Production Machining

DEC 2018

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

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Page 27 of 51

Supply Chain Mastery is Critical in 2019 B ased on aggregated figures, 2018 is likely to conclude as one of the best years for U.S. economic growth in recent history. is growth, combined with that anticipated in 2019, however, comes at a time during which the business environment is being affected by a growing list of both domestic and global economic and political factors. As such, the vision of the path forward for virtually all manufacturing leaders has become opaque. In the near term, manufacturers who develop a mastery understanding of their supply chains—which in many cases have and will continue to be shocked by regulatory changes—may be able to convert this into a competitive advantage, and thus an opportunity to capture new business. Also, based on the lessons learned from the Great Recession, manufacturers must think strategically about the types of new business they should seek and make customer diversification a significant part of their growth strategy. Automotive. e automotive industry continues to track along the same trends as reported at the end of 2017 and throughout the year in Gardner Intelligence's end-market reports. Unit sales continue to show a growing preference for SUVs and light trucks over cars. is trend is not new, as unit car sales, which peaked in June 2014, have experienced an average 7.5 percent rate of annualized contraction in the 17 quarters since then. Truck and SUV sales continue to offset the weakness in car sales, which has kept total vehicle sales since mid-2015 at a monthly average of 1.4 million vehicles or 17.3 million units on an annual basis. Vehicle financing plays a critical role in this market. Recent years of historically low interest rates and length- ening financing terms—allowing for smaller monthly payments—supported by an improving jobs market have significantly helped the industry. By mid-2018, the average amount financed for a new vehicle stood at $30,262. Adjusting for inflation, consumers spent almost 9 percent more on a new vehicle in mid-2018 than they did in mid-2012; however, most of this increase occurred after reaching the 2015 peak. Based on the Energy Information Administration's short- term energy outlook, West Texas Intermediate oil prices are projected to remain at their present level of around $70 per barrel, leaving fuel prices through 2019 relatively unchanged if all other things remain constant. e creation and increasing avail- ability of new engine and drivetrain types and technologies to the market has and will continue to create a need for expanding supply chains and supply networks. At the same Contributed by Michael Guckes :: According to the survey responses by production machinists, the rate of total new order growth slowed significantly during the second quarter of the year. At the time this article is written, many companies are taking a wait-and-see approach to the regulatory changes impacting the industry. The manufacturing industry may find renewed confidence in the overall strength of the domestic economy. GBI: Precision Machining— New Orders and Exports (3-MMA) 70 65 60 55 50 45 40 35 30 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 n New Orders n Exports 26 PRODUCTION MACHINING :: DECEMBER 2018 SPECIAL REPORT

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