The three month outlook for sales, lead time, employment and profitability are all quite positive as our industry passes the fourteenth month above the May 2009 low. Our July 2010 Business Trends Report provides hard data that the precision machining industry is maintaining “A New Normal.”
Manufacturing Recovery: The PMPA Business Trends Sales Index shows a 16+ point gap between the 3 month and 12 month moving average. This makes a convincing case for cautious optimism for sales at the “New Normal” that we find ourselves.
The PMPA Business Trends Index of Sales for March 2010 reached the 100 mark.
That 100 value means that our sales level in March 2010 is essentially the same as our average sales for the year 2000, which is the base year (2000=100) for our index calculation.
ISM’s report of manufacturing’s expansion for the fourth , and economic expansion for seventh month in a row, combined with PMPA’s Business Trends Index improvement for 5 consecutive months, confirm that we are in a recovery phase, rather than the free fall we just survived.
What should we be doing differently as we recover, compared to what we needed to do while we were free falling?
Our industry sales continue to recover. For our industry, this data shows that recovery is underway. Thirty-four percent (34%) of participating shops reported double digit sales increases in October. The outlook for sales in the short term has stabilized. There are strong and positive indicators of sales recovery in the Precision Machining Industry.
For the Precision Machining Industry, a strong case can be made that our sales are recovering. Fifty-two percent (52%) of our particpants reported double digit sales increases in September.
The outlook for sales in the short term has stabilized, with only 19% of respondents expecting a decline in sales overthe next three months.
The economy is now recovering. The precision machining industry is recovering according to several indicators of sales as an industry, sales growth per company,and hours scheduled across all markets served.
3 reasons we believe that the Precision Machining Industry’s recovery has begun:
1) Sales have leveled off and did not decline further.
2) Half of all participants reported increases in sales for July. One third reported double digit sales increases.
3) Average length of first shift indicator climbed by 1.2 hours in July.
Understanding of the processes and and performance measurements behind the numbers are absolutely essential to make benchmarking a useful tool for your company’s improvement efforts. Two essential factors for succesful benchmarking are 1)If Benchmarking does not lead to a specific action, it is a waste of your company’s resources.; 2) If you aren’t benchmarking to the best, your benchmarking will be under effective.
Unexpected positive economic news from Bank of Canada and Ford bodes well for contract manufacturers in North America.