Friday, October 23, 2009

Growth expectations leveling out: PMA

American Metal Market
October 19, 2009
By Corinna Petry(PMA mentioned, PMA members quoted)

Metalforming companies expect a leveling in business conditions and incoming orders during the final quarter of 2009.Some 30 percent of Precision Metalforming Association (PMA) members expect the trend of general economic activity will rise over the next three months, according to the association’s October survey, down from 47 percent last month, and 54 percent predict activity will remain the same over the next quarter.

Thirty-eight percent of members said the trend in incoming orders will increase over the next three months compared with the past three months, down from 51 percent in September."While metalforming companies generally have experienced a significant rebound in orders and shipments over the past few months, there is real concern about whether the rebound has staying power," PMA president William E. Gaskin said. "Many believe that the current uptick is primarily inventory restocking and that without a more robust recovery of consumer spending and capital investment their increased orders will disappear later this year and during the first quarter of 2010."On the other hand, he said, members’ outlook "is much more robust than it was one year ago, when the majority were seeing new orders drop precipitously.""Overall, business will probably be down from what it has been in the past couple of months," said Bill R. Smith, a principal with Termax Corp., a Lake Zurich, Ill.-based maker of automotive fasteners. "I think the last couple of months were good due to ’Cash for Clunkers.’ We expect that business activity going forward will be about 85 to 90 percent of the level seen in August and September. "Smith said his company is still producing two to three times what it was in April and May. "August was good and September was a little bit better, but I have a feeling automotive is just filling up inventories and this level won’t be sustained," he said.But D&H Industries Inc.’s national sales manager, Michael San Filippo, said his company’s October order rates are up from September."We have landed some new business (to supply parts for lawn and garden equipment) and that will start shipping this month and picking up in November," he said. "A manufacturer was performing this work in-house and decided to outsource it to make room for a different product line."Business from other customers to the Oconomowoc, Wis., company "are pretty much level," San Filippo said. "We are seeing an influx of rush orders where people are looking to replace depleted inventory."Some 54 percent of members said their average daily shipping level is above that of three months ago, compared with 53 percent in September, while 31 percent said their shipments are flat compared with 30 percent in September.Companies appear to have stopped their head-count reductions. This month, only 60 percent of metalformers reported employees on short-time or layoff vs. 68 percent in September. The rate also may reflect that some companies have permanently downsized their work force, eliminating plans to recall workers previously considered temporarily laid off, Gaskin said. The worst month for layoffs in the industry was April, when 85 percent of PMA members said they had layoffs.The PMA surveys 149 metalforming companies in the United States and Canada for its monthly report

Larson note: I to agree that restocking inventories is the main thrust of this manufacturing increase but so what. An increase is an increase. Now look for the cash for more energy efficient appliances to come on in a month or two. Let’s see it as a way to help jump start America's factories. This in and of itself will not stop the downward spiral of unemployment but it has got to help. At least Mrs. Larson might get a new stove out of the program.

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