HEAT TREAT ECONOMIC NEWS

New Sustainability & Decarbonization Initiatives for Heat Treat

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS, OP-ED

op-ed

Searching for sustainability resources? Check out this first installment of the Sustainability Insights series, from the Industrial Heating Equipment Association (IHEA) for what’s available to in-house heat treaters across the industry.  

Discover the resources IHEA provides in their web-based Sustainability area and a new webinar series launching May 11.

One thing is certain, and it's that there is great deal of uncertainty about how to begin addressing issues of sustainability and decarbonization. As heat treaters begin to receive more and more questions about decarbonization, IHEA saw an opportunity to help the industry and began developing a variety of initiatives relating to sustainability and decarbonization in the industrial heating equipment industry. 

Getting Started with Sustainability 

Contact us with your Reader Feedback!

The first step towards decarbonization is understanding this is a topic that will not go away. While they may not see any immediate consequences, heat treaters need to at least begin preparing now for what is quickly approaching. Before long, clients are going to be demanding heat treaters show that they are lowering their carbon emissions. Thinking, “This will not affect my business,” will be detrimental in the long term.  

IHEA recommends to start by considering efficiency and getting an initial assessment of carbon footprint. The fastest, easiest way to reduce carbon footprint is to burn less fuel by investing in efficiency improvements. As a side benefit, operating costs are also reduced. IHEA's current combustion courses do have content on efficiency and low carbon fuels and a webinar series specifically designed to help everyone understand how to determine their initial accounting of their carbon footprint. 

Future Plans 

The deeper driving forces that will affect our industry regarding sustainability are regulations, incentives, and energy economics. Rapidly changing environmental policy, growing technology incentives, and a shifting relative cost of fuels (and alternate fuel options like hydrogen) are opening new pathways for businesses to factor carbon footprint and sustainability into their operations. 

Because of these upcoming changes, IHEA is developing a wide array of services and tools that will help those looking to lower carbon emissions determine the best approaches for their heat treat facilities. An entirely new body of content will be developed that will be at the leading edge of this industrial revolution.  

To kick things off, IHEA has developed a Sustainability area on their website that features the foundation of information the industry needs. The Sustainability area includes the following sections: Sustainability FAQs, Sustainability Terms & Definitions, and Sustainability Resources. The Sustainability section will continue to expand by adding content and resources on a regular basis.

Additionally, IHEA is launching a series of webinars that will start the process of walking companies through the complicated issues related to decarbonization: 

  • May 11: Thermal Processing Carbon Footprint (click to register/read more)
  • June 15: Defining Greenhouse Gas (GHG) Emissions to Target NET-ZERO 
  • July 20: DOE Tools and Programs for GHG Reduction 
  • August 24: Ongoing Sustainability: Industry Best Practices for Continual Improvement 

The goal is to provide unbiased education for everyone involved in the process heating industry. The webinars are complimentary. Visit www.ihea.org and click on the "EVENTS & TRAINING" tab.  

Brian Kelly
President at Honeywell Thermal Solutions

Recently elected IHEA President Brian Kelly of Honeywell Thermal Solutions says, “IHEA is taking a leadership role because we see that this will be an ongoing and changing landscape for the industry for years to come. With the years of collective expertise of our membership we feel that we can provide information, education, and guidance to help everyone navigate what is sure to be a challenging environment.” Kelly continued by saying, “In the end, we want to be a source to count on to help our entire industry in their sustainability journey as it will be a long and winding road that will be different for everyone.” 

For more information:

Visit www.ihea.org. 

Find heat treating products and services when you search on Heat Treat Buyers Guide.com

 

New Sustainability & Decarbonization Initiatives for Heat Treat Read More »

IHEA Monthly Economic Report: Elephants and Mice

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in April starts with an analogy of current world events compared to a scene from the animal kingdom. The statement, "when elephants fight it is the mice that suffer," is used to describe the "elephants", the U.S. and China. There's not a lot of good that comes when two major world economies continue to disagree all while still depending on each other for supplies and material goods.

How does this analogy include the heat treating industry? Heat treaters come under the "mice" category, and there are definite hardships that continue to plague supply chain, production, and demand; as the "elephants" battle. China is putting up all sorts of obstacles on their exports, and now the U.S. is dealing with the Biden administration's push for the automotive industry to convert electric vehicle production. "How does the U.S. manufacturer avoid becoming the mouse that gets trampled by this fight between elephants?" the IHEA report questions. "The simple assertion is that the U.S. has to find alternative sources for the materials and commodities that have been provided by China. This may be simply stated but accomplishing this will be anything but simple."

An examination of the economic indices shows how the tension between nations seems to be affecting numbers. A majority of the sectors see drops: Steel Consumption, Industrial Capacity Utilization, Metal Pricing, Capital Expenditure, Durable Goods, and Factory Orders. However, 4 indices show, if not improvement, steady progress: New Auto/Light Truck Sales, New Home Starts, Purchase Managers Index, and Transportation Activity.

Good news for heat treaters in the automotive sector is that demand for cars and light trucks is still high. This is tempered with banks that are becoming more guarded in offering car loans since large numbers of people are not keeping up with their loan payments. Another concern creeping in is the future of traditional vehicles since the push for EVs is becoming apparent. The "mice" have a lot to think about for the future of automotive sales.

 

"The most recent factor [for volatility in this market] is the push to force adoption of the electric vehicle through putting severe limits on traditional vehicle mileage performance."
Source: IHEA
The 3-pronged influences in the steel industry - construction, vehicle manufacturing, and oil and gas pipeline - are declining overall. The report says that 2024 could be even worse than the current year.

"Oil and gas demand [one of the 3 relevant sectors] has started to improve as the daily commute resumes and that will spur more demand for pipelines."
Source: IHEA
This decline in PMI seems to be common around the world, as the U.S. is only 1 of  over 20 nations that are seeing a downturn. The slight uptick for the month might be due to the U.S. seeking different sources for supply chain; Mexico and India are filling the gap with available resources.

"The data is still not back to the expansion zone above 50 but it is headed in the right direction and is only slightly below that cut-off line."
Source: IHEA

Heat treaters know that durable goods include things like appliances and equipment. This sector is staying strong due to demand in markets like defense, multi-family housing, and machinery.

"There was a slight dip this month but overall, the sector is still solid."
Source: IHEA

"The transportation sector is often a leading indicator. . . .There is no reason to book a truck or plane or rail car unless there is something to move," states the IHEA report. Not only does this index rise when actual goods are being moved to demand, but the need for transportation comes when there is "anticipated demand." These numbers are encouraging, still staying on the positive side.

"Trucking and rail are still down from their past levels but it is worth noting that these numbers are still in positive territory."
Source: IHEA

Anne Goyer, Executive Director of IHEA

The mice are depending on the elephants to make some decisions that will benefit all. While the U.S. is still dealing with China, the report encourages making decisions based more on economical reasons rather than political clout. It seems the writing is on the wall to consider alternative nations from which to source supplies and raw materials. Within the U.S., there are raw materials that can be sourced; so maybe it is time to focus on those resources.

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of IHEA. Email Anne by clicking here.

 

 

Find heat treating products and services when you search on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: Elephants and Mice Read More »

IHEA Monthly Economic Report: Progress in the Face of Setbacks

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in March came out a little later than usual in order to incorporate recent global banking events. Even with bank failures, heat treaters can see the economy being part of an overall forward, albeit slow, recovery from the big recession during the pandemic.

Some of the banks to collapse were Silicon Valley Bank along with others such as Signature Bank and Republic Bank as well as Credit Suisse in Europe. The continual raising of rates, by the Feds, to fight inflation exposed weaknesses in banks that were already struggling. In the aftermath of this collapse, the report states uncertainty in how the Fed will respond to inflation in the future.

While the following report shows current stability in the economic indices, there is uncertainty following the banking collapse about how the economic future will unfold. The report states, "the industrial sector is still expected to decline although the speed of that decline has slowed
a bit. The projected readings are far below the trend line . . . but has started to show some very slow recovery." Only time will tell how the banking collapse will affect the future trends.

As a first example of continuous supply chain improvement, new automobile and light truck sales are up. New cars are being produced more consistently, and people are attracted to new vehicle purchase over the high-priced used vehicle market.

"Now that the supply chain crisis has started to recede the new cars are available again."
Source: IHEA

New home starts have about the same data as last month's report with the need still great for multi-family units are needed. The durable goods chart will be shown next since a good portion of that manufacturing is feeding into the new home builds.

"The good news for the manufacturer is that appliance demand is far higher with multi-family homes."
Source: IHEA

"There have been major gains in sectors such as vehicle manufacturing and aerospace..."
Source: IHEA

Another economic trend for heat treaters is the steel consumption sector. Construction is going strong, but know that this could drop when current projects get finished. There is hesitation in construction to embark on new projects because of financing concerns. As mentioned before, automotive is still doing well.

"Most of the big projects have started to get closer to completion and the economic environment is causing delays in starting new efforts."
Source: IHEA

Similarities can be seen in the industrial capacity utilization and the factory orders scenes. When the panic due to supply chain problems hit, companies bought up as much as they could. Now, there is the opposite problem of overstock. Inventory is going to have to be sold before these numbers will start working their way up again.

"Until these excess inventories are dealt with there will be slack reports."
Source: IHEA

"The dip in commodity pricing has already passed for the most part..."
Source: IHEA

Raw metal pricing saw a huge dip with the bank failures, and the report shows this is due to investor panic. Already the numbers are leveling out.

Anne Goyer, Executive Director of IHEA

Overall, the report is showing on-trend charts and indices. Even with the bank scares recently, the economy is not radically dropping and changing. Things are straightening out - slowly, slowly - as the recession moves more and more into the rearview mirror.

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of IHEA. Email Anne by clicking here.

 

Find heat treating products and services when you search on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: Progress in the Face of Setbacks Read More »

IHEA Monthly Economic Report: Certain Uncertainty

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in February shows that 2023 has already been forecasted in very different ways by expert analysts. Some are claiming that 2023 is just going to be terrible with rampant recession, pointing to the Purchase Manager's Index (PMI) as the true marker for what to expect. Then, there are the more moderate studies. The automotive and aerospace industries are looking up. The split forecasts might leave one spinning in confusion.

By taking a closer look at some of the specific industries, the economic summary shows that, "We don't quite know what to do with 2023 yet." The report reiterates this balance of highs and lows, with several bright spots for heat treaters, "In the more detailed breakdowns we see some significant variations – booms in automotive and aerospace but declines in machinery. Less volatility in fabricated metal and more volatility as far as primary metal is concerned."

The 10 economic indices show the aforementioned balance with almost half showing some increase, and the other sectors have a drop. A closer look below will show that even within the indices that are dropping, heat treat related markets are holding steady. Global events continue to  impact metal prices. Indices that are down include: New Automobile and Light Truck Sales, New Home Starts, Industrial Capacity Utilization, and the Transportation Activity Index. The up indices are Steel Consumption, Metal Pricing, PMI, Capital Expenditure, and Durable Goods.

High interest rates and high new vehicle prices are driving these sales down. Heat treaters, keep in mind that older vehicles are still on the road needing parts and eventually replaced.

 

"There is a threat of continued low demand."
Source: IHEA

With a look at new home starts, yes the index is down. There is a bit of a surprise within this big picture. Multi-family unit construction is actually up by 11%! This means heat treating is needed for construction components as well as appliances that go into these units. There is a relationship here with the durable goods pictured a few charts further down. Demand is high for these manufactured items.

"New homes are expensive, and loans to buy them are expensive as well."
Source: IHEA

Metal pricing reflects political events around the world - places like China and Peru where industrial metals and copper are sourced. Supply chain problems are correcting, but government conflicts continue. Currently the numbers are up, but quite a bit of uncertainty swirls.

“The sense is that prices are settling into a predictable pattern — for now.”
Source: IHEA

Durable goods are things that are supposed to last years. Appliances for the multi-family housing units shown above would be something in this category.

"A bigger demand for U.S. exports and most of these are high-value manufactured goods."
Source: IHEA

Robotics industry is booming too as is the automation sector. Durable goods also includes U.S. exports, and those are in high demand.

Anne Goyer, Executive Director of IHEA

2023, it would seem, is a year to "Keep calm, and carry on". The incredible lows due to the pandemic, and then some major highs coming out of that time are in the past. With some rising indices balanced with some low economic markers means, "companies are facing a year of unknowns after a couple of years of predictability."

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of IHEA. Email Anne by clicking here.

Find heat treating products and services when you search on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: Certain Uncertainty Read More »

IHEA Monthly Economic Report: The Big 3 Plus 1

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in January takes a look at the 3 common problems for the economy and provides another sector that may be surprising player. Usually, inflation, recession, and supply chain have been considered the culprits for the economic downturns in past months. There is something else edging in as cause for concern: the worker shortage. Specifically, the looming problem that the Boomer generation is retiring.

By 2030, the report projects, every worker of this generation will have reached retirement age. It is forecasted: "These people will be very hard to replace, and it will be expensive." Worker shortages have been discussed before, but now the study is showing that things are at "crises level."

"Remarkably stable" due, in part to "expansion of capital spending"
Source: IHEA

The 10 economic indices have all shown a drop except two: Durable Goods and Metal Pricing. Metal prices are remaining stable even as there are signs of reducing demand. The report credits this to companies thinking there will be a slowdown this year. Global events do make copper rather volatile, but nickel and aluminum are holding steady.

"The metal markets have been stabilizing to a degree."
Source: IHEA

All of these indices are slowing down: New Auto Sales, New Home Start, Steel Consumption, Industrial Capacity Utilization, Purchasing Managers Index, Capital Expenditure, Factory Orders, and Transportation Activity. It's difficult to pin just a few reasons for this, but supply and demand issues, high interest rates, and high prices overall have consumers hanging on to their money if they can.

Some supply chain resolution but "consumer demand is frequently frustrated by the lack of the desired vehicle."
Source: IHEA

In the automotive arena, heat treaters can find measures of security in knowing production is still expanding.

"The estimate is that another 5 million homes are needed."
Source: IHEA

Yes, the numbers are down, but overall there is a great need yet for housing. Multi-family homes see numbers still up by 12%, so that reflects well for heat treaters providing construction needs.

Some slowing in the steel sector
Source: IHEA

The report on steel consumption shows decline in the three major "drivers" for the industry: commercial construction, vehicle manufacturing, and the oil and gas business.

Anne Goyer, Executive Director of IHEA

2023, it would seem, is going to see a lot of spending on labor. There is hope even while seeing numbers drop, and it is possible that the nation is moving into a better time. The claim is that the "recession threat [is fading]," and supply chain circumstances are improving with China and elsewhere.

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of IHEA. Email Anne by clicking here.

Find heat treating products and services when you search on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: The Big 3 Plus 1 Read More »

IHEA Monthly Economic Report: Q4, New Year, and Beyond

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in December gives forecasts for Q4 results and takes a look into the start of 2023. The 3.9% growth from Q3 is not expected to be matched in Q4, but the spending power of the consumer holds out hope for battling recession.

The 3.9% growth from Q3 is not expected to be matched in Q4 and beyond, but the spending power of the consumer holds out hope for battling recession. The thought is that inflation highs have peaked, and interest rates could lower about halfway into 2023. Heat treaters should note that applicable indices are remaining steady while still dealing with supply chain problems and work force shortages. Of the 10 economic indices in this report, 6 sectors are steady or seeing growth; while 4 are on a downturn.

Holding steady with biggest strength found in automotive.
Source: IHEA

The categories included in seeing maintenance and growth are: New Auto & Light Truck Sales, Steel Consumption, Industrial Capacity Utilization, Metal Pricing, Durable Goods, and Factory Orders. Automotive sales are strong; people are wanting and needing to replace vehicles they've maintained for a long time. "People want new and they are confident enough in their job security to buy a new vehicle."

Automobiles are still in heavy demand due to supply chain issues and need to replace older vehicles.
Source: IHEA

There are no surprises from the Steel Consumption reports, as the "big three sectors are all performing about as expected – vehicle manufacturing, construction and the oil and gas arena." Metal Pricing is seeing a A Tale of Two Cities because copper is affected by political tensions around the world, but aluminum is seeing strong demand, particularly for the aerospace industry.

Interest rates are prohibitive for single-family home purchases.
Source: IHEA

Those indices that are in decline or experiencing drops are: New Home Starts, Purchasing Managers Index (PMI), Capital Expenditures, and Transportation Activity. New home purchases are difficult for those buyers because the interest rates are high. There is a bit of a bright spot for heat treaters since multi-family home sales are still strong; this means metal products are needed - appliances, window frames, and construction components.

Manufacturers are showing caution in purchases.
Source: IHEA

The PMI "is always a good indicator of overall industrial activity as the purchasing manager will be doing what they do at the start of any industrial process." In the report it's down to 47.7; not an emergency, but very uncomfortable level.

Anne Goyer, Executive Director of IHEA

The report on these indices takes a middle-of-the-road approach. There are no alarmingly sharp drop-offs in the reports, neither is there any drastic growth into the positive numbers; it all comes down to inflation. Economic markers are such that the interest rates are as high as they will get indicate a drop about halfway through the new year. The report looks for some lowering of the numbers to "between 4.25% and 4.50%" while the Fed members think the rate "may top out at 5.1%."

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.

Search for heat treat solution providers and suppliers on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: Q4, New Year, and Beyond Read More »

IHEA Monthly Economic Report: Good and Bad News

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in November takes a look at high inflation. The report focuses the reasons for current inflation on four factors: supply chain issues, oil crises stemming from Ukraine situation, increase in wages, and possibility of bringing jobs back to American soil.

"If one compares the readings for other nations to that of the US, there is still more growth here than in Europe and even Asia." Hints of good news can be found, even as inflation continues to be high.

The IHEA report hones in on good and bad news related to wages and reshoring of jobs. Thirty or forty years ago, moving production overseas meant that U.S. employers could spend very little on wages. What's happening now is China and other players are seeking to have domestically independent economies, which means paying their own employees higher wages. The report states, "The China under Xi Jinping seeks to be far less dependent on its export economy and wants to be driven by its own consumers. For that to happen the Chinese consumer needs more money and that means higher wages. The bargain that was Chinese production has faded." So the bad news for manufacturers is that wages are high everywhere. The good news is that this helps bring the jobs back to North America.

Good and bad news carries over into the steel industry. "Imports of steel are down and that is good for domestic producers but the demand slump has many concerned."

Anne Goyer, Executive Director of IHEA

There is good and bad for reshoring the jobs back to America. The report states, "If they [American companies] produce close to the consumer, they can be more adaptable . . . . The ability to take advantage of U.S. innovation and development improves. This all comes at a cost as well – higher wages, higher regulatory costs and higher taxes." It seems that America has been caught off guard. Bringing jobs back to America, in a time when preparations have not been implemented, means growing pains. The pressure is on to find workers, train workers, and keep current and new workers happy.

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.

Search for heat treat solution providers and suppliers on Heat Treat Buyers Guide.com

 

IHEA Monthly Economic Report: Good and Bad News Read More »

IHEA Monthly Economic Report: The Power of Politics

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in October investigates the role politics takes in the economy. At this time of the year, thoughts turn to elections, with the economy discussed throughout the nation. What can politicians really do to change the course of the nation's economy? The IHEA report shares a hope for 2023 and some thoughts on what politicians could do to encourage this growth.

The nation's economy spreads over diverse sectors. It's difficult to point to one area to explain the cause of the recession. Some, like the aerospace and automotive, are seeing positive growth. Other areas, like electronics and machinery, are still in a downturn. The report states, "The expectation is that GDP will expand by a very anemic 0.3% in Q3 and this will be followed by another two quarters of GDP decline (0.5% in Q4 and another 0.5% in Q1 of 2023)." After this, if the estimates play out, 2023 will see the economy growing by the end of year. Forecasts suggest that Q2 of 2023 will see small, albeit positive, growth; while Q3 and Q4 suggest significant moves to the positive.

People are holding back on spending, wanting to save something for an uncertain future. They are thinking about their jobs and are concerned for household budgets. If they could be motivated to spend, that will help the economy with substantial growth in 2023. Politicians can do something about this, according to the report.

How can the political sector make an impact? "The most useful thing the politician could do now would be to reassure the population so that there would be the kind of spending that pulls an economy out of a downturn," explains the report. "There could be significant encouragement for the process of reshoring or attention paid to worker shortage or infrastructure development." According to the report this isn't happening. It doesn't seem like the politicians are interested in taking this approach.

Ann Goyer, Executive Director of IHEA
Anne Goyer, Executive Director of IHEA

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.

Search for heat treat solution providers and suppliers on Heat Treat Buyers Guide.com

IHEA Monthly Economic Report: The Power of Politics Read More »

IHEA Monthly Economic Report: “I don’t really know” and That’s OK

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary this September reiterates the point that it has been making for several months this year: economic growth plus negative economic indicators equals “I don’t really know” what will happen in the economy.

Industrial Capacity Utilization
Source: IHEA

First, the summary takes time to look at contradicting economic indicators. The first example is in GDP growth: While Q1 and Q2 exhibited persistent negative GDP growth, Q3 projections of 1.3% positive growth is a promising sign that the threat of a recession is starting to fade. Other indicators also show borderline economic stability and possibly growth; with unemployment rates being low and seeing capacity utilization numbers in normal range and the Purchasing Manager’s Index in expansion zone (both just barely), “there are as many factors suggesting recession as there are factors that point towards slow growth but growth, nonetheless.” The economic summary projects the following in this borderline hopeful situation: “My own analysis of the situation (for what it is worth) is that the US will escape a formal recession in 2022 or 2023 but will experience a downturn of some significance as compared to where we were in 2021.”

Purchasing Managers’ Index
Source: IHEA

Second, the summary evaluates the causes for inflation, a hot topic and a very visible, uncomfortable sign. We’re looking at three variables for this assessment: lockdowns, the energy crisis, and reshoring. “The estimate,” relates the economic summary, “is that the lockdowns cost upwards of $10 trillion in lost wages, shuttered business, health care costs and the like. The $800 billion [in U.S. stimulus money] did not offset the economic loss and was therefore not inflationary. There was a surge in inflation in early 2021 as the restrictions started to lift and people started to spend again but most of that pressure had dissipated by Q3. There would have been reduction in inflation pressure had there not been other factors.” The next cause for inflation, the energy crisis, was caused by the War in the Ukraine since Russia’s invasion of the Ukraine effectively cut off the world’s second largest producer of oil from the global economy. The energy crisis and inability to access many goods after shutdowns and wartime supply chain disruptions has also led to much reshoring in the U.S. With reshoring — an indication of growth — comes near inevitable price increases at the expense of more secure supply chain lines: “As companies return to the U.S., they will naturally encounter higher costs – for labor, for land and the like. They will see higher regulatory costs and will encounter more limits. These will add to the costs even as these companies benefit from a more reliable supply chain.”

Anne Goyer, Executive Director of IHEA
Anne Goyer
Executive Director
IHEA

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.

.

Search for heat treat solution providers and suppliers on Heat Treat Buyers Guide.com

IHEA Monthly Economic Report: “I don’t really know” and That’s OK Read More »

IHEA Monthly Economic Report: Hopeful Horizon Now Approaching

/ FEATURED NEWS, HEAT TREAT ECONOMIC NEWS

The most recent monthly Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary released in June shares that there are pessimistic and optimistic readings of the data at every turn. While companies seem to be a little confused about whether to expect constriction or growth, the report rightfully notes that "[the] reality is that the U.S. economy is diverse and at any given moment there are sectors that are growing and shrinking – especially in the manufacturing community." Today's summary highlights the diversity of what to expect in the economy.

"The price of steel and aluminum has been rising and fast. There is nothing especially surprising about this fact but the impact on operating costs can’t be underestimated. Fully 77.6% report rising costs and we all know full well what has been taking place in the energy sector."

A quick aside: The dominant factor influencing global economics is war in the Ukraine. The direct effects of Ukrainian agricultural product disruptions -- like wheat and corn -- is compounded by sanctions on Russia which leads to a decreased supply of oil. This stress in the energy market has triggered global inflation that everyone has experience with. For manufacturers, the price of steel and aluminum is rising fast. "There is nothing especially surprising about this fact," the economic summary reads, "but the impact on operating costs can’t be underestimated."

75% of manufacturers are small businesses, which means they will experience the smallest economic changes very keenly. So, while capacity utilization numbers are growing and have just reached into the acceptable utilization zone -- that is, between 80% and 85% where there is relatively low downtime and few bottle-necks -- many small operations businesses will take longer to adjust to new machinery purchases or employees.

To gauge whether or not to prepare for a recession, one should look at the order activity and employment habits of manufacturers. If order activity is stable or increasing, this is a good indicator that manufacturers expect to be able to fulfill more orders and grow with demand. Similarly with employment, when manufactures hire and keep a stable number of workers instead of laying off or decreasing the number of workers, this is also a good indication of a growth economy. Both of these conditions are shown to be true, reports this month's economic summary.

To end on an encouraging note, there isn't reason to believe that most manufacturers are concerned about a recession. With 55.1% expecting business growth and 31.1% expecting business stability, manufacturers remain on track with their capital investment plans to handle these positive expectations. Part of this is linked to the shortage of workers with the right skill set; so expect manufacturers to continue investing in technologies and robots to meet this lack.

Anne Goyer, Executive Director of IHEA
Anne Goyer
Executive Director
IHEA

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.

 

 

.

Search for heat treat solution providers and suppliers on Heat Treat Buyers Guide.com

 

 

 

 

 

IHEA Monthly Economic Report: Hopeful Horizon Now Approaching Read More »