Interesting Turn to the Economy

January 22, 2013

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

We run a sales forecasting model every month to try to predict how we’ll do for bookings one and two months out.  Our model is a neural network model based on company performance, econometric data, and market trends. This type of model uses years of historical information to try to develop predictive trends. We run the model multiple times to get a range of predictions. Sometimes they are tightly grouped, and other times, they can bounce around. This happens even though the same data are used. When things bounce around, there are usually conflicting data. Data that usually move together begin to come apart. That’s what happened in December. Good econometric information was clashing with negative emotional measures and the predictions bounced back and forth between dismal and pretty good. The real, numerical data was showing  growth, but people were still negative on the economy.

We were expecting that the emotions would begin to turn to mirror the numbers, and that began to happen in January. Prior to January, most of of our bookings had been from recently added customers, seemingly unaffected by the slow economy, while our legacy customers, more affected by the economy, were not ordering. That changed in January. We began to see orders from companies who had been dormant for the past few years. Additionally, the newer customers started ordering larger quantities of parts. This is beginning to feel more “normal”, if such a term can describe our post recession economy. In any event, we’re enjoying the change. Hopefully, it will continue. Maybe the forecasting model will start showing more stable numbers and operate as if the world has returned to a more predictive mode.

A Video Interview with Kirk Barrett on the Economic and Design Value of Graphite Permanent Mold Castings

June 20, 2012

Our sales manager, Kirk Barrett, was interviewed at the Design 2 Part Show in Marlborough, MA.  Kirk speaks on the benefits of graphite permanent mold castings.  Interview with Kirk Barrett.

Get a Quick Cost Estimate with Graphicast’s “Ballparker’ Application

May 31, 2012

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

Graphicast has added a new feature to our website – the Price Ballparker. This tool will give you a quick estimate of the cost of a machined casting just by entering the volume of your part, the estimated production lot size, and then comparing your part to photos of easy, moderate, and difficult to machine parts. That’s it. The Ballparker tool determines these costs based on mathematical modeling of the various production steps of thousands of production runs of parts at Graphicast. We’re able to give you a reasonable estimate of costs just by entering the information and comparing your part to the most similar part in our model. If your part is considerably smaller or larger than the parts shown, the model is less accurate. Just go to the Engineering and Design pull down menu to access the estimator. Please contact us with any questions you may have or if you want us to look at your part in more detail for a more accurate quotation.

Graphicast Castings Get a Clean Bill of Health

March 2, 2012

Graphicast recently put a large sample of machined castings through an x-ray testing procedure. A third party laboratory  measured the castings against the same standards used for critical components in jet engines and other aircraft applications. The results? A clean bill of health! Take a look at the x-rays yourself. These results clearly show that the Graphicast LTA graphite mold casting process produces extremely dense, low porosity castings. Although these casting aren’t going into a jet engine, they could.

X-rays of Graphicast LTA castings

Something Good is Happening in Manufacturing

November 30, 2011

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

Graphicast just closed the books on the incredible month of November 2011. Our shipments were among the five best months in the last 10 years, and our bookings exceeded our previous best month by over 35%! Our backlog is at its highest level in five years and we’re running 7 days per week. We’re planning a plant expansion, and we can’t get equipment in fast enough as far as we’re concerned.

We’re hearing similar stories from other companies in the state. Although unemployment remains high and the overall economy is slowing growing, there is a major expansion underway in some parallel economy that’s not showing up in the normal data. One explanation is that the manufacturing economy is driven by global economics, not national economics. As there are parts of the world nicely expanding, those of us in manufacturing are expanding as well. I wonder what things would be like if the US economy really took off?

We’ve crossed the ISO 9001 finish line. Now the work begins.

July 26, 2011

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

We just successfully completed our Stage 2 ISO 9001:2008 certification audit . Our auditor’s findings will next go through a technical review by other auditors, and we should receive our registration information within four to six weeks. We managed to complete the entire process in just under a year, which is a credit to Dave Gregory, our quality manager, and the entire Graphicast team. Our employees embraced the process and the concepts of a formalized quality system from the start. Now that we’ve reached this point, the challenge of maintaining and improving the system remains in front of us. We’re looking forward to this next phase of the ISO 9001 journey.

We can see the finish line for the first step of our ISO 9001 journey

April 22, 2011

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

While Graphicast has always maintained a reputation for quality products, we did not have a lot of market pressure to become an ISO-9001 registered supplier. Our customers were happy with our quality system and we regularly passed quality audits. That is, until the recession hit us square in the face. We found very quickly that in response to the recession, many companies were actively strengthening their supply chains. Besides ensuring that their suppliers were financially viable, they were also trying to eliminate internal costs associated with working with those suppliers. One way to reduce costs was to reduce vendor audits and any vendor uncertainty. This put the pressure on us to be able to succeed in this environment. So began our ISO 9001-2008 registration and certification journey.

With a good production quality system in place. our efforts were aimed at the documentation and control aspects of the ISO quality system. We’ve made a lot of progress in the past nine months and just completed our certification stage 1 audit. Based on the results of that audit, we have our registration audit scheduled for the end of July.  If all goes well, we will have completed the first part of the ISO journey, getting our ISO 9001-2008 certification. Then the challenge of maintaining and improving the system begins. We’re looking forward to it!

Are You Ready for “The Sixth Wave”?

April 8, 2011

“Geoff Forester photograph, courtesy of the New Hampshire Community Loan Fund”.

No, I’m not talking about surfing. I’m talking about an economic wave that’s in its early stage of emergence and will drive our economies for the next 50 to 60 years. In the 1920s, a Soviet economist, Nikolai Kondratiev, studied capitalist economies and noticed that they went through repetitive cycles of expansion and contraction. These  “Kondratiev Waves” last about 50 years. He identified the first wave as occurring in the early 18th century. His ideas eventually lead to his execution in the late 1930s, but other economists continued his work, trying to understand the reasons for these cycles. Although this theory is not universally accepeted, it does offer insight into societal, political, and technological changes that have occurred throughout history.  In the 1980s, Cesare Marchetti offered supportive research when he wrote about society as a learning system and decribed Invention/Innovation Cycles whose ebb and flow correspond to these economic waves.

The Kondratiev Wave consist of four periods. As liquidity expands in the initial phase of the cycle, commodity prices rise reflecting the increasing business activity and inflation. As business activity and inflation accelerate, speculators bid up commodity prices due to their fear that inflation will continue to accelerate. After the rate of inflation peaks and starts to fall, the acceleration premium is removed from prices. Thus, commodity prices start to fall despite continued but slowing inflation, a trend called disinflation. At the same time, a change in psychology away from fear and toward feelings of relief and hope induces people to channel the excess purchasing media created during disinflation into bidding up the prices of investment assets such as stocks. Because inflation continues, the wholesale prices that manufacturers charge for finished products, the retail prices that stores charge for goods and the levels of wages that employers pay for labor all continue to rise but at a continously lesser rate, following the rising but slowing trend of business activity and inflation. Near the end of the cycle, the rates of change in business activity and inflation flip to zero. When they fall below zero, deflation is in force. As liquidity contracts, commodity prices fall more rapidly, and prices for stocks, wages and wholesale and retail goods join in the decline. When deflation ends and prices reach bottom, the cycle begins again.

Most who subscribe to the Kondratiev Wave theory identify our current economic situation as being in the last phase of the fifth wave cycle. The authors of The Sixth Wave have suggested that the emerging wave will be powered by the economics and technology of scarcity. Those who can do more with less and reduce waste will prosper. Industrial trends such as Lean Manufacturing, Six Sigma, and Theory of Constraints are all associated with elimination of waste, reduction of variability, and improvement of production velocity. These practices support a Sixth Wave mentality. 

At Graphicast, we recently described our experience with a customer who worked with us to take an expensive assembly of four machined components and turn them into a single, economical casting that was stronger, more rigid, and less wasteful to produce. There are many more opportunities to reduce costs by redesigning and rethinking your needs, than by just making the old design “cheaper” by outsourcing to a low labor cost area. In the long run, the better design is the most productive way to succeed in the Sixth Wave economy.

Good luck getting ready for the next wave. We may not yet be out of the Kondratiev “winter”, but prosperity awaits those who embrace the upcoming “spring”.

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