Purchasing's business conditions index at 35-month high

From Purchasing Magazine:

Purchasing magazine's business conditions index jumped to 61.4 this month from 51.2 in January, marking the sixth month of the past seven in which the index was above the 50.0 market that signals growth

The Purchasing index is above the 58.4 manufacturing index reading reported in January by the Institute of Supply Management (ISM) and the highest since the 62.8 reading in April 2007. "Business is still down considerably from 2007-2008 levels," says the purchasing director of a heavy equipment manufacturing firm in Illinois. "However, many customers are still making inquiries about potential equipment purchases in 2010."

Good News for 2010

Is that a sunrise we see? It IS!

In a recent interview, Steve Jagler, executive editor of Biz Times Milwaukee, lists more than ten concrete examples of growth in the Badger State. His message includes:

"The recovery has begun and will pick up steam in 2010. It won't come easily, and it won't come quickly, but we're seeing some very promising trends: In recent polls, 86 percent of BizTimes.com readers say their company will either add jobs or at least maintain the status quo in 2010, and 76 percent say they are optimistic about how their company will do in 2010."

You can read the full article here.

Global Impact on Prices

We often hear things about the global effect on steel prices. Is China buying? Selling? How about freight costs? What is the bottom-line result? At Dalco, we stay on top of prices and trends, both here and abroad. We don't get wrapped up in what 'might happen' or make any knee-jerk reactions. But it helps to know how global markets affect what we all pay for raw materials.

Here's a great example. It's a New York Times report about copper mining entitled "China Willing to Spend Big on Afghan Commerce." We're not reading anything political into it, and we deal in steel, not copper, but it demonstrates that current events can affect pricing and availability in the future. Take a look.

WHAT'S IN STORE NEXT YEAR?

What will 2010 bring? At this point, nobody can say for sure.

BUT…most indicators are positive. And there are reasons to be very optimistic.

Fabricators & Manufacturers Association economist Chris Kuehl named several factors that should guide the business climate. First is international markets, which are already leading the economic recovery. Next is the U. S. consumer, who will start to relax…and spend. Also, government spending will begin to benefit the shop floor.

There are no guarantees, but optimism fuels confidence, and confidence helps create spending. And those are very good signals.

Read more in “Metal Fabrication in 2010: A Wildcard Year” from thefabricator.com

LASTING CHANGE COME FROM PEOPLE

When it comes to making manufacturing improvements, getting people involved is what drives long-term success.

At Dalco, we've been involved in Lean, 5S and other quality improvement initiatives and we're proud to say that it's been our people...and not just management memos...that have made those initiatives pay off.

A recent Industry Week article mirrored this, and went into more detail on how every manufacturer, large or small, can make sustainable changes. The focus? People above processes:

It takes your people at their workstations, using the right tools, to make change happen in your organization to achieve the desired results that will be measurable in your company's financial performance. It's only through people that your problems can be identified, and then your people select the appropriate tools to use in deploying countermeasures to correct them.

Here's a link to the complete article.

PARTNERS VS. PEDDLERS

Someone showed us this article from Purchasing Magazine and we thought it was right on target. It illustrates the competitiver advantages that are created when suppliers team up with buyers (and their companies) to find better ways of working together. Real partnerships (which got a lot of lip service back in the 1990's).

One example:
Steve Strongosky, purchasing manager at paint giant The Sherwin-Williams Co. in Cleveland, says that deeper and longer-term relations with suppliers can be an important element in differentiating his company from its competition. Thus, Strongosky, who is an engineer by training, works closely with both R&D internally and outside suppliers to try to spot promising areas of cooperation.
"We look for a robust commercial relationship with our partners focusing on price and quality but we also take into consideration what they have to offer us in terms of product innovation," he notes.

At Dalco, we couldn't agree more. We don't just try to close sales. We try to build a relatuionship that works!
Find the full article here.

CHINA TO CUT STEEL OUTPUT

From Forward Magazine.....
China's State Council, or cabinet, this week called on local authorities to "resolutely" reduce overcapacity in steel and cement manufacturing. This is not a new idea in China, which for years has been decreeing steel capacity reductions, even as tens of millions of tons of new capacity have been added. Local governments, which often compete with one another in steel production, have been reluctant to close all but the most obsolete and inefficient plants. Further, China's US$586 billion economic stimulus has helped create a capacity glut.

"Overcapacity and redundant projects remain prominent because of slow progress in industrial restructuring...," the State Council said. It plans, this time, to use controls on market access, reinforced environmental supervision and new land use controls to slowly strangle away capacity. Banks were directed to lend money for the targeted sectors only in strict adherence with industrial policy.

But the problem of reducing output is illustrated by the current struggle for control of Rizhao Iron and Steel Group, a privately held steelmaker that produces about 8 million tons annually. The Shandong provincial government wants to build a large steel group, with an annual capacity of 20 million tons, in Rizhao city. Shandong Iron and Steel Group, the provincial government's steelmaker, has been trying to buy out Rizhao, its competition, opposed by Du Shuanghua, Rizhao Steel's founder. To help, the provincial government has applied muscle in the form of special inspections of Rizhao facilities to find environmental issues that would justify its shutdown... unless it merges with Shandong. Local officials say that if Shandong can't buy Rizhao Steel, it may simply build a new plant, thus significantly adding to the area's capacity while achieving the provincial steelmaking goal. Du, who has run a profitable operation through the economic downturn, has been courted by his native Hebei province, which wants him to move his company and production there.can’t see the opportunity.