September 2007 Edition

NEWS

Industry News

So You Think You're Hot Stuff?

Better? Faster? More efficient? No, we're not referring to the Six-Million Dollar Man, we're asking about your company. Here's a chance to brag about what you do and how you do it and, perhaps, be profiled in Modern Applications News.

MAN is starting a new section — Hot-Shot Job Shop — where you can submit a description of your company and what it does better than your competitors. If our panel of expert judges finds your shop newsworthy, we'll select it and produce a one-page company profile of your business in both MAN and its e-newsletter, with a new shop profiled each month

Readers will be able to vote on each shop profiled and a representative of the business voted most interesting will be featured on the cover of MAN's IMTS issue.

Details of how to apply online will be forthcoming.

Manufacturing Technology Consumption Both Up and Down

May U.S. manufacturing technology consumption totaled $313.74 million, according to AMTDA, the American Machine Tool Distributors' Association — AMTDA — and The Association For Manufacturing Technology — AMT, up from April, but down compared to the same period in 2006.

The total, as reported by companies participating in the United States Manufacturing Technology Consumption — USMTC — program, was up 6.5 percent from April, but down 6.5 percent from the total of $335.52 million reported for May 2006. With a year-to-date total of $1,606.13 million, 2007 was up 7.5 percent compared with 2006.

These figures are based on the totals of actual data reported by companies participating in the USMTC program.

The USMTC report, jointly compiled by the two trade associations representing the production and distribution of manufacturing technology, provides regional and national U.S. consumption data of domestic and imported machine tools and related equipment. Analysis of manufacturing technology consumption provides a leading economic indicator as manufacturing industries invest in capital metalworking equipment to increase capacity and improve productivity.

Any reading above 100 indicates that USBEF's machine tool lease payment delinquencies — a measure of machine tools users' liquidity and consistent profitability — are at a rate below the average rate of 1990 to 1999. As profitability rises liquidity rises, delinquencies fall and the index rises.

Manufacturing Migrating Out of Traditional Regions

A report by the National Association of Manufacturers shows manufacturing's geographic distribution in the U.S. has shifted in recent decades, with more manufacturing taking place outside of the traditional centers in the Northeast and Midwest. This broadening of the manufacturing base had an impact across the U.S. The five largest manufacturing states in terms of dollar volume of business activity in 2004: California, Texas, Ohio, Michigan and Illinois [see associated table].

Another perspective of manufacturing's role in state economies is the percentage of a state's economy dependent on the manufacturing sector. The largest manufacturing states are Indiana, Iowa and Wisconsin. Ohio, Kentucky, North Carolina and Arkansas tie for fourth place, followed by Michigan and Oregon [see the associated table and map].

Trumpf and Jenoptik Form Joint Venture for Laser Components

The Trumpf Group, Ditzingen, Germany, and Jenoptik AG, Jena, Germany, intend to expand their cooperative efforts with a joint venture which will bundle laser component efforts. Each have a 50 percent share of JT Optical Engine GmbH + Co. KG, headquartered in Jena. The venture still requires anti-trust approval.

JT Optical Engine will develop, produce, and sell optical modules known as "optical engines" for fiber-optic lasers. Next to pump diodes and control and beam management, the optical engine is an important component in fiber laser devices. The venture company will offer the modules to third parties and supply both Jenoptik and Trumpf.

In financial news, the Trumpf Group preliminary data for fiscal year 2006/2007 shows sales grew 18 percent to $2.68 billion. Orders received increased about 16 percent to $2.83 billion. The group will be entering the new fiscal year with a cushion in terms of orders.

The company credits a strong world economy and the high demand for production tools and equipment contributing to sales growth. The strongest gains came from Eastern Europe and Germany. Western Europe and Asia had a considerable upswing, according to Trumpf.

Investments rose 73 percent to $226 million.

Hardinge Experiences Growth

Hardinge Inc., Elmira, NY, experienced a 14.3 percent increase in net sales during the second quarter of 2007, compared to the same quarter in 2006.

Sales during the second quarter of 2007 were $89.7 million, compared to the $78.5 million for the same quarter in 2006. Net sales for the first six months of 2007 rose 14.8 percent to $176.7 million, compared to $154 million in the first six months of 2006.

The company produced net income of $6 million during the second quarter of 2007, or $0.57 per diluted share, compared to the $3 million, or $0.34 per diluted share, it earned in the second quarter of 2006. Net income for the first six months of 2007 was $11.3 million, or $1.18 per diluted share, compared to $5 million, or $0.56 per diluted share, for the first six months of 2006.

Romi Elects New CEO

Industrias Romi S.A., elected Livaldo Aguiar dos Santos to chief executive officer, replacing Americo Emilio Romi Neto, who remains as chairman of the board.

The election of dos Santos is one of the measures implemented to strengthen the company's corporate governance practices, including the listing of Romi's common shares

Dos Santos is 54, and his professional experience includes 15 years in management posts in engineering capital goods and logistics companies.

Faro Raising Funds

Faro Technologies, Inc., Lake Mary, FL, announced that it expects to raise $56.1 million in a registered direct offering with institutional investors. The net proceeds to Faro are expected to be approximately $53.3 million after deducting placement agent fees, but before deducting other expenses. Faro has priced the registered direct offering at $34 per share and expects to sell 1.65 million shares of its common stock in the offering.

Faro intends to use the net proceeds for working capital and general corporate purposes. Faro may also use all or a portion of the net proceeds to acquire additional businesses or technologies. Currently, no commitments or agreements for any such acquisitions or investments are in place.

Agie, Charmilles and Mikron Become GF AgieCharmilles

Agie Charmilles combined its Agie, Charmilles, and Mikron brands under a new brand identity, GF AgieCharmilles. This unification lets the company offer products in EDM and high-speed and high-performance machining, under a single brand.

As GF AgieCharmilles, the company bolsters its position as a manufacturer of machine tools for mold and tool making, as well as component production.

With the combination, Harry Moser was made chairman of Agie Charmilles U.S., and Glynn Fletcher was appointed president. Fletcher has served as executive vice president of Agie Charmilles since the company became a unified legal entity in 2006. Prior to that, he served as president of Agie Charmilles in the U.K., and then of Agie U.S. for more than three years.

Vietnam Hosts Machine Tool Show for Third Year, but It's No IMTS

MTA Vietnam2007, the third Vietnam International Precision Engineering, Machine Tools and Metalworking Exhibition & Conference, hosted 8,728 visitors at the Ho Chi Minh International Exhibition and Convention Centre.

A total of 433 exhibiting companies, 83 percent from outside of Vietnam, attended, including Agie Charmilles, Brother, Carl Zeiss, Citizen, Doosan Infracore, Fanuc, Finn-Power, Geka, Hexagon Metrology, Hurco, Mazak, Mitsubishi Electric, Mori Seiki, Nikon, Okamoto, Renishaw, Trumpf, Salvagnini, Seco Tools, System 3R, Walter, and Sodick.

From July 9 to 12, 2008, Hanoi will be the host city for MTA Vietnam at the Giang Vo Exhibition & Fairground.

Manufacturing Confidence on the Uptick

The National Association of Manufacturers/Industry Week business outlook survey for the second quarter of 2007 points to confidence edging up from both large and small companies, after declining during the prior four quarters.

The survey of 293 NAM member companies showed 80 percent of large and 79 percent of small manufacturers eyeing a positive business outlook for the second quarter of 2007. This is a jump from the corresponding 78 and 77 percentages reported in the first quarter of this year.

Large manufacturers — those employing more than 1,000 workers, and small companies, with less than 1,000 workers — recorded their business outlook as well as their 12-month expectation on sales, prices, capital investment, inventories, employment and wages. The full NAM/Industry Week Manufacturing Index is at www.nam.org/manufacturingindex. Survey highlights include

Sales Expectations
Looking ahead 12 months, both large and small manufacturers expect sales to continue growing. Small firms expect an increase of 3.9 percent. This is a slower pace than the 4.3 percent expectation in the first quarter, as well as slower than the average expectations from 2004 through 2006. Large firms expect their sales to increase by a more-robust 4.5 percent over the next 12 months. This is an improvement from the first quarter.

Pricing Expectations
Both large and small manufacturers expect an increase in pricing power. Large firms expect to raise price by two percent while small firms expect the prices of their products will increase 1.9 percent. This is an increase for both small and large firms compared to the first quarter of 2007, signaling that demand is up.

Investment Expectations
Large manufacturers expect capital expenditures to rise 2.3 percent, while small companies expect investment spending to grow by 2.2 percent. For both large and small firms, this reflects the same expectations as in the first quarter.

Inventory Expectations
Both large and small survey respondents expect to reduce inventory levels during the next 12 months. Large firms expect reductions of 1.7 percent, while small companies expect 0.6 percent over the coming year. For large companies, this marks the 13th consecutive quarter firms expect inventory reductions. For small companies, this is the second consecutive decline following modest inventory investment increases in 2006.

Employment Expectations
Both large and small manufacturers expect increased employment during the next 12 months. Large firms expect an employment increase by 0.3 percent, while smaller firms expect employment levels to rise by 1.7 percent. Both are continuations of a modest positive long-term trend.

Wage Expectations
Large manufacturers expect wages to increase by 1.9 percent over the coming 12 months. This is similar to the 2 percent expectation reported in the first quarter survey and slightly slower than the 2.5 percent pace expected in 2004 through 2006. Small companies anticipate wage increases of 2.3 percent in the coming year. This is stronger than the 2 percent increase anticipated last quarter and slightly stronger that the 2.2 percent increase expected from 2004 through 2006.

Update

Since we ran "30 Years of Expertise Pays Off," [MAN, Vol. 41, No. 6, June, 2007, p. 26] Southwestern Laser has been acquired by LAI International and Joe Wagner was named plant manager.