Growth continues for Wisconsin manufacturers

The rate of growth in manufacturing activity in the Southern Wisconsin/Northern Illinois area slowed down a bit in June from the previous month, but continues to grow, according to the latest Institute of Supply Management-Milwaukee Survey.
The June seasonally adjusted Milwaukee-area PMI was 59, down from May’s seasonally adjusted index of 62. However, any rate over 50 indicates growth.
For the first time, the Milwaukee index was compiled by the Marquette University Business Center for Global and Economic Studies and Center for Supply Chain Management.
The Marquette team has redesigned the survey to be as compatible with the National Institute of Supply Management survey as possible.  The new Milwaukee PMI indices are comparable to past surveys, as well as the national survey.
Manufacturing is important to Wisconsin, and to the United States. Not only is the economy improving, but there appears to be a renaissance of interest in the competitiveness of US-based manufacturing. The years ahead in the greater Milwaukee area could be very interesting,” the Marquette team said today.
Among the findings for the Milwaukee manufacturers in June: New Orders grew, stronger than May; production grew at a level consistent with May; employment grew but at a rate lower than May; supplier deliveries grew, strong than May; inventories declined substantially; customer inventories declines; prices increased, but at a lower rate than May; the backlog of orders declines; exports were up; and imports were up.

Among the comments collected from Milwaukee-area manufacturers:
“Petroleum based products continue to see increasing cost pressure.”
“Customer orders are slowing, lead times increasing from Asian suppliers due to manpower and electrical capacity. Price increases due to exchange rates.”
“Our two greatest issues are the continued slowness in housing starts and a significant shortage of key materials for other markets.  The issue is within the petrochemical area where we need the other chemicals that come off of ethylene manufacture when derived from crude oil. Ethylene can also be derived from natural gas… The rise in crude prices against relative stability in natural gas has caused most of the world ethylene producers to derive from natural gas, leaving a global shortage on many other materials. This is expected to be a very long term issue. No end in sight.”
“Commodity cost fluctuation and inflation. Falling value of the dollar.”
“Availability of components is our biggest problem – many suppliers have material and/or capacity shortages; the result for us is late deliveries, extended lead times, and in some cases we have been placed on allocation. It is having a negative impact on current production as well as new product development activities. Second biggest problem continues to be rising costs/inflation, as we are having very limited success in passing these additional component and materials costs on to our end user customers – result is a squeeze on our margins.”
“Rapidly escalating raw material costs. Expect this to continue through 2011.”
“Increase in raw material prices have been challenging.”
“Recovering from the temporary Toyota demand reductions due to natural disaster. We are back over 90 percent of March 2011 rates.”

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