Manufacturing and transportation companies have seen falling order levels flatten out over the last six months and some sectors can expect a limited recovery in 2010, according to several analysts with Milwaukee-based Robert W. Baird & Co. that cover those sectors.

“(Housing) is one of the few markets where people are comfortable saying that it will grow and it will grow meaningfully (in 2010),” said Peter Lisnic, a Baird senior research analyst that covers industrial and building products. “The broad consensus for housing starts for next year talks about numbers in the high 700,000 to 800,000 units ranges. Our own models suggest numbers that will be lower but will be above numbers that we’re seeing this year at the 550,000 to 600,000 range.”

Home renovation and commercial building will remain at current lows for much of next year, Lisnic said.

“(Nonresidential) construction starts are down about 18 percent this year,” he said. “And forecasts are for at least the same if not worse for next year.”

Transportation-related businesses and manufacturers have seen a limited recovery this year and should see continued improvement in 2010, said Jon Langenfeld, a Baird analyst who covers transportation and logistics.

“The encouraging part is looking at what has happened with demand trends, nationally and internationally,” he said. “Demand trends have bottomed – that is still a very weak trend, but it is stability. That’s unusual because there has been so much volatility (in recent years) and is encouraging from our standpoint.”

Transportation-related companies should see an additional boost during the second quarter of 2010, when manufacturing, retail and related companies replenish their inventories, which were allowed to fall to “unprecedented” levels this year.

“When the confidence builds out there from the retailers, from the manufacturers, that inventory will start to expand,” Langenfeld said. “We think that is probably not going to occur in any large way until the second quarter. But we think it will eventually occur as the economy mends itself.”

Recovery in the automotive market remains several years off, largely because of low levels of consumer confidence and available credit for potential buyers, according to David Leiker, a Baird analyst that covers the auto and commercial truck industries. However, the domestic auto industry will eventually need to supply the country with about 15 million new cars per year.

“The scrap rates are 12 million to 13 million units a year in the U.S.,” Leiker said. “And household growth puts us at another million or two million units there. But that’s probably not until somewhere between 2013 and 2015, unless there is a fairly rapid recovery in employment and incomes on the consumer side.”

Manufacturers that are part of the automotive supply chain continue to struggle with low sales levels and a difficult borrowing environment. Many of those suppliers will continue to struggle in 2010, Leiker said.

“Among the private companies, which make up a large part of that supply chain for the auto industry, they continue to be under stress as volumes have picked up to replenish inventory,” he said. “The working capital constraints have been pretty heavy. There are still a couple of suppliers that are filing for bankruptcy.”

While signs are pointing to a slow recovery in the manufacturing sector, that recovery remains vulnerable, Lisnic said.

“Demand has generally bottomed across end markets, but there is pretty significant uncertainty as to how fast the recovery slope will be or how steep the slope will be,” he said. “Managements are uncertain at this point as to the strength of the recovery. That’s tempering capital investment, that’s tempering hiring plans and constraining the growth.”

Wisconsin manufacturers looking to improve performance, stimulate growth and respond to new challenges as the economy recovers from the recession are able to leverage Next Generation Manufacturing grants offered through the Wisconsin Manufacturing Extension Partnership (WMEP).

The grants range from $5,000 to $6,500 and are targeted at small and midsize manufacturers with less than 500 employees. Companies are able to use the funds to pay for lean transformation or business growth services delivered by WMEP.

“Unfortunately it won’t be back to business as usual for Wisconsin manufacturers,” said Mike Klonsinski, WMEP’s executive director. “The changes that were occurring before the recession - high volatility, spikes in demand and hyper-competition - are accelerating in the post-recession economy. To win new customers and market share in this global environment, manufacturers must have the best possible systems and processes in place to be highly innovative, lean and agile.” 

WMEP’s lean transformation process includes a comprehensive assessment of a company’s operations, identification of key competitive priorities and an action plan to achieve them. Its business growth process helps manufacturers implement Eureka! Winning Ways, a nationally recognized system for rapidly generating and testing new product ideas. 

Funds are available on a first-come, first-served basis. Interested manufacturers should contact Dale Raab of WMEP at (414) 588-1350 or raab@wmep.org.

“Wisconsin manufacturers who adopt Next Generation Manufacturing principles can improve their competitiveness, win a greater share of global markets, and react quickly to market opportunities,” said Wisconsin Department of Commerce Secretary Richard J. Leinenkugel.

Milwaukee is finalist to be Spanish company's North American headquarters

Milwaukee is one of two cities to be finalists in a Spanish company's quest to locate its new North American headquarters.

Wisconsin Secretary of Commerce Richard Leinenkugel reported on the phone from Bilbao, Spain, at the Metropolitan Milwaukee Association of Commerce (MMAC) all-member meeting held last week that he had just concluded a "12-hour cage match" presentation to a Spanish company.

Leinenkugel is courting the Spanish firm with a southeastern Wisconsin delegation that includes officials from the Milwaukee 7, We Energies and Richard "Rocky" Marcoux, commissioner of the Milwaukee Department of City Development.

Sources declined to identify the Spanish company that is being courted by Milwaukee.

Milwaukee is "at the finish line" of landing the company's North American headquarters that would bring hundreds of jobs to southeastern Wisconsin and could also generate more work for vendors in the region, sources said.

"It's between us and one other city," said one source close to the negotiations.

Officials representing the Spanish company have been studying the business climate in southeastern Wisconsin for weeks, BizTimes has learned. The company sent representatives to the MMAC's Future 50 program in September, and they toured several southeastern Wisconsin factories, including the GenMet metal fabrication plant in Mequon. The plant tours were designed to give the Spanish company some insight about the array of potential partners and vendors in the region, sources said.

When asked by MMAC chairman Gale Klappa, chief executive officer of Wisconsin Energy Corp., about why the Spanish company is interested in Milwaukee, Leinenkugel said the company was impressed by southeastern Wisconsin's workforce, the company wants to be close to its North American market and the company's customers are in the region.

Sources said they expect the Spanish company to make a decision on the site for the North American headquarters by the end of the year.

Feds order more military vehicles from Oshkosh Corp.

Oshkosh Corp. has received an additional $438 million award from the U.S. Army Tank-automotive and Armaments Command Life Cycle Management Command (TACOM LCMC) to manufacture 1,000 MRAP All Terrain Vehicles (M-ATV).

This is the fifth award Oshkosh has received to supply M-ATVs and brings the total number of vehicles Oshkosh will deliver to 6,219. The aggregate amount of the five awards is valued at more than $3.2 billion.

"The most significant way we can show support for our Armed Forces is high rate, quality production of these important vehicles that provide the mobility and survivability necessary for the harsh Afghanistan terrain," said Robert Bohn, Oshkosh Corp. chairman and chief executive officer. "Additionally, through our extensive network of aftermarket services, we are supporting the vehicles in-theater with parts supply and field service representative support."

Since receiving the initial award on June 30, 2009, Oshkosh has delivered ahead of its contracted, accelerated delivery schedule every month and will ramp production up to 1,000 vehicles per month in December.

U.S. Defense Secretary Robert Gates praised Oshkosh Corp.’s workers Thursday during a tour of the company’s plant.

Alto-Shaam Inc. is one of the best-known names in the restaurant industry. Most Americans have eaten food prepared with one or more of the company’s systems, but most people don’t know what the Menomonee Falls-based company does.

The company, founded 55 years ago, is best known for its cook and hold ovens, known in the restaurant industry as prime rib ovens. When they were developed, the ovens made it possible for restaurants to cook and serve large pieces of prime rib. The ovens are able to detect when the internal temperature of the meat has reached a predetermined point, and then switch to a holding temperature.

“In the food service industry, (a cook and hold oven is) usually called an Alto-Shaam,” said Robert Simmelink, corporate executive chef and business development manager in its domestic sales division.  “Our sizes run from a countertop unit to a large double oven. They can handle anything from 20 pounds to up to a 240 pound capacity.”

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Meals are part of the meeting sequence of doing business in China. Be prepared for two-hour lunches and three- to six-hour dinners, sometimes followed by a few hours of karaoke.

This is a time when both sides ostensibly are relaxing but are actually trying to get to know each other. Meals are not just a way of showing hospitality. They are an extension of the meetings process itself, and to navigate them, you need to be aware of what your host is trying to convey, and you need to be receptive, appropriate and clear in your responses.

It is important to be friendly, but you are not there to entertain them. It is about business. When in doubt, reverse the situation and think about it in terms of someone from China showing up on your doorstep, asking about doing some business.

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S.C. Johnson to sponsor anti-malaria fight for Clinton Global Initiative

In its continuing initiatives around “Doing What's Right,” Racine-based S.C. Johnson & Son Inc. announced its first commitment as part of its involvement in the Clinton Global Initiative (CGI).

Founded by former President Bill Clinton in 2005, CGI brings world leaders from a variety of backgrounds together to create partnerships that result in innovative and measurable solutions to some of the world's most pressing challenges.

SC Johnson is rolling out a new anti-malaria information, education and communication (IEC) program, based on the success of the company's previous anti-malaria initiatives. In partnership with the Global Business Coalition (GBC), an organization focused on helping companies fight malaria on a global scale, a repository of malaria-related information will be created for non governmental organizations (NGOs), governments, businesses and community health groups to help them support their local populations in Africa and other parts of the world where families are at risk of contracting malaria. All of the information will be shared with these groups electronically either via the GBC website or via email. The program will provide valuable resources and best practices for organizations and people motivated to educate others on the risks of malaria, as well as its prevention and treatment. In essence, it will be a one-stop-shop for anti-malaria information.

"S.C. Johnson is honored to make this commitment to the Clinton Global Initiative. CGI has an outstanding record of doing what's right by creating partnerships that deliver results," said Jane Hutterly, S.C. Johnson executive vice president of worldwide corporate and environmental affairs. "Through our collaboration with the Global Business Coalition, we can make our goals a reality. Together we can make a difference by empowering people with education and tools to fight the ravages of malaria."

The Milwaukee section of the American Society for Quality will hold the workshop “Building and Sustaining a Lean Culture - The Quality People Value Stream” on Thursday, Nov. 19 from 3:30 to 8:30 p.m. at the Hilton Garden Inn - Milwaukee Park Place, 11600 Park Place, Milwaukee. The workshop will discuss connecting and simultaneously developing the “Product” and the “Quality People” value streams helps accelerate your lean implementation while setting organizational foundations for a sustainable lean culture within your company. The guest speaker will be Mike Hoseus, co-author of “Toyota Culture: The Heart and Soul of the Toyota Way.” Visit www.asqmilwaukee.org or contact Loreto Datu or 866-560-2426.