S1-E7 Transcript Brad Holcomb ISM

(Interviewer) Welcome to the manufacturing talk radio the only show they takes a look at the obstacle opportunity ?? on small and the mid size enterprises, the

the manufactures here America. brought to you by ?? with your hosts tim grady and Lew Weiss.

Hello every one out there we are so many excited to be in the show today we are looking forward any common you send in to live in

MFGtalkradio.com. before we go to our guest Mr.Brad Holcomb from the institute of supply management but we give you a quick post grip from a

last week show which was phill director of nuke private development and Phill was talking to about B to B marketing and specificly the area

is not a business pay attention to in a digital marketing and off course first was that where’s the website and i think ??? to the website

few a days and every one is heared googles changing algorithm and that is to focus on expert contents so that are organic rankings improve on

google and also to work with SEO company so they can help you on your pay per click, those two components are really important to get your

rankings up, and then next piece was Email marketing so that you keep in touch with your customers and i think he is ?? to there was Email marketing

is great way to enahnce the relationship, exchanging bits and pieces of information but it is not a real driver of relationship ?? old bill

telephone still seems to be ?? use to bill required so pick up the phone and touch some one tnt use to say and then social media we flinked in been

the new leader for B to B marketing also follow by facebook but linkedin is really becoming a discussion tool for B to B marketing and that’s

another component you should pay attention to. so what that we wanna who a began the speak with brad Holcomb ?? Supply management by a few

realistic thing may have your fingure nails ?? because we are looking at the drops ?? and i am not expert in ?? we surddenly have enjoyed

having brad on this show who can help us to dig in do what? and give understanding of it so today show is very ? brad welcome to the show.

(Brad) thank you very much for very very nice to be here and today i talk about the intresting january report and i think we have a opportunity

to dig in and to explain ??  related to december and so waht’s doubt.

? so appreciate brad i know that Lew Weiss from all levels on a ford groups is ours answer isn’t here didn’t he may be a ?? but i look forward to your

explaination and you propably answered on fox news tbs news so give us a quick over view of 51.3 before we started draw down in the recorded self.

(Brad) ?? registerd 51.3 ?? to manufacturing ?? months but it is down 5.2% points from december so we have growth in january over december

but i had a lower rate then december over november and will explain out more ?? the 51.3 again represent growth in january and continuing

on that change.

(Interviewer) and what are we talk about i think the one we ?? drop the largest was new orders ?? one from 644 and 512.

(Brad) the PMI once again and ?? need upon this questions and answer them rightly but just for reminder that the PMI is comprise a 5 sub matrics

according to matrics new orders production, employment, supplier deliveries and ?? again those five are equally wheighted to comprise the

PMI which now as the 51.3 but your question of new orders it is that 51.2 which again represent cross over 5 december but it’s down 13.2%

7.10 so 51.2 being lower then december number of 64.4 that infact the largest drop for change in the new orders index same in the 1980’s

which ?? not be intresting so that in the last four years industry propably ?? it’s also course the biggest jobs. never the last 51.2 represent

below in january but december not just rates we were seen 5 or 6 months 2013.

(Interviewer) and do you have ?? in ?? information from NewYork 350 respondants for days, why they drop what triggered it you get any inside

of that Brad?

(Brad) yes we get inside but you don’t have ?? counter five ?? information of this elements of factor to this agree and so how ever i would ??

to a comments that i list in to the records from panel and several of them had pointed to the poor weather this ??  well weckered call january

and the last two back days as something that definately ?? slow the busnisess, slow transportation and some time stop ?? they were enable

deliver raw material and you can finish good the weather is certainly impact ?? for example and we come back to that but that one down 3.44

that’s be rather low level and unwelcome level but we can definately in my mind it that should be to the weather infact one of our common

from the plastics and the rubber products industry we exactly risk this fellows. we have experienced many late deliveries during the past week

due to the weather shuting down truck lines so the wall of comments that i list many many other that we get point to there weather, i think

it also back to another PMI ??? i made a reference just now to raw material and then choice been down suddenly make sense to lated delivery

by bad weather it’s also a big drop to a new orders. new orders can drop because of this bad weather because number of businesses of just shut

down during this call off days and then protectfuly in north east, mid west and ?? send or recieve orders so what to agree to doing up now

but the main thing is  51.2 new orders and it should be 1.3 PMI still represent growth and that’s a good thing and i am gonna come back to

how much growth in this few minutes.

(Interviewer) ok so we are say again the icing and chilling is effect on the PMI at the moment but it doesn’t look like a go up to the roof

and jump, how is effect on production as well because people can’t get the work and produce goods give us some feel for production ????

(Brad) production is 54.8 again above the 50 ?? but down 6.9 i would it should be ?? and also related to about in  raw material and ?? and

not ability to get all of their ?? at least a time remainer and effect on production.

(Interviewer) Okay i know just before the show i call a ?? from the radio some one saying that the dowes and a mile relly here because of the

favourable employments numbers ??

(Brad) right right right, so our employments not related to manufacturing it’s once again up forward to the december 2.3 expand growing for

the past seven months all thought it is down interns ?? for the rative change from december by three and half 7.10 and people get sincere about

you know they look at the percentage change but always remember that a number above 50 in the PMI or supporting indexes these a good things

it is a growth of previous month now back to our employment again it’s growing but it’s growing little much slower than december and in

general our employment number you know co-relate with labour statstics but next there is no exact co-relation but in general just that

employment numbers would be favourable as we see them over the couples of days, now having all of that the employment in manufacturing is

this one thing you know manufacturing again so you know it’s a kind of a earth, history and UNITED STATES, just a work on nature, but related to

non-manufatcturing these days ?? smaller ?? manufacturing and i think we mention this on a show before it’s a 11 or 12 percent of US GDP

and non-manufatcturing or services is the rest so our numbers rather up over 50 that’s mean the manufatcuring is continuing the hier,

continuing to sale of in position but not a really high rate not translate into alot of jobs ???? and i hope that some one help for but in

manufacturing for say emplyment is up in january and that’s a good thing.

(Interviwer) i appreciate that you are mentioning the non-manufatcuring i would just looking in that report most favourable this month ??

Economy ?? and that was shows growth and bills activity and new orders and employments and above numbers from manufacturing.

(Brad) yes that meets me to a very fresh topic as well we list an article that’s ??? so one of the economical from the particular and

individual this week suggesting that so ??? manufatcuring indexes know what co-relating against sudden other indexes.


Brad: And we take a look at that of duty to respond  and they also publish the response which also which  was very nice. One or two things that are in our  response like I mention.

Interviewer: Okay

Brad:One is that and this is related to those PMI  and then MNI is that our survey you know had its  first appearance in 1931 and you know that time  there was very low economic theaters.They.. Survey  with 380 using this xx index system is the major  change into a simple concept we ask simple questions  about such as our new orders better same or worse  than last month and so they can answer in one or two  ways they resolve together and we take all of their  best responses and add one half of the same  responses that sum the index… and the decison  index that publish and the result is anything above  fifty is growing anything below fifty is contracting  and if 50 is equal to push so in this simpleA one  month over the previous month you know publish is 55  that represents that number 50 is equal point 55  represent a 10% greater the situation when compared  to month five or fifty now its ten its so in our  case that.. Most recent genome number and.3 where  there is 1.3 over 5o that’sGonna be a 2.6%  improvement in PMI the 51.2 new orders is going to  be a2. 4 percent new orders in January related to  December so these are ways to really understand our  indexes which are our simple and unique in this  marketplace economic indicators and we are well  regarded you know as launch standing and in each  month.. The first set of metrics which stars the…  from the information about the state and reaction of  the US economy.

Interviewer: Oh well great I appreciate that it’s  good for our listeners to know how this is put  together, I want them to have a clear understanding  of what they chose I will tell you on working with  all my.. Four group for many years they have seen  the ism number as.. The number one up their business  will up number 1 down below 50 they will have it a  troubled time

Brad: great perfect… there are two points in this  response I like to refer you that was one how do we  create this.. Indexes they mean etc. the other point  that’s made is that we urge everyone to look at a  number of economic indicators as they analyze their  business and do projections you know the forecast  and other kind of analysis. So this is our PMI,  which is published 2 days later and that one from 53  to 54% you know about 58% of the US economy.So  that’s not the reacting to one particular thing or  another you know so take it for what it is for how  is positioned in this oh hopeful the economic  indicators and really strive to understand its  meaning.. We believe it’s quite significant..

Interviewer:” Great to okay brad we are going to  break to quick commercial and we are going to come  back in 90 seconds with brad Holcomb from the  institute of supply and management.

Unknown: Since we are talking about the institute of  supply and management..profit educational that  serves more than forty thousand supply management  professionals with over a hundred and fifty.. And  over ninety countries, IMF mission is simple they  are simply out to enhance the value and performance  of procurement in management practitioners and the  organizations world wideThey do this education…..  they do this education….. and information  disafimation all this and more is available in the  renowned ISM report on business and manufacturing  report the PMI and.. Discussing today and all of  this can be found at website, simply this is the  ISM. w’s ISM. w’s And information disafimation all  this and more is available in the renowned ISM  report on business and manufacturing report the PMI  and.. Discussing today and all of this can be found  at website, simply this is the ISM. w’s ISM.  w’sAdvertisement And let us shoot out too. our  sponsors… its absolutely your best to open your..  steel casually carbons stainless and tool steels  Nichole Allue and titanium, copper you name it, they  do it just go to steelforge.com or send us your  request for quote steelforge.com and now back to  them as he digs into THE brad Holcomb

Interviewer: The December number being up at the  56.5 your order 64.4 was that reflecting buying for  the.. Of teasing and season. number of that?

Brad: oh sorry I missed it it clicked on the.. The  point that you are just requesting

Interviewer: oh, I am sorry lets just I just was  asking you that December number 56.5 and.. 64.4 I  was wondering of those were reflective buying for  the holiday season.

Brad: The great question answer is no because this  no yeah, that’s a great answer too ha-ha

Interviewer: Ha-ha

Brad: question.. good answer, but we see in our  lives all of our properties, indexes new orders  productions employments and supply deliveries each  chain.So we just got that exercise and its checks  out those normal seasonal effects like you Christmas  you know another holiday shop at the end of the  year.

Interviewers: Okay.. Supply and deliveries because I  know that happens to be a number that increased  despite the weather I can give you a few.. For that?

Brad: Yeah, that one you can call it that to the  weathers well supply deliveries are about its a good  thing it went off a little bit extra points over  January we need said that it was 4.3 it mean that  the supply deliveries were slowing faster than the  previous month and if you think about you the  weather impact as well as simply the run as we had  in manufacturing growing lastSeveral months supply  and delivery, slowing road due to the weather  related to some pretty risk business ahh make since  suppliers are having a harder time is the catching  up and keeping up and you know in this environment  you know we believe that the positive thing so its  added in a positive way to the PMI when it’s above  50.

Interviewer: Okay and just to help me put bread is  supply or delivery really means delivery is in the  manufacture from their raw material supplier?

Brad: Correct exactly yes

Interviewer: I just want to be clear on that, lets  talk about.. Time that you whine do and get back  that please give us some idea how well you are  doing?

Brad: Arementories are down on you know they have  just 50 points you once again as a kind of weird  supply chain managers like to keep things no too  much in monetary not too little in monetary its also  a good way to you know manage costs to the xxbelow  50 in The interesting times but then at 44 down xx  that’s somewhat surprising I certainly believe what  are they related to some degree, therefore.. the  suppliers we mention supply and deliveries you know  very much into a related, matrix and as an impact xx  so I would expect that to go up next month if we can  you know…


yes i know ( inaudible)

Brad: Yeah, no sorry but the way, just as an aside,  when I went to bed last night I went to bed in my  home deals Texas when I woke up and I looked outside  it was snowing 20degrees and I thought I was  transported back to my birthplace.. its shedding  there everywhere.

Interviewer: Yes, it certainly is and I know that  it.. They were shut down for four days and that was  unusual for.. Texas to be struggling with whether  they know it would be expected, but you know will  see how it expands about next month.

Brad: Now…. that’s about, you know customer  orders in December soon we should also take out  normal winter effects, but this is a very abnormal  January and so will see a more dramatic impact due  to thisparticulalry record cold in January.

Interviewer: Hmm hmm okay, yeah it has been record  cold in xxx. customer inventories 44 too low I find  that interesting we guys are going to touch  inventories and customer because we think its gotta  be pinned up to man somewhere in that pipeline can  you xx?

Brad: No, I agree with you and that’s very one of  the reasons of…. and its regard anything below and  the related questions are put together anything  below 50 it’s too low and it’s too xx have represent  you know kind of a more propetiency on the part of  Customers to restart and reload anytime if it’s  below 50 so 44 is you know it’s a relatively..  Number and it also impact it by their interacting  lines because knowing it is specifically mentioned  at, you know the trucking lines were shut down  either to deliver raw materials or on one end of the  factory or deliver some finished good on the other  hand.

Interviewer: Hmm hmm now I see that a 26 month trend  I guess I ask myself a question if I have  inventories to lower that form month of xxsome time?

Brad: Oh, if it was.. The month to month kind of a  thing related to January related to December if you  take 44 from 50 that.. In January. And its not  (inaudible) we are on trend as we.. Customer  inventories to low now, just looking at my other  chart here The last time I was directing at the 50  points its November 2011 and so there is any  tendency on the part of a customers xx to carry the  inventories just like factories have been learning  to more nimble and carry more less than inventories  then put more That responsibility onto their  suppliers to keep inventories and then be able to  make quicker deliveries so its not surprising at all  that there’s been tendered to be below 50 on purpose  in the case of January 44 in both inventories you  know It’s quite low and probably lower than anybody  would really like the case of customer inventories  just to surprise that those represent.. It will see  more play out in the next couple of months.

Interviewer: And I know they say prices are moving  up here it will now 50.5 over 50.. and in December  actually been I think everybody is going to watching  drug free store we see shops of milk, eggs and  butter and they can resign and been waiting for  manufacture to begin the xx it will be the rising  cost getting from the suppliers is that we were  saying in 60.5.

Brad: I was at the grocery store on the other day I  notice that the xxwere rising as well


Interviewer: Ha-ha, okay




Oh, sorry about that now 60.5 in January is for me a  very normal kind of a thing you know being in the..  business from the past 25 years the first few months  xx is when suppliers come Catching up with the one they got in the house which a new.. Which we see them (inaudible) do you think its a pick up?in and.. In the new  contracts and the negotiations for the year ahead So  we generally see new patterns an over the year quite  increases to this degree in January, February march  and then also to cool down, but this is very normal  very phenomenal and it’s no concern what so ever.

Interviewer: Well, what are the things we appreciate  about the show if you are purchasing manager  expertise you did that for 20 years, so you are Catching up with the one they got in the house which a new.. Which we see them (inaudible) do you think its a pick up?

Brad: Oh yeah referred to yourxx of orders, its contracting from last month it was 50.1 prior to now 48 so its contracting so that means that production is being chewed in xxxrelatively lower new orders and everyone knows that keeping production sort of study And level related to employment and other aspects is kind of the name OS the games and now that was the xxxfor its a good thing, but xxto manage it well they are priorities so that you may not live-in to your best customers you are managing Yourxxexactly for that purpose for production and 2 points below its 50 it is certainly you know a great place xx to be.


Ohh its intresting that two of you feel that positive….?


Brad: Well its not a negative if you put it that way (inaudible) if its start to go into the much lower you know low four tees and we have to go back and look orders we withdraw somexx between the level of two orders xxxxyour production and get some ideas what’s going on there?

Interviewer: I don’t know you are able to answer this question, but all my xxgroups in the primary metals industry than the fabricated metals industry and we have been pretty quiet for it about being 90 days in terms of new orders coming in and they are chewing Into their backlog and the medals industry whole seems to be slower at them, Onet when we talk about that.. Their customers and we are not seeing the orders any sense of xx that is it medals?


Brad: There is desire work that I report the less the less the industries which are growing this actually is quite the opposite what you just talked about primary medal is on the talk of the list of our industries reporting grow part of the game primarty medal is Is listed number 1 which means that it is showing more growth than the next industry, which is electrical pull and so on so it’s that kind of a short term xx protection if you will..



hmmhmm hmm

Brad: But on the other hand and there should be timing issues as well in the same paragraph of new orders we report seven industries decreasing the orders of January and on the bottom of that list is fabricated metal products so we swung from primary Metals going as fast to fabricated metal products they are climbing the most and it will be something that you all will be really very interested to watch over the next few months xxforward or focusing on your xx.

Interviewer: Right and that’s quite interesting to do with the report that you generate (inaudible) and the feel for how are they doing xx and whether or not they are tracking with the ISM PMI before we are going to go to import and export take a quick commercial break.


Interviewer: And again we are talking with brad Holcomb from the institute of supply and management, which is not so profit educational organization that serves more than forty thousand suppliers, professionals with more than hundred and fifty xxx in 90 countries ISM missions is to enhance the value of procurement and managing supply chain practitioners and the xx world wide. They do With the combination of education, research standard of xxx and information disaffimation including the renowned ISM in xx buisness xx and the other category fabricated xxthat seems like a complete contradiction terms are how can you do 1 with the other left.

Unknown: It’s all that you dig in the reports that with bread and we certainly appreciate with him giving his insight and what’s happening brad one of the touch on xx at the moment and what’s next for the exports?

Brad: Ah yes exports refers to new export order largely finished at our factories and we have 8 industries reporting growth in export orders and they are listed in our reports and among the list is fabricated m, et al products we don’t break out the proportion of export orders related to new orders but it does provide some insightsInto you know how much is related to export for your industry how much is related to domestic activity and so we got 8 industries reporting growth, we got like 2 industries reporting at decreased in export orders and that’s plastic and rubber products and paper products and eight industries reporting noChange in January reporting in December. So at board level 54.5 essentially xxx 55 xx for fourteen xx of months.


and import xxxx so about 50 still strong give us your report on that please.

Brad: Yeah 53.5 but down in terms of a rate 1and a half percent, but still 90% over 60 for 12 consecutive months it represents xxx so between the two of the important exports we see some goods lovable activity you know flowing back in for the international.

Interviewer: And I also want to know the report it says anyway 51.3% and correspond to 2.7% in degrees in real most domestic products you know in the united states if we achieve xx but we achieve 2.7 I think we would be doing pretty well

Brad: That’s a good point and you know there are various customers still 2013.. from 2.7 to 4% and I am not sure.. but again we recall it in January we just got all our seasons off and we do regression analysis against various other developments in the labor forExample factory outlet and so on and then we look at the PMI related to GDP and the crossover point is 6+43.2 this time and that will remain constant through the year, so anything above in the PMI anything above 43.2 represents growth in the overall economy.

interveiwer: hmm

Brad: And I told you 1.3 correspond to 2.7% in the real gross domestic product and as we go long throughout the year I will comment on both the individual month and sort of the day year today picture and present those numbers that we xxx.

Interviewer: Okay, so we talked about 56.5 in December dropping in 513 I feel reasonably we assured that we should be xx our risk.Pretty positive news on a xxmove brad.

Brad: No, I agree with you 100%.. I think the first thing we able to look at is it a bug… and then other things you know % change so you know being about 50 is a good change its growing its just in this case growing than the last month.

Interviewer: Okay, that still a xxnumber I know certainly I was in forge group if it is being over 50 and they were concerned that this drop was, you know it looks like start market it said it it could be beheld it xxthat would not the case with ISM it seems trend more xxx that probably accurate.

Brad: Yeah, I would say that that’s accurate, but the thing that I would say from my own xx is the xx certainly that also watch trains in are there in a real xxx degree of change overtime so I often hear comments of people that just sort of in the learning momentaltough oh my god 51.3 down 5.2% response from last month yeah but what is that mean alright 51. means still means grow.

Interviewer: Oh, that’s great and that’s why we really appreciate having you on the show brad again for the listeners we are talking with brad Holcomb that rules the charity institute of supply and management but manufacturing business survexxx going over theXxmanager index its the quote that first comes out the business everyone and often you hear the number on the news, but you know it’s just the ISM number today it was 51.3 it will spend a lot of time helping us understand and what that mean we are grateful having you on this show brad go in real depth….

Brad: Well, I really appreciate having the opportunity to talk about this record and that was a pleasure to be with you

Interviewer: Well, thank you very much, we certainly also appreciate xxof forge groups being sponsored because they are in the manufacturing industry this is all meaningful conversation for them and for all of their brothers in that industry next show we willHave crises TD Bank so we are gonna have a banker on the show and we will get into the world of finance and business to business so we all look forward to that again thank you very much brad for being on the radio talk today.

brad:my pleasure thankyou.

Interview: And I think that we wrapped up the show today look forward who listen to next week and if you like then send in the comment you can send it to live at MFGtalk radio. You can find our website at MFG radio.com and you can find your sponsor on ourWebsite at steel forge .com (inaudible) or give them a call at 973 2765000 again, those 9732765000 and those the wrap for manufacturing talk radio today.