Current Affairs
July 3, 2024
Furniture Market Update
Furniture up in June as overall economy struggles
By Larry Adams
July 2, 2024 | 1:03 pm CDT
Economic activity in the manufacturing sector contracted in June for the third consecutive month and the 19th time in the last 20 months, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
Furniture & Related Products was one of eight industry categories that reported growth in June, coming in as the fourth highest growth industry behind printing, petroleum, and primary metals.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee:
“The Manufacturing PMI registered 48.5 percent in June, down 0.2 percentage point from the 48.7 percent recorded in May. The overall economy continued in expansion for the 50th month after one month of contraction in April 2020. (A Manufacturing PMI above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index remained in contraction territory, registering 49.3 percent, 3.9 percentage points higher than the 45.4 percent recorded in May. The June reading of the Production Index (48.5 percent) is 1.7 percentage points lower than May’s figure of 50.2 percent. The Prices Index registered 52.1 percent, down 4.9 percentage points compared to the reading of 57 percent in May. The Backlog of Orders Index registered 41.7 percent, down 0.7 percentage point compared to the 42.4 percent recorded in May. The Employment Index registered 49.3 percent, down 1.8 percentage points from May’s figure of 51.1 percent.
“The Supplier Deliveries Index remained in ‘faster’ territory, registering 49.8 percent, 0.9 percentage point higher than the 48.9 percent recorded in May. (Supplier Deliveries is the only ISM Report On Business index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 45.4 percent, down 2.5 percentage points compared to May’s reading of 47.9 percent.
“The New Export Orders Index reading of 48.8 percent is 1.8 percentage points lower than the 50.6 percent registered in May. The Imports Index dropped into contraction territory, registering 48.5 percent, 2.6 percentage point lower than the 51.1 percent reported in May.”
Fiore continues, “U.S. manufacturing activity continued in contraction at the close of the second quarter. Demand was weak again, output declined, and inputs stayed accommodative. Demand slowing was reflected by the (1) New Orders Index improving to marginal contraction, (2) New Export Orders Index returning to contraction, (3) Backlog of Orders Index dropping into stronger contraction territory, and (4) Customers’ Inventories Index moving into the low side of the ‘just right’ range, neutral for future production. Output (measured by the Production and Employment indexes) declined compared to May, with a combined 3.5-percentage point downward impact on the Manufacturing PMI calculation. Panelists’ companies reduced production levels month over month as head count reductions continued in June. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth. The Prices Index eased but remained in expansion (or ‘increasing’) territory; the index registered its second month of cooling increases.
“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions. Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability. Suppliers continue to have capacity, with lead times improving and shortages not as severe. Sixty-two percent of manufacturing gross domestic product (GDP) contracted in June, up from 55 percent in May. More concerning is the share of sector GDP registering a composite PMI calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 14 percent in June, 10 percentage points higher than the 4 percent reported in May,” says Fiore.
The eight manufacturing industries reporting growth in June — in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; Furniture & Related Products; Paper Products; Chemical Products; Miscellaneous Manufacturing; and Nonmetallic Mineral Products. The nine industries reporting contraction in June — in the following order — are: Textile Mills; Machinery; Fabricated Metal Products; Wood Products; Transportation Equipment; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Computer & Electronic Products.
June 27, 2024
Truckin’
With Rates Dropping, Operating Costs For Truckers Hit Record High In 2023
by Tyler Durden
Thursday, Jun 27, 2024 – 09:55 PM
By David Hollis of TruckersNews
Operating expenses for trucking companies increased in 2023, according to the results of a new study released today.
The American Transportation Research Institute’s 2024 Analysis of the Operational Costs of Trucking found the overall marginal costs of operating a truck hit $2.270 per mile in 2023, a new record high. While the increase was only 0.8 percent over the previous year, when surcharge-protected fuel costs are excluded, marginal costs rose 6.6 percent to $1.716 per mile, according to the study.
ATRI’s annual report analyzes line-item costs, operating efficiencies, and revenue benchmarks by fleet sector and size.
Overall, 2023 expenses rose moderately across most categories, with average costs across line-items increasing at less than half the rates experienced during 2021 and 2022, according to the study. It found:
- Truck and trailer payments grew by 8.8 percent to $0.360 per mile
- Driver wages grew by 7.6 percent to $0.779 per mile
- Repair and maintenance costs grew by 3.1 percent to $0.202 per mile
- Insurance premiums grew by 12.5 percent to $0.099 per mile after two years of negligible change
ATRI said the soft 2023 freight market — which continues in 2024 — posed many challenges for operational efficiency. Deadhead mileage rose to an average of 16.3 percent for all non-tank operations, and driver turnover rose by five percentage points in the truckload sector.
These pressures combined with low freight rates strained profitability across the industry, said ATRI in a statement announcing the release of its study.
Average operating margins were 6 percent or lower in all fleet sizes and sectors other than LTL. The truckload and specialized sectors experienced drops in per-mile or per-truck revenue, and most saw “other costs” – expenses outside of the core marginal line-items – increase as a share of total revenue.
https://www.zerohedge.com/economics/rates-dropping-operating-costs-truckers-hit-record-high-2023
June 19, 2024
European Petrochemicals
Billionaire Jim Ratcliffe Says Europe’s Chemical Industry Is a Mess
Francine Lacqua, Rachel Graham and Alex Longley, Bloomberg News
, Wood Mackenzie Ltd
(Bloomberg) — The high cost of energy and carbon have left Europe’s petrochemical industry struggling to compete with the rest of the world, according to Jim Ratcliffe, head and founder of industry giant Ineos Group.
“Europe’s a mess for petrochemicals today,” Ratcliffe said in an interview with Bloomberg TV. “Everybody’s leaving petrochemicals in Europe, which I’ve never seen in my working life before.”
Europe’s soaring energy costs after Russia’s invasion of Ukraine forced swaths of capacity to close, pressured by output from regions where production was cheaper, particularly Asia and the US. Ratcliffe said energy prices in Europe are five times higher than those in North America, making production in the region uneconomic.
Chemicals are key to the supply of plastics and products that are used in everything from textiles to electronics and construction. As well as being pivotal to industrial growth, the sector accounts for almost 10% of European manufacturing, with about 597 billion euros ($640 billion) of sales before the downturn.
Since 2022, there has been a spate of cuts to chemicals capacity in the region. BASF SE is curbing operations at Germany’s biggest chemicals site. Exxon Mobil Corp. is mothballing its operation at its biggest oil-processing plant in France, while LyondellBasell announced a review of its European operations in May.
Ratcliffe, who is Britain’s second-richest man with a net-worth of more than $15 billion, said Ineos’s own profits have mirrored the shift, with the majority of earnings now coming from the US. Twenty years ago they mostly came from Europe, he said.
Over 70 business and industry leaders, including Ratcliffe, earlier this year called on the European Union to cut energy costs and the regulatory burden of green rules to help the region remain competitive. Parts of the chemicals sector won’t currently be included in the bloc’s carbon border adjustment mechanism when it comes into effect, a scheme designed in part to protect the region’s industry.
“Energy is really important for an economy at the end of the day,” he said. “Places like America are in a great place for manufacturing because they’ve got cheap energy, they’ve got no carbon taxes.”
Permanent Closures
The comments mirror those from major industry groups, who have warned that Europe’s chemical output has plunged.
“Production has collapsed massively in the last two years,” a spokesperson for VCI, Germany’s chemicals lobby group said. Production has over the last two years fallen to levels not seen since the global financial crisis and will likely never recover to where it was before Russia’s invasion of Ukraine, they said.
It’s worth noting that the picture isn’t entirely one-sided.
Ineos is investing in an ethane cracker — one of the types of plant involved in making plastics — in Antwerp that’s set to become operational in mid-2026. Other petrochemical-focused units are also expected to come online in Europe in the next few years, according to Mohamed Chilmeran, research analyst for oils & chemicals at Wood Mackenzie Ltd.
Still, when considering Europe’s overall petrochemical capacity, closures will outpace additions going forward, Chilmeran said.
The crisis is also far from confined to mainland Europe, with the UK also seeing a collapse in its chemicals output. Ineos operates the Grangemouth chemicals plant in Scotland, but Ratcliffe said the nation’s industry has all-but collapsed.
“There’s not much chemical industry left in the UK,” Ratcliffe said. “It’s finished.”
June 5, 2024
PFA Spring Meeting
Polyurethane Foam Association Fall Meeting Addresses Sustainability, Industry Innovation
Manning and Gallagher Win Dr. Herman T. Stone Technical Excellence Award
Dr. Herman Stone Technical Excellence Award Winners: Michael Gallagher of The Mattress Recycling Council and Liz Manning of Econic Technologies were winners of the Dr. Herman Stone Technical Excellence Award for their presentations on New Markets for Recycled Foam and CO2-Based Polyols. The Award is voted on by the audience in PFA’s Technical program. Gallagher and Manning tied in the voting, so two awards were given.
ST. PETERSBURG, FL (May 31, 2024)—
The Polyurethane Foam Association’s
Spring Meeting in St. Petersburg featured a
spectrum of presentations on topics of
interest to the flexible polyurethane foam
industry, many focusing on a common
theme: Sustainability.
PFA’s Industry Issues Session provided updates on isocyanates, end use markets, sustainability programs, and “Made In USA” claims.
In the Technical Program on the following day, presentations covered foam recycling, new polyol technology, equipment for process controls, memory foam evaluations, sustainability certifications and circular economy.
Philippe Knaub of FXI, PFA’s President, recognized new PFA members including Midwest Foam and Dynamic Systems, and noted that the association’s work for its membership is more valuable than ever.
“PFA has earned a reputation as a resource for good science and accurate information about flexible polyurethane foam,” Knaub said. “This credibility is important as we address challenges such as sustainability, reliable testing and proposed regulations that may affect our business. PFA has proven that cooperative efforts by its members can be much more effective than any individual company managing such challenges alone.”
After PFA’s Technical Program, two presenters were named as winners of the Dr. Herman Stone Technical Excellence Award. The award is voted on by the audience at the Technical Program, and the vote resulted in a tie. Liz Manning of Econic Technologies won for her presentation, “Update: CO2-Based Polyols for Polyurethane Applications,” and Michael Gallagher of the Mattress Recycling Council won for his presentation, “Developing New Markets For Recycled Foam.”
The award is named for Dr. Herman T. Stone, who served as PFA’s first Technical Director. In 2007, Dr. Stone was inducted into the Flexible Polyurethane Foam Hall of Fame.
“A number of attendees told me that this year’s technical presentations were exceptionally good,” said Bill Gollnitz of Plastomer Corporation, Past PFA President and moderator of the Technical Program. “It’s very fitting that we were able to provide awards to two presenters.”
To learn more, visit www.pfa.org.
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