Managing indirect spend is crucial for controlling costs. It is also a proven tactic. But direct connectivity still has a ways to go in aligning with indirect procurement. In a relevant piece of new research from our sister site Spend Matters, the team lays out just why direct procurement execution systems need to integrate visibly between tier-1 manufacturers, logistics providers, banking partners, MSPs, BPO firms, raw materials suppliers and more.
ATTN: manufacturers, if you haven’t factored supply chain risk management into your global procurement strategy then now is the time to take a long, hard look at what AGCO is doing with the help of riskmethods.
The world’s largest manufacturer of agricultural machinery, AGCO won the “Excellence in eSolutions” award for its “Procurement transformation” achievements. Find out their secret to success by joining us for the webinar, Award-Winning Supply Chain Risk Management at AGCO with Thomas Kase, VP at Spend Matters, and Jan Theissen, director, Strategy & Methods, Global Purchasing & Materials Management at AGCO.
Rules and regulatory compliance already got ya down? Well, another rule’s comin’…(check out the video above for a preview.)
The final rule of EPA’s Clean Power Plan, set to go into effect mid-summer 2015, will likely have significant financial implications for US manufacturers. The potential cost, supported by several independent third-party studies, could be far below the original estimates put forth by the EPA. This has led to great cause for concern among domestic manufacturers as they already struggle to compete with international companies who, in many cases, receive heavily subsidized energy.
So what are US manufacturers to do? Stay tuned for “What EPA’s Clean Power Plan Could Cost US Businesses (and What Procurement Can Do About It)”. This 45-minute interactive video presentation, with Q&A session following, will feature:
Lisa Reisman, CEO, Azul Partners and Executive Editor, MetalMiner™
Ross Eisenberg, Vice President, Energy and Resources Policy at National Association of Manufacturers (NAM)
Mark Pruitt, Principal, Power Bureau
Jennifer Diggins, Director, Public Affairs, Nucor Corp.
What You’ll Learn About EPA’s Clean Power Plan
What the actual proposed rule entails
How manufacturers, including those in the steel industry, view the plan and its potential effects
How a typical steel cost breakdown could change
The roles volatility and grid reliability play
How purchasing / procurement professionals can best prepare themselves for regulatory compliance
Need CEH credit? Attending this webinar will count toward 1 CEH from ISM.
This guy is all for a pipeline. (He’s also a trademark of MillerCoors.)
Although President Obama just nixed TransCanada’s proposed Keystone XL pipeline, tar sands oil will in all likelihood continue to dribble from Canada to China and elsewhere, regardless of whether a pipeline links Alberta to the Gulf.
At least that’s the conventional wisdom many folks in the US manufacturing sector point to, when discussing the pros and cons of Keystone XL.
Keystone XL Pipeline and Construction Industry in the US
MetalMiner’s Jeff Yoders took readers through the implications of this glorified “construction stimulus” project in his analysis back in November 2014 – the last time Keystone was shot down:
The final environmental impact statement said 42,000 jobs would be created by Keystone XL in construction and support jobs in the states of Montana, South Dakota and Nebraska.
We have covered the rail car shortage in those states over the past few weeks and one of the side benefits of building the pipeline would be a reduction in strain on class 1 railroads, but the construction piece of the pipeline has been the focus of the argument since its initial permit application was applied for in 2008. The Associated General Contractors of America (AGC) points out that nearly 10,000 miles of pipeline have been built in the US since the application was filed with little to no argument. The AGC is a big supporter of Keystone XL.
Those 42,000 construction jobs certainly look enticing to the skilled laborers in those states still looking for work, yet, pipelines are anything but permanent solutions to unemployment. That same State Dept. environmental review found that the Keystone XL will create only 35 permanent jobs. (35, that’s it.) So, for such a limited impact is, essentially, a construction stimulus project really worth all of this debate?
If the environmental objections to the process of pumping large amounts of water and natural gas into tar sands to pump steam into the tar to extract oil are to be believed, then yes.
Our Executive Editor Lisa Reisman interviewed Andrew Browning of Consumer Energy Alliance back in 2011, and he took us through why an “all-of-the-above” energy policy makes sense – including the construction of Keystone XL.
As much as folks talk about severing ties to crude oil entirely as an energy source, the sad truth is that we’re nowhere near making that a reality just yet. Simply to sustain the country while new energies are worked out and tested, oil has a firm place in the mix of energy sources that the US has to work with. Not only that, the production of the pipeline itself, Browning mentions, will help create jobs in steel and manufacturing. Bottom line, Browning says, “The Canadians are going to produce this.” It’ll go east or west if not south; it’ll end up in China if not the US.
We caught up with William Strauss, senior economist and economic advisor in the economic research department at the Federal Reserve Bank of Chicago, on how he views current and future trends in the U.S. manufacturing economy. He’ll be speaking at Commodity/PROcurement EDGE this October.
MetalMiner: How would you characterize the current macroeconomic climate for manufacturers?
William Strauss: With regard to overall economy, the view is that it’s expanding, although at a fairly below-trend pace. That’s been a bit of a disappointment this year. In the first half of 2009, manufacturing had been on a tear, growing at a pace twice its historical growth rate. This was coming off of a downturn, of course, so inventories got depleted, and were being rebuilt. Even though the economy was muddling along, manufacturing led things. But the inventory story has come to an end.
As global shipping continues to reach for the max — Panamax, Panamax Max, Post Panamax, Post Panamax Plus and New Panamax, to be exact, in addition to other massive container ships plying the global seas these days — our focus shifts to the liquids that have been traveling to Japan more and more lately.
In his rebuttal to reshoring stories in the Atlantic, as we detailed in Part One, Alan Tonelson also brought up a good point about subsidizing reshoring for businesses which, although makes sense and is a good thing, is rather unsustainable in this current economic climate for the US (what with the huge national debt that the impending fiscal cliff is bringing into sharp focus).
However, the biggest ostensible benefit of reshoring manufacturing to the US on a macro level may be local job creation and not much more, if one is to take Timken CEO James Griffith’s overall viewpoint in this interview as a proxy for the entire manufacturing industry: that companies must get closer to where the growth is.
For expert commentary on metals impacted by Section 1502 of the Dodd-Frank financial reform law — the so-called conflict minerals law — we contacted Michael Pfeifer, president of Industrial Metallurgists, LLC, which provides learning and courseware around material engineering and material training.
Mike has 20 years of experience as an engineer in product development and manufacturing.
We asked Mike to help us better understand the role of MSDS (material safety data sheets) in identifying materials that might fall under the conflict minerals rules. Mike reminded us that MSDS sheets do not serve as the “controlling document.”
Caterpillar, the US multinational manufacturer of mining and earth-moving equipment, is often touted as a bellwether of the global manufacturing sector, leading some to think that if news comes out of Caterpillar’s fortunes being down, then the whole global economy must be down.
In reality, Caterpillar’s position in this respect is more subtle — and therefore valuable — as an indicator than it first appears.
While the global economy fell into an abyss in late 2008, Caterpillar’s prospects seemed to follow in close order, but the firm quickly responded to the downturn and the firm has been doing well during the last two years, in spite of a global economy with few bright spots outside of China.
Now though, the firm warns in its third-quarter financial figures of a reduced forecast for full-year revenues to $66 billion from an earlier range of $68 billion to $70 billion, according to Reuters.
As new housing construction finally shows some glimmers of health, China steel prices and iron ore prices primarily drove the monthly Construction MMI® to a value of 92 in October, an increase of 4.5 percent from 88 in September.
MetalMiner’s construction metals index bumped up four points over the last month primarily due to rising rebar and H-beam prices in China. China rebar had fallen three months in a row, but rose over September, while China H-beam prices saw a four-month declining price trend that broke this past month.
European aluminum commercial sheet as well as iron ore prices in China – 62% Australian fines spiked 13 percent – also lent support to this month’s construction index.
Though the ISM reported surprisingly strong US manufacturing numbers, US construction spending fell slightly in August (Ed. note: US government construction spending releases lag the monthly MetalMiner Construction MMI® by approximately 30 days.)
“We note, however, that it appears as though residential housing has finally begun to climb out of its trough based upon the most recent numbers from the S&P/Case-Shiller Home Price Index,” said Lisa Reisman, managing editor of MetalMiner. “Anecdotally, many manufacturers that serve the housing market have also suggested the same to us.”
“Our forecast is that housing will continue to contribute to the economy for the remainder of this year and throughout next year and beyond. Improvement in residential construction helps lift the rest of the economy and is both a direct and indirect positive for nonresidential construction.
This month we extend the forecast horizon out to 2014. The Reed Construction Data forecast, which assumes no recession, is for total construction spending to increase 8.1% in 2012, 7.9% in 2013, and 9.6% in 2014.”
“This bodes well for the Construction MMI® going forward,” Reisman said, “and as we will see over the course of the next few days when we release additional monthly metal index data, many of the metals that support that industry have seen a lift.”
Drivers of the Construction Metals Index Rise
After dropping the previous month, the Chinese low price of 62% Australian iron ore fines prices rose 13 percent. The price of Chinese rebar rose 8 percent after falling the previous month. The price of Chinese H-beam steel prices rose 5.5 percent.
The price of European 1050 aluminum rose 6.3 percent over the past month after holding steady the previous month.
US shredded scrap prices were down 6.7 percent for the month.
The weekly US Gulf Coast bar fuel surcharge grew 0.6 percent, while the weekly US Midwest bar fuel surcharge was down 1.3 percent.
Chinese aluminum bar rose 1.1 percent for the month.
The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends over a 30-day period. For more information on the Construction MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.