Articles in Category: Manufacturing

MetalMiner is pleased to have guest columnist Jack Taylor contribute a GOES market analysis. Jack is an independent metals analyst and consultant focusing on ferrous and base metals used in the energy industry. Prior to working as a independent metals consultant he worked at PowerAdvocate as an Energy Business Analyst and at Independence Investments covering the automotive and transportation sectors. He can be reached at JTaylorMA(at)gmail.com

Many investors and analysts have been watching rare earth metals markets over the past few years, yet another metal, not as rare but just as valuable, has gone unnoticed – Grain Oriented Electrical Steel (GOES). GOES is a high value product that is almost six times the price of hot rolled coil; it is mainly consumed by transformer manufacturers. Indirectly, GOES impacts the utility market since it represents as much as 40% of transformer material costs and, therefore, influences the construction and maintenance cost of utilities operations. GOES represents only 0.2% of finished steel products volume with very limited supply due to a small number of producers: two in the U.S. (AK Steel and ATI Ludlum) and 200 world-wide as reported by Novolipetsk Steel. GOES base price in years past has been set on a yearly basis with a surcharge added to circumvent any fluctuation in raw material costs.

Source: US Census Bureau; compiled by Jack Taylor

GOES pricing is heavily influenced by the demand of power construction and supply of raw materials. Power construction spending has declined 7.9% while overall non-residential construction spending collapsed 13.2% since January of last year according to current U.S. Census Bureau (USCB) data. Hot rolled coil, the largest raw material cost component of GOES, usually dictates where the final surcharge could travel. Surcharges can fluctuate significantly and be substantial: earlier, in 3Q2008, domestic producers increased charges to over $1000 per short ton while, as of this writing, they are near $350 per ton as stated on domestic producers’ websites.

Last year’s implementation of the new Department of Energy (DOE) efficiency rules also impacted demand for GOES by transformer manufacturers. Most new transformers must use thinner laminations of GOES, which will result in the increase of the number of strips required, while also increasing the weight of the transformer along with material costs. Conversely, many other countries have not set the same efficiency standards and, therefore, many producers simply do not make sufficient amount of GOES with specs meeting new DOE regulation for import to the U.S. With only two domestic producers, GOES sales have remained more profitable compared to other types of steel. There is little expectation to increase the number of GOES manufacturers as the entry barrier is high due to the considerable cost of research and development. Those that have the technology have increased production but not enough to meet the 200K ton per year shortage worldwide according to Sumitomo Metals Industries.

Over the course of 2010, GOES pricing decreased nearly 15% due to power generation projects being delayed or canceled according to my estimates. Less demand for transformers caused unfilled orders of power generation equipment to rise 14% over the past year (USCB). Furthermore, rising raw material costs also dampened transformer and GOES demand somewhat as many buyers pushed back delivery dates. Hot rolled coil and steel plate costs rose more than 20% last year due to iron ore and coking coal suppliers switching to quarterly contracts instead of yearly contracts in order to capture higher open market pricing. Consequently, transformer costs grew 4-10% in response to escalating steel prices last year according to my findings. On a positive note, given most high voltage transformers take 12-18 months to manufacturer new orders increased 27% (year-over-year) during 2010 in anticipation of a pickup of power generation spending over the next few years. Next month we will dive into the GOES forecast for 2011 and what impact it will have on the power industry.

–Jack Taylor

The US economy is giving off a bevy of mixed signals, as some economic indicators point toward good signs of recovery while others highlight the uncertain nature that the manufacturing sector faces.

Much of that uncertainty is manifested in fears of rising inflation. (What do you say to that, Ben Bernanke?)

In terms of the raw numbers, two indexes we track are showing increases. The Institute of Supply Management’s Purchasing Managers’ Index (PMI), certainly one of our key indicators, posted a 0.4 percent increase in December 2010, which put the index at 57 percent. (Click on the table below for a larger view.)

Source: Institute for Supply Management

This is good news, and shows that overall US manufacturing is growing (when the PMI is over 42 percent, it generally indicates growth), and it corresponds with roughly 5 percent GDP growth. The upward trend has generally been sustained since the dark days of mid-2008.

Source: ISM

The Primary Metals and Fabricated Metals Products sectors reported overall growth to the ISM; aluminum, copper, nickel, steel and stainless steel, tin plate and titanium dioxide all posted increases in price.

Which brings us to the other index that has a lot to do with prices the Producer Price Index (PPI), put out by the Bureau of Labor Statistics and measuring the average change over time in the selling prices received by domestic producers for their output. Metals buyers and sellers are not alone in battling inflation to wit, December 2010 saw the largest increase in the PPI since last March, posting a 1.1 percent rise in finished goods. (Click on the graph below for a larger view.) General freight trucking increased 0.4 percent, and general warehousing and storage increased 0.7 percent.

Source: US Bureau of Labor Statistics

But raw material price rises are up and rising across the board, and amid the gradual growth that manufacturing has been experiencing, this could be cause for concern. Coking coal prices, just for an example, could see sustained rises (and not just because of the latest act of God the disastrous floods devastating northeastern Australia). Oil is again flirting with $100 per barrel, and that has a direct effect on shipping costs.

The Financial Times and Reuters have picked up on this with a raft of stories in the past few days, allowing readers to hear a host of industrial voices decrying the price increases. John Byrne, Boeing’s director of commodities, and Chris Lidell, GM’s CFO, both expressed concern that raw materials costs would cut into 2011 profits in a recent FT article. The largest metal components of the average car are steel, averaging 2,100 pounds, and aluminum, at around 400 pounds, according to the piece and let’s not forget copper. David Leiker, an auto analyst at RW Baird, “estimated that raw materials made up about $3,500 of a car that sells for $28,000.

A Reuters analysis took an interesting look at how consumer product manufacturers are ingeniously cutting costs Kraft shorting its Singles packs by two slices, Kimberly-Clark skimping on the size of its toilet paper squares but the woes extend to base metal industries as well. China’s Baosteel, the country’s biggest steelmaker, recently upped its prices again. The article quotes Oliver Pursche, co-manager of the GMG Defensive Beta Fund, saying “the greatest uncertainty for commodity prices, especially metals and energy, is how aggressively China moves to try to cool its economy.

“If there’s a sense China will continue to raise interest rates, raise its loan requirements and try to slow things down, you can see a pretty quick sell-off,” he told Reuters.

American companies are also digging in their heels. Wagner Cos., a Wisconsin-based manufacturer, expects to see steel prices increase anywhere from 5 to 10 percent this year, and is bracing itself by “beefing up steel inventories at lower prices, according to the Milwaukee Journal-Sentinel.

One of the bottom lines here is that we must watch steel closely as it comes out of its trough early this year, since it reaches across so many industries and shows up in so many finished goods. (Not only in the US but also globally, especially as construction and automobile demand pervade emerging economies.) As price inflation could hit steel even harder, we’ll keep an eye on how metal manufacturers continue to cut costs in innovative ways.

Join us for a free webinar on steel price trends and outlook for 2011 along with guest speaker Metalwest, where we’ll discuss how OEMs can improve profitability through lean metal supplier programs.


–Taras Berezowsky

A handful of recurring mantras that we’ve been repeatedly hearing deal with an issue that is at once profound, powerful and remarkably simple and they all relate to the rebirth of US manufacturing.

Whether it’s Nucor Corporation’s public outreach platform, the Obama administration’s latest overtures to America’s industrial base or the latest science and technology-driven show on PBS, the words and what they imply for our economic future in the 21st century couldn’t be clearer. From “building things, to “making things to simply “making stuff, these short sayings have become a drumbeat for marching towards the challenges we know we face and will have a hard time overcoming (just spend a few minutes with this great Businessweek article to see what I mean). If we keep chanting the message, the thinking goes, the realization that commitment to industrial innovation and production is at the core of US economic survival will dawn upon every American.

Now that 2011 is fully underway, I feel confident that this year, we will see renewed interest in “making stuff growing stronger than ever before. While MetalMiner has covered issues that run the gamut from imploring the US Congress to make business and industry compete effectively, to critiquing some interesting attempts by manufacturing groups to urge young Americans to take up industrial arms, we haven’t yet looked at what popular media can do to fulfill the “making stuff mantra.

Enter a new 4-hour PBS miniseries, titled aptly enough “Making Stuff. Kicking off this Wednesday, Jan. 19, the show (which comes from the venerable science series Nova) will look at four different aspects of the materials that have shaped, and will continue to shape, human lives, subtitled “Stronger, Smaller, Cleaner, Smarter. David Pogue, a New York Times technology reporter, will host.

Source: pbs.org

Metals should factor into most of the four episodes. From determining whether steel is the strongest material in the world, to exploring the effectiveness/viability of lithium vehicle batteries, Pogue will extrapolate from what we already know by showing what scientific innovation is doing to constantly improve. “Few people realize it, but materials are the basis of our civilizationthe Stone Age, the Iron Ageand materials are what will take us into the future, says Paula S. Apsell, Senior Executive Producer for NOVA, on the show’s website.

Now, I know what you’re thinking this is just another gimmicky show meant to glorify popular science and extol the virtues of mostly plastics-and-composite-based innovations that move away from the heavy industry we depend on; “what can it possibly do for the metals industry? Well, I would argue that shows like this, while at least exposing the marvels of hands-on engineering to a wider audience, also point the way to where metals companies and their workers can be making their money in the future. Take the following as an example, from the show’s producer, Chris Schmidt:

“When describing Ëœsmart materials,’ one analogy scientists give is the evolution from the first Terminator robot, a machine made of metal and circuitry, to the shape-shifting Ëœliquid guy’ in Terminator 2, he said.

In other words, think of the innovations that will involve metals in the near future. “An Army tanker trunk [sic] that heals its own bullet wounds. An airplane wing that changes shape as it flies ¦ For inspirations and ideas, scientists are turning to nature and biology and producing some innovative new developments in materials science, the press release states. We seem to be at the same spot for this stuff as we were when solar and wind energy mass production was becoming a reality years ago.

Remember the past? Well, on into the future we go and any valuable exposure that can get us there, so much the better.

Join us for a free webinar on steel price trends and outlook for 2011 along with guest speaker Metalwest, where we’ll discuss how OEMs can improve profitability through lean metal supplier programs.


–Taras Berezowsky

Here are some things to keep in mind this week as China’s President Hu Jintao flies stateside to hang out with President Obama and Chicago Mayor Richard M. Daley, among others, later this week:

Same old, same old from the diplomatic machine.

Secretary of State Hillary Clinton does what she’s supposed to, by downplaying the tension between the world’s two largest economies. She said that the US is neither viewing China’s rise “as a threat, nor are they “interested in constraining Beijing’s growth, according to this Reuters article. It’s great when heads of state formally say things that everyone else in the room doesn’t really believe (often including the person saying them!)

Meanwhile, People’s Bank of China makes it look like they’re playing nice.

As folks like Treasury Secretary Tim Geithner keep insisting that China take measures to let the yuan appreciate faster, China’s central bank makes small, conciliatory moves (such as this one). According to forex dealers in the article, while China’s government “tries to paint a picture of resisting U.S. pressure for yuan appreciation, in reality it often lets the currency strengthen ahead of major political events in recognition of the importance of the ties between the world’s two biggest economies. The yuan’s value was pushed up to 6.60 against the dollar; at the end of the day Wednesday, the currency was up 3.53 percent since it was depegged from the dollar in June 2010. Look for no more than some gentle pushing from Obama on this issue this week, while Hu demurs it’s been said that Hu is not looking for any major moves forward, but simply wants to do some light patching of relations. They’ll find some way to dance around it, while what really needs to happen is a “come-to-Jesus moment, if you will, to put the imbalances of US-China trade directly on the table.

Don’t count out Chicago it wants to be “friendliest city to China investment.

Mayor Daley is throwing a private, corporate-funded dinner for Hu on Thursday, while the Chicago Council on Global Affairs will arrange a networking lunch and session at which more than “40 US-China business deals are expected to be signed ¦ including contracts, trade agreements, partnerships and Chinese investments in the U.S., reports Crain’s Chicago Business. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products helped organize the business event, while President Hu is set to “visit a Chinese-owned auto parts firm, a Chinese wind energy company and the Confucius Institute in Chicago, a Chinese language and cultural education center housed at Walter Payton College Preparatory High School on the Near North Side. Covering all bases!

Going forward from here how to help US manufacturing.

In the Good-News department, The Fed reported on Jan. 14 that industrial production grew overall in 2010, coming in at 5.8 percent, according to Agence France-Presse. “Industrial production, led by manufacturing and mining, finished the year on a strong note and is poised to sustain growth in 2011, said Thomas J. Duesterberg, CEO of the Manufacturers Alliance/MAPI, quoted in Industry Week. He continued that “strong export markets and “strong capital spending is needed to drive further growth which is where a federal plan for US manufacturing would come in. With the State of the Union address coming up, the Alliance for American Manufacturing wrote a letter to the Obama administration, outlining five key areas to focus on: Access to capital, creating demand and promoting manufacturing utilization, workforce development, and ultimately (most closely related to Hu’s visit) competitiveness and trade deficit reduction.

American manufacturing has made its points clear to the current government deal with the China problem, or there’s no turning back. We’ll see if formal state visits such as these will make any meaningful dent, or if politicians continue to dance around the elephant(s) in the room.

–Taras Berezowsky

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MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


When you’re between a rock and a hard place in need of cutting costs while maintaining profit what do you do? An even better question might be: what does a state legislature do?

Turns out, in the case of Illinois 48th place among all states in job creation and No. 1 in budget deficit and state debt you raise taxes without cutting spending.

Spend Matters, our sister site, has written a couple incisive posts check them out here and here detailing the shortcomings of the legislature’s previous plans. Here’s a taste:

“If Governor Quinn really wants to “build [a] framework that will allow the state to pay its bills, stabilize the budget and strengthen the Illinois economy,” how about (gasp) cutting pensions, ridding ourselves of ridiculous union agreements (including our Governor’s agreement to not lay off workers) and reducing the overall size of the bloated state workforce by 25% as a start?

Socking it to small Illinois businesses, like ours, which will certainly factor higher taxes into proposed growth plans, will cause further economic hardship and delayed hiring, even before the so-called recovery ramps into gear.

(Speaking to the aforementioned “ridiculous union agreements is an excellent article in the Jan. 8 issue of the Economist, titled (Government) workers of the world unite, that shows the gross imbalance between public and private unions.)

The fact is that Illinois’ financial predicament is just as prickly as the potential solutions. According to which data you choose, the state is running a $13 to $15 billion budget deficit, and has $8 billion worth in unpaid bills to schools and hospitals. Now that the House and Senate ended up passing a tax hike increases of 66 percent in income tax and 47 percent in corporate tax let’s take a look at how the media is treating this massive legislative decision.

Both the Chicago Sun-Times and Tribune displayed varying levels of disdain for the bill. The Sun-Times surprisingly hailed the decision as a necessary one, although warily. The Tribune flat out excoriated the legislature, and both papers called out the failure to cut spending.

“Cutting overhead would offend their friends in the public employee unions and other pet constituencies. Ask retired state workers to pay something for their health care? Cap employee pensions? Perish the thought, the Tribune‘s editorial states. “So ” get this ” not only are they raising taxes to avoid budget cuts, they’re including a provision to let their spending continue to rise ” year after year.

The Sun-Times echoes the sentiment: “Republicans pointed out that Democrats started by building in a spending base that’s actually 10 percent greater than what the state spent this year as it delayed paying bills to forestall the looming crisis, writes Mark Brown.

Illinois and Chicago manufacturers see no redeeming qualities to the increases. “Greg Baise, president & CEO of the Illinois Manufacturers Association, led the opposition testimony against the tax hike in committee noting that this legislation will drive another nail in the coffin of manufacturing which has seen the loss of 300,000 jobs in the past decade by significantly increasing the cost of doing business in this state, according to a statement on the association’s website.

Another big blow to manufacturers and other businesses in this bill: the suspension of net operating loss provisions for the next four years. Whereas before, companies could spread net loss forward, mitigating the damage to their bottom line, this move results in “a double whammy” for recession-hit firms, the IMA said.

The main question for manufacturers now, as Monica Davey, the New York Times‘ one-person Chicago bureau, puts it, is “Will Illinois businesses really now flock to neighbors Wisconsin and Indiana as opponents have suggested?

If you’re a manufacturer in Illinois, or do significant business there, how will this affect your business practices? Let us know post a comment!

–Taras Berezowsky

Join us for a free webinar on steel price trends and outlook for 2011 along with guest speaker Metalwest, where we’ll discuss how OEMs can improve profitability through lean metal supplier programs.

If you’ve been registering a pulse over the last year, you’ve surely read a host of stories about how the Chinese economy is plowing along on the road of global market development. The renminbi’s severe devaluation against the dollar (only slightly appreciating over the last half year) is one of a slew of sly tools that Beijing is using to compete ever harder in the market. China’s economic bulldozer is reaching such critical mass, that to many, the country’s global grip seems to be reaching a point of no return. A still-developing but already crucial area that directly helps Chinese growth is direct foreign investment, not only in far-flung places such as Africa and Australia, but increasingly, in the United States.

FREE Download: Our latest MMI® Report, analyzing 10 industrial metal price trends.

To begin with an example: as many of our readers know, China is at the forefront of the wind turbine industry, accounting for almost half of the $45 billion global market. A recent NY Times article points out how companies such as Spain’s Gamesa take their operations into China to get a piece of the action, only to be slowed by Beijing’s strict rules of how to do business. (Namely, a 2005 regulation called Notice 1204, imposed by China’s National Development and Reform Commission that required wind farms to buy equipment of which no less than 70 percent was to be manufactured domestically.) The US is no stranger to tapping Chinese workforces, having done so for over two decades. But now, not only is China subjecting western companies like Gamesa to strict rules, but they are also investing in the US manufacturing sector on their own terms and on American soil.

The world’s largest producer of solar panels, China’s Suntech, now has a 75-person, 117,000-square-foot outpost in the Arizona desert, according to a recent Business Week article. This is one example of a spate of Chinese activity within US borders, which looks positive because it gives US workers jobs but ultimately benefits China’s bottom line by escaping trade barriers, capitalizing on the U.S. government’s alternative energy push, and learning lessons that could help them in their home market, writes David J. Lynch.

This isn’t necessarily new, but is steadily increasing as the US domestic economy continues its malaise while China is constantly looking to boost growth and its global reach. Other ventures mentioned in the article: the contentious investment of $200 million in Mississippi’s Steel Development Co. proposed by China’s Anshan Iron and Steel Group Corp. back in May; and Chinese state-owned Tianjin Pipe (TPCO) planning to build a $1 billion steel pipe mill in Corpus Christi, Tex., that would employ 500-600 people and avoid 63 percent tariffs. (TPCO has been around in the US since 1993, basing its operations in Houston.)

And we can’t forget how, back in Nov. 2010, Pacific Century Motors bought GM’s Saginaw, Mich.-based company Nexteer Automotive from the ailing US automaker, billed as the single largest Chinese investment in the global automotive supplier industry.

What does this mean for US/China/global business? Well, it depends whether the investment is seen as opportunistic encroachment on US economic territory (and, by extension, a big middle finger to free trade regulations, US tariffs and WTO rules while taking advantage of corporate tax breaks), or as a helping hand to quell domestic unemployment here in the states. Some US political and business leaders seem open to this idea. “Chinese companies, thanks to government-backed loans, monopolies, and preferential treatment, are awash in cash and should be a source for investment in the U.S. economy, investment that would help maintain and create jobs in the U.S.,” wrote Jon Huntsman, U.S. ambassador to Beijing, in a WikiLeaks-released cable, quoted in Lynch’s piece. Since the US is indebted to China, this could be one of the ways that American workers benefit from the relationship rather than losing out. However, it may end up that China’s overall benefit from increased investment in the United States’ economy serves the People’s Republic in the long run more than it does sustainable US manufacturing.

With our office currently very attuned to the world of babies (Lisa and Jason welcomed their third boy, Simon, into existence nearly two weeks ago), not to mention their feeding schedules, this little news item certainly set off the baby radar.

The Chicago Tribune reported that the Consumer Product Safety Commission just passed the toughest rules regulating baby cribs in US history. The main target is the “drop-side model, in which the sidepiece that drops down can cause babies to become trapped and hang themselves to death. Beginning this summer, drop-side cribs, and also those with unsafe mattress supports/slats, will be illegal to put or keep on the market. Another historic rule prohibits the sale of almost all second-hand cribs, since most would not pass the new standards.

Source: CPSC via Chicago Tribune

(For the record, Lisa and Jason are not using a drop-side crib. Whew.)

Needless to say, this will have quite an effect on both babies and their parents, and manufacturers.

In terms of baby safety, the rules are reportedly a long time in coming according to the Tribune, between November 2007 and April 2010, at least 35 fatalities attributed to structural crib problems were reported. Since 2007, 11 million cribs have been recalled. Earlier this year, “seven firms, including Million Dollar Baby, Jardine Enterprises and LaJobi Inc., voluntarily recalled more than 2 million drop-side cribs, according to an LA Times article.

On the manufacturing side, will this cause new supply chain disruptions, with new plans for production and distribution having to go into effect pretty soon?

The Juvenile Products Manufacturers Association, a non-profit trade association, doesn’t think so.

“There will be a negligible impact to manufacturers upon passing of the final rule in terms of product being able to meet the new federal standard, the association writes on its Web site.

But JPMA is worried about potential re-testing of already-safe cribs creating hiccups in getting the product to market efficiently.

According to their site: “JPMA does anticipate impact on the cost to be in compliance with the new mandatory rule to the manufacturers from a material standpoint. JPMA estimates the impact to be upwards of approximately 10% due to additional materials being utilized in order to meet some of the new requirements.

Even if companies like Child Craft, the world’s largest crib manufacturer, have to do an about face to adjust to the new regulations, babies around the country will undoubtedly be safer in the long run.

So, anyone want to speculate on future used-crib scrap market trends?

–Taras Berezowsky

A new Commerce Department report last Friday shed light on potential good news for the US economy and its trade deficit, showing that overall US exports increased while imports were down. As MetalMiner continues to digest the report, we’re also beginning to investigate the implications of the KORUS Trade Agreement between the US and South Korea on the metals industry.

According to the report and corresponding fact sheet, U.S. exports of goods and services increased by 3.2 percent in October 2010 to $158.7 billion since September 2010, while imports decreased 0.5 percent to $197.4 billion over the same period. This means the monthly U.S. goods and services trade deficit decreased by 13.2 percent to $38.7 billion when compared to September 2010. Industrial materials and supplies were primary drivers for both the increases in exports and decreases in imports.

Putting a spotlight on the KORUS agreement, manufactured goods made up 81 percent of U.S. merchandise exports to Korea in 2009. Semiconductors and other electronic components were the largest manufactured export category, with $3.0 billion, or 10 percent of total U.S. shipments of merchandise. Aerospace products and parts accounted for $2.0 billion, while industrial machinery accounted for $1.3 billion.

After the most recent agreement between the Obama administration and the South Koreans on Dec. 6, critics in both countries were unhappy, citing concerns for their respective manufacturing sectors. The United Steelworkers union and the United States Business and Industry Council said the U.S.-Korea Free Trade Agreement would benefit South Korea’s interests at the expense of U.S. manufacturing, as reported in a Crain’s publication. “The final agreement will result in increased access to the U.S. market for Korean producers with insufficient assurance that the closed South Korean market will sufficiently open up to our auto exports and other manufactured goods, the USW union is quoted as saying. On the other end, South Korea’s Democratic Party also denounced the deal as humiliating and treacherous, preventing “South Korea’s access to the US auto market, which should be a key pillar of the FTA, reported by The Business Times.

Please check back in this week, as we continue looking into how metal buyers and sellers perceive the trade situation between the US and Korea, and how reductions of tariffs on both sides help or hurt their respective bottom lines.

–Taras Berezowsky

The New York Times published a profile of Jeffrey Immelt, GE’s CEO, last Sunday titled “G.E. Goes With What It Knows: Making Stuff, lauding his singular efforts to bring the company back from focusing on its financial divisions, instead putting the emphasis on gasp! actually making and building things.

Yep, you know that when one of the “bluest of blue-chip companies has to get out the media megaphone to announce its “come to Jesus moment realizing that manufacturing, the cornerstone of the past that the company was built on is now the wave of the future something is changing in the air.

Indeed, Steve Lohr, the Times’ veteran business reporter, invokes the term (as well as the feeling of) “change in the profile almost as many times as there are numbers of GE products “drive change, “drive growth and change, “efforts to push large-scale change but, alas, as the saying goes: the more things change, the more they stay the same. The issue here isn’t change at all. A return to manufacturing simply seems imminent, so going back to an old classic shouldn’t feel any different at all.

But, after a decade or more of so many companies getting on the financial services bandwagon, it seemed natural for builders and makers like those at GE to get caught up in the financial world.

“The big buildup of GE Capital occurred during the tenure of Mr. Immelt’s famous predecessor, Jack Welch, Lohr writes. “But while Mr. Immelt, who took over in 2001, spun off the unit’s insurance business, he also bulked up on commercial real estate and other loans. In 2004, G.E. even bought a subprime lender in California, WMC Mortgage, which it shed in 2007 for a $1 billion loss.

We’ve long known that many companies in the metals sphere realize building things is the key to future economic stability look no further than Nucor, whose progressive and extremely effective corporate culture needs no significant overhaul.

Ultimately, it’s good for metals suppliers that CEOs are re-emphasizing manufacturing and exporting, not divesting valuable resources by padding meaningless financial investment. GE is undoubtedly one of the largest metals buying companies in the world, with their hands in so many sectors of global infrastructure aviation, power generation, transportation, oil and gas, water supply, health care, appliances, media the list goes on. Their Commercial Aviation Services arm alone has a fleet of over 1,800 owned and managed aircraft with approximately 245 airlines in over 75 countries, according to their Web site. GE is also America’s largest exporter after Boeing, with commercial and military clients, so their role as buyer/producer/seller of metal products, especially in the aviation sector, is far-reaching.

With someone as “influential as Immelt leading the way as an industrial advocate (as a member of the White House’s Economic Recovery Advisory Board, he has called for a doubling of the country’s manufacturing employment, to 20 percent of the workforce, Lohr writes in the Times article), hopefully manufacturing will thrive in new ways in the next decade as long as we can create and sufficiently sustain increased demand of US exports worldwide. And that’s not simply up to just one company, or one heady, ambitious CEO.

–Taras Berezowsky

If I were to do an informal survey right now, I’m pretty sure a sizable number of our readers either work for small manufacturing businesses or depend on small businesses to continue their operations.

That’s why the argument that Scott Shane lays out in a recent Business Week article is pretty important to our readers indeed, to the majority of working Americans in the country today. Shane asserts that the Fed’s second installment of quantitative easing will do very little to help small businesses (which account for roughly half of the private-sector economy), instead potentially widening the gap between them and their large multinational counterparts.

The jobless rate remains high, up to 9.8 percent in November, and the Bureau of Labor Statistics reported that only 39,000 new jobs were added last month at least 150,000 a month are needed to keep the unemployment rate stable. The Financial Times outlines the good news: the PMI slipped only 0.3 points to 56.6 last month, according to ISM, keeping up the recent trend of overall positive growth, which is what many economists expected. “Manufacturing was fuelled by accelerating growth in imports, inventories and supplier deliveries, the article reads. “However, employment, production and new orders grew more slowly in November.

Small businesses are especially hurting in the latter three areas. The slightly improved manufacturing statistics may not be reflective of what SBs are facing, and indeed, SB owners are responsible for many of the new jobs added. Shane points out that the Small Business Administration says small companies generate more than 50 percent of “nonagricultural private-sector gross domestic product but only 31 percent of exports.

The major goals of QE2 to drive bond interest rates down and hope banks will lend more are lost on SBs, because they are suffering from lower demand for their products/services and have no incentive to borrow money to expand their operations (not that the banks are champing at the bit to lend anyway.)

What we’re left with is to push for more constructive developments on the fiscal policy side of things, not the Fed’s monetary policy, as Shane concludes. The Obama administration’s recent compromise on extending the Bush tax cuts is step in this direction; entertaining the idea of a QE3 is not. Lisa Reisman and Jason Busch, editors of MetalMiner and Spend Matters, respectively, outlined exactly what Congress needs to do in 2011 to help the manufacturing sector many of their ideas apply to the future health and well-being of small businesses, those very companies serving as the heartbeat of a nation that makes and builds things.

–Taras Berezowsky

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