@Risk

New orders for manufactured goods rose for the second consecutive month in December, the US Department of Commerce reported on Friday.

In addition:

• Shipments increased 0.7 percent –up for the seventh consecutive month.
• Unfilled orders increased 1.4 percent –now up 20 of the last 21 months.
• Inventories increased 0.1 percent –up 26 of the last 27 months.

The latest report from the Institute for Supply Management also showed signs of improvement. According to the ISM Report On Business, economic activity in the non-manufacturing sector grew in January for the 25^th consecutive month.

ISM’s research found that the 12 non-manufacturing industries reporting growth in January were (in order): (more…)

Economic uncertainty in the EU is leading European manufacturers to scale-back operations, investment projections and optimism.

In fact, recently released Q3 ’11 results of the MFGWatch Quarterly Survey of North American & EMEA Manufactures show that:

• Only about one-third (35 percent) of the European supply-side manufacturers polled reported business growth in Q3’ 11 –that’s down from 44 percent in Q2.
• About the same amount (34 percent) of suppliers said their businesses have contracted –that’s nearly double the 18 percent who reported contraction in Q2.
• Buy-side manufacturers in Europe aren’t faring any better. Sourcing manufacturers in the EU reported growth in their businesses fell from 44 percent to 27 percent in Q3’11. Buy-side manufacturers indicating contraction rose from 16 percent to 30 percent over the same period.

In addition, the survey found that both buy-side and supplier manufacturers in Europe are hiring less and laying off more employees. Among supply-side manufacturers, 13 percent fewer added jobs, while another 13 percent more shed jobs (20 percent, up from 3 percent in Q2’11). Sourcing manufacturers also saw employment dwindle – with 27 percent adding jobs (down from 31 percent) and 18 percent decreasing payroll (up from 9 percent in Q2’11).

What’s more, as MFGWatch points out, perhaps the most telling results that point to the worsening European economic conditions are: (more…)

Several materials used in the manufacture of clean energy technologies such as wind turbines, electric vehicles, solar cells and energy-efficient lighting are at risk of supply disruptions in the short term, according to a new report released by the US Department of Energy (DOE).

The 2011 Critical Materials Strategy is DOE’s second report on this topic and provides an update to last year’s analysis. After its analysis, the DOE has concluded that:

• Supply challenges for five rare earth elements (REEs) (dysprosium, neodymium, terbium, europium and yttrium) may affect clean energy technology deployment in the years ahead.
• The risks of supply disruptions in the short term will generally decrease in the medium and long term.

The report also includes a discussion of DOE’s strategy to address these critical materials challenges. DOES says its strategy rests on three pillars: (more…)

Rising labor costs and quality concerns have many US companies reevaluating their overseas strategies.

In fact, new research conducted by Cook Associates Executive Search found that a full 85 percent of manufacturing executives see the possibility of  certain manufacturing operations returning to the US.

What are the reasons for this potential shift? Survey participants cited:

• overseas costs (37 percent)
• logistics (19 percent)
• other, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes (36 percent)

The study, which polled nearly 3,000 manufacturing executives primarily in small- to mid-sized US companies from October 13 through November 18, 2011, identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the US. (more…)

Results of the 2011 Change in the (Supply) Chain survey show that many Japanese high-tech companies are shifting supply sourcing locations from domestic to other Asian countries, such as South East Asia.

More specifically, the survey, which was conducted by IDC Manufacturing Insights and commissioned by UPS, revealed that:

• The Japanese companies interviewed expect to reduce their domestic supply sourcing by nearly half, from 96 percent to 53 percent in the next three to five years.
• These companies also expect to increase sourcing from Mature Asia Pacific Countries (Thailand, Malaysia, Hong Kong, and Singapore) almost threefold, from 9 percent to 24 percent.

The key concern appears to be cost management. More than two-thirds (68.9 percent) of the Japanese companies surveyed cited “reducing total supply chain costs” as the top supply chain priority in the past years. Not surprisingly, cost is also expected to remain one of the top drivers of change in the supply chain in the next three to five years. (more…)