Production machining has changed from large runs of parts carved out of free machining materials to smaller runs of parts from much more difficult to machine materials. Learn how to adjust to this challenge.
Attendees at PMPA’s National Technical Conference learned that the demographic changes in our workforce are having a powerful effect on how the people in our shops find the information they need.
Prices of raw materials used to make precision machined products are up substantially, from 44% to 114% from March 2009 - March 2010 for 6 of the 7 materials we track. Low inventories, increasing demand and idled production facilities are among the factors involved here in North America, as are the historic iron ore agreement and continued high demand in China. Fuel price increases also impact freight, which is an important factor in our business. We will not be shocked to see monies paid for steel in May to be $80 per ton higher than they were in April based on already announced price increases and the current price on busheling.
The precision machining industry provides leading safety technology that makes a difference in our everyday lives: anti-lock brakes for our cars—check; air bag components—check; heat-treated bolts and fasteners for our seat belts and to hold those child seats in securely—check.In addition to automotive, we make parts used in the manufacture of food, pharmaceuticals, medical devices and energy—four more industries where performance and safety are critical.
Prices for most raw materials used to make precision parts have double-digit increases for the year ending December 31, 2009. Surcharges, price increases, and short supplies of even common items characterize today’s market. Until larger inventories of scrap build up from increases in production, the industry and its supply chain face a paradox of no scrap from which to make steel, therefore no steel to make parts, therefore, no scrap to make steel… Copper and brass has doubled over the year. Aluminum is up over 40%. We anticipate spikes in surcharges, allocation, and long lead times throughout the first quarter of 2010.
The year 2009 will be remembered by many of us as a teacher—a cruel teacher, perhaps—but a teacher, nevertheless. There are several important lessons that we learned as an industry, as small- to medium-sized businesses and as manufacturers.
There is nothing like "business as usual" to nurture a, well, let’s call it a "business as usual" managerial role. In normal times, as managers, we work to achieve our organization’s mission by planning, organizing, leading and controlling.
Of course prices have risen. Manufacturing expansion following 18 months of decline. Supply chain pretty much destocked. Low inventories. Domestic mills operating at 47 percent of capacity. Global influences on scrap and raw materials. You need a program to follow this game. We're providing you one with this edition of PMPA's Material Impacts Report.