3/11/2010
The 17th Annual MAPI Benefits Forum will be held on Tuesday, June 8; a new MAPI Workers’ Compensation Cost Control Forum will be held on Wednesday, June 9; and the 3rd Annual Talent and Leadership Development Forum will be held on Thursday, June 10. The programs will run each day from 8:30 a.m. to 4:30 p.m. (CDT) at the Hyatt Rosemont near Chicago O-Hare airport.
The Forums will provide attendees with a variety of opportunities, enabling them to engage in open dialogue about the challenges they face in an increasingly complex domestic and global marketplace. Each Forum features presentations and discussions on how companies are succeeding in managing, respectively, their benefits, workers’ compensation, and organizational development programs in a difficult economic environment.
The programs allow for, and facilitate, more intensive and participatory dialogue in addition to more personal networking than is generally experienced at larger conferences. The Forums also offer participants highly interactive discussions with peers from firms with leading-edge programs, allow for the exchange of applied best practices across industries, share ideas about cost-saving efficiencies and experiences, and enhance individual and company knowledge base and problem solving resources.
The 17th Annual Benefits Forum will focus on how companies are designing and managing their benefits programs during difficult business conditions while concurrently planning for a turnaround. Among other topics, the Forum on Best Practices for Controlling Workers’ Compensation Costs will focus on cost containment techniques such as state of the art safety initiatives; innovative early return to work programs; aggressive claims management; and effective workers’ compensation training. The 3rd Annual Talent and Leadership Development Forum will focus on how companies are continuing to sustain their leadership and development programs commensurate with planning strategies for an improved business climate.
The program for each Forum also features the popular Manufacturers Alliance/MAPI roundtable discussion, in which attendees can receive peer feedback on issues of current importance, thus offering the potential to identify solutions in a collegial group setting.
The registration fee for each Forum is $650 for MAPI member company executives ($550 for registration before April 15) and $800 for executives of non-member companies ($700 before April 15). The registration fee for all three Forums after April 15 is $1,800 for MAPI members and $2,200 for non-members. The conference fee includes all meeting sessions, meeting agenda materials, welcoming reception on the evening preceding each Forum and continental breakfast and luncheon on the day of the event.
For more information, visit the Alliance website at www.mapi.net and click on the Forum logo on the home page, or contact Les Miller, Manufacturers Alliance/MAPI Senior Attorney, at (703) 647-5104 or lmiller@mapi.net regarding the Benefits and Talent and Leadership Forums, or Fred Stocker at (703) 647-5120 or fstocker@mapi.net regarding the Workers’ Compensation Forum.
3/2/2010
A Manufacturers Alliance/MAPI report, Benchmarking SG&A Expenses (S-128), presents detailed data relating to SG&A costs associated with finance and a number of specific functions within finance; information technology; human resources; legal; sales and marketing, research and development; and selected administrative functions.
Survey participants included members of MAPI’s CFO and Financial Councils and provide information and more narrowly defined benchmarks related to SG&A costs than are generally available.
The 32-page report, based on responses from 21 companies, includes charts, tables, and anecdotal comments of participants. The survey can be a valuable resource and reference for companies desiring insight on overhead expenses.
The survey is available to MAPI member company executives for $75 each and to other purchasers for $150.
To order, click here or contact Iesha Ward at 703.647.5119. 3/1/2010
The following is an analysis from Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, regarding the Institute for Supply Management (ISM) index for February 2010.
“The Institute for Supply Management (ISM) reports that the index for February 2010 manufacturing activity was 56.5, somewhat lower than the 58.4 report in January. Since an index value above 50 percent means that manufacturing activity is growing, the February report is encouraging,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. “The severe winter weather along the East Coast and Toyota’s production shutdowns undoubtedly had a negative impact on manufacturing production in February. According to the ISM report, the adverse events last month were offset by on-going improvement in economic activity and the inventory swing that occurs when firms have to slow their destocking, and eventually build stocks, due to continuing growth in orders.
“Relatively small fluctuations in the indexes are normal for the indicator since there is a clearly discernable growth trend in the data,” he added. “A unique aspect of the report , though, is how quickly the employment indicator has rebounded and signaled job growth. Manufacturing is not known as being a sector that generates many jobs quickly in a recovery. The employment indicator may be signaling that job cuts were overdone broadly and the labor market will shortly starting improving.” 2/26/2010A number of positive trends are emerging as the United States digs itself out of the “Great Recession,” but there remain cautionary signals that growth will be muted and the rebound restrained, according to a new report.
The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will experience 2.8 percent growth in 2010, followed by 3 percent growth in 2011. By supplying major assumptions for the economy and running simulations through the IHS Global Insight Macroeconomic Model, the Alliance generates unique macroeconomic and industry forecasts.
A number of factors are in play during the recovery: the consumer, though still burdened by feeble income and job growth, will receive some relief via transfer payments and tax cuts that in turn will boost spending; parts of investment—most notably in transportation equipment, information technology, and residential housing—will increasingly provide the demand surge needed to sustain production growth; the swing in business inventories will provide growth momentum as firms reduce destocking and eventually rebuild inventories; and federally funded stimulus outlays will contribute to the government spending stream through 2011.
“The overall economy grew in the third and fourth quarters of 2009 and high frequency data point to moderate economic performance in the first quarter of 2010,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “Similarly, manufacturing production hits its trough in June 2009 and has increased over 5 percent through January 2010. A moderate recovery is undoubtedly under way, but it is the pace of future near-term growth that is questionable. We believe that consumers will continue to deleverage and that the previous growth model based on credit availability to marginally creditworthy borrowers is not repeatable. Government tax cuts have replaced lost income for the moment, but eventually spending has to be grounded on wage increases and employment growth. A jobless recovery is not an option in this cycle.”
Manufacturing production growth declined 11.2 percent in 2009 and is expected to rebound to 5.4 percent growth in 2010, and to an additional 5.3 percent growth in 2011.
Production in non-high-tech industries is expected to increase by 3.3 percent in 2010 and by 4.8 percent in 2011. High-tech manufacturing production is anticipated to improve significantly, with solid 14.6 percent growth in 2010 followed by robust 17.8 percent growth in 2011.
The forecast for inflation-adjusted investment in equipment and software is for 9.4 percent growth in 2010 and for 12.1 percent growth in 2011. Capital equipment spending in high-tech sectors will continue the improving trend. Inflation-adjusted expenditures for information processing equipment are anticipated to rise by 8.1 percent in 2010 and to increase by 6.7 percent in 2011.
MAPI expects industrial equipment expenditures to improve by 6 percent in 2010 and by 17 percent in 2011. The outlook for spending on transportation equipment is for a healthy 50.1 percent increase in 2010 and a 33.6 percent advance in 2011. These figures should help compensate for a 48.7 decline in 2009.
Spending on non-residential structures is the lone GDP expenditure category expected to retrench in each of the next two years, declining by 14.6 percent in 2010 before decreasing further, by 6.2 percent, in 2011.
Exports and imports will both be trending upwards. Inflation-adjusted exports are anticipated to improve by 9.2 percent in 2010 and by 7.6 percent in 2011. Imports are expected to grow by 9.6 percent in 2010 and by 6.8 percent in 2011. The employment outlook, unfortunately, will continue to pose a challenge. MAPI forecasts unemployment to average 10 percent in 2010, and 9.4 percent in 2011.
The price per barrel of imported crude oil is expected to average $72.60 in 2010 before heading even higher, to $77.50 per barrel, in 2011. While expensive by historical standards, this still compares favorably to the average $92.30 price per barrel in 2008.
2/25/2010
The following is an analysis from Cliff Waldman, Economist for the Manufacturers Alliance/MAPI, regarding the durable goods report for January 2010. The report indicated a 3 percent overall increase but a 0.6 decline when transportation orders are excluded:
“The weakness and uncertainty of the nascent economic and manufacturing recovery was reflected in a disappointing report on demand for long-lasting manufactured goods in January,” said Cliff Waldman, Manufacturers Alliance/MAPI Economist. “While total new orders increased a healthy 3.0 percent on top of nearly 2 percent in December, this was entirely due to volatile transportation orders. Excluding transportation demand, total new orders actually fell by 0.6 percent. The industry level data were mixed, indicative of a less than stable expansion. Machinery demand fell by nearly 10 percent, although it was up more than 5 percent from year-ago levels. Fabricated metals demand was flat.
“Further, it continues to be evident that business confidence in this economic recovery vacillates,” he added. “New orders for non-defense capital goods, a proxy for the business equipment spending that is sensitive to business confidence in the economy, fell by nearly 3 percent after a similar increase in January. Strong but volatile manufacturing output in recent months reflects a large inventory restocking after the historic liquidation that was seen in late 2008 and early 2009. But recent indicators on employment and housing have been disconcerting and at a minimum show that the strength of the domestic economic recovery is less than certain. And on the global front, almost all of the strength is coming from Asia. Until the new expansion broadens both domestically and globally, a strong and sustained manufacturing recovery is questionable.”
2/23/2010
The United States embraced a credit-based growth model that required both increasing debt among existing borrowers and ever easing credit standards to attract more new borrowers, two primary factors that led to the “Great Recession” of 2008 and 2009, according to a new Manufacturers Alliance/MAPI report.
Government debt is now compensating for the deleveraging of the consumer sector, but is growing so quickly that it may overrun the ability to service the debt load.
“The primary risk going forward is that the debt bubble merely shifts from the private sector to the government sector,” said Daniel J. Meckstroth, MAPI Chief Economist and report author. “If the federal deficits run amok, a larger share of the economy will shift to less productive areas, the growth rate will suffer, and the limits of government indebtedness will likely be determined by foreign investors’ willingness to hold U.S. government debt.”
Meckstroth recounts that consumers went headlong into debt in the 2000s and leveraged their incomes into even higher debt levels. Household debt rose from 92 percent of disposable income in 2000 to 130 percent at the cyclical peak in 2007. Household debt, therefore, increased at a 10 percent annual rate over the seven year period, while disposable income gained only 5 percent annually.
“Home mortgages and home equity loans drove a very large proportion of households’ increased indebtedness,” he said. “Consumerism at its worst was driven by plentiful, cheap credit that was both secured and promoted by overinflated housing prices.”
The consumer saving rate is expected to increase in the current decade compared to the last, but the major impediment to higher overall savings and investment rates in the United States is the large, and growing, federal deficit.
From the cyclical economic peak in 2000 to the cyclical peak in 2007 (which includes the 2001 recession), gross domestic product (GDP) increased at a 2.4 percent annual rate. The annual average pace of economic growth from 2007 to 2019 is likely to be only 2 percent, and if there is another major economic crisis this decade, the economic growth rate will be even lower.
Meckstroth wonders if the next bubble may already be forming.
“‘Bubblenomics’ is not over,” he cautions. “Arising out of the worst recession in over half a century is a potential new bubble—government debt. Bailouts, stimulus spending, and tax cuts appear free. The perception is that federal deficits do not matter. It is easy, therefore, to believe the story that the government has unlimited resources and that government deficits will not personally be a great cost to taxpayers.”
2/17/2010The following is an analysis from Thomas J. Duesterberg, Ph.D., President and Chief Executive Officer for the Manufacturers Alliance/MAPI, regarding the industrial production report for January 2010:
“In the January report showing a 0.9 percent rise in industrial production, manufacturing led the way with solid gains across the board,” said Thomas J. Duesterberg, President and Chief Executive Officer of the Manufacturers Alliance/MAPI. “The inventory cycle is now working strongly in favor of production growth, as stocks of basic goods like primary metals (up 22 percent over January 2009 levels), chemicals (up 9.1 percent over last January) and even paper (up 6 percent over last January) are being rebuilt. Another strong area was autos, as increased sales led to a 4.9 percent rise over December 2009 levels and 40 percent growth over last January’s depressed levels.
“Improving exports as well as growing domestic demand are also helping manufacturers, especially in areas like chemicals, machinery and information and communications equipment,” he added. “The growth in exports and the inventory swing should sustain the solid performance in manufacturing throughout the first half of 2010.”
2/12/2010
The report separately analyzes two distinct regions: Western Europe and Central Europe. The former generally comprises the 16 countries that form the currency union (Eurozone), while the latter includes the three largest economies of Central and Eastern Europe (CEE3): the Czech Republic, Hungary, and Poland. All forecasts are based on a proprietary MAPI model.
Kris Bledowski, Ph.D., Manufacturers Alliance/MAPI Economist and report author, writes that preliminary data indicate that the European economy emerged from recession during the second half of 2009, but improvement in the industrial sector lagged. Coming out of contraction, Bledowski expects the industrial sectors of the Eurozone, Central Europe and the CEE3 all to grow roughly in the 2 percent to 2.5 percent range in 2010.
“We have seen accelerating improvement in inventory adjustment; a sharp pickup of trade, both intra-Europe and globally; and rising demand in the wake of fiscal expansion adopted by most European governments,” he said. “The improvement in the industrial sector, however, is far less pronounced. Manufacturing production did indeed start climbing last summer, albeit hesitatingly, but great variations remain.”
In the Eurozone, the report envisions a more positive outlook in 2010 with 13 of 14 industries showing growth, led by motor vehicles at 8 percent. Thirteen industries are also anticipated to grow in 2011, with computers and electronics the pacesetter at 14.5 percent. Textiles is the lone industry expected to decline in both years, by 7.8 percent in 2010 and by 3.4 percent in 2011.
In Central Europe, 12 of 14 industries are expected to show growth in 2010, and 13 of 14 should expand in 2011. As in the Eurozone, computers and electronics show strength, with 14.5 percent growth forecast in 2010, followed by even more robust gains of 18.3 percent in 2011.
Bledowski reports that six industries are in the accelerating decline (either early recession or mid-recession) phase in the Eurozone, while eight industries are in the decelerating decline (late recession or very mild recession). None is in the accelerating growth (recovery) or in the decelerating growth (expansion) phase of the cycle.
In Central Europe, two industries—construction and food, beverages and tobacco—are in accelerating growth; one industry, machinery and equipment, is in accelerating decline; 11 industries are in decelerating decline; and none is in the decelerating growth phase.
“The pace of manufacturing recovery in developed Europe will underperform its American counterpart in both 2010 and 2011,” Bledowski said. “European businesses will be hemmed in by cautious consumers and face lingering financing constraints.”
1/14/2010
The long-awaited recovery in the manufacturing sector may be clearly in sight, according to the quarterly Manufacturers Alliance/MAPI Survey on the Business Outlook—December 2009 (ER-694e), a leading indicator for the industrial sector. The December 2009 composite index rose to 57 percent from 38 percent reported in the September 2009 report, representing the highest level since the March 2008 survey also registered 57 percent, and the first time in six quarters it has reached 50 percent or above.
At its current level, the index indicates that overall manufacturing activity is expected to grow over the next three to six months. It should also be noted that the index measures the direction of change rather than the absolute strength of activity in manufacturing.
“Since many of the indexes are based on comparisons with activity in the fourth quarter of 2008, during which manufacturing sector activity had taken a sharp downward turn, the improvement in the composite index is not, by itself, evidence of a meaningful recovery,” said Donald A. Norman, Ph.D., MAPI Economist and survey coordinator. “The extent to which the individual indexes improved, however, along with the significant increases in the forward looking annual orders and investment indexes, provide the strongest indication to date that the manufacturing sector is on the upswing.”
While a variety of individual indexes are included in the survey, the business outlook index is a weighted sum of U.S. shipments, backlogs, inventories, and profit margin indexes. Eleven of 12 individual indexes showed improvement, including 10 by double digits.
Two components showed impressive 31-percentage point gains.
The quarterly orders index, based on forecasts for the fourth quarter of 2009 with the same quarter one year ago, rose to 42 percent from 11 percent in the previous survey. The non-U.S. prospective shipments index, which measures expectations for shipments abroad by foreign affiliates of U.S. firms in the first quarter of 2010 compared to the same quarter of 2009, jumped to 64 percent from 33 percent.
The U.S. prospective shipments index, which similarly reflects expectations for first quarter 2010 shipments compared with the first quarter of 2009, improved to 59 percent in the December survey compared to 30 percent in the September report. The export orders index, which compares fourth quarter 2009 exports with those of fourth quarter 2008, increased to 47 percent in December from 19 percent in the September survey.
The backlogs index, which compares the fourth quarter 2009 backlog of orders with the backlog of orders one year earlier, rose to 36 percent from 16 percent in the September survey. An accumulation of backlogs usually occurs when new orders exceed shipments.
The U.S. investment index, which queried executives on their expectations regarding capital investment in 2010, was 66 percent, up from 47 percent, indicating increased domestic investment this year. The non-U.S. investment index provides insight into expectations regarding capital expenditures abroad. The December 2009 index was 68 percent, a solid improvement over the 52 percent recorded in September, indicating a significant number of respondent companies are anticipating capital spending growth outside the United States.
The research and development (R&D) index asked survey participants for their insights regarding R&D spending in 2010 compared to 2009. The R&D index was 66 percent, well above the 49 percent in the previous survey.
The annual orders index, based on a comparison
of expected orders for all of 2010 with orders in 2009, was an impressive 80 percent in December compared to 66 percent in September. The profit margin index increased to 38 percent in December from 22 percent in the September report, a solid improvement but still remaining under 50 percent.
The inventory index is based on a comparison of inventory levels in the fourth quarter of 2009 with those of one year prior. It increased to 8 percent in December from a record low of 7 percent in September. This remains a positive sign indicating that manufacturers will need to increase production for restocking purposes and for new orders.
The capacity utilization index, based on the percentage of firms operating above 85 percent of capacity, was the lone index to decrease, dropping to 7 percent in the current survey from 8.4 percent in the previous survey. On a more positive note, though, the percentage of firms operating below 75 percent of capacity fell to 52.6 percent from 56.7 percent.
The survey reflects the views on current and future business conditions of 59 senior financial executives representing a broad range of manufacturing industries.
To order a copy, click on the link above, or contact Iesha Ward at 703.647.5119 (iward@mapi.net).
1/12/2010
The Canadian economy withstood the global recession in 2009 better than most G7 nations, including the United States, and is poised to see marginal improvement in 2010, according to a new Manufacturers Alliance/MAPI report.
The G7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
In Review of the Canadian Economy, 2009-2010 (ER-692e), Jeremy A. Leonard, MAPI economic consultant, writes that Canada was spared the worst of the 2008-2009 global recession due to its relatively sound banking sector and strong improvements in its terms of trade, the latter buoyed by robust demand for its natural resources.
Real gross domestic product (GDP) in Canada declined only 3.3 percent from the third quarter of 2008 to the second quarter of 2009, the smallest peak-to-trough decline among G7 nations, and well below the 3.8 percent drop in GDP in the United States. Prospects for 2010 are encouraging for a moderate recovery, with GDP expected to increase by 2.6 percent. Domestic demand should grow by 2.8 percent.
The forecast for Canadian manufacturing is for the sector to remain essentially flat on a year-over-year basis. The weakness is due to sluggish export demand driven by a likely U shaped American recovery and the strong Canadian dollar, as well as lackluster capital spending at home.
In a forecast of selected economic indicators for 2010, the report indicates that pre-tax corporate profits are expected to grow by 9.5 percent, exports to increase by 4.5 percent, and imports to increase by 7.6 percent. Consumer spending is anticipated to grow by 2.8 percent, and real disposable income should increase by 3.5 percent.
The unemployment rate edged up from 6 percent to 8.7 percent during the recession but fell back to 8.5 percent by the end of 2009. According to the report, the rapid turnaround in the labor market is unusual and is a byproduct of resurgent business confidence.
Canada’s economy remains on more solid footing than that of the United States for several reasons.
“The structural underpinnings of the Canadian economy are firmer than those in the United States,” Leonard said. “The credit crunch is essentially a vestige of the past, and, thanks to more prudent mortgage lending practices, Canada has avoided the longer term adverse effects that continue to plague the American economy.
“In addition,” he concluded, “Canadian labor markets are already starting to improve, providing strong growth in aggregate disposable income, which is the lifeblood of economic activity.”
To oder a copy, click on the link above or contact Iesha Ward at 703.647.5119 (iward@mapi.net). | Edit in Browser | /_layouts/images/icxddoc.gif | /MediaCenter/news/_layouts/formserver.aspx?XsnLocation={ItemUrl}&OpenIn=Browser | 0x0 | 0x1 | FileType | xsn | 255 | | Edit in Browser | /_layouts/images/icxddoc.gif | /MediaCenter/news/_layouts/formserver.aspx?XmlLocation={ItemUrl}&OpenIn=Browser | 0x0 | 0x1 | ProgId | InfoPath.Document | 255 | | Edit in Browser | /_layouts/images/icxddoc.gif | /MediaCenter/news/_layouts/formserver.aspx?XmlLocation={ItemUrl}&OpenIn=Browser | 0x0 | 0x1 | ProgId | InfoPath.Document.2 | 255 | | Edit in Browser | /_layouts/images/icxddoc.gif | /MediaCenter/news/_layouts/formserver.aspx?XmlLocation={ItemUrl}&OpenIn=Browser | 0x0 | 0x1 | ProgId | InfoPath.Document.3 | 255 | | Edit in Browser | /_layouts/images/icxddoc.gif | /MediaCenter/news/_layouts/formserver.aspx?XmlLocation={ItemUrl}&OpenIn=Browser | 0x0 | 0x1 | ProgId | InfoPath.Document.4 | 255 | | View in Web Browser | /_layouts/images/ichtmxls.gif | /MediaCenter/news/_layouts/xlviewer.aspx?listguid={ListId}&itemid={ItemId}&DefaultItemOpen=1 | 0x0 | 0x1 | FileType | xlsx | 255 | | View in Web Browser | /_layouts/images/ichtmxls.gif | /MediaCenter/news/_layouts/xlviewer.aspx?listguid={ListId}&itemid={ItemId}&DefaultItemOpen=1 | 0x0 | 0x1 | FileType | xlsb | 255 | | Snapshot in Excel | /_layouts/images/ewr134.gif | /MediaCenter/news/_layouts/xlviewer.aspx?listguid={ListId}&itemid={ItemId}&Snapshot=1 | 0x0 | 0x1 | FileType | xlsx | 256 | | Snapshot in Excel | /_layouts/images/ewr134.gif | /MediaCenter/news/_layouts/xlviewer.aspx?listguid={ListId}&itemid={ItemId}&Snapshot=1 | 0x0 | 0x1 | FileType | xlsb | 256 |
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