Production Machining

DEC 2018

Production Machining - Your access to the precision machining industrial buyer.

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productionmachining.com :: 15 Helping Precision Machine Shops Be More ProducƟve and Proftable Before we make our predictions for the coming year, perhaps a brief review of what we thought was ahead last year might be in order. In July 2017, we committed in this space in an article entitled "Precision Machining Industry Outlook: You Should Be Bullish, Too." Then in February 2018, our Craftsman's Cribsheet, "A Cribsheet for 2018," was published in these pages. Let's take a look at how we did. Precision Machining Industry Outlook: You Should Be Bullish, Too Let's just jump to our conclusion: "What's our take? Economic expansion and recovery is once again underway. The list of positive indicators that point to higher industrial activity in 2017 is growing. PMPA's own indicators for shipments, lead times, employment are positive at 96 percent of respondents expecting employment to remain the same or increase in the next three months and profitability all point to 'manufacturing optimism' at this time. The Labor Force Participation Rate is finally recovering, but something has changed. The risk that we face in our shops has declined. Have you changed your outlook based on the view of these facts?" Today, our comment is, "Boy is it! At the time we wrote the 2017 piece, our June Business Trends Index had just hit a near record at 135, three months after achieving an all-time high of 137 in March 2017. PMPA's August Business Trends report in 2018 came in at 143, tying the new all-time high record set in March 2018. August 2018 was up 9.2 percent over August 2017. Demand remains strong, for August sales to tie March, typically our industry's strongest month. It is really a bellwether event." To what did we attribute our belief in a positive 2018? Three key factors: end of hostile regulatory enforcement, tax reform and market indicators. End of Hostile Regulatory Enforcement We said, "The de-emphasis of hostile enforcement by the regulatory agencies under the new administration is a convincing reason to consider again the opportunities to grow and invest in our shops." What made that happen? The president's unprecedented pledge for regulatory rollback, eliminating two existing regulations for every new Precision Machining Industry Prognostications: How'd We Do? By Miles Free – Director of Industry Research and Technology Continues on page 17 regulation yielded approximately $8.1 billion in lifetime regulatory savings, with more than another $9 billion expected in 2018. Tax Reform We mentioned tax reform. In a bit of understatement, we said, "Tax Reform is another positive indicator that seems to bode well for our prospects in the coming year." The Tax Cuts and Jobs Act signed in December 2017 was the first major overhaul of the federal tax code in three decades. That it encouraged U.S. manufacturing is borne out by the sales records in our business trends reporting, already mentioned above. And the successful IMTS in Chicago, which set records for most exhibit space and highest number of exhibitors and booths. Market Indicators "Our shops serve many markets, and the outlook for many of them is quite positive as well. Some market indicators that bode well for our industry include the PMPA Business Trends Shipments index, which recently hit a new all-time high of 138. The index was 100 for calendar year 2010. The Housing Market Index hit a 12-year high, its highest since June 2005. Many precision parts are involved in the equipping of homes with appliances, HVAC, electronics

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