A Manufacturing and Procurement Outlook: Construction and Automotive Forecasts Jason Busch - July 17, 2013 2:28 AM | Categories: Commodities, Metal Miner, Procurement Strategy & Planning | Tags: Incendiary Tidbits, L1 Recently I spent 13 hours in the car with my business partner and better half, Lisa Reisman, as we drove our kids to summer camp in Wisconsin. Lisa is the co-founder of MetalMiner and oversees our parent company, Azul Partners, with our third partner, Pierre Mitchell. As Lisa will tell you, with the growth of the company and our diverse roles running different parts of it, we have infinitely more time right now to talk as a couple on the weekends than we do during the week as business partners. The good news is that over half a day in a car allows you to catch up on a range of subjects beyond work, such as where the economy is going and how our data and interpretation of third-party data is influencing our research, focus areas, and coverage. With this time – and with the sound of Barney humming in the background for our youngest – I decided to do an ad-hoc interview with Lisa on her views about the economy, manufacturing, metals, China, and more. Below we feature the first installment of this interview. Jason (Spend Matters): What red flags do you see right now around demand, the economy and procurement trends? Lisa (MetalMiner): Within the US, I’m concerned about the construction market, especially commercial construction. Even though the Architectural Billings Index (ABI) is up, we’re seeing power transformer expenditures and commercial construction numbers come off their highs. There are indeed some warning signs if you begin to look below the rosy residential numbers. The automotive tea leaves are also a concern to me, despite the apparent strength of volume numbers in the sector. Our MetalMiner Automotive MMI last month reached its lowest reading since we started measuring metals prices for the automotive market in January 2012. I worry that even though we’ve seen strong automotive growth and there is a small run-up in steel prices right now, that output is not necessarily going to stay strong in the sector. Jason (Spend Matters): Could you expand on the economists’ perspective? Don’t the numbers tell another story? Lisa (MetalMiner): The economists we pay closest attention to are predicting a lesser performing economy in the second half of the year and the downward price pressure we’re seeing in many of the industrial metals markets we track would suggest early indicators of demand are falling. This is despite the fact the apparent output/volume numbers in automotive and some other sectors have appeared strong in recent months (although the May PMI tells a different story that is more in line with what we’re seeing). I’m not trying to be negative. The numbers tell the story. Our automotive metals pricing index for automotive peeked in February and has been sliding ever since even though the industry has recorded record sales. One concern we’re paying attention to is how much of this is real demand versus dealers resorting to discounting and incentives, as well as what is sustainable (e.g., actual consumer demand vs. one-time incentives to drive fleet sales). Regardless of what happens in automotive and construction, the good news is that it’s a good time to be buying raw materials and riding the market down. As we continue this talk, I’ll explain how falling material prices impact commodity management and sourcing strategies. Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.