August • September 2008 • Vol. XXVI No. 6 • An Arnold Publication

Industry  News • Executive Hotline

Executive Hotline

U.S. Manufacturing Moves Back Into Growth Mode

The Institute for Supply Management is reporting surprisingly good news on the national manufacturing front.

The Tempe-based group finds that U.S. manufacturing activity grew in June for the first time in five months — mostly thanks to strong export figures. The small growth came as inventories climbed and prices rose for every commodity except copper.

The reading of 50.2 from the Institute for Supply Management was up from 49.6 in May. It beat the prediction of 48.7 from the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.

The previous four months, the overall index has hovered near its lowest level in five years.

Chip Sales Increase 7.5 Percent

Worldwide sales of semiconductors were $21.8 billion in May, 7.5 percent higher than the $20.3 billion reported a year ago, the Semiconductor Industry Association reported Monday.

The San Jose-based trade organization said May sales were 2.8 percent higher than the $21.2 billion reported for April 2008. Year-to-date sales of $103.4 billion are up by 5.3 percent from the $98.2 billion reported for the first five months of 2007, and total semiconductor sales excluding memory products were up by 12.3 percent year-on-year.

SIA noted that May is historically a relatively strong month for semiconductor sales.

Growing sales of consumer electronic products in emerging markets, including China, Latin America and India, have become a major factor driving semiconductor sales, Scalise said.

Tesla Motors to Build Bay Area Plant Silicon Valley [San Jose]

Tesla Motors Inc. will build its next generation electric Tesla Roadster at a factory in the Bay Area.

“We will be doing this in the Bay Area to keep better control over production,” said Tesla Chairman Elon Musk, in an e-mail to the San Francisco Business Times. “One of the mistakes that Tesla made early on was being too spread out around the world.”

Tesla Motors, based in San Carlos, makes the Tesla Roadster, an electric sports car released in England in March with a $100,000 price tag. The company plans to release its next-generation vehicle, a sedan-style electric vehicle called the Model S, in 2010. The Model S is expected to cost $60,000. Tesla had considered building a manufacturing plant in New Mexico to produce the Model S.

Drori also cited being close to Tesla’s “most important markets” and Governor Arnold Schwarzenegger’s leadership on climate and energy issues as tipping points that kept the carmaker in California.

The state offered Tesla lucrative incentives to keep the company’s manufacturing facilities in-state, including $100 million of tax-free financing for manufacturing equipment.

“We want these cutting-edge companies not to just start in California and do their research and development here — we want them to build in California,” Schwarzenegger said in a release.

Kennedy/Jenks Buys Bates Engineering

Kennedy/Jenks Consultants of San Francisco has purchased Bates Engineering of Denver for an undisclosed sum. The deal,closed June 28.

Robert Bates founded the eight-employee engineering firm in 1991. Kennedy/Jenks, which is 89 years old, is an employee-owned company that entered the Denver market in 2006.

Kennedy/Jenks last year purchased the Denver engineering firm of Meurer & Associates, which had 23 employees. Kennedy/Jenks now has 33 employees in Colorado.

Ultrasound System Maker Zonare Hopes to Raise $86.25M in IPO

Zonare Medical Systems Inc. has filed a registration statement with the Securities and Exchange Commission for an initial public offering that could raise up to $86.25 million.

The Mountain View-based company plans to list on the NASDAQ under the ticker symbol ZONE.

Zonare develops, manufactures and commercializes ultrasound systems.

DOD will Rebid Tanker Contract

The DOD said July 9th it will reopen the bidding for a contract, which could be worth as much as $100 billion over 20 years, to replace the Air Force’s fleet of aerial refueling tankers. Top officials indicated they want the competition conducted quickly, and the Air Force plans to issue a revised request for proposals late this month or in August. The Air Force chose a team led by Northrop Grumman, and Boeing protested the award. A Government Accountability Office report later found the Air Force made serious errors during the contract competition.

Boeing Projects $3.2 Trillion Aircraft Market Over Next 20 Years

Boeing Co. said the world’s markets will buy $3.2 trillion worth of new airplanes in the next 20 years.

The   aerospace giant  said its 2008 Current Market Outlook estimates 29,400 new commercial airplanes — both passenger and freighter — will be required by 2027 as airlines replace older, less fuel-efficient airplanes with newer planes.

Boeing estimates that passenger air traffic will grow by 5 percent a year and cargo traffic will grow 5.8 percent annually.

The biggest segment in the future, number-wise, is the single-aisle airplane market, which Boeing said will require 19,160 planes worth $1.36 trillion. Boeing builds its single-aisle 737 in Renton, Washington.

The biggest segment, dollar-wise, is the twin-aisle market, which Boeing said will require 6,750 planes worth $1.47 trillion. Boeing builds its twin-aisle airplanes in Everett, Washington.

Boeing said its forecast takes into account the airline industry’s current challenges, including a declining economy and rising fuel prices.

Tesla Hires 24-year Chrysler Veteran

Electric car maker Tesla Motors hired Mike Donoughe to oversee both its Roadster sportscar program and its development of a five-passenger sedan.

Donoughe worked 24 years at Chrysler, where he led redesign efforts for the company’s mid-sized vehicles.

Donoughe will work at Tesla’s San Carlos, CO. headquarters. His title — a new position at the company — is executive vice president, vehicle engineering and manufacturing.

Manufacturing Extension Partnership Gets $340,000

The U.S. Department of Commerce has awarded a $340,201 grant to the New Mexico Manufacturing Extension Partnership.

 The Partnership offers resources, consulting, organizational development services and information technology to small manufacturing businesses throughout the state. The grant came through the Commerce Department’s National Institute of Standards and Technology, which works to support small-scale manufacturing nationwide, said U.S. Sen. Pete Domenici, R-NM, in a news release.

Sheik Purchases 54 Boeing Jetliners for Startup Carrier

Startup FlyDubai has placed an order for 54 Boeing 737-800 series jets. Boeing announced the order, worth $3.78 billion based on list prices, at its opening news conference at the Farnborough International Airshow. Observers noted that Sheik Ahmed bin Saeed Al-Maktoum, chairman of the Emirates Group, was able to book the order despite a backlog of 3,600 planes over the next 10 years.

Robertson Aviation fuel tanks sold to Colombian Air Force

Robertson Aviation LLC-manufactured fuel tanks are part of a sale made by Helicopter Support Inc. to the Colombian Air Force, HSI officials announced Wednesday.

The deal calls for 12 extended-range aircraft fuel tanks manufactured by Tempe-based Robertson to go to Colombia through a sale by a division of Sikorsky Aerospace Services.

It is the first sale by the Trumbull, Conn.-based HSI of Robertson equipment since the two entered into a distribution agreement in January. Robertson designs equipment for extended-range flying for aircraft and helicopters.

Financial terms of the deal were not disclosed. 

Industry News

CNC Software, Inc., Developer of Mastercam®, Celebrates 25th Anniversary

CNC Software, Inc. is celebrating its 25th Anniversary in 2008. Two brothers, Mark and Jack Summers incorporated the company in 1983 with a new programming concept for CNC machine tools. They developed a PC-based CAD/CAM software package with an emphasis on the CAM side. During that time, most of the programs were more CAD-oriented and expensive.

“Ours was developed with the machinist and the design engineer in mind,” says Mark Summers, president. “I was a machinist, and I will always be a machinist at heart. It’s a direct approach–design the parts and generate the toolpaths to machine them.” 

They called the software program “Meghan”, named after Mark Summer’s eldest daughter, and then changed it within the first year to Mastercam as a clearer descriptive of the software’s primary function. A third brother, Brian Summers, soon joined the company and now serves as vice president. Jamie Summers, Mark’s wife, is chief financial officer.

Today, Mastercam is one of the most recognized and best selling brand of CAD/CAM software in the world and has the highest number of seats installed – 135,824 at the end of 2007. The company continually uses its success to reinvest in itself with new Mastercam generations, (the latest is Mastercam X2) improved features and ease of use, its infrastructure of more than 400 dealers worldwide, its world-class green facility, and its intellectual property from the best minds in software development. Last year, 2007, the company reported record sales of $29.4 million.

Young S. Park Joins Phillips Engineering Technologies

Phillips Engineering Technologies Corporation has appointed Young S. Park to the position of international sales manager, with responsibilities that include the development of a new sales network in Europe, South America and Korea. 

The Company offers a well-established line of machine tools that include vertical turning centers and vertical grinding centers with tables ranging from 40" to 200", as well as horizontal machining centers and boring mills, all under the Phillips Olympia name. 

Mr. Park has an extensive background in machine tool marketing, sales and engineering.  Prior to joining Phillips Engineering Technologies, he served as president of Doosan Machinery America, Inc. and, before that, as president of Kia Heavy Industries USA Corp. 

Flow International Merger With OMAX Corporation Clears FTC Hurdle

Flow International Corporation manufacturer of industrial waterjet machines announced  that the U.S. Federal Trade Commission (FTC) has accepted a consent decree with Flow which will permit the merger of Flow and Omax Corporation.

“We are very pleased to have accomplished this critical step towards the merger of Flow and Omax,” said Charley Brown, CEO of Flow. “Management teams of both companies can now focus on completing the definitive merger agreement and the necessary filings with the Securities and Exchange Commission.  The transaction is expected to close during our second fiscal quarter, which ends October 31. We remain tremendously excited about adding the strengths of the Omax team to our own. Omax has been singularly focused and successful in the development, marketing and servicing of its Omax JetMachining Centers, offered for sale through the most efficient distributor channel in the industry both domestically and worldwide. As our plans unfold, customers, distributor associates and team members throughout both Flow and Omax can look forward to dynamic growth supported by even better products and customer service. Significant elements of this growth will come from the important distribution channel that Omax has built plus the well respected Omax brand name and product line up.”

Northwest Machine Tool Expo Expands Show  Schedule To Three Days

With the strength of the machine tool market in the Pacific Northwest as well as strong exhibitor and attendee feedback, Northwest Machine Tool Expo has expanded to a three-day event.

Cygnus Expositions announced the expansion of the Northwest Machine Tool Expo. The Northwest Machine Tool Expo will again be co-located with the Northwest Facilities Expo and will be held May 5-7, 2009 in Portland, OR.  This event is sponsored by the American Machine Tool Distributors’ Association (AMTDA).

In 2007, the co-located Northwest Machine Tool Expo & Northwest Facilities Expo delivered a motivated buying audience of over 2,500 and was an ideal professional setting for buyers and sellers to connect. Extending the show an extra day will allow both exhibitors and attendees more time to network. 

“Adding one extra day to the event permits buyers the flexibility they need to visit and compare products” says senior group show director, Jill Ryan, “and adds countless sales opportunities for exhibitors.”

Northwest Machine Tool Expo features the industry’s leading companies.  These companies showcase the latest products and services, including metal-cutting & metal-forming machines, measuring equipment, EDM, tooling CAD/CAM, lasers, cutting tools, drilling, finishing, and other manufacturing and industrial products.

David Cogswell Joins Ellison Technologies as Tsugami Product Manager

Ellison Technologies recently announced that David Cogswell has joined their Southern California office as Tsugami product manager. The new position was created to support Ellison’s current base of Tsugami customers and to introduce the line of Swiss-type sliding headstock lathes to manufacturers in the region.

Cogswell brings thirteen years of experience working with multiple platforms of CNC Swiss-type machines and valuable expertise in process development, including programming and tool design to Ellison. He will serve as Ellison’s dedicated Tsugami specialist and be supported by Ellison Technologies and Tsugami’s exclusive North American importer, Rem Sales. 

“David is a highly skilled applications engineer who takes great pride in helping his customers solve manufacturing challenges,” according to Kevin Uhlig, vp of Tsugami/Rem Sales. “We are very pleased to add him to our national sales team.”

Cogswell will utilize Ellison Technologies’ Santa Fe Springs showroom to demonstrate Tsugami’s capabilities to prospective customers; to engineer manufacturing solutions, and to program machine functions.

Industrial Metal Supply Names New Key Executive

 Industrial Metal Supply Co.,   Irvine, CA has hired a prominent metals and manufacturing industry veteran
to manage the expansion of its metals finishing and fabrication division.

Martin J. “Marty” Mechsner, president and CEO of the Small Manufacturers’ Institute  (SMI), and president of Schober’s Machine and Engineering (SME), joins IMS as  the new general manager and chief engineer of its Fabrication Division.

Mechsner’s appointment underscores the trajectory of success for the company,  now celebrating 60 years since it started business in California in 1948.

”Marty Mechsner has a wealth of knowledge and experience in defining strategic direction and managing tactical execution of manufacturing engineering operations, and a proven track record of helping small manufacturing companies reduce costs and optimize their manufacturing processes in the supply chain,” says Eric Steinhauer, president of IMS. “Marty’s considerable and varied skills will help us strengthen our business relationships with manufacturing and design firms, welders and  fabricators, and machine shops throughout the southwest.”

Methods Now Exclusive North American Importer of Kiwa- Japan Machining Centers

Methods Machine Tools Inc.,   has announced  that they are the exclusive importer of Kiwa, Japan Horizontal and vertical machining centers throughout North America. The new agreement combines reliable, high quality Japanese machining centers with Methods’  application expertise, service and support.  The Kiwa line of machining centers and spare parts will be available at each of the seven Methods Technology Centers and at Methods distributors located across the U.S., in addition to select Methods dealers in Canada and Mexico.

“By adding Kiwa Systems to our line, we are able to offer job shops more innovative, affordable ways to increase their machining productivity and profitability”, said Mr. Bryon Deysher, President & CEO of Methods, “The addition of Kiwa’s high quality horizontal and vertical machining centers complement our broader line of high performance milling, turning, drilling and EDM systems very well. We are excited about the agreement and look forward to providing value driven Kiwa solutions.”

Kiwa machines will be under power at Methods Technology Centers by mid August. In addition, KIWA Systems will be featured at Methods’ Booth # A-8517 at IMTS.

Barbara Flora Appointed Doosan Marketing Manager

A veteran of more than 13 years in the machine tool industry, Barbara Flora has recently been appointed marketing manager for Doosan Infracore.  Her responsibilities include participating in the establishment and implementation of the company’s marketing programs.  Specific responsibilities encompass advertising and press relations, catalogs and brochures, the internet, and events including trade shows, open houses, press conferences and sales meetings.

Prior to this assignment, Ms. Flora served in a variety of capacities, most recently as Doosan Infracore’s order processing manager.

Melin Tool Appoints E.L. Associated for Southern California

Melin Tool Company, family owned manufacturer of premium carbide and cobalt HSS end mills, drills, and other cutting tools,   announces the appointment of E.L. Associated Sales as their representative for Southern California and Nevada. Bill Bowen of E.L. Associated brings an excellent knowledge of cutting tools, a dedicated sales force, and a stocked warehouse of Melin’s high performance and general purpose cutting tools to the market.

Paul Haro Appointed New Territory Manager for
Clancy Machine Tool 

Paul Haro has been in the machining industry for over 25 years. His experience includes machining and programming, machine tool sales, and most recently the cutting tool and supply business. Paul has held positions as sales manager, general manager, and sales engineer for various local and international suppliers.

Clancy Machine Tool is a full service CNC machine tool distributer covering Northern California.

Methods Announces Grand Opening/Open House for New Arizona Technology Center 

Methods Machine Tools Inc., a leading supplier of innovative precision machine tools, announced the Grand Opening of their new state-of-the-art Technology Center in Tempe, Arizona will be celebrated during an Open House from October 14-16, 2008.  The event coincides with Methods’ 25th year anniversary of operating in Arizona.  Customers, prospects and media are welcome and encouraged to attend.

“Methods is committed to bringing the best machine tools and support to the southwest market,” said Mr. Bryon Deysher, President / CEO of Methods Machine Tools. “We are proud to announce that our new facility in Arizona is operational and excited to mark the occasion during the October Grand Opening and Open House.”

Located at 615 West 24th Street in Tempe, Methods has even further enhanced their customer support operations by increasing their parts department by 80% and adding a spindle rebuild area to the new 18,000 square foot facility.  A modern 5,200 square foot showroom will also allow customers to see the latest metalworking technology first-hand.

The Open House, scheduled for October 14-16, will include two technology seminars:

            October 14 only, 10:00 a.m.: 5 axis Techniques
            October 14-16, 2:00 p.m.:  “Swiss Made Simple”

Methods will have the following machines on display: Matsuura 5-axis machining center, Citizen Swiss turning centers, Nakamura multitasking turning center, KIWA expandable horizontal machining center, FANUC wire EDM, HWACHEON Lathe, FANUC RoboDrill Eco and FANUC RoboDrill JobShop cell. Visitors will also be able to check out the latest products and talk to company representatives from the following vendors: Koma, Reinshaw, Tecnara, Lyndex, Big Kaiser, ATS / SMW, Kennametal, Iscar, Sandvik, Esprit, Delcam, and more. Door prizes will also be awarded. For more information or to register to attend, please call (602) 437-2220 or visit methodsmachine.com.

Methods Machine Tools, Inc., has been a leading supplier of precision machine tools and accessories for nearly 50 years, providing installation, parts, service, and training through a network of dealers throughout North America.