Factory Laughs

Here is a funny video. Unless you want to gripe about the lax safety, injuries etc. (Scrooges)
I like the look and the sounds. You even here the forklift backup tone. Dead on capture of what a lot of factories are like.



As one of the commenters said:
Boss: Why aren`t you working!
Limbless employee:Dropped my starburst Chief
Boss: sighs *rolls up sleeves* Ugh if you want something done right...

Server Rooms are the "in" Place

Yesterday we heard about the alternate entrance to the server room. Now come "Server Huggers"

Server huggers relish spending time in air-conditioned data centers, sitting on raised floors under florescent lighting with a laptop connected to a console port of a server (or, if they are lucky, standing against a server rack using a dedicated terminal and a slide-out keyboard tray). They spend hours staring at command-line on a terminal and at notebooks of commands, passwords and IP addresses…

Remind you of the people who hang out in the measurement lab?

How Did This Happen?

We have heard blame placed at the feet of Democrats, Republicans, poor people, greedy home flippers.... Brad Delong has an extended excerpt of Michael Lewis's article "The End" in Portfolio magazine.

Michael Lewis believes that the seeds of our financial crisis were sown when Wall Street investment banks transformed themselves from partnerships to public corporations--that that destabilized their internal risk controls and incentives and made them go for variance

It continues to be enraging to me that the economy and the manufacturing base suffers because of the flippant risk accepted and the huge rewards as happily accepted by those in power.

From Michael Lewis:

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

How often does this happen in our plants?

Creative Access

Here is a good example of using creativity to solve a problem. It seems to be a common occurrence to find that a machine needs to be moved, but there is no space in the new area, or access is limited. There are lots of alternatives and solutions, you just have to be open to new ideas.
Here is a good example.

The access to the server room is now via the women’s bathroom.

The photo is a killer.

CEO Gluttony

It used to be a sin. At the New Century Financial Corp "Loan volume was down and defaults were up, the earnings report showed, and in recent weeks at least five stock analysts had downgraded the company's shares."

Moreover, four executives had sold nearly $20 million in stock in the last four months, six times as much as they had sold over the previous 12 months.

The LA Times goes on to state:

Those executive stock sales, however, have emerged as a central element in
the Justice Department's criminal investigation of New Century, according to a
person familiar with the inquiry who was not authorized to speak publicly.

Do manufacturing business CEOs have the same avarice?

Interview Tip

Here is a nice piece on an interesting aspect of the job hunt. What happens if a position is filed too quickly?

I went into their conference room, and was a bit startled by the fifteen people sitting around the table. This was known as "The Gauntlet." This group of people only asked a few, fairly non-technical questions. Most seemed bored, and some occasionally looked at their watches and yawned! Now, I am not the most exciting person in the world, but I am certainly not that boring. I finished the interview and left feeling quite confused. What the hell just happened?

The Lighter Side of an Assembly Line

Time for some comic relief. Does the Supervisor remind you of anyone that you know?

Dirty Finger Nails

Mitch Albom has an opinion. He has a thing or two to say to Congress if he had the chance.

Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.

From the November issue of Quality Digest: Lean Six Sigma as I Saw It - Part 1

H. James Harrington's November column is a cliffhanger. Harrington traces the roots of Six Sigma from Motorola through GE and into some further improvements from Allied Signal.

Motorola's Six Sigma program highlights:

• Record hard savings
• Focus on measurement
• Statistical analysis
• Process mapping
• Process capability analysis
• Statistical process control
• Graphical methods

GE's management ..brought some changes to the Motorola model:

• it added "define" to MAIC, making it DMAIC
• it placed a strong focus on the voice of the customer
• it added process redesign to Six Sigma
• it pushed Six Sigma into the product development area, creating Design for Six Sigma
• it extended Six Sigma to service
• it achieved cost savings as a result of changes to the process, not only from reductions to the staff.

Harrington then traces through the lean concepts at Ford, the death of lean at Ford, and ends with a question, :with lean all but dead in the auto industry, how and why did Toyota bring it back to life in the 1960's?"

The Market's Impact on Industry and the Role of the Government

How is this like the Great Depression?
http://video.nytimes.com/video/2008/10/08/business/economy/1194822635827/echoes-of-a-dismal-past.html?partner=permalink&exprod=permalink

CEOs to Speak at National Summit in '09

Let's hope manufacturing gets much more attention. The Detroit Economic Club announced the speakers.

DETROIT - More than a dozen corporate chiefs have agreed to speak at a national convention in Detroit next year on the future of manufacturing, technology, energy and the environment.
Speakers at The National Summit June 15-17 at Ford Field are to include James Mulva of ConocoPhillips, Matthew Rose of BNSF Railway Co., Michael McCallister of Humana Inc., Robert Nardelli of Chrysler LLC and Rick Wagoner of General Motors Corp. Ford Motor Co. Chairman Bill Ford and Dow Chemical Co. chief Andrew Liveris announced plans in September to co-host the summit.
Organizers say it's the nation's first such gathering and could promote a national plan to overcome industrial and economic upheavals.

Cleanliness Requirements

Depending on the type of product your factory produces there are different definitions of "clean".

For electronics there are a series of cleanliness guidelines that can be quite intense.

The International Organization for Standardization (ISO) has developed a code system called ISO Cleanliness codes, a universal standard for measuring and reporting particulate contamination levels in fluids. ISO 4406:99 is the newest
and most commonly used cleanliness code.

For more routine electrical and mechanical components you may also have requirements. These are stampings, laminations, forgings, machined steel, etc. Often a drawing will say something like "free of debris" or "clean and oil free". How does your plant handle these requirements? My experience is that usually there is minimal attention paid to cleanliness. Unless there has been a complaint in the past, parts are shipped with standard due care. What is standard due care?

• Practices such as:
• Parts are cleaned with machining coolant with no specific method defined.
• Parts are wiped down with whatever paper shop towel or rag that is provided.
• Blown off with air.
• Parts are put through a washer.
• Nothing is done at all because the process is considered to be clean (like plastic molding for example)

Does your plant monitor cleanliness? Let me know your experience. Please!

Businesses for the New Economy

With so many plants closing, many of us need to find new careers. Here is a golden oldie:

The View from Canada - Leo Panitch

Leo Panitch is a Distinguished Research Professor, renowned political economist, Marxist theorist and editor of the Socialist Register. Without delving into Panitch's pedigree of economic theory, his discussion here is another perspective to help sort out what happened.

Peter Schiff and the further fall.

Peter Schiff called the current meltdown. Viewing his appearance on November 20 on CNBC one is struck by his comment about the false economy.
"Our entire phony economy is callapsing around us."
"We have to go back to a sane economy where we save our money and actually make stuff."

Plant Closing #13

Paper is another thing in less demand in a weaker economy. Boise Inc announces some capacity reduction.

BOISE, Idaho, Nov. 17 /PRNewswire-FirstCall/ -- Boise Inc. (NYSE: BZ - News), a leading manufacturer of packaging products and communications papers, announced today that it will restructure its paper mill in St. Helens, Oregon, permanently halting pulp production at the plant and reducing annual paper production capacity by 200,000 tons.
The permanent capacity reductions will result in a loss of approximately 300 jobs at the St. Helens mill and 25 jobs in related sales, marketing, and logistics functions elsewhere in the company. Eligible salaried employees will be offered severance packages and outplacement assistance. Closure agreement negotiations will be scheduled with the AWPPW Local 1 to determine the impact for union employees.

Photo: Scott Butner's photostream

The Unemployment Rate

"The number of Americans filing for unemployment benefits approached a 26-year high." Ouch.

Via the Bureau of Labor Statistics.
THE EMPLOYMENT SITUATION: OCTOBER 2008

Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent.
The unemployment rate rose by 0.4 percentage point to 6.5 percent in October, and the number of unemployed persons increased by 603,000 to 10.1 million. Over the past 12 months, the number of unemployed persons has increased by 2.8 mil-lion, and the unemployment rate has risen by 1.7 percentage points.

Plant Closing #12

From their website; Pilgrim's Pride produces healthy, high-quality food products that go into some of the world's finest recipes.

• Pilgrim’s Pride Corporation (NYSE: PPC) is the largest chicken company in the U.S. and the second-largest in Mexico.
• Net sales in fiscal 2007 totaled $7.6 billion.
• Pilgrim's Pride is currently ranked #327 on the Fortune 500 list of largest U.S. corporations.
• Pilgrim's Pride employs approximately 50,000 people in the U.S. and Mexico.

This news is not shocking from a percentage impact to their employment, what I didn't know is that a suffering economy impacts chicken producers.

HARRISONBURG VA - Pilgrim's Pride will cut more than 300 jobs nationwide as it wrestles with the sluggish economy, the company announced in a statement Friday. A source close to the company's Broadway plant says the local facility will likely cut "six to seven" positions. A Pilgrim's Pride spokesman would not confirm that figure

They supply Kentucky Fried Chicken, maybe people are eating out less.

Why Save Financial Industries And Not Real Industries?

Robert Reich has a great article at Talking Points Memo Cafe discussing why financial companies seem to be favored for assistance in this crisis, while real industries like the automotive companies are denied.

Why We're Rescuing Wall Street and Not the Auto Industry: Citigroup Versus General Motors
By Robert Reich - November 22, 2008, 1:29PM

Read it.

Viewed from Wall Street, Citi is too big and important to be allowed to fail while GM is simply a big, clunky old manufacturing company that can go into chapter 11 and reorganize itself. The newly conventional wisdom on the Street is that the failure of the Treasury and the Fed to save Lehman Brothers was a grave mistake because Lehman's demise caused creditors and investors to panic, which turned the sub-prime loan mess into a financial catastrophe -- a mistake that must not occur again. So, by this view, the government must do everything and anything to keep Citi alive. But GM? GM is just ... jobs and communities.

"GM is just ... jobs and communities." I don't know if you have been following the Congressional hearings. Did you pick up a "tone". It was infuriating.

Reich makes a great point. "...Wall Street's self-serving view of the unique role of financial institutions is mirrored in the two agencies that run the American economy -- the Treasury and the Fed. Their job, as they see it, is to keep the financial economy "sound," by which they mean keeping Wall Street's own investors and creditors reasonably happy."

Why don't we have a federal agency that is focused on manufacturing industries with a view to recognize unfair foreign competition and supporting a strong national manufacturing base?

Robert Reich is one of those people I always stop to watch on the pundit shows. He would be a great dinner guest. I wonder what role he might have in the new administration.

Worker Adjustment and Retraining Notification Act (WARN) for Employees

More of us need to be aware of what to expect if we are to be layed off. Or our plant is going to be closed. The Worker Adjustment and Retraining Notification Act (WARN) applies to employers with 100 or more employees. The purpose of WARN is "to protects workers, their families, and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs".

There is an employee guide here.

WARN applies when an employer:
• Closes a facility or discontinues an operating unit (see glossary) permanently
or temporarily, affecting at least 50 employees
• Lays off 500 or more workers (not counting part-time workers) at a single
site of employment during a 30-day period
• Announces a temporary layoff of less than 6 months that meets either
of the two criteria above and then decides to extend the layoff for
more than 6 months
• Reduces the hours of work for 50 or more workers by 50% or more for
each month in any 6-month period. Thus, a plant closing or mass layoff
need not be permanent to trigger WARN

The Department of Labor has a fact sheet for employers here.

What happens if an employer fails to give the proper notice?

An employer who violates WARN is liable to each affected employee for an amount
equal to back pay and benefits for the period of violation, up to 60 days. This
liability may be reduced by any wages the employer pays over the notice period.
WARN liability may also be reduced by any voluntary and unconditional payment
not required by a legal obligation.
An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. The penalty may be avoided if the employer satisfies its liability to each affected employee within three weeks after the closing. In any suit, the court, in its discretion, may allow the
prevailing party a reasonable attorney's fee as part of the costs.

• WARN is enforced through the U.S. District Courts, as provided in section 5 of the Act.
• Workers, their representatives, and units of local government may bring individual or class action suits against employers believed to be in violation of the Act.
• The U.S. Department of Labor has no authority or legal standing in any enforcement action and cannot provide specific binding or authoritative advice or guidance about individual situations.
• The Department provides assistance in understanding the law and regulations to individuals, firms, and communities.

AIAG PFMEA 4th Edition Minor Corrections

For those of you that use the AIAG PFMEA manual, AIAG has published a few minor corrections. Several of the corrections are due to a common mistake where people say, "Process Failure Mode Effects and Analysis". The correct title does not include the "and". I probably do this myself. I rarely say more than "PFMEA" anyway.

FMEA (Potential Failure Mode and Effects Analysis) 4th Edition Errata Sheet
Page Original Language (see highlight) Corrected Version Language or explanation

Chapter III focuses on DFMEA
(Design Failure Mode Effects and Analysis)

Correction:

Chapter III focuses on DFMEA
(Design Failure Mode and Effects Analysis)

Exagerated Wage Claims

Have you heard how Detroit wages are about $70 an hour including benefits? Does this seem possible? An article in The New Republic, by Jonathan Cohn, tries to set the story straight.

Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automotive Research--who was my primary source for the figures you are about to read--average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income--hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.
More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

OK, so where does the $70 an hour come from?

Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

That matches what I have heard about the massive legacy costs that the big three support, all of the retirees' health care costs and pensions. The transplants do not have this burden because they are newer and do not have many retirees, plus the corporations overseas have massive government support for the health care and retirement of those workers.

Plant Closing #11

The automotive OEMs do not look like they will convince Congress to loan them any money this year. I am not sure what this will mean. The CEOs say that it could mean huge job loses. For now, Chrysler has announced one of there truck plants that was already targeted to be closed will be closed early.

Chrysler has announced it is closing its plant a year early, by Dec. 31. It will lay off more than 1,000 workers.

Plant Closing #10

I just read that the Spam plant is working overtime because people are turning to cheaper meats. Now I see Sara Lee is closing a hot dog factory on the South Side of Chicago.

Sara Lee Corp. is closing its South Side kosher hot dog and meat processing plant, 1000 W. Pershing, leaving about 185 people without jobs.

Sara Lee plans to sell the plant..... good luck. I hope they do find a buyer. Sara Lee says that the kosher meat business is not a core business and not profitable enough. Maybe a more focused owner can keep it thriving.

The Buzzards are Circling

Hey, here is some good news for a change.

Plant closings mean huge opportunities for demolition, remediation, transportation and other related companies. The sheer size and complexity of a plant closing means millions of dollars in contracts are up for grabs.

Even in death there is life.

Plant Closing #9

I spent a night in Ft Smith once. Nice little town. I think I had to buy a membership in a club in order to drink there. Actually, it was just a bar, but the law said you had to be a member to drink there. Here is some bad news for the town.

Plastics manufacturer Jarden Plastics Solutions in Fort Smith is closing and will lay off 93 workers.
The company said Tuesday that external factors, including diminished demand from Whirlpool Corp., made the closing necessary. Whirlpool laid off another 700 workers at its Fort Smith plant last week.

Ft Smith is the "future site of the U.S. Marshals Museum."

Corrosion Protection

The Automotive Steel Partners has another publication that could be helpful to those of you who deal with corrosion to steel elements. Of you have inadequate corrosion protection you either receive corroded parts, or you ship them.

The publication brings together basic corrosion conditions, materials, coatings, manufacturing processes, design considerations, test methods and “lessons learned”.

Four types of corrosion are relevant to underbody structural components: crevice, pitting, galvanic and cosmetic.

The document is focused on automotive applications, but is a great resource for useful knowledge about various coatings and definitions. The focus is on the design engineer, but I think the plant needs to be as aware of the requirements and testing for steel parts so that the long term processes are properly focused.

A Plumber's Tale

NY Times has an article about real plumbers.

While Mr. Wurzelbacher’s question concerned Mr. Obama’s plan to raise taxes on people earning $250,000 a year, the median wage of the nation’s 436,000 plumbers, pipefitters and steamfitters in 2007 was $44,090, according to the Bureau of Labor Statistics.

Binomial Probability Calculator

I found a helpful web site, stattrek.com. Stat Trek, get it?  I needed to calculate the probability of only having one failure out of 248 tries. I know this is a binomial distribution problem and wanted to find an on-line calculator. The probability of a failure in the current population is 0.0204.

I wanted to know the probability that at least 1 fails. P(X ≤ 1) = P(X =0) + P(X=1) There are a bunch of on-line calculators that will tell you the binomial probability as well as the cumulative probability. Stattrek has a decent one. They also have tutorials.

Rick Wagoner

I was listening to the exchange between the US 3 Auto CEOs and the Senate Banking Committee. I am not sure who was asking the question. It was a Southern Senator, by the accent. He asked something like, can you guarantee that you won't come back for more money?

Rick replied, if you can guarantee exactly when the credit crisis will end, we can give you a solid estimate of what we need. He got a little hot. He is under immense pressure.

What is Happening at Your Plant?

Share your experiences. Is your plant seeing production cuts? Layoffs?
How is you management dealing with the situation? Is communications good? Are actions fair?

We all want to know!

Industrial Production Facts

Related to my prior post, I want to provide some definitions to help with understanding the data provided by the Federal Reserve Statistical Release.

What does the Industrial Production index cover?

The industrial production (IP) index measures the real output of the manufacturing, mining, and electric and gas utilities industries.

Manufacturing consists of those industries included in the North American Industry Classification System, or NAICS, definition of manufacturing plus those industries–logging and newspaper, periodical, book and directory publishing–that have traditionally been considered to be manufacturing and included in the industrial sector.

Where does the data come from?

On a monthly basis, the individual indexes of industrial production are constructed from two main types of source data: (1) output measured in physical units and (2) data on inputs to the production process, from which output is inferred. Data on physical products, such as tons of steel or barrels of oil, are obtained from private trade associations and from government agencies; data of this type are used to estimate monthly IP wherever possible and appropriate. Production indexes for a few industries are derived by dividing estimated nominal output.

All of the juicy details are here.

Industrial Production Increased in October?

Industrial production increased 1.3% in October, according to the Federal Reserve. This result follows a 3.7% decline in September.

However, the 1.3% increase is month over month, so the October result just reflects a return to more normal operations affected in September by hurricanes Gustov and Ike in the Gulf of Mexico and the Boeing strike.

Excluding these special factors, total industrial production is estimated to have fallen around 2/3 percent in both September and October.

At 107.3 percent of its 2002 average, total industrial production in October was 4.1 percent below its level of a year earlier. The capacity utilization rate for total industry rose to 76.4 percent in October, a level 4.6 percentage points below its average level from 1972 to 2007.

Hardest hit, construction supplies (-7.0%) and business equipment (-8.0%)
You can look at the whole thing here.

Plant Closing #8

Umm... Many of the articles about plant closings cite 3rd quarter earnings. Those might be the good old days..... Here is a piece on Dana

Revealing it lost $271 million on lower sales in the third quarter, Dana Holding Corp. announced additional layoffs and plant closings Thursday morning.The Toledo auto parts producer said it will shut as many as 10 more plants in 2009 and 2010 and will cut 5,000 jobs this year instead of the originally announced 3,000.

Dana just emerged from Chapter 11 in Febrary.

Bailing Out the Automotive Companies

I wonder how many of you work in businesses that rely on the automotive industry? If you do not work directly for an OEM are you a direct supplier? Tier 2?

The debate is on as to whether to give the big 3 some sort of support to get over the current credit crisis. The argument goes pretty much one of two ways.

Let them sink due to their own bad decisions. We have many alternatives thriving outside of Detroit.

The automotive companies support too many employees and retirees, and tiered suppliers to allow them to fail. Not now in this crisis. Plus, the US needs an automotive industry as a manufacturing base.

David Lazarus of the L.A. Times has an excellent article, "Bail out Big Three car makers? Sure, with conditions".

"It would be hugely catastrophic if Detroit went under," said Ehrlich, 60. "Some level of assistance would be helpful." Then he climbed into his German-made Porsche and roared off.

Lazarus's article, coming from a Californian perspective, is worth the read.

Plant Closing #7

Siemens announced the acceleration of a pant in Bellefontaine Ohio.

The Bellefontaine plant closure will affect 434 jobs.

Siemens originally announced the closing for 2010.

The work will go to existing Siemens facilities in Monterrey and Juarez, Mexico, and to other third-party suppliers.

Automotive Steel Partners

If you do any work with steel stampings then you may find the work of the Automotive Steel Partners useful. One publication that they have gives some guidelines for establishing and evaluating CMM measurement:

Automotive Body Measurement System Capability Gage Capability for CMM Data Evaluating the capability of a CMM differs slightly from a check fixture. Since CMM measurements are taken using automatic programs, manufacturers generally are not concerned with the operator or reproducibility effect. In this instance, the gage variability for a CMM consists primarily of repeatability. Some manufacturers, however, break CMM gage repeatability down to static repeatability and dynamic repeatability. Dynamic repeatability, or setup error, represents the ability to measure identical part characteristics using the same gage on the same part with loading and unloading between measurement trials. In the case of static repeatability, the part is not unloaded or unclamped between trials. Thus, static repeatability represents the pure error in the measurement instrument. These data suggest that the dynamic repeatability, based on the setup or loading/unloading of the part in the holding fixture, is the main source of CMM gage error. Here, more than 90% of the repeatability error repeat may be attributed to loading and unloading of the part between measurement trials.

Voting Lines

Have you followed the problem with long lines at polling places? I watched the news running up to the election and saw the long lines. There was discussion about lawsuits to add more machines or times in some locations. Why was there such a problem?

When I voted there were no long lines. And on election day itself there didn't seem to be reports of a problem lingering through the day. At opening there was often a line built up but as the day progressed these lines dwindled down.

At my polling place the "fill in the oval" method is used. You get a huge ballot sheet and fill in the oval of your choices with a black ink pen. When you are finished you take the ballot to a scanner and your votes are scanned in. There is a paper record and the votes are electronically tabulated.

Here is the process where I live:

The sign in desk had 3 staff.

Step 1: had you sign a signature card and show ID.
Step 2: checked you against the voter roll.
Step 3: handed you the ballot and explained what to do next.Each of these steps took about 15 to 30 seconds.
Step 4: queue waiting for a voting station.

There were four of the portable voting desks that many of you have seen. The voting desks have fold up screens on three sides to offer some privacy. In addition to the four voting desks the staff had set up four additional desks with cardboard screens. This brought the total "fill in the dot" stations to 8.

Step 5: fill in your selections.

I will tell you that step 5 was the bottleneck. The ballot had the national races, state races and proposals, and a bunch of judges and other "stuff". If a voter actually weighed in on every single issue they probably had to fill in 20 ovals. Assuming they knew their choices in advance (hahaha) it might only take 2 minutes. I watched some people stand there for 10 minutes.

Step 6: have your ballot scanned. There was one scanner. This took about 10-15 seconds, including banter.

The staff could have increased output by adding a few more tables if needed.
What went on in your area?

Census Bureau Reports September Manufacturers' Data

The U.S. Dept of Commerce has released the September 2008 "Full Report on Manufacturers' Shipments, Inventories and Orders".

New orders for manufactured goods in September, down two consecutive months, decreased $11.2 billion or 2.5 percent to $432.0 billion, the U.S. Census Bureau reported today.

There is a lot of data in the report, almost all grim. One industry segment that stood out was farm equipment. Year to date increase over 2007 was 26.5%. Most other segments were down. And this is September data, before most of us were aware of the crisis.

Plant Closing #6

A recent post explained that the cost of labor in China was 4 to 5 times more expensive than in countries like Cambodia and Bangladesh. The global downturn is also having an affect on the global manufacturing base. Chinese exports are declining which is having an effect on toymakers that export to the US.

European Plants Hit Too

Europe automotive industries are also in a crunch. Bosch announced measures to deal with reduced orders in Europe.

Some 3,500 workers at the Bamberg plant will start working reduced hours on Friday, with the measure set to last six months. The workers affected produce diesel engine components.
Bosch's move comes as the global financial crisis weighs heavily on the auto industry. In recent weeks, automakers such as BMW AG, Daimler AG and General Motors Corp. subsidiary Adam Opel AG, among other automakers in Europe, have announced production cuts.

Ugh... October was BAD

I think we all knew this.

NEW YORK (Reuters) – U.S. factory activity contracted sharply in October, falling to its lowest in 26 years as the financial crisis ravaged the world's largest economy and its trading partners around the globe.

From the Institute of Supply Management:

(Tempe, Arizona) — Economic activity in the manufacturing sector failed to grow in October for the third consecutive month, and the overall economy concluded 83 consecutive months of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

Amazing that we had 83 consecutive months of economic growth. It makes the 84th the more striking.

Plant Closing #5

The housing downturn claims another factory:

It's not merely that Shaw Industries Group Inc.'s Plant 76 is the economic lifeblood of Trenton and Dade County, its 440 good-paying jobs make it the county's largest private employer. The factory has been a constant here for some 40 years, changing hands from time to time but always providing economic certainty: It was where people went to work after high school, and the only place many ever worked.

In towns like Trenton there are often only one main plant. Sometimes they have survived through the years by leaning the operations enough to remain competitive. The recession was too much to withstand.

Demographer Johnson says small towns that lose their main employer often fade
into obscurity, but he believes Trenton will endure: "Their saving grace is
their proximity to the Chattanooga metro area. A lot of these people are
certainly going to find jobs there."

Hope.

Melamine - Tainted Food. How Could it be so Pervasive?

Have you followed the current melamine scandal from China? The first scandal involved pet food.

Melamine was first discovered in food during the pet food scandal in 2004 (and again in 2007), which caused the death of many animals in the United States.

The new scandal started with baby milk contamination that hospitalized a bunch of kids.

The scandal broke on 16 July, after sixteen infants in Gansu Province who had been fed on milk powder produced by Shijiazhuang-based Sanlu Group were diagnosed with kidney stones.

The milk was contaminated with melamine. What is melamine?

Melamine is sometimes illegally added to food products in order to increase the apparent protein content. Standard tests such as the Kjeldahl and Dumas tests estimate protein levels by measuring the nitrogen content, so they can be misled by adding nitrogen-rich compounds such as melamine.

In other words, melamine is sometimes added to milk to make the milk appear to be a higher grade or to allow diluting to stretch the milk and earn more profit. (Same reason it was added to pet food)

Over the course of a few weeks melamine was found throughout the Chinese milk supply. Then it was found is many products that contain milk in China. Then it was found on products outside of China that contained Chinese milk products.

Now.... it seems meat may be contaminated.

In an AFP news report, Zhang Zhongjun, programme officer with the Food and Agricultural Organisation, said China’s agriculture ministry was investigating the possibility that melamine had been added to animal feed.
“If the feed is found to be contaminated, then there is the possibility (that pork, chicken, fish and beef could also be contaminated),” he said.
Zhang believed that feed producers could have laced their products with melamine to falsely boost protein content, similar to the methods of milk producers.

The question that I have is, how can melamine be so pervasively used, by so many companies, and so many employees, and there is no whistle blown? How likely do you think it would be for some illegal or immoral practice to be conducted in your plant without someone alerting authorities?

At the Mercy of Design

How often do yo think about how linked your factory is to the products that you sell? Sometimes sales are simply due to the overall economy, as they are right now. However, your company is always fighting for market share from your competitors. the design of your product matters. Brandweek.com has an in-depth article about something called Design Thinking.

When Whirlpool launched its KitchenAid Series II line of appliances in 2007, the company was taking a bigger-than-usual gamble. Whirlpool's designers didn't just imbue the Series II—a refrigerator, microwave, range, oven and dishwasher—with the kind of sleek, industrial look popularized by TV foodie shows; the appliances shared distinctive design touches like responsive black touch display panels and bow-shaped chrome handles—clear indications that each appliance was meant to be part of a set.That may sound simple, but in fact it broke with industry orthodoxy. Conventional wisdom holds that consumers buy stuff like this piecemeal, most often as a "distress purchase" when the old one breaks down. So why did Whirlpool spend a lot of its own money to create a uniform look when most consumers wouldn't care?

The company's approach to advertising was similarly counter-intuitive: The brand advertised the whole line at once. Usually, ads for refrigerators come in March and campaigns for ovens hit in late summer.

Because the design is closely linked to life on the shop floor it is good to know some of the current thinking about best practices. Hopefully, the design activity has some linkage to the manufacturing environment.

What Operation Do You Work In?

This is a dairy plant.

Let me know what part of the plant operation you work in.

I am currently working in a mix of several areas, mostly focused on assembly.

How about you?

Manufacturing Operations

• Processing

• Assembly

• Material Handling & Storage

• Inspection & Testing

• Coordination & Control

Textile Labor Costs

Here is some interesting data about the costs to produce textile goods in various countries. The data is a little dated. From EmergingTextiles.com:

...lowest labor costs are still in Bangladesh, at 22 US cents per hour or five times lower than in China's richest coastal areas.
Labor costs include wages, social charges, and a series of bonuses.

$0.22 per hour?

In addition to Bangladesh, Cambodia, Pakistan and Vietnam are other apparel exporters taking advantage of extremely low labor costs at 33 cents, 37 cents and 38 cents per hour, respectively.

What about China?

China's lowest labor costs are at 55 cents in the country's inland and remote areas while labor costs may now reach US$1.08 in certain areas of coastal provinces.

Recent strengthening of the dollar will help US relative costs, but..... wow.

Legacy Automotive Shrinks

The current economic crisis is another blow to the US automakers. The high price of gasoline hurt large size vehicle sales. Then the lack of demand for both new and used large sized vehicles hurt the resale value of all of those vehicles currently being leased. their value plummeted. The big three had to write of billions of losses. Then the credit crisis and drop in consumer confidence hurt ALL vehicles sales.

Somehow GM and Chrysler started to discuss merging. I don't know how these things start. I suppose the big dogs sit around in the board room and toss this stuff around. Maybe Cerberus first broached the subject. There has been news leaking about discussions for weeks. Forbes writer Joann Muller wrote an article, Picking Over Chrysler's Bones, with some further details.

Only seven of the 26 models in Chrysler's lineup are likely to be retained if General Motors merges with Chrysler.... They are the Chrysler Town & Country and Dodge Caravan minivans; Jeep Grand Cherokee and Wrangler SUVs; Chrysler 300 and Dodge Charger sedans; and the Dodge Ram pickup. Together, those core models account for 56% of Chrysler's sales.

The alternative to a merger is apparently bankruptcy. Even with the better option of a merger, Muller's article details some of the expected fallout:

....up to half of Chrysler's 14 assembly plants would close, resulting in 24,000 hourly and administrative job cuts, Grant Thornton says. (About 5,000 cuts have already been announced.) In all, the company says 30,000 to 40,000 of Chrysler's 67,000 existing jobs would be eliminated.

That is darn close to 60% staff reduction.

Cartoon about the topic here.
Intersting discussion about it here: new big three; Toyota, Ford/Mazda, Honda?