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Greetings!
Greetings from Avanti:
In this edition of manufacturing news, we have a few new changes. In the last edition, the main focal point was "How to save money in a time where materials and value added services are increasing". This week we will try and offer some explanation on why we need to recoup our material costs asap on long running blanket orders. Also, to let you know what is happening in the foreseeable future at Avanti Engineering, Inc.
We are doing our best trying to explain and help all of our customers understand the process needed to provide materials on blanket style orders. Some high volume users of machined parts with blanket orders expect us to purchase all the materials at once to lock in pricing. To achieve this, we would have to take receipt and pay for all this within 30 days. This is not feasible as some orders have parts where the majority of the total cost is in materials, sometimes as much as 70 to 80%. In addition we are being asked to ship monthly, etc...over a period of time from 6 to 12 months. It's extremely important that we all understand that this is very difficult to do and still maintain our cash flow. However, anyone interested in taking enough quantity for the material cost of the entire order within 3 months would benefit in not having any surcharges, and the balance of the order could be taken as needed. There are some extreme instances where material increases had to be made and adjusted during a blanket order, to continue supplying product. "We don't like doing this either, but cannot absorb the additional costs."
I have some interesting news relative to parts washing & cleanliness of our products. Avanti has made a substantial investment in purchasing an automated parts washing system which will clean a multitude of different style parts by using a hydrocarbon cleaning solvent which is completely eco friendly and non water based. In addition, these parts, once cleaned free of chips and oil will be completely dried during the same operation. We are excited about this upgrade of our parts washing process which should provide a cleaner, drier part for our customers. This also reduces our internal costs through reduced labor, chemical usage and liability exposure. This equipment is expected here in our shop around June 1st.
Regarding outside services for plating, heat treating, passivate, anodize, etc... We have been experiencing increased cost for these services as well as surcharges for metal, energy, scrap, fuel etc... Due to the extreme just in time deliveries and short lead times we've seen a jump in minimum charges from our subcontractors due to expediting smaller quantities for short and sudden delivery demands. Avanti will start applying these "value added increases on new quotations" for services on all parts requiring outside service processing. The cost should be minimum, but will help us recover the extra fuel/labor costs for the deliveries and the minimum lot charges that we've been incurring with our outside suppliers.
We introduced our new Customer Service Supervisor Carlos to you a few weeks ago and we regret that Carlos took another position with another company and didn't give any notice. We have asked our accounting assistant, Jaime Schmidt, if she was interested in the position. She has answered with a very excited and resounding yes. So, starting immediately, Jaime will be our new Customer Service Representative. Jamie has proven to be dedicated and reliable, with a great personality and has worked in customer service before. She can be contacted at jschmidt@avantiengineering.com We feel she will be a an asset and benefit to you, our customers, as she has been for us here at Avanti Engineering, Inc. We all wish her success in this position change.
Thank you for reading our newsletter. We hope you find it both informative and helpful. If you have any suggestions on new material that you would like to see addressed in future editions, please feel free to contact me by email or by phone. Thank you for your business and loyalty in working with Avanti Engineering, Inc.
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Strong Manufacturing Numbers Support Copper, Other Base Metals - But Will It Last?
As many of our readers surely have read about lately, US manufacturing numbers for February were reported by the Institute for Supply Management (ISM) to be the strongest in seven years. The ISM's purchasing managers index (PMI), a primary metric for measuring manufacturing growth, was up to 61.4, from 60.8 in January; that's a 0.6 percent increase. The PMI numbers show that US manufacturing activity, according to the ISM's Web site, has expanded for the 19th straight month, and the overall economy grew for the 21st consecutive month. On the face of it, this appears to indicate good news for the metals sector.However, although the overall numbers look appealing, some sub-findings told a different story. The ISM reported that out of 18 manufacturing industries, 14 of them reported growth in February, and they listed them in order. (Fabricated metal products placed ninth out of 14. One respondent from the fabricated metals industry said, "Our plants are working 24/7 to meet production demands.") But, primary metals represents one of the four industries that contracted in February. Despite reports of contracting activity in the primary metals sector, the one thing that is not going down anytime soon is prices. Commodity prices rose across the board, and no commodities at all reported price drops in February. For example, aluminum has been rising for six straight months, steel for six straight months as well, and copper for seven straight months Read More. |
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Manufacturing in U.S. Probably Grew in February at Fastest Pace Since 2004
Manufacturing in the U.S. probably grew in February at the fastest pace in almost seven years, indicating factories are providing more momentum for the expansion, economists said before a report today.
The Institute for Supply Management's factory index rose last month to 61, the highest since May 2004, from January's 60.8, according to the median estimate in a Bloomberg News survey. Readings greater than 50 signal growth. Other data may show construction spending fell 0.4 percent in January.
Business investment in new equipment is prompting companies like Eaton Corp. and Deere & Co. to raise profit forecasts as the global economy expands. Federal Reserve Chairman Ben S. Bernanke, testifying before Congress today, may reiterate that policy makers are concerned about the pace of recovery and the time it's taking to reduce unemployment even as manufacturing prospers. Read More
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As always, thank you for your business and your interest in Avanti Engineering, Inc. and for taking the time to stay in touch with us by reading our newsletter. If you have any suggestions for improving our newsletter by including specific information, please let me know. Thanks Again! Best Regards, Rocco BrattaAvanti Engineering, Inc.630-260-1333 "Great ideas come from Avanti Engineering, Inc., just give us a chance to help." |
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