Cultural Change Dominates Manufacturing Conference
At Managing Automation's Progressive Manufacturing Summit 2009, held in Sarasota, Fla., last week, manufacturers gathered to address the conference's theme, "Redefining the Business of Manufacturing in Turbulent Economic Times."

More than 200 attendees focused on cultural changes before deploying the technologies that will help them operate more intelligently and efficiently. William A. Strauss, senior economist and economic adviser at the Federal Reserve Bank of Chicago, opened the conference program with a talk titled "The New Economic Landscape," during which he discussed the effects of the recession on manufacturing and what the shape of the economy may look like in the next few years.

In a spot poll of manufacturing members in the audience, 72 percent said that culture will outweigh technology as the facilitator of enterprise integration, Managing Automation reports.

Manufacturing Tech Consumption Down
April's U.S. manufacturing technology consumption totaled $97.04 million, down 41.5 percent from March and off by 77.7 percent from a year ago, according to the Association for Manufacturing Technology (AMT) and the American Machine Tool Distributors' Association.

"The 41 percent drop in April orders from March levels and the Chapter 11 filings of GM and Chrysler eliminated any doubt that we still have a couple of rough months ahead," AMT President Douglas K. Woods said in a statement. "Accessible credit is the key to a viable manufacturing technology industry surviving this recession. Congress has provided the loan guarantees but they need to change the criteria for making loans before their efforts will result in cash flowing back into the system."

With a year-to-date total of $497.40 million, 2009 is down 70.7 percent compared with 2008, according to the U.S. Manufacturing Technology Consumption report.

Initial Jobless Claims Decrease
Last week's employment report from the U.S. Department of Labor suggests that the economy's downward spiral is slowing. Initial jobless claims fell by 24,000 to 601,000 in the week ended June 6 from an upwardly revised 625,000 claims in the prior week. The number of people collecting benefits rose for a 19th straight time to a record 6.82 million in the prior week.

However, the insured unemployment rate held steady. The unemployment rate among people eligible for benefits held at 5.1 percent, the highest since 1982, for the week ended May 30.

The four-week moving average of initial claims fell to 621,750 from 632,250.

Fourteen states and territories reported an increase in new claims for the week ended May 30, while 39 reported a decrease.

In its latest monthly report, the Labor Dept. determined that job losses in May came out to about 345,000 — about half the average monthly decline for the prior six months. Still, the unemployment rate stands at 9.4 percent, and experts predict it will yet exceed 10 percent. Employers appear to be delaying hiring decisions until they are convinced the economy is improving. While the recession may end soon, unemployment likely will remain high for the foreseeable future.

Chrysler Officially Exits Bankruptcy
Two weeks ago, the U.S. government guided General Motors Corp. into bankruptcy. Last week, the U.S. government guided Chrysler LLC out of Ch. 11 reorganization and into the waiting arms of Fiat, which gets most of Chrysler's assets and $6.6 billion in "exit financing" from the federal government.

"With the touch of pen to paper and a simple wire transfer, Chrysler completed its alliance with Fiat on Wednesday morning, largely ending its quick trip through bankruptcy," the New York Times reported. "The reorganization was completed in 42 days."

Turin-based Fiat now owns 20 percent of Chrysler, with 55 percent held by its workers' union and the rest owned by the U.S. and Canadian governments.

"Chrysler's swift trip through bankruptcy fell within the Obama administration's optimistic timeline, which could signal that the more complex process facing GM , now in its own Chapter 11 proceeding, has a chance to be completed within the targeted three-month timeframe," MarketWatch says.

Although the "rescue" of GM and Chrysler may signal a new focus in the government on preserving a manufacturing sector seen as critical to the fragile economy, neither of the bankruptcy filings was met with unanimous resounding cheers. Given the economic and financial climate in addition to decades of questionable management, though, many have argued that there were few other options. Time will tell the actual cost — and outcome — of the government's steps to save the U.S. auto industry.

China Auto Sales Up
"China's policies to support its auto market drove sales up 34 percent in May," the Wall Street Journal says (subscription required).

According to data issued Tuesday by "a semi-official industry group," the latest data show:

Chinese consumers are still responding to government measures implemented early this year to boost small car sales, which included subsidies and a cut in taxes on auto purchases. Sales of minibuses, a segment that significantly benefits from the policies, rose 84 percent in May from a year earlier to 172,600 units. Sales of other vehicle segments have also been growing. Passenger car sales rose 42 percent from a year earlier to 591,300 units, while sales of sport-utility vehicles rose 26 percent to 47,700 units.

The Journal notes that China remains a bright spot for the struggling global car industry.

In separate data, customs authorities last week reported that Chinese exports plunged sharply in May, posting the seventh consecutive monthly decline. The country posted exports worth $88.8 billion last month, a 26.4 percent drop from the same month last year, customs data showed. Meanwhile, Chinese imports totaled $75.4 billion, a drop of 25.2 percent. The trade surplus in May stood at $13.4 billion.

Wholesale Inventories Fall
"Wholesalers slashed inventories more than expected in April as businesses struggled to get stockpiles in line with falling sales," the Associated Press reports. Wholesale inventories fell 1.4 percent in April, more than the 1.1 percent decline that economists expected and marking the eighth consecutive month that inventories dropped.

According to the U.S. Department of Commerce on Tuesday, end-of-month inventories of durable goods were down 2.2 percent from March and were down 5.9 percent from April 2008. Inventories of metals and minerals, except petroleum, were down 6.8 percent from March and inventories of motor vehicle and motor vehicle parts and supplies were down 4.5 percent. End-of-month inventories of non-durable goods, virtually unchanged from March, were down 6.6 percent compared to April 2008.

Still, AP notes, "analysts were slightly encouraged because sales dipped at a slower pace than in the previous month."

A chief economist at Standard & Poor's in New York said he "viewed the smaller sales decline as a 'little sign' that sales are beginning to stabilize." Domestic consumers, who pulled the U.S. "out of the past two recessions by increasing their spending, also will be critical to a future recovery since export sales are expected to remain weak with foreign countries struggling through their own recessions."

Peter Bernstein Remembered
Peter L. Bernstein, the author of Against the Gods: The Remarkable Story of Risk and other books on economics and finance, died earlier this month at the age of 90. Bernstein was the first editor of The Journal of Portfolio Management in 1974, a widely read scholarly journal for investment managers and academics in the field of finance and investments. His book Against the Gods, published in 1996, won the Edwin G. Booz Prize for the most insightful, innovative management book published that year and has sold more than 500,000 copies worldwide.

In this McKinsey Quarterly video, the well-known American financial historian discusses the meaning of risk and explains why sophisticated mathematical models to control it sometimes go awry.

(Video may take a minute to load.)