevant to metal fabrication machinery and the like, I have stumbled upon news of a woman who has a skin condition unlike any other. Her name is Noorsyaidah, and she lives in Indonesia. According to her own testimony, she has been growing metal wires out of her skin for the last 19 years. Not only this, but they seem to have a mind of their own: when her sister tries to trim them, they shrink back and grow out of some other body part instead.

According to several terribly written articles containing lots of opinions and more typos than actual facts, she has consulted with 4 different medical professionals who all claim to be stumped for a diagnosis. She also has several x-rays of her insides, which show lots of metal wires inside her stomach area. It should be noted that the x-rays do not appear to be fakes.

What these “scholarly” articles lack in actual information,they more than make up for with disgusting photographs of the woman’s chest and stomach areas, which are riddled with rusty-looking metal wires poking out of them. You can see from the photos that the wires irritate her skin and she does not appear to be having much fun at all. If you absolutely must see these photos, click here.

It seems that in her own country, the general consensus for her condition is that she was cursed and this is all the result of a bad (as in downright lousy) spell that was put on her. Due to the fact that the spell was cast over 20 years ago, it has had plenty of time to work itself into her system and so, according to professional experts on these matters, it will take a long time for any counter-spells to work their own magic.

Although the woman swears that her “condition” is not self-inflicted, it’s hard to not observe the obvious fact that the metal wires only seem to appear in places that she would be able to stick them into all by herself. And although the x-rays showing the wires in her stomach really do appear to be genuine, does that really prove that she is a human metal fabrication factory? The general assumption is that the wires are growing out of her skin, but no one seems particularly interested in proving or even challenging this, especially when an explanation as compelling as witchcraft provides such a ready answer to this mystery.

I did a little research of my own to see if someone would be able to swallow a bunch of metal wires without keeling over and dying along the way. Swallowing a few metal wires is nothing compared to what I found. A 52 year-old woman in Holland by the name of Margaret Daalman went to the hospital complaining of a stomach ache, and the x-ray there revealed the presence of 78 forks and spoons in her stomach. On being questioned about this, she admitted that she had a strong urge to swallow cutlery and that this had been a private hobby of hers for kind of a long time.

If I knew I had 78 forks and spoons inside my stomach, I wouldn’t wait for a hospital doctor to give me a diagnosis on my bellyache. But that’s just me. It definitely redefines the meaning of “please pass me a fork, dear”.

In any case, if the Indonesian woman truly is cursed, then maybe her curse is someone else’s blessing. If she does in fact grow metal wires out of her body, then maybe some forward-thinking entrepeneur in the metal fabrication industry could pay her a salary and then regularly harvest her metal wires. With a little bit of modern technology on her side, she could be a self-regenerating paperclip factory. This might sound a bit callous, but personally, I think it would be a better job for her than taking care of young children, which is what she currently does for a living.

Remember – in the words of Robert South: “Problems can become opportunities when the right people come together.”

Shipwreck With $235M Worth of Silver Discovered

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Less than 2 months ago I wrote an article about a shipwreck that had been discovered off the coast of St. Maarten. It was thought to possibly contain buried treasure. I still haven’t heard back on that from my friends there, so my guess is that it’s still waiting to be pulled up out of the sea..

About a week later, a US sea exploration company discovered a ship that is indeed filled with silver. It had gone missing in 1941 about 300 miles off the Irish coast when it was torpedoed by a German sub. I bet it sank very quickly, since it also happened to be carrying 200 tonnes of silver. That would be about $235 million worth, by today’s silver prices.

The company that made this discovery (Odyssey Marine Exploration Inc.) will get to keep up to 80% of the silver. With that much silver and money involved, no wonder that the fact that it’s 8,000 feet below sea level doesn’t seem to be a huge deterrent to them.

Their recovery expedition is scheduled to start next spring.

Strangely enough, the precise GPS coordinates for the exact location of the shipwreck don’t seem to have been released publicly. But this hasn’t stopped the company shares from rising since this discovery hit news wires.

My thought is that if we all start practicing holding your breath for long periods of time starting now, then we might be in good enough shape to discreetly do the 8000-foot deep dive to get a little piece of the action for ourselves. Meanwhile, I’ll keep asking around for the GPS coordinates.

Sure it’s a long shot. But as long as they’re still finding real buried treasure out there somewhere, we can all keep dreaming, right?

In any case, don’t forget that you heard about it first from the friendly folks at C Marshall Fabrication Machinery.

Fabtech 2011 – Chicago November 14-17

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The Fabtech trade show, which bills itself as North America’s largest metal forming, fabricating, welding and laser event, is now behind us. The 500,000 square feet of exhibition space, 1,200 exhibitors and 30,000 expected attendees (not yet a confirmed number) made this year’s show, held last week at McCormick Place, the largest ever. So, having said that, we at C Marshall Fabrication Machinery were part of creating history.

After small initial “hick-ups” with our booth, the show took a very good start on Monday, November 14. The steady stream of potential buyers interested in our MH314c 4-roll on the floor as well as the wide range of MG rolls and other metalworking machinery offered by CMF kept our booth personnel busy and focused. And it wasn’t just us being very pleased with the turn-around; the word all over the exhibit hall was that exhibitors were happy and felt that there was a genuine interest in investing and not just “kicking tires”.

We generated a larger number of leads than expected but of course, even if they now feel like “quality leads” it isn’t until later that this may or may not prove to be accurate. CMF looks forward to several weeks of intense quoting and follow-ups.

The overall feeling I got from this year’s Fabtech show is that optimism is back after several years of uncertainty and “holding-back” due to a cloudy economy and confusing signals sent by the bumpy market. The exhibitors as well as the event attendees had generally a more positive outlook on the manufacturing future; thus the attendees were more opt to seriously looking into investing in capital machinery.

Now, facing the after-show-work, I am already looking into what needs to be done for next year’s Fabtech show in Las Vegas. Yes, it seems like it is so far away in the future, yet we all know how quickly time passes and nobody wants to wake up at the last minute when it comes to planning for this show.

As the Holiday Season is approaching I wish my customers, vendors, dealers and all the people active in the metal fabrication world a Very Happy Thanksgiving.

Cary Marshall
President

For additional information on the MH314C click here

A Lesson in Art Appreciation

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Art evokes different feelings in different people, but apparently this one gave a few people an intense urge to steal it

My article last week (“How Not To Steal A Steel Bridge”) talked about how stupid most criminals are. This week’s article really drives that point home.

Metal theft of all kinds have been on a steady increase in the last few years all over the world. Metal theft rises proportionately to the values of different metals. Fire hydrants, x-rays (for the silver traces in them), bronze and copper graveyard markers, beer kegs and even entire bridges have become fair game for metal thieves.

In December 2005, a world-famous two-tonne bronze sculpture by Henry Moore, valued at nearly $5 million, was stolen from the 72 acre estate of the Henry Moore Foundation in Hertfordshire, England. Somehow, the thieves managed to physically remove this huge and unwieldy sculpture from its home there, hoist it onto the back of a pick-up truck, and drive it away without anyone noticing.

A global search for the criminals ensued. It was of course originally assumed that it had been stolen by art thieves. This probably resulted in a lot of wasted time chasing down leads that brought investigators no closer to solving the crime. It wasn’t until 4 years later, in May 2009, that they were finally able to piece together the sculpture’s final days.

According to chief inspector Jon Humphries, of Hertfordshire police, it is believed the sculpture was intentionally damaged beyond repair shortly after it was removed from its premises on the back of the flat-bed truck, from where it was moved through a Dagenham scrap dealer in December 2005 and on to another Essex scrapyard. Shortly after, it was shipped abroad, possibly to Rotterdam and then further east, circumventing an order to Interpol to monitor all ports for the distinctive figure. The sculpture’s remains finally made their way to China, where the metal was used for electrical components.

It is believed that the sculpture, which was valued at $4.8 million when still intact, was melted down and sold for no more than $2400, once again proving that no matter how enterprising or innovative they may appear, at the end of the day, your average criminal is a complete idiot – and a broke idiot, at that. It never ceases to amaze me how hard some people are willing to work for an “ill-gotten gain”. If they would just apply themselves to a productive, legal activity instead, they’d be bound to end up with more for themselves – at far less cost to others.

No Sign of U.S Manufacturing Slump

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Machinery stocks may outperform the market through the end of the year as new orders rebound, helping to defy concerns about another U.S. recession.

American manufacturers booked $32.6 billion in new orders for machinery equipment in September, the most since July 2008, according to data from the Census Bureau released Oct. 26. The Standard & Poor’s Supercomposite Machinery Index, which includes Caterpillar Inc. (CAT) and Deere & Co. (DE), has gained 26 percent since Oct. 3, while the S&P 500 has risen 13 percent. The machinery index lagged behind between July 7 and Oct. 3, when it fell 35 percent, compared with a 19 percent decline for the S&P index.

“There’s skepticism about the industrial economy and machinery stocks, but robust activity suggests the risk of a double-dip recession is less likely,” said Stephen Volkmann, a New York-based analyst at Jefferies & Co. The sector may continue to rally through December, as it has tended to outperform from November through year-end during the past decade, he added.

There’s “no evidence” of a collapse in North American manufacturing as shipments still are growing, said Ann Duignan, a New York-based analyst at JPMorgan Chase & Co. The total for September was $31.1 billion worth of machinery equipment, up 13 percent from a year ago, Census Bureau data show.

“Companies are still reporting modest growth with no wholesale change in demand,” Duignan said.

Rising Outlook

Parker Hannifin Corp. (PH), based in Cleveland, increased its fiscal 2012 outlook for industrial North American-segment revenue growth to about 8.3 percent from about 6.2 percent, as orders “re-accelerated” during the period ended Sept. 30, said Duignan, who maintains a “neutral” rating on the stock. The motion- and control-technology maker’s orders from the region grew 16 percent compared with a year ago, following an 11 percent rise the previous quarter, the company said Oct. 18.

“There’s a lot of activity,” and “order trends here in North America are still very positive,” President and Chief Executive Officer Donald Washkewicz said on an Oct. 18 conference call.

Caterpillar, based in Peoria, Illinois, reported third- quarter revenue of $15.7 billion, compared with $11.1 billion a year ago, the company said Oct. 24. The construction and agricultural-equipment maker’s order backlog was $24.4 billion, up 40 percent.

“Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point,” Chairman and Chief Executive Officer Doug Oberhelman said in a statement. “This was the best quarter for sales in our history, and our order backlog is at an all- time high.”

Strong Demand

The industry is attracting investors because it supplies “key end-markets,” such as agriculture and energy, where demand remains strong, said Zahid Siddique, associate portfolio manager at Rye, New York-based GAMCO Investors, with holdings in machinery-index members Flowserve Corp. (FLS), Kennametal Inc. (KMT) and Crane Co. (CR)

Machinery companies are a “proxy for global capital expenditures” because almost half their sales come from foreign customers, said Volkmann, who upgraded six of the businesses to “buy” from “hold” last month, including Eaton Corp. (ETN), Cummins Inc. (CMI) and Parker Hannifin.

The recovery in capital spending worldwide is “riding on” the U.S.,China and emerging markets, said David Hensley, director of global economic coordination at JPMorgan in New York. There’s “strong momentum” in these expenditures, which include machinery equipment, even with the European sovereign- debt crisis and this summer’s protracted negotiations between President Barack Obama and Congress over the budget deficit.

‘Continued Expansion’

JPMorgan lowered its growth estimates for Western Europe, reflecting a mild-to-moderate recession that already may be under way; “still, we think growth will continue outside of Europe, supporting continued expansion in capital spending,” Hensley said.

Illinois Tool Works Inc. (ITW), which makes fasteners for transportation and construction products, may be a “sign of things to come” in the region, said Duignan, who rates the stock “neutral.” Its European revenue grew 3.8 percent during the quarter ended Sept. 30, and it predicts “modestly lower” revenue there in the fourth quarter, the Glenview, Illinois- based manufacturer said Oct. 25.

Durable-goods production in Germany fell for the second consecutive month, as a Bundesbank index dropped to 98.7 in September from 99.6 in August. This was “a little weaker than expected, and made me wonder if Europe may be headed in a different direction” from the U.S., Volkmann said.

Unfolding Crisis

The unfolding debt crisis in Europe, possible slowing growth in Asia and any prolonged weakness in the U.S. housing market may threaten outperformance in this industry, said Siddique, whose firm oversees $34 billion in net assets. Even so, companies continue to show resilience as “these risks remain potentially manageable,” he said.

Kennametal — a supplier of cutting tools to Caterpillar and other manufacturers — remained “very bullish” on its outlook as of the quarter ended Sept. 30, Duignan said.

The Latrobe, Pennsylvania-based company “continued to experience growth in customer demand,” President and Chief Executive Officer Carlos Cardoso said on a Oct. 27 conference call. “This supports our continued expectations of a manufacturing-led recovery, at least in the United States.”

To contact the reporter on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net

To contact the editor responsible for this story: Anthony Feld at afeld2@bloomberg.net

How (not to) steal a steel bridge

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According to the Pittsburgh Post-Gazette, two men were arrested a few weeks ago, for stealing a bridge. That’s right, you read that correctly: they stole a bridge.

These enterprising young men, aged 24 and 25 respectively, used a torch to take apart an entire 50-foot steel bridge in North Beaver Township, PA. They actually succeeded in their theft of the 15-ton bridge, which must have been a truly difficult undertaking. Although they now face felony charges of criminal mischief, theft, receiving stolen property and conspiracy, you almost want to admire them a little bit for the effort that must have been involved in successfully stealing an entire bridge without anyone noticing.

However, nearly all articles reporting this theft left readers guessing what their motive could have possibly been, since it was not clear at all why anyone would go to this kind of trouble. It was speculated that maybe they had decided to dismantle or steal it because the bridge was rumored to be haunted (can you say ”grasping at straws”?).

Their motive did later come to light, however, when it was discovered that they had sold the dismantled parts of the steel bridge as scrap metal.

Now that we have a motive, let’s run this back and see how the numbers work out.

The thieves are now being held on $25,000 bail each. This is based on the nature of their crime and on the fact that the bridge they stole had an estimated worth of $100,000. Hopefully for the thieves’ sake, the valuation of the bridge was based mainly on the value of the steel that was used for its construction. Maybe the fact that it was considered haunted had something to do with its perceived value. It certainly wasn’t particularly useful anymore: it was in a secluded rural area, privately owned and used only rarely to transport material (such as scrap metal?). After it was no longer there, workers were easily able to use a nearby road as an alternate route.

Whatever the case may be, looking at the above numbers, you’d think the criminals could easily afford their own bail. After all, they had just sold a bridge valued at $100,000. Sadly, they could not. In spite of their best-laid plans, they had forgotten to check the most important thing of all: the constantly fluctuating value of scrap steel. Unaware that the demand for steel had gone down, they only got a grand total of $5179 for scrapping 31,000 pounds of bridge steel.

They say criminals are criminals because they’re too stupid to make an honest living. For a minute there, I thought I’d actually found a story that was an exception to that rule – after all, it seems like you’d have to be terribly clever to be able to pull off stealing and selling an entire bridge. But finding out that they were only able to cash in $5100 just puts these guys back in line for the “Idiots Supreme”award. They could have made more money working at their local 7-11 for the amount of hours they must have put in on their “Steal the steel bridge” project. And they wouldn’t be sitting in jail right now contemplating their navel lint, either.

Maybe the bridge was haunted, after all.

– By Anja Wulf

ECONOMIC NEWS

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GDP Grew 2.5% In Third Quarter.

The CBS Evening News (10/27, lead story, 3:25, Pelley) reported, “If you were looking for the day the economy began to rise, today could be a contender.” In the first quarter of 2011, the GDP grew 0.4%, while in the second quarter it grew 1.3%. The 2.5% growth is “still weak, but there is a hint of momentum.” Reporter Anthony Mason said the numbers have “eased recession fears for the moment, but it hasn’t erased them.”

ABC World News (10/27, lead story, 3:00, Stephanopoulos) reported, “Signs of life in our economy” were difficult “to miss,” maybe “because we hoped for them so much.” However, “the big question tonight, will this momentum translate into jobs and the comeback America’s been waiting for?” ABC’s Dan Harris said since this summer “we’ve been living in fear of a another sickening, soul-crushing drop back into a recession,” but “the roller coaster appeared to be heading back uphill.”

NBC Nightly News (10/27, story 2, 1:30, Faber) reported that the average American “won’t feel” any effects from Thursday’s numbers announced or rising stocks “for some time, if we feel it at all.” And 2.5% growth isn’t the pace “to actually generate jobs.” However, “it creates confidence in the CEO suite, perhaps.”

In a front-page story, the New York Times (10/28, A1, Dewan, Subscription Publication) reports that Thursday’s new numbers aren’t “brisk enough” to “entirely dispel fears of a second recession,” and Kathy Bostjancic, the Conference Board’s macroeconomic analysis director said the current “growth rate may be hard to sustain,” because CEO and consumer confidence are “starting to melt away.” Meanwhile, David A. Rosenberg, chief economist for Gluskin Sheff, added that “declines in the savings rate” indicated in Thursday’s report, down one percent to 4.1 percent, while rare, “herald recession” at least half the time they occur.

According to the AP (10/27, Crutsinger), the summer’s growth was spurred by consumers “who spent more while earning less and by businesses that invested in machines and computers, not workers.” Still, the numbers are “the best quarterly growth in a year” and they were welcomed after “weeks of wild stock market shifts and the weakest consumer confidence since the height of the Great Recession.”

Bloomberg News (10/27, Kowalski) notes that in the third quarter, “household purchases, the biggest part of the economy, increased at a 2.4 percent pace, more than forecast by economists.” However, Bloomberg’s Consumer Comfort Index fell “to minus 51.1 in the week ended Oct. 23, the lowest in a month,” and 94 percent in the US said they have “a negative opinion about the economy, the worst since April 2009 and one percentage point shy of a record high.”

McClatchy (10/28, Hall) reports that Thursday’s numbers relaxed “the threat of a double-dip recession” and decreased “anxiety over the near-term economic future.”

USA Today (10/28, Davidson) reports that while some like Wells Fargo chief economist John Silvia said the report showed “very broad-based growth,” others like HIS Global Insight’s Nigel Gault said news of increased growth on the back of decreased savings is “not a solid foundation for growth.”

The Financial Times (10/28, Bond, Harding, Subscription Publication) and Wall Street Journal (10/28, A3, Mitchell, Murray, Subscription Publication) also have reports and analyst reaction.

From SME Daily Executive Briefing 10/28/2011