Since Applied Process is involved in the heat treatment of manufactured goods, our business is a good barometer of US Industrial Production. When people need more stuff Austempered, US Industrial Production is rising. When people need less stuff Austempered US Industrial production is usually flat or falling. In spite of what you hear or read in the news, US Industrial Production is rising (as it has been for 2-1/2 years) and should continue to do so for a while.
In some sectors, production is still rising briskly. Who would have thought in 2010 that by 2012 US ductile iron casting production would be UP by 50% and Chinese ductile iron production would be DOWN by 50%? In fact, US manufacturers are facing a shortage of ductile iron castings as US ductile iron foundries are running at near capacity while a glut of Chinese iron foundry capacity is resulting in downsizing, business closures and government bailouts of state-run metal casting enterprises there.
A long awaited recovery in US construction activity is finally emerging which should help shore up overall industrial production as other sectors of industry are peaking in production. HD Truck production is headed for a +250,000 unit year with HD trailer production at record levels. AG equipment production may set another record. US light vehicle sales are inching, once again, towards 16 million units. Meanwhile the low value of the dollar versus the Euro, the Japanese Yen and the Chinese Yuan make imports more expensive and exported US goods more attractive to foreign buyers.
And…..don’t look now…..but US manufacturing workers remain the most productive on the planet. According to the United Nations Bureau of Labor statistics, the average value-added for a US manufacturing worker is five times that of a Chinese worker, four times that of a Mexican worker, two times that of a German worker, 1.5 times that of a Korean worker and 1.3 times that of a Japanese worker. Couple that with our new-found sources of domestic energy and the US is well-positioned to be the number one economy in the world for the foreseeable future.
As this is all going on, US manufacturers are looking for ways to reduce the mass and cost of their products. Nissan recently reported that of the mpg gains on their 2013 US-produced models, 15% of the gain was attributed to mass reduction coming from material/process substitution. Ford has indicated the desire to reduce the mass of their class-leading F-150 by 750 lbs. (340kg) by 2025, expecting most of that weight-loss to come from material/process substitutions. HD truck trailer manufacturers are looking for “every pound” they can get, as every pound reduced in trailer weight is one more pound that their customers can add in paid-for shipped goods.
Applied Process offers an array of high strength-to-weight ratio options for the design community ranging from Austempered Ductile Iron (ADI) conversions from steel or aluminum, to Carbo-Austempered™ steel powertrain parts that can transmit more torque with the same, or less, mass. Our engineers and technical staff are working with customers daily to develop product designs that are better, faster, cheaper and more sustainable. It’s one of the most-fun parts of what we do at Applied Process.
Pay no attention to the man behind the curtain telling you that US manufacturing is “dead” or being “off-shored”. Reality is quite the contrary.