Author Archives: Carlos De Sordi

Manufacturing Industry Continues Record Expansion

The manufacturing industry continues its record expansion despite a slight dip in February, according to the Gardner Business Index (GBI).

Manufacturing posted a 53.4 for February 2019, a slight drop from the previous month. However, that score marks the 25^th consecutive month where the industry was considered “expanding.” Industries that score above 50 on the GBI are considered to be expanding while those that score lower are considered to be contracting. Still, the rate of expansion is down significantly year over year, as February 2018 saw a GBI score of 65.2, a record high.

Within the manufacturing category, the fastest growing industries included power generation, primary metals, aerospace and others.

Demand for Platinum Expected to Rise

Demand for platinum is expected to rise in 2019, as investment in the material will offset weaker demand from the automotive and industrial segments.

According to a report by the World Platinum Investment Council (WPIC), global demand is expected to increase by 5 percent, to 7.7 million ounces, this year. The WPIC is predicting an increase in demand to 530 thousand, driven by strong demand for bars, coins and exchange traded fund holdings. This should offset predicted decline in other industries.

Despite the increase in demand, the WPIC predicts that global supply of platinum will actually increase 5 percent in 2019. This is largely due to a 6 percent increase in growth.

Supplier Strikes Problematic for the Automotive Industry

A series of auto supplier strikes in northern Mexico could lead to significant issues for the entire North American automotive industry.

According to reports, workers from as many as 48 companies in the town of Matamoros have walked off the job, demanding a 20 percent pay increase and a bonus. This is resulting in losses of as much as $500,000 for some companies. Penalties for failing to deliver parts on time are adding to the losses. Industry experts believe continued work stoppages could catastrophically impact supply for the entire North American automotive industry.

While labor stoppages in Mexico are usually ended fairly quickly, industry insiders are concerned that strikes could spread to other towns. According to reports, suppliers have lost an estimated $50 million over the last 30 days.

Manufacturing Down Slightly in February, Still Growing Overall According to ISM Report

The latest monthly report from the Institute for Supply Managements (ISM) showed a slight decrease in manufacturing expansion, as new orders, employment and production are down slightly.

According to reports, the group’s PMI index for February was at 54.2 percent, a decrease from 56.6 in January. Despite the slight decrease, the number is indicative of continued overall growth in the industry. A PMI above 50 percent indicates the sector is growing, while a PMI under 50 percent means it is contracting.

According to the report, cold weather was a significant driver in the slight reduction. Past ISM reports have also indicated a drop in production during the winter months.

Shale and Natural Gas Industry Faces Financial, Environmental Challenges

The shale and natural gas industry is booming, but companies both large and small still have their fair share of problems to solve as it continues to grow.

Modern technology is reducing cost and time to complete for drilling, while large shale plays like the Permian Basin have a glut of supply. But experts say that glut has led to a significant amount debt financed operations trying to get in on a burgeoning market.

“It’s doing well if you look at supply and market share,” David Victor, Ph.D. and Co-Director of the Laboratory on International Law and Regulation at UC San Diego, said. “If you look at finance, it’s a little uneven. The technological improvements have been enormous, but competition has been intense and a lot of these are debt financed companies. There is a lot of hemming and hawing inside the industry right now as to who is going to survive, what consolidation is going to look like and how debt service is going to be met.”

In addition to financial challenges, the industry must also contend with environmental issues. While natural gas is generally regarded as cleaner than some types of energy, like coal, it still has its detractors. Larger companies have taken steps to reduce their footprint, but many smaller companies have not done so. This can partially be attributed to debt financing, as many of these independent companies don’t have a reason to plan for a future that may not happen.

“The industry in the United States, especially the independents, seem to have a shorter time horizon than the integrated larger companies about the elements of their policy,” Victor said. “From their point of view, they have been either ignoring policy or they have subscribed to the policy that gas is good for climate because it competes with coal and lowers emissions. That’s true for shallow decarbonization, but it’s not for deep decarbonization.”

Victor said shale and natural gas companies planning for the future need to start with controlling their environmental footprint. He called out the industry’s methane emissions as the biggest hurdle to clear.

“One of the things companies can do is get more involved in understanding how they can lower their environmental footprint while still using gas,” Victor said. “That is why the efforts around methane control are so important. They are about identifying the parts of the gas system that will be easy to control and have a big impact. That hasn’t spread throughout the industry, particularly with the independents.”

Many of the challenges the industry faces are more conceptual than practical, which make them difficult to prepare for.

“Some of this is very hard to prepare for because its very existential,” Victor said. “If you don’t have a pipeline network or rules that prohibit the use of gas, you don’t have an industry. People are going to need to work hard to change the way the policy process looks at gas.”

With so many debt financed small companies in the mix, Victor said the larger, more stable companies are going to have to take the lead when it comes to charting a course for the future of the industry. He also said the work of the Oil and Gas Climate Initiative (OGCI) was critical

“Transformation in the industry is going to be a 10 to 20 year phenomena,” Victor said. “In some cases I can understand where the independents are coming from, especially if you have debt service maturing in the next two years. The companies that have a longer time horizon are going to have to lead on this. That’s why initiatives like OGCI are so important because they are trying to demonstrate what exactly we are doing.”

New BMW Tech at 2019 Mobile World Conference

Automakers have made their presence felt at the 2019 Mobile World Conference in Barcelona, introducing new tech and concepts for their vehicles.

BMW introduced its natural interaction system, which will allow drivers to use voice commands, gestures and eye contact to interact with their car. The system uses sensors and speech recognition in combination with a variety of algorithms to perform tasks like opening windows, adjusting air vents or performing tasks on the onboard computer. Drivers will also be able to ask questions about exterior objects.

The German automaker said the first phase of these functions will be available on the 2021 BMW iNext.

Michigan Researchers Create New 3D Printing Technique

Researchers at the University of Michigan have created a new approach to 3D printing they believe will make the process faster.

According to reports, the new technique can lift complex shapes from a vat of liquid, solidifying liquid resin with two lights and controlling where the resin hardens and where it remains fluid. This method allows for the creation of 3D objects in one single process. This process can be up to 100 times faster than the conventional 3D printing process.

Members of the Michigan engineering department believe this process can be used to create objects that are stronger than their counterparts created with filament. In addition, additives can be used to change the complexion of the resin, allowing more versatility. The university has filed three patent applications related to the process.

FERC to Consider Emissions When Approving LNG Terminals

The U.S. Federal Energy Regulatory Commission (FERC) announced it’s changing the way it evaluates potential liquified natural gas (LNG) terminals going forward.

According to reports, FERC will now consider direct greenhouse gas emissions from these facilities before approving them. The agency applied its new review process for the first time in its consideration of the Calcasieu Pass Project in Louisiana. That project, which will have the capacity for 12 million tons of gas per year, was approved.

The change is part of an overarching strategy by FERC to streamline their approvals process. The agency is slated to move forward with 12 more LNG terminal projects.

Roadway Fatalities Down Slightly Year Over Year

Roadway fatalities dropped slightly year over year, but are still up significantly over the last five years.

According to the National Safety Counsel, about 40,000 fatalities occurred in 2018. That’s down about 1% from 2017 but 14% higher than the fatality figure in 2014. The report estimates that more than 4 million people were seriously injured in roadway collisions in 2018. That’s also a 1% decrease from 2017.

The report also found that driver behavior is a key factor in the number of fatalities remaining high. About 8% of fatal crashes were the result of distracted driving, while 2% involved drowsy driving. Motor vehicle crashes are the second most common accidental cause of death in the United States. Accidental opioid overdoses surpassed them for the first time last year.

Mining Company Asks for Unity in Creating International Governing Body

The world’s largest mining company is asking peers to create an international governing body to oversee the construction and operation of tailing dams in response to the Vale disaster in Brazil.

According to reports, BHP is asking mining companies to join together in creating an independent, international organization that would oversee construction, operation and integrity of tailing dams like the one at Vale’s Feijao mine that burst last month, killing almost 170 people. A similar incident at Vale and BHP’s jointly owned Samarco mine killed 19 people in 2015. Tailing dams are used to store mining waste.

In response to the disaster, the Brazilian government has banned the construction of upstream mining dams and ordered that all current upstream waste dams be decommissioned by 2021.