Current State of America's Transportation Manufacturing Market 2015

Sponsored by
Transportation Manufacturing Research Report 1

About the Author
Lee Mashburn is an accomplished business-to-business marketing and
product management executive who has helped companies like SAP, SSA
Global, and Honeywell to transform and grow into market leadership
positions.
Currently, Lee is Vice president of Global Marketing for Spinnaker Support, a
leading provider of third-party maintenance and managed services for SAP
and Oracle software applications.
Lee has captained numerous corporate-wide strategic and marketing
planning processes. Leveraging available market research data, Lee and his
teams have astutely analyzed to uncover the optimal market targets to
attack.
Lee has developed his “Mashburn Report” series in order to provide a more
insightful and cost-effective product for business professionals and
investors who wish to supplement the market data they have traditionally
used - in order to make more informed, conﬁdent, and timely business
decisions.
The Mashburn Reports are available for:
‣ Durable Goods Manufacturing Overview Report
‣ Primary Metals Manufacturing
‣ Fabricated Metals Manufacturing
‣ Machinery Manufacturing
‣ Computer & Electronic Product Manufacturing
‣ Electrical Equipment Manufacturing
‣ Transportation Equipment Manufacturing
‣ Nondurable Goods Manufacturing Overview Report
‣ Food Product Manufacturing
‣ Beverage & Tobacco Product Manufacturing
‣ Paper Product Manufacturing
‣ Petroleum & Coal Product Manufacturing
‣ Chemical Product Manufacturing
‣ Plastics & Rubber Product Manufacturing
2Transportation Manufacturing Research Report

3
Introduction
This report addresses questions like:
‣ What is the current state of America’s
transportation product manufacturing industry?
‣ How does the transportation product manufacturing
sector rank against other durable and nondurable
goods manufacturing industries?
‣ Which key ﬁnancial and performance metrics are
important to track? Why? What are the current
states of those key metrics? How have they
trended over the past decade - and particularly in
2014?
‣ What data sources have been leveraged to support
the information contained in this Mashburn Report?
‣ What is the MASHBURN RATING? How is it used to
monitor and compare the current health of various
manufacturing industry segments?
Mashburn Reports empower those
involved with manufacturing markets:
‣ Finance, procurement, and IT executives
‣ Marketers and product managers
‣ Business analysts
‣ Strategic and operational planners
‣ Industry consultants
‣ Venture capitalists
Transportation Manufacturing Research Report

4
WHOLESALE TRADE RETAIL TRADEMANUFACTURING
Merchant, Durable Goods
•Motor Vehicles, Parts, & Supplies
•Furniture & Home Furnishing
•Lumber & Construction Materials
•Pro & Commercial Equipment
•Metal & Mineral
•Household Appliances & Electronics
•Hardware, Plumbing, & Heating
•Machinery Equipment & Supplies
•Miscellaneous
Merchant, Nondurable Goods
• Paper & Paper Products
• Drugs, Druggists, Sundries
• Apparel, Piece Goods, Notions
• Grocery & Related Products
• Farm Product Raw Material
• Chemical & Allied Products
• Petroleum, Petroleum Products
• Alcoholic Beverage
• Miscellaneous
Wholesale, Electronic Market
•Business-to-Business
•Trade Agents & Brokers
Durable Goods
•Wood
•Nonmetallic Mineral
•Primary Metals
•Fabricated Metals
•Machinery
•Computer & Electronics
•Electric Equipment, Appliances
•Transportation
•Furniture
•Miscellaneous
In-Store
•Motor Vehicles, Parts, & Supplies
•Furniture & Home Furnishing
•Electronics & Appliances
•Building & Garden Equipment
•Food & Beverage
•Health & Personal Care
•Gasoline Stations
•Clothing & Clothing Accessories
•Sporting Goods, Hobbies, Games
•General Merchandise
•Miscellaneous
Non-Store
•Electronic Shopping
•Mail Order Houses
•Vending Machine Operators
•Direct Selling Fuel Dealers
Nondurable Goods
•Food
•Beverage & Tobacco
•Textile Mills & Products
•Apparel
•Leather
•Paper
•Printing
•Petroleum & Coal
•Chemical
•Plastics & Rubber

Sample of Data Sources
‣Manufacturers’ Shipments,
Inventories, and Orders (M3)
‣Quarterly Financial Report
(QFR)
‣Employment Situation
Report
‣Job Openings and Labor
Turnover
‣Producer Price Index
‣Consumer Price Index
‣Labor Productivity and
Cost
‣Import/Export Price Index
‣Gross Domestic Product
‣Personal income
‣Industrial Production
‣Capacity Utilization

Performance Indicators Tracked
6
Mashburn Reports analyze and chart dozens of key ﬁnancial and operational performance indicators,
including:
Employment Situation
‣Employment level
‣Average hours worked
‣Average earnings
‣Job openings
‣Labor turnover
Consumer Spend
‣Personal consumption
expenditures
‣Personal income
Output & Inventories
‣New & unﬁlled orders
‣Value of shipments
‣Inventory levels
‣Industrial productivity
‣Capacity utilization
Financial Statements
‣Net sales
‣Cost of sales & operations
‣Operating & net income
‣Assets & liabilities
‣Shareholders’ equity
‣Net working capital
Price & Cost Indexes
‣Consumer price
‣Producer price
‣Labor productivity & cost
‣Import/export price
Misc. Metrics
‣Cash-to-cash cycle
‣Current ratio
‣Quick ratio
‣Return on assets
‣Return on sales

Sponsored by
Brief Overview of America’s
Manufacturing Market
MASHBURN REPORT
January 2015

America’s Manufacturing Market Size, 2014
8
Durable
Goods
48.3%
Nondurable
Goods
48.3%
By Value of Shipments
per the M3 report
$5.98 trillion
2.5% y-o-y growth
Durable
Goods
47.8%
Nondurable
Goods
52.2%
By Total Sales
per the QFR report
$6.90 trillion
2.7% y-o-y growth
By Employee Level
per the BLS employment report
12.24 million
1.5% y-o-y growth
Durable
Goods
63.4%
Nondurable
Goods
36.6%

Sub-market NAICS
2014 Share
per value of
shipments
Key words
Wood Products 321 3.3% sawmills, veneer, truss, wood containers, pre-fab
Nonmetallic Mineral Products 327 3.7% clay, pottery, glass, cement, gypsum
Primary Metals 331 11.2% iron and steel mills, aluminum, foundries
Fabricated Metal Products 332 12.4% forging, stamping, cutlery, hand tools, boilers, tanks
Machinery 333 15.0% agriculture, mining, industrial
Computer & Electronic Products 334 12.0% computer, peripheral, communications, audio, video
Electrical Equipment & Appliances 335 4.3% lighting, household appliance, electrical equipment
Transportation 336 29.5% motor vehicle and parts, aerospace, railroad, ships
Furniture & Related Products 337 2.4% household and ofﬁce furniture, kitchen cabinets, window treatments
Miscellaneous 339 6.1% medical equipment and supplies, jewelry, silverware, sporting goods
Durable Goods Manufacturing Market
9
Durable goods are products designed to last at least three years; bigger ticket items like automobiles,
televisions, and refrigerators. These products account for roughly 15% of consumer spending.

Nondurable Goods Manufacturing Market
10
Soft drinks, vegetables, shoes, paper bags, soap, and motor vehicle tires. These are examples of manufactured nondurable
goods. These goods are typically designed to last less then three years. Nondurables account for about 25% of all personal
spending. In contrast to the volatility found in durable goods sales, nondurables orders grow at a more stable rate during
both good and bad economic times.
Sub-market NAICS
2014 Share per
Value of Shipments
Key Terms
Food Products 311 25.6% animal food, grain, sugar, vegetable, dairy, seafood
Beverage & Tobacco Products 312 4.6% soft drinks, bottled water, brewery, tobacco
Textile Mills 313 1.0% fiber, yarn, fabric, thread
Textile Products 314 0.8% carpet, rugs, linen, rope
Apparel Manufacturing 315 0.5% hosiery, socks, cut and sew
Leather & Allied Products 316 0.2% leather, hide, footwear, handbag, purse
Paper Manufacturing 322 5.6% pulp, paper, paper bags, stationary, sanitary
Printing & Related Activities 323 2.5% commercial printing, books
Petroleum & Coal Products 324 27.3% refineries, asphalt paving, roofing, lubricants
Chemical Manufacturing 325 24.5% petrochemical, resin, pharmaceutical, paint, soap, ink
Plastics & Rubber Products 326 7.4% plastics, pipe, foam, plastic bottles, tires, hoses

Transportation
B
Machinery
B
Primary Metals
C+
Plastics & Rubber
B-
Food Products
C+
Fabricated Metals
C
Computer & Electronics
C-
Paper
D+
Chemical
D
Electrical
D
Petroleum & Coal
F
Beverage & Tobacco
D-
2014 Mashburn Industry Health Ratings, Manufacturing
10

Transportation Manufacturing
NAICS 336
$4 trillion
Annual revenue generated
by all global transportation
manufacturers
20%
Approximate United States share
of worldwide transportation
manufacturing market
12,000
Number of United States
transportation
manufacturing companies
WORLDWIDE OVERVIEW
Companies in this industry manufacture transportation equipment, including motor vehicles and parts,
aircraft and other aerospace products, ships and boats, and railroad rolling stock. The global transportation
equipment manufacturing industry generates as much as $4 trillion in annual revenue. Leading
transportation equipment-producing countries include Brazil, China, France, Germany, India, Italy, Japan,
South Korea, and the US. Low growth is forecast for the next two years.
Demand is driven by employment and interest rates, growth in consumer income, military budgets, and the
overall economic climate. The proﬁtability of individual companies depends on manufacturing efﬁciency,
technical expertise, and product quality. Large companies enjoy economies of scale in manufacturing and
purchasing, as well as advantages in marketing and distribution. Small companies can compete by
specializing in niche markets.
SOURCE: Hoovers

2.5%
$949b
USA 2014
29.5%
2014 share of durable goods
manufacturing market
2014 vs. 2013
new orders
New Orders
Market Share
Growth Rate
13
NAICS 336
Motor Vehicle
‣ Automobile
‣ Light truck & utility
‣ Heavy duty truck
Motor Vehicle Body & Trailer
‣ Body
‣ Truck trailer
‣ Motor home
‣ Travel trailer & camper
Motor Vehicle Parts
‣ Engine
‣ Electrical
‣ Steering & suspension
‣ Brake system
‣ Transmission
‣ Seating & interior
‣ Metal stamping
Aerospace Product & Parts
‣ Aircraft
‣ Aircraft engine
‣ Guided missile & space vehicle
Railroad Rolling Stock
Other Transportation Equipment
‣ Motorcycle & bicycle building
‣ Military armored vehicle
Ship & Boat Building

14
NAICS 336
By Value of Shipments
per the M3 report
$852 million
2.5% y-o-y growth
By Total Sales
per the QFR report
$1.07 trillion
3.0% y-o-y growth
By Employee Level
per the BLS employment report
1.57 million
3.5% y-o-y growth
Motor
Vehicles
68%Aerospace
26%
Other
6%
Motor
Vehicles
66%
Aerospace
24%
Other
10%
Motor
Vehicles
56%Aerospace
30%
Other
14%

15
Industry Health Dashboard Key
-18.7% 10.1%
Operating Proﬁt Growth Rate
Performance Metric
Current Health Status
Trend Indicator and
Last Reported Value
10-year High
10-year Low
Grade F D C B A
recent trend is neutral
recent trend is positive
recent trend is negative

16
Transportation
Mashburn Ranking: 1/12
B 86%
-1.8% 6.6%
Operating Proﬁt Growth Rate
0.49 1.36
Net Working Capital Ratio
0.14 0.82
Quick Ratio
-10.3% 8.2%
Return on Sales
99.0 49.9
Cash Conversion Cycle
-7.4% 6.3%
Return on Assets
73.2 111.2
Industrial Production
57.1% 79.7%
Capacity Utilization

17
Mashburn Ranking: 1/12
B 86%
$368k $546k
Value of Shipment per Employee
$50.6k $64.7k
Average Annual Employee Earnings
1.00 1.08
Export/Import Ratio
$430k $684k
Total Sales per Employee
1.91 1.10
Inventory to Shipment Ratio
99.7 118.6
Producer Price Index
1,308m 1,786m
Employment Level
Unﬁlled Order to Shipment Ratio
7.62 19.51
Transportation

18
Raw data extracted from the Sept 2014 Quarterly
Financial Report, produced by the U.S. Census Bureau
Transportation Manufacturing, USA
Financial Statements
Key Takeaways
The U.S. Census Bureau collects and publishes quarterly
aggregate statistics on the financial results and position of
U.S. transportation manufacturers - via a report entitled
Quarterly Financial Report (QFR). The QFR provides insight
into industry health and exposes trends that are useful for
benchmarking the performance of individual manufacturers.
The U.S. transportation manufacturing industry grew sales by
an enviable 6.3% in 2014, delivering an operating profit
margin of 6.0%. Net profit margin before taxes jumped up
after a down year in 2013.
There is really nothing compelling to infer from the industry
aggregate balance sheet. The quick and net working capital
ratios are healthy and trending in the right direction. The
cash conversion cycle has been healthier but is also trending
positively. Return on assets looks ok, stockholders’ equity is
up slightly, and working capital is level.

19
Employment Situation, Index Comparison
Jan 2006 to Dec 2014+2.3%
-1.2%
CAGR since Dec ’05
+0.3%
Employee Level
Weekly Hours
Hourly Earnings
Emp Level! Hourly Earnings! Weekly Hours!

20
M3 Report
Jan 2012 to Dec 2014 Jan 2012 to Dec 2014
60,000!
63,000!
66,000!
69,000!
72,000!
75,000!
78,000!
USD,inmillions!
Value of Shipments!
100,000!
105,000!
110,000!
115,000!
120,000!
125,000!
130,000!
135,000!
USD,inmillions!
Total Inventories!
50,000!
55,000!
60,000!
65,000!
70,000!
75,000!
80,000!
85,000!
90,000!
USD,inmillions!
New Orders!
550,000!
575,000!
600,000!
625,000!
650,000!
675,000!
700,000!
725,000!
750,000!
USD,inmillions!
Unﬁlled Orders!

21
Income State, Index Comparison
Mar 2006 to Sep 2014
+43.4%
+3.5%
+75.6%
Net Sales
Op Income
Net Income
Sales! Op Income! Net Income before tax!

22
Key Performance Indicators
-6%!
-4%!
-2%!
0%!
2%!
4%!
6%!
8%!
10%!
Operating Margin! Net Pre-tax Margin!
-6%!
-4%!
-2%!
0%!
2%!
4%!
6%!
8%!
10%!
Return on Sales!
-6%!
-4%!
-2%!
0%!
2%!
4%!
6%!
8%!
Return on Assets!
60!
70!
80!
90!
100!
110!
Cash Conversion Cycle (C2C)!

Key Performance Indicators
40!
50!
60!
70!
80!
90!
100!
110!
120!
Industrial Production! Capacity Utilization!
95!
100!
105!
110!
115!
120!
Producer Price Index!
95!
100!
105!
110!
115!
120!
125!
Export Price Index! Import Price Index!
$0!
$100!
$200!
$300!
$400!
$500!
$600!
USD,inthousands!
Value of Shipments per Emp.! Total Sales per Emp.!

ABOUT SPINNAKER SUPPORT
Spinnaker Support has steadily emerged as the leading global provider of third-party maintenance and managed
services for SAP and Oracle enterprise software applications. Over 400 clients spanning over 70 countries depend
on Spinnaker Support services to help them reduce IT and other costs, boost operational and ﬁnancial
performance, and to ensure productive enterprise software applications that maintain alignment with business
objectives. A small sampling of our transportation manufacturing clients is displayed below:

APPENDIX

26
Metric Definitions
Operating income: equals sales (or revenue) minus cost of goods
sold, labor, and other day-to-day expenses.
Operating margin: a measure of profitability. It indicates how much
of each dollar of revenues is left over after both costs of goods sold and
operating expenses are considered. Calculated as, Operating Margin =
Operating income / Sales
Return on sales: a metric used to evaluate a company’s operational
efficiency; provides insight into how much profit is being produced per
dollar of sales. Calculated as Net Income before Taxes divided by Net
Sales.
Working capital: a measure of both a company’s efficiency and its
short-term financial health. Calculated as Current Assets minus Current
Liabilities.
Working capital ratio : indicates whether a company has enough
short-term assets to cover its short-term debt. Calculated as Current
Assets divided by Current Liabilities. Anything below 1 indicates negative
W/C (working capital). While anything over 2 means that the company is
not investing excess assets. Most believe that a ratio between 1.2 and
2.0 is sufficient.
Quick ratio: measures a company’s ability to meet its short-
term obligations with its most liquid assets. The higher the quick
ratio, the better the company's liquidity position. Calculated as
(Current Assets minus Inventories) divided by Current Liabilities.
Cash conversion cycle: a financial metric that measures
the length of time required for a company to convert cash invested
in its operations to cash received as a result of its operations.
Calculated as (Average inventory processing period plus average
receivables collection period) minus average payables payment
period.
Inventory to shipment ratio: a key measure of the time, in
months, that would be required to exhaust inventories if shipments were to
remain at their current level.
Return on assets: the ratio of annual net income to average
total assets of a business during a financial year. It is a
profitability ratio.
Industrial production index: measures the amount of
output from the manufacturing, mining, electric and gas
industries. The reference year for the index is 2002 and a level of
100. If the IPI is growing month-over-month for a particular
industry, this is a sign that the companies in the industry are
performing well.
Capacity utilization: Extent or level to which the
productive capacity of a plant, firm, or country is being used in
generation of goods and services.
Producer price index: measures the average change over
time in the selling prices received by domestic producers for their
output.
Export and Import Price Index: Indexes that monitor the prices
of goods purchased out of the country but produced in the U.S. (exports)
and the prices of goods purchased in the U.S. but produced outside of
U.S. (imports).

The purpose of the Manufacturers' Shipments, Inventories, and Orders (M3) survey is to provide broad-based monthly statistical data
on current economic conditions and indications of future production commitments in the manufacturing sector. The Manufacturers’
Shipments, Inventories, and Orders (M3) Report is released in two stages each month. An advance report, for just durable goods
manufacturing, is available about 18 working days after each reporting month. Durable goods, by definition, are products that last
for three or more years such as aircraft, automobiles, machinery, and computers. The full M3 report follows about 5 working days
later.
The M3 is among the most anticipated reports released each month, particularly the advance durable goods portion. It contains
nuggets (like new orders for factory goods figures) that provide clues about what might occur in the future. An increase in new
orders signals production that will take place in the months ahead, keeping factories and employees busy to satisfy customer
demand. A persistent decline in new orders can lead to factory slowdowns, possible employee layoffs, or even build-up of excess
inventory.
The M3 is based upon data reported from manufacturing establishments with $500 million or more in annual shipments. Units may be
divisions of diversified large companies, large homogenous companies, or single-unit manufacturers in 89 industry categories.
Survey respondents report four different data sets:
• Value of shipments - Products that have been ordered that are now being delivered. Shipments are a good measure of what’s
going on in the economy right now, and this figure is used to help calculate GDP. Calculated after factoring out discounts and
before freight charges and excise taxes are added.
• New orders - Qualifies for M3 report if the new order comes with a legally binding agreement to purchase a product for
immediate or future delivery.
• Unfilled orders - A favorite measure for economists in that a backlog of unfilled orders typically means that factories will stay
busy going forward and can suggest an increase in new jobs and greater spending on capital equipment that factories need to
boost output. However, there can be negative consequences to a backlog of unfilled orders as well.
• Total inventories - The M3 report considers all stages of inventory at current cost or market value.
New durable goods orders reflect the very latest demand for U.S.-made products across the world. The volume of new orders can
swing dramatically from month to month, primarily due to large transportation or defense orders. A single large military or aircraft
order can inflate total new orders and can mislead analysts about the economy’s underlying strength. This is precisely why the
Census Bureau reports new orders in total, total excluding transportation orders, and total excluding defense orders.
27
What is the M3 Report?

28
BLS Reports
The Bureau of Labor Statistics (BLS) is the principal fact-finding agency for the
Federal Government in the broad field of labor economics and statistics. The BLS
is an independent national statistical agency that collects, processes, analyzes,
and disseminates essential statistical data to the American public, the U.S.
Congress, other Federal agencies, State and local governments, business, and
labor. The BLS also serves as a statistical resource to the Department of Labor.
Each month the Current Employment
Statistics (CES) program surveys
approximately 144,000 businesses and
government agencies, representing
approximately 554,000 individual
worksites, in order to provide detailed
industry data on employment, hours, and
earnings of workers on nonfarm payrolls.
The Producer Price Index (PPI) program
measures the average change over time
in the selling prices received by
domestic producers for their output.
The prices included in the PPI are from
the first commercial transaction for
many products and some services.
The International Price Program (IPP)
produces Import/Export Price Indexes
(MXP) containing data on changes in
the prices of nonmilitary goods and
services traded between the U.S. and
the rest of the world.

Current State of America's Transportation Manufacturing Market 2015

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (20)

Featured

Featured (20)

Current State of America's Transportation Manufacturing Market 2015