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US machinery lead times: why yours is negotiable
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#US industrial production#Federal Reserve G.17#capacity utilization#machinery NAICS 333#machine tool lead times#reshaped-v3

US machinery lead times: why yours is negotiable

Sadaf Masood

When an American supplier comes back with sixteen or twenty weeks on a machine, a fixture package or a spares kit, treat that date as an opening position rather than a build time. US manufacturing ran at 75.7 per cent of capacity in August, two and a half percentage points below its long-run average, and the capacity itself is one per cent larger than it was a year ago. A supplier with that much room is usually quoting you a place in a queue, and queue positions move for buyers who ask the right question.

The right question is which constraint the date comes from. There are only three honest answers, and each one is negotiable in a different way.

Ask which constraint, against the line item

An order-book constraint moves if you change the quantity, split the shipment, or take a slot somebody else dropped. A scheduling constraint moves if you accept a different build sequence or a partial release, taking the long-lead assembly first and the rest later. A shipping constraint moves with the freight mode and the incoterm and has nothing to do with the factory at all.

Put the question in writing, against the line item rather than in the covering email: which of these sets the sixteen weeks — order book, build schedule or transit? Name the machine or the process that is the constraint, and the date it frees. A supplier running at three-quarters of capacity that cannot name its constraint is telling you the date came off a template, and a templated date is the easiest kind to move.

"Capacity utilization for manufacturing declined 0.3 percentage point to 75.7 percent in August, a rate that is 2.5 percentage points below its long-run (1972–2025) average."

Machinery is the line that is genuinely busy

That 75.7 per cent covers all of manufacturing, and it hides the part you are buying from. Machinery output — the Fed's NAICS 333 — was 6.3 per cent above its year-earlier level in August and grew at a 7.4 per cent annual rate in both the first and second quarters. Manufacturing as a whole managed 1.0 per cent over the year and fell 0.3 per cent in August, ending seven consecutive monthly increases.

So a machine builder can fairly claim a fuller order book than the average American factory, and some of them will be right. That is exactly why you ask rather than assume, and why you ask for the constraint by name. Meanwhile manufacturing capacity grew 1.0 per cent over the year while the rate of use fell: the sector is adding room slightly faster than it is filling it, which is not the picture of an industry that can only offer you one date.

One date to put in the diary

The Federal Reserve issues its annual revision on 24 November, rebasing the indexes to 2022 and revising every industry series from 1972 to the present. Every figure above is provisional until then, in a specific and dated way. If a supplier quotes an American production statistic back at you as a reason the date cannot move, that is a fair and precise thing to say in reply.

If the American date will not move far enough for the job in front of you, price the part against a shop that can start this month — Vesprr's CNC machining service quotes from your drawing.

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