A Bit Of The Index Whiplash
First of all, I’d like to take the opportunity to introduce myself to all of IMPO’s readers out there. For the last three or so months I’ve been working behind-the-scenes (along with a number of other people) to get the IMPO Insider Daily delivered to your inbox, well, on a daily basis. It’s good to finally get to speak, more or less, with all of you.
One of my primary tasks every morning is to scour the Associated Press for news related to manufacturing. Between fiscal reports, layoff notices, and more news about shipping American jobs overseas, I started to notice a trend: index reports that attempt to analyze the status of manufacturing. For a while, I considered them to be a vital beat on our industry, a quantitative breakdown that might help me better understand this new-to-me world. So I watched their rise and fall.
We began September with what appeared like spectacular news: the ISMs manufacturing index report for August showed growth to a score of 52.9, the highest in more than 18 months. Headlines boldly claimed, more or less, that “manufacturing is back!” Naturally, September slipped back down to 52.6, leading to a more conservative tail-between-the-legs type of claim: “We’re down, but we’re still going up … right?”
It doesn’t end with the ISM. There’s durable goods and factory orders. Trade deficits and export/import rates. Just like the manufacturing indices, when one is going up, another is plummeting, and none of the forecasters or analysts can agree if we’re on the way to recovery or catapulting so deep we won’t ever see another sunrise on our economy.
Unless you’re sitting atop a chair more expensive than my car somewhere near Wall Street, news that the ISM index has slipped or risen the smallest amount is not really going to affect your choices as managers and business owners. You’re not going to let go of workers because factory orders dipped in August, and you certainly didn’t throw in the towel at the beginning of the year when the ISM index was at its lowest. These reports seem to exist for those who want a surface-level knowledge of the industry without getting their hands dirty, so to speak.
Manufacturing occupies a strange place in the thoughts of the common consumer. When one thinks of a manufacturing plant, they see machinery, not people. When they see a product, they think of the processes it might have gone through along the way, not the people who packaged it. I was the same way, and my dive into the manufacturing world has made me realize that the personal side of manufacturing is far more important than I’ve ever realized.
I’ll be the first to admit I don’t know everything about the manufacturing industry. I certainly know more than when I started here at IMPO, but “comprehensive” is definitely not the right word. More like obtuse. But I can say one thing: an arbitrary index has never taught me a thing about the true state of manufacturing.
But I spend most of my time in an office, which isn’t the best environment to connect to the personal side of my audience. I was fortunate enough to travel down to Rosemont in September for the Design & Manufacturing Midwest show. The reaction I got from manufacturers was pretty anonymous.
Who knows, maybe this month’s manufacturing index from the ISM agrees with the sentiment I found at the Design and Manufacturing Midwest conference. At this point, I wouldn’t know—I’ve ridden the ups and downs of forecasting, and I’m feeling a little whiplashed.
How do you all keep on beat on our industry and make rational decisions for your company? We aren’t CFOs or Wall Street addicts, so what are your management strategies during these difficult times? Along the same lines, I’d like to know how manufacturing is really doing, from the source, not an analyst. If you have some anecdote about how things are progressing I’d welcome it. I still have a lot to learn!
Let me know what kind of news interests you. What you do want to read on a daily basis? How do you keep a beat on this industry? Are indexes more important that I’ve let on? Let me know at Joel.Hans@advantagemedia.com.