BUSINESS NEWS | COMING EVENTS | PEOPLE NEWS | MERGERS IMPROVEMENTS PROJECTED FOR U.S. INDUSTRIAL MANUFACTURERS OWNCOMPANY REVENUE NEW YORK, NY-The latest edition of the PwC US Manufacturing Barometer reports that despite ongoing uncertainty about the global economy, a vast majority of U.S. industrial manufacturers expect positive own-company revenue growth for 2011 and the next 12 months. While several key factors including higher costs of raw materials and commodities, oil and energy prices, higher costs of services worldwide and the economic impact of Japan's earthquake and tsunami have contributed to the uncertainty about the world economy over the past 12 months, U.S.-based industrial manufacturers continued to grow international sales in the second quarter of 2011 and are projecting continued strength for overseas revenues. "U.S. industrial manufacturers are showing confidence in the strength of their businesses by reporting positive expectations for their company revenue, international sales and gross margins, as well as plans for greater spending, even against a backdrop of building uncertainty for the U.S and world economies," says Barry Misthal, U.S. industrial manufacturing leader for PwC. "While several headwinds are expected to grow over the next 12 months, as cited in PwC's latest survey, U.S. industrial manufacturers aren't as concerned about demand over the next 12 months as in past quarters. Furthermore, they are planning major new investments to introduce new products and services, expand their geographic reach and undertake business acquisitions to bolster growth." The composite average growth estimate for own-company revenue growth in the Calendar year rose to 6.3% in the second quarter of 2011 from 5.3% in the previous quarter, the fifth consecutive quarterly increase and nearly four times higher than the second quarter of 2010. Eighty-eight percent of respondents forecasted positive own-company revenue growth for 2011, an increase of four points over the first quarter of 2011 and 23 points over the second quarter of 2010. Of those, 33% are forecasting double-digit growth for 2011, which is flat compared to the prior quarter, while 55% are forecasting singledigit growth, up four points over the prior quarter and 20 points higher than the same time a year ago. Only 8% forecast negative growth in the second quarter of 2011 vs. 13% in the first quarter of 2011 and 20% in the second quarter of 2010. Looking at the next 12 months, 90% of those surveyed expect positive revenue growth for their own companies, up a point compared to the first quarter of this year and 17 points higher than the second quarter of 2010. Twenty-eight percent forecast double-digit growth, while 62% forecast single-digit growth, compared to 33%, who forecast double digit growth and 56% forecasting singledigit growth in the first quarter of 2011. Gross margins for the second quarter remained positive. They were higher for 32% of respondents and lower for 20%, for a net plus 12%, which is above the prior quarter's plus 8%. According to the report, industry growth estimates for 2011 rose significantly to 5.4% in Q2 from 3.9% in the prior quarter of 2011. Eighty-seven percent of panelists expect positive industry growth for 2011, compared to 79% in the prior quarter and 65% in the second quarter of 2010. U. S.-based industrial manufacturers that sell abroad continued to grow revenue In the second quarter of 2011, with half of respondents reporting an uptick in sales over the past three months, an eightpoint increase over the second quarter of 2010, but down slightly from the prior quarter. Forty-eight percent responded that sales remained the same in the second quarter of 2011. The projected contribution of international sales to total revenue in the next 12 months increased to 36% from 34% in the prior quarter. "Nearly every respondent noted that international sales were up or the same compared to three months ago, reinforcing our view that with the right strategies, plans and understanding of the various risks involved in doing business overseas, industrial manufacturers can find robust opportunities to drive revenues in today's global marketplace," adds Misthal. Looking at the next 12 months, 48% of industrial manufacturers expressed optimism about the U.S. economy, down nine points from the first quarter of 2011, but three points higher than the same period in 2010. Uncertainty about the U.S. economy was cited by 45% of panelists, an increase of seven points over the first quarter of 2011, while 7% remain pessimistic in the second quarter of 2011, an increase of two points from the prior quarter. Thirty-eight percent ofU. S.-based industrial manufacturers who market abroad are optimistic about the prospects for the world economy over the next 12 months, a decline of six points from the prior quarter but flat compared to the same period last year. The majority (55%) are uncertain, up slightly from 51%, while 7% are pessimistic about the global economic outlook. In the second quarter of 2011, 57% of respondents believed the U.S. economy was growing, down from 65% in the prior quarter. For the second consecutive time in five years, no panelist believed it was declining. Forty-three percent believed the U.S. economy did not change from last quarter, an increase of 8% over the first quarter. Over the next 12 months, more than half of the panelists (52%) are planning major new investments of capital, an increase of three points over last quarter and 19 points higher than the same period last year. The increase marks the sixth straight quarterly increase in spending projections. Operational spending also is expected to increase, With 88% planning an increase, up from 86% in the fourth quarter of 2010 and 80% in the second quarter of 2010. Operational spending plans are led by new product or service introductions, which was cited by 60%, an increase of 11 points over the prior quarter. This was followed by an expected increase in spending on information technology (48%), business acquisitions (45%) and geographic expansion (43%). Seventy-three percent of respondents expect to participate in new business Initiatives, with 45% planning merger and acquisition (M&A) activity during the next 12 months, an increase over the prior quarter of nine points. This M&A activity response was the highest rate in four years and was ranked equally with those planning to expand to new markets abroad, which increased from 33% in the prior quarter. Plans for new facilities abroad rose 13 points to 35%, while plans for joint ventures (38%) also rose. Fifty-two percent of respondents plan to add employees to their workforce during the next 12 months, up slightly from the first quarter of 2011 and five points higher than the same period last year. The percentage of participants who are planning a net reduction stayed the same as the second quarter of 2010 at 7%, but increased from 3% in the prior quarter. "With concerns that the U.S economy may have stalled in the second quarter of this year and a number of barriers being cited that have the potential to limit growth in 2011, industrial manufacturers are looking to the M&A market to fuel growth," continues Misthal. "The right deals can not only add scale but build efficiencies and help businesses gain access to new markets." Concern over oil and energy prices contributed to 70% of panelists citing this as the greatest potential barrier to business growth over the next 12 months, rising five points from the prior quarter. Oil and energy price concerns outweighed legislative and regulatory pressures, which was cited by 60% vs. 54% in the first quarter of 2011. Taxation policies showed the biggest increase over the prior quarter, up 20 points to 53%. Concerns about demand continued to decline for the third consecutive quarter to 40%. A third of the panel (33%) cited decreasing profitability, up 11 points from the prior quarter. In the second quarter of 2011, 33% of U.S.-based industrial manufacturers reported higher costs, and 8% reported Lower costs. This compares to the prior quarter when a majority (51%) of U.S.- based industrial manufacturers reported higher costs, and 8% reported lower costs for a net plus 43%. In the second quarter of 2011, 28% raised prices and only 7% lowered them, for a net plus of 21%. This compares to the prior quarter when 43% raised prices, and only 11% lowered them, for a net of plus 32%. "As rising commodity costs continue to pressure the bottom lines of U.S. industrial manufacturers, there is an obvious need for companies to look at their current operational effectiveness and cost management programs," adds Misthal. "Stronger, updated programs that reflect the current environment of higher commodity costs can uncover real opportunities to make business adjustments that offset these challenges." Overall, 70% of U.S industrial manufactures either sell in Japan (67%) or manufacture in Japan (30%). Nearly half (47%) of U.S. industrial manufactures surveyed responded that their company has been directly affected or expects to be affected during the next 12 months By the Japanese earthquake, tsunami and nuclear fallout. Overall, the impact on these 47% of industrial manufactures was cited as severe by 11% and moderate by 32%. A production disruption inside Japan was cited by 50% and outside of Japan by the same 50%, while a sales disruption in Japan was cited by 57% and outside Japan by 43%. Thirty-nine percent of panelists noted an overall revenue drop off from these events. The disruptive events in Japan caused panelist companies to examine their own worldwide business continuity plans for supply chains (40%) and for operations at company sites near a nuclear plant or in earthquake zones (32%). "One-time events like the tragic situation in Japan have ramifications that extend across business communities as well," says Misthal. "We're seeing more companies look at their own worldwide business continuity plans for supply chains and the geographical risk of their operations." PwC's Manufacturing Barometer is a quarterly survey based on interviews with 60 senior executives of large, multinational U.S. industrial manufacturing companies about their current business performance, the state of the economy and their expectations for growth during the next 12 months. This survey summarizes the results for Q2 2011 and was conducted from April 7 through July 14, 2011. FORD WORKS TO DEVELOP NEW MATERIALS FOR TIRES DEARBORN, MI-Ford Motor Co. Has established a cross-functional team whose mission is to develop new tires that improve safety, boost fuel economy and enhance vehicle handling. Located at Ford's Research and Innovation Center in Dearborn, MI, the tire team works closely with Ford's chassis engineering and vehicle engineering functions, as well as leading tire companies, to test new compounds, new tread designs and other innovations. The three key attributes to any road tire tread are traction or grip, wear and rolling resistance. The challenge to building a better tire is that often improving one attribute may compromise another. A tire with better grip, for example, may have a higher rolling resistance and therefore, energy consumption. Based on the feedback we received from chemical suppliers and tire companies, Ford is now at the forefront of understanding tire technologies on a deeper level and pushing hard for new technologies," Flanigan says. Flanigan's group, which is part of research and innovation, was formed in October 2009 and works with Ford's vehicle engineering and chassis engineering teams. Ford has developed technologies for soy-based seats, and this team is applying these concepts to tires and other rubber products. The research team has already developed patent-pending technologies for EPDM (Ethylene Propylene Diene Monomer-used in weather stripping) rubber using bio-oils. Ford research into other rubber parts could provide new solutions for tires. SUPPLIERS IMPROVING BUT STILL AT RISK SOUTHFIELD, MI-North American manufacturing suppliers have generally become healthier since 2009, according to the latest BBK Ratings data. In spite of this, many manufacturers are still concerned that their suppliers' financial health can deteriorate quickly and potentially disrupt their operations. This is reflected by the increased demand for BBK to rate suppliers. "BBK ratings requests are up this year, indicating there's still a lot of uncertainty about the economy and that more companies want to proactively evaluate their suppliers to eliminate surprises," says Michael Wagner, BBK director of proactive services BBK completes its ratings by gathering and evaluating suppliers' financial data at the request of the suppliers' OEMs, tier one and tier two customers. BBK Ratings provide them with current, objective, comprehensive, confidential evaluations of their suppliers' financial status and the factors influencing it. Rated companies represent several industrial sectors: manufacturing, services, agricultural and retail. "Private companies are recovering nicely from the nation's economic collapse: 65% are now rated as financially stable compared to 46% in 2009, however, 24% are still showing some level of financial distress," says Wagner. GM TO INVEST $328M IN FLINT TRUCK PLANT DETROIT-General Motors will invest $328 million to prep its Flint, MI, plant to produce the next generation Chevrolet and GMC full-size pickup trucks. According to GM, the investment will create or retain 150 jobs at the plant, which currently has 2,047 employees. Presently, the Flint plant builds heavyduty versions of the Chevy Silverado and GMC Sierra. The investment is part of $2 billion GM is spending in eight states throughout the next 18 months. According to GM's press release, Michigan has been a major beneficiary in the current round of investments, designated for $744 million. The Flint Engine, Bay City Power train, Detroit- Hamtramck Assembly, Lansing Grand River Assembly, Saginaw Power train and GM Components Holdings in Wyoming, MI, all were designated for manufacturing investment along with a $130 million data center on GM's Warren, MI, Technical Center campus. View the latest in quality industry news by visiting our headlines at qualitymag.com-updated daily. Just click the tag now and see what you're missing. If you don't have the mobile app on your smart phone, visit http://gettag.mobi to get started. ASSOCIATION NEWS Five mobility engineering professionals received the SAE INTERNATIONAL Lloyd L. Withrow Distinguished Speaker Award during the SAE 2011 World Congress (Warrendale, PA) in Detroit. The awards were given to Guofei Chen; Garrick J. Forkenbrock; Angelo Onorati; John P. Rugh and Thomas Wallner. Originally established in 1984 as the SAE Distinguished Speaker Award, the award name was changed to the SAE Lloyd L. Withrow Distinguished Speaker Award in 1993 to honor the late Lloyd L. Withrow. The award recognizes individuals who have demonstrated outstanding presentation skills at SAE technical sessions. PEOPLE NEWS CONTINUED services, sales and operations at global industry leaders such as SAP America, Oracle, Misys and Siebel, Martinson has a long-standing record of developing global business strategies and directing the worldwide growth of enterprise technology companies. She succeeds James E. McGowan as the company's CEO. G&F Industries (Sturbridge, MA) has announced the promotion of five key employees. MARK BERRY was promoted to vice president of operations from his previous position of director of operations; ANDY DOW to vice president of quality assurance from director of quality; and CHARLIE FEELEY to vice president of IT and materials from director of information systems and logistics. Also promoted were PAULA PARKER, manager of accounting and human resources from accounting manager and KIM DAVIS to office manager from office assistant. Tecumseh Products Co. (Ann Arbor, MI) has appointed JAMES J. CONNOR to the role of president and CEO. Connor has broad experience with manufacturing companies at the CFO and CEO levels and as a strategic adviser to numerous other companies. He most recently served as the chief financial officer for Tecumseh Products Co. Since January 2010. LMI Aerospace (St. Louis), a provider of design engineering services, structural assemblies, kits and components to the aerospace, defense and technology markets, has appointed RYAN P. BOGAN to the position of chief operating officer of LMI. Bogan was previously CEO of D3 Technologies, a subsidiary of LMI. Bogan will relocate to LMI's corporate offices in St. Charles, MS, and will report to LMI's CEO Ron Saks. Guill Tool & Engineering (West Warwick, RI) has appointed retired Naval officer JAMES R. HOUSTON to the role of vice president of engineering. In addition, Houston will handle business development for the company. Houston served as operations officer for the war gaming department at the Naval War College from January 2005 until April 2010, where he directed and mentored a department of more than 80 officers, professors and enlisted personnel. In addition to monitoring and integrating the strategic growth of both technology and staff, he managed million dollar facility upgrades, coordinating virtually all modifications. BUSINESS NEWS SIGMATECH'S (Huntsville, AL) UltraMap-TSV system won Best of West at SEMICON West, presented by industry association SEMI and Solid State Technology. The UltraMap-TSV system from SigmaTech is a fully automated through silicon via (TSV) and deep-trench metrology system capable of characterizing both TSV and deep-trench features from both the front and back sides of subject wafers, up to 300 millimeters in diameter. Advanced composites components engineering ALPHA COMPOSITES (Buckinghamshire, UK) has been awarded AS 9100 Revision C Certification, the quality management system specifically written to meet aerospace industry production and manufacturing standards. Alpha Composites provides design, tooling, manufacturing and engineering solutions to meet component requirements. JENOPTIK'S (Rochester Hills, MI) Industrial Metrology division has been awarded a contract to supply fully automated roughness measurement systems for three engine plants in North America. The contract is valued at $6.5 million, and includes integration into the production lines, as well as comprehensive after-sales. Delivery of the systems to the plants in the United States, Canada and Mexico will start during the course of this year and be completed by the end of 2013.
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