Full Feature Blog

The Rise and Fall of Crude Oil Production and Its Impact on the Permian Basin

All eyes are on the U.S. oil production rates and prices per barrel. Where will they go next?

According to an article published in Forbes magazine, U.S. Crude Production Returns to Record Levels, the recent attacks on Saudi’s oil infrastructure had a lesser impact on the world’s oil markets than expected. The reason? Over the past decade, oil production in the United States has experienced steady and, at times, explosive growth. The resulting oil production stabilized world markets despite recent events and has kept all eyes locked on the future of U.S. oil. The price of West Texas Intermediate (WTI) did experience an increase of $2, however, bringing the average price to $57 per barrel. (Dallas Fed: October 2, 2019

You may remember an article we posted over the summer that discussed pessimism over oil well productivity. We shared an article from Oil & Gas Journal (OGJ) where Rystad Energy indicated that they could not find sufficient evidence that oil and gas well performance showed any signs of decline. They also concluded that average new production per well matched all-time highs found earlier in the year.

Production growth did appear to be slowing during the summer months, but it has started to rise a bit. Speaking to the constant ebb and flow of oil production, the Energy Information Administration (EIA) reported the final week in September showed weekly U.S. crude oil production numbers that tied the all-time production record of 12.5 million barrels per day (BPD) experienced a month prior.

At the beginning of October, the numbers fell slightly but remained 1.3 million BPD higher than the previous year. During the second week of October, the EIA reported the 332,000 BPD decrease in U.S. crude oil production in July was geographically isolated to the Federal Offshore Gulf of Mexico. This was due to Hurricane Barry and is likely temporary, they say. They also anticipate production to continually increase each month resulting in 13 million BPD in December 2019.

So, where does that leave the Permian Basin and West Texas?

Well, that’s tough to say. Robert Rapier, a senior contributor for Forbes, reports that nearly half of the reported 400,000 BPD increase since the summer months hail from the Permian Basin. However, Permian rig counts continue to fall and that seems to be in line with overall U.S. counts (see chart below). On the other hand, production is climbing and well completions have picked up partly due to recent pipeline capacity.

Baker Hughes Rig Count as of Oct. 4, 2019:

Area Last Count (2019) Count Change from Prior Count Date of Prior Count (2019) Change from Last Year Date of Last Year’s Count (2018)
U.S. Oct 4 855 -5 Sept 27 -197 Oct 5 2018
Canada Oct 4 144 +17 Sept 27 -38 Oct 5 2018
International Sept 2019 1,131 -7 Aug 2019 +127 Sept 2018

Source: Baker Hughes

With all the ups and downs, there’s quite a bit of chatter about a slowdown throughout the Basin. We caught an article on Bloomberg that spoke about the loss of oil jobs in the region, fewer hotel proceeds and a 19 percent drop in drilling. A drop that’s affecting everything from the building of well-site roads to the chemicals used to kill bacteria during hydraulic fracturing.

Slowly, unemployment rates are creeping up as well. According to the Dallas Fed, the rate was 2.3 percent in August, an increase of 0.3 percent from May. The Permian Basin’s unemployment rate is still well below the Texas rate of 3.4 percent, but employment growth has slowed. The number of home sales are also slowing, but the prices of homes are climbing, bringing the median home price to $308,634.

These projections are a far cry from the hustle and bustle the region experienced just a year earlier when radio ads were filled with companies looking to fill shale-patch jobs. We’d love to hear your projections for what’s next in the Permian Basin. In what ways are you feeling the impact of the everchanging oil market? How will this impact your business? Share your thoughts in the comments below.

What do you expect in 2020?

Please answer these two questions. Your response is anonymous.

Best Practices for West Texas Machine Shops: Machine Parts Right, the First Time

Texas has a long history of crude oil production as far back as 1543, but West Texas and the Permian Basin have steadily yielded large quantities of oil since the early 1920s. One of the biggest discoveries for Texas happened in 1936 just west of Lubbock in Cochran County and was later named Slaughter Field. Since then, an entire industry has sprung up to support the needs of the oil industry, supplying everything from nuts and bolts to precision parts and instruments used in exploration, drilling, extracting, production and refinement.

Our local machine shops here in West Texas help the oil and gas industry run smoothly. Combine the tight schedules companies keep with even tighter turnaround expectations, and machine shops are under the gun to deliver the goods fast and accurately. That’s why machining parts correctly the first time around is so critical to staying on budget and retaining customers.

Consider the cutting tools you use.

Using an inferior or poorly spec’d cutting tool results in increased machining time and cost. It can also dramatically increase material passes and the load you put on your tooling, requiring replacement more often. Cheaper tools not only have a shorter lifespan, but they can damage workpieces causing you to start over. Talk to your cutting tool supplier and schedule an on-site consultation to determine what specific tooling requirements your operation requires for optimum performance.

Consider the machinability of certain material.

The higher the machinability, the faster and less costly the material can be machined. That depends on the physical attributes of the material. Often, the softer the metal the easier it is to machine. For plastics, stiffer material is often better for accuracy and low friction. Minimize redo’s by assessing your material usage regularly and adjusting tooling and machinery to match.

Don’t underestimate the cost of machine downtime.

Even a few short hours of machine downtime can have catastrophic effect on revenue. Invest the time to evaluate your machines’ performance, regularly schedule maintenance and replace when necessary. Many shops try to make do with outdated or underperforming machines, thinking that it’s saving them money. That line of thinking rarely pays off and can be costly. You have limited floor space and that real estate should be home to machines that are generating money. Evaluate your facility and try to optimize your floorplan to get the most bang for your buck.

Hire smart and train machinists regularly.

The more machines you have in your facility, the more machinists you need to run them. Not only is equipment failure a major contributor to revenue loss, so is operator error. That’s why it’s critical to have knowledgeable machinists on staff. Today’s growing labor shortage may make that seem impossible, but there is another way to secure good talent. Look for potential employees that show initiative and a willingness to learn. Then train them on your processes. Not only is it sometimes easier to mold a less experienced worker to your specific processes, but investing in workplace training and development is linked to increased employee longevity and satisfaction.

Whether you’re creating a one-off piece or looking to produce large-scale volume, the accuracy and effectiveness of your machined parts can make or break your operation. The longer it takes to machine a part, the more money it costs you. Not only do you need to look at machining time, material costs, start-up costs, but you also need to consider the special cutting tooling you need. Getting it right the first time saves you time, money and unnecessary machining steps.

Are you a machine shop in West Texas or beyond? Do you have a part that is difficult to make or struggling to turn a profit? M&M Sales & Equipment has technical experts on staff to help you choose the right cutting tools so that you can machine parts right the first time. They understand the technical nature of the work you do because they’ve been there. Stop in or call one of our four Texas locations, and let us help you maximize output and profitability in your shop.

Related Reading: What’s Machine Downtime Really Costing You? (And How to Avoid It)

Aerospace Alert: Run Longer and Cleaner with New TRIM® C390 Coolant

The aerospace industry comes with strict requirements when it comes to the use of lubricants, and for good reason. We’re talking about lubricants used in machining components for expensive machinery, often carrying valuable cargo. The industry demands high-performance, lightweight and dependable lubricants that can ensure the highest level of performance and safety in your operations.

The latest solution is here and it’s good. The new TRIM® C390 High Performance Aerospace Synthetic is designed for the machining of composites for global aerospace industries. With a name like Master Fluid Solutions, you know this synthetic coolant has been designed specifically to offer both cooling and lubricity, without all the oily residue common in other synthetics.

TRIM ® C390 can improve your machining operations through:

  • Resisting corrosion on ferrous and nonferrous materials
  • A low-foaming formula even in chilled environments up to 60° F
  • Meeting nuclear and aerospace chemical content and machining requirements
  • Performing in wide range of operations including general grinding, spar milling and turbine blade manufacture
  • Providing low carryoff and long sump life
  • Easy cleanup and removal for decreased operating costs

Learn more about TRIM C390 from Master Fluid Solutions.

Watch this video from Master Fluid Solutions to learn how to extend your coolant life:

The team here at M&M Sales & Equipment would be happy to speak with you and uncover all the ways we can help you improve and maximize operations in your facility. Contact us, give us a call or stop in.


Save on Sandvik Coromant Cutter Bodies with Purchase of New Steel Milling Grades, Sept. 9-20

Manufacturers and fabricators know all too well the challenges of working with hard and abrasive steel, especially when working at high speeds or for extended periods of time. The cost of wear and tear on cutting inserts can be high, whether it’s due to unstable conditions, wet conditions or heat changes. Frequent use results in cracks, breaks and wear.

Sandvik Coromant recently released their new steel milling grades designed to boost steel milling operations. They launched the GC1130, the GC4330 and the GC4340 with the goal of increasing tool life and process security over the previous generations.

The GC4330 and GC4340 are both made with advanced technologies and a new substrate coating called Inveio™ which increases wear resistance, without impacting security. And the hard, thin-coated PVD grade GC1130 with Zertivo™ technology is ideal for light roughing to finishing operations and this steel milling insert provides superior performance in all machining conditions.

M&M Sales & Equipment is extending special manufacturer savings directly to you, but only for a limited time. The deal runs from Sept. 9-20, 2019.


Receive 50% off the regular list price on cutter bodies when purchased with new steel milling grades. *


Deal applies to milling cutter bodies including:

CoroMill® 390
Versatile concept suitable for mixed production
For mixed production with a variety of component features and materials, this is your go-to cutter. With an assortment including many different types of tools and wide selection of corner radii and insert sizes for various depth requirements.

CoroMill® 490
First choice for general and repeated shoulder milling
Light-cutting, positive concept with four cutting edges. Precise cutter bodies and insert location along with low-vibration machining process provide accurate shoulders without mismatch. Covers roughing to finishing.

CoroMill® 210
Productive roughing concept for high-feed face and plunge milling
First choice when high metal removal rate is the first priority. A 10° entering angle allows for extreme feed rates when face milling. This directs the cutting forces in an axial direction, providing a stable cutting action and no vibration tendency.

CoroMill® 745/725
Multi-edge cutters for best production economy
Offers multi-edge, double-sided insers with the cutting performance of a positive single-sided concept. Available also with a 25° entering angle as a productivity booster in CoroMill® 725.


And the following:

  • CoroMill® 200 – Robust face milling and profile cutter
  • CoroMill® 245 – General purpose cutter
  • CoroMill® 345 – First choice for highly productive face milling
  • CoroMill® 415 – Small diameter, high feed face milling cutter
  • CoroMill® 419 – Five-edged milling concept


View the family of Milling Cutters including High Feed Milling, Face Milling, Shoulder Milling and Profile Milling.


Contact your M&M Sales & Equipment representative to learn how you can take advantage of special pricing direct from the manufacturer. Just don’t wait too long, because the special deals end Sept. 20, 2019. If you have any questions or need help selecting the tools and supplies right for your job, don’t hesitate to contact us by clicking here.

Or, give us a call at your preferred branch location:

*Discount with qualifying insert order with cutter bodies only. Must purchase 10 inserts per inch (25 mm) to receive cutter blitz discount pricing. No returns, all sales are final. Offer is valid from September 9-20th, 2019.


Is Pessimism Over Oil Well Productivity in West Texas Premature?

You may recall a recent post titled Steady as it Goes for Permian Basin Rig Counts where we shared April 2019 oil rig count data as supplied by Baker Hughes. We also asked the question, “Why has there been a slowdown in oil drilling?” and countered it was likely due to spending cuts from independent exploration and production companies. At the time, it appeared that crude prices would continue to go down. However, the latest rig-count report shows the number of oil rigs in the Permian Basin is holding mostly steady.

Let’s take a look at the most recent Baker Hughes report from August:

The U.S. Rig Count is down four from the last count performed in July of this year and down 104 from the count performed in August of last year. According to recent reports from Baker Hughes, Midland County, Texas, gained two rigs and the Permian Basin lost one. Texas is up one rig totaling 455.

See chart below for additional details.

Area Last Count (2019) Count Change from Prior Count Date of Prior Count (2019) Change from Last Year Date of Last Year’s Count (2018)
U.S. August 2 942 -4 July 26 -102 August 3
Canada August 2 137 +10 July 26 -86 August 3
International June 1,138 +12 May +179 June

Despite somewhat favorable results, there is still some pessimism regarding well productivity in the Permian Basin. Many firms fear the state of oil and gas well performance in West Texas due to the depletion of core inventory, growth in the share of child wells and well-spacing challenges. However, we discovered an article featured in Oil & Gas Journal (OGJ) that may shed some light on why that pessimism may be premature. In it, OGJ reports that Rystad Energy is holding firm on their outlook for the basin. In fact, Rystad’s Head of Shale Research, Artem Abramov, was quoted as saying, “We conclude that the average new production per well in the basin matches the all-time highs seen in early 2019 despite depletion concerns.” View the entire article here.

One potential downside associated with the increase of crude oil production in the Permian Basin is the likely increase in natural gas. According to World Oil, current constraints on natural gas pipelines may reduce oil drilling in areas that have heavy concentrations of natural gas. That said, Pipeline & Gas Journal reports that pipeline operator Magellan Midstream Partners LP expects new pipelines to be in the works to help improve the crude oil bottleneck in the Permian Basin.

Share your thoughts on today’s oil and gas news. How will it impact your business?

Tariffs Give Cause for Concern in Texas Manufacturing

If you were to thumb through some accounts of how tariffs are impacting the Texas economy, many would point to continued expansion and growth. According to the Texas Manufacturing Outlook Survey for June of this year, it would appear that Texas factory activity continued to expand and the production index went from 6.3 to 8.9. The increase marks favorable manufacturing conditions, yet the survey also indicated a significant drop in general business activity and positive company outlook. In fact, the company outlook index fell from –1.7 to –5.5, marking a new three-year low. The uncertainty index rose to 21.6, the highest it’s ever been since the metric was added to the survey in early 2018.

According to Emily Kerr, senior business economist at the Federal Reserve Bank of Dallas, “Tariffs are certainly a factor that’s driving up uncertainty and now we have explicit proof of that.”

What impact could we expect this uncertainty to have? Any uncertainty could lead to decreased customer demand, project delays and a sharp tightening of spending budgets, with fears of ultimately hitting manufacturing employment numbers square in the jaw.

While overall unemployment numbers are looking good, manufacturing employment fell 0.7 percent in May. Let’s take a look at what 115 Texas manufacturers had to say about the impact of U.S. and foreign tariffs.

  • 45 percent said tariffs aren’t affecting them
  • 41 percent said tariffs are already hurting their bottom line
  • 32 percent said they expect negative long-term impact
  • 30 percent said future costs are unclear
  • 21 percent said they don’t expect an impact
  • 18 percent said tariffs will give them a boost

Of those who answered “negative” to Current 2019 impacts, 54 percent reported passing those additional costs onto customers. Other answers included finding new domestic suppliers (17%) or bringing production or process back in-house (17%).

After digesting all those facts and figures, what does the future of manufacturing hold for Texas? Regardless of the actual impact tariffs are having on local manufacturers, the consensus appears to lean toward increased caution in the future regarding hiring, expansion and various expenditures.

What do you expect in the longer term and how will you prepare for the future? Let us know in the comments below. And, as always, if you need help finding the cutting tools and products you need for better productivity and profitability, contact us today. The pros here at M&M Sales & Equipment are happy to help.

What’s Machine Downtime Really Costing You? (And How to Avoid It)

Manufacturers often spend a lot of time focused on machine uptime and not nearly enough time monitoring downtime. Uptime, otherwise known as Overall Equipment Effectiveness (OEE), is comprised of three important components:Quality, Availability and Performance, according to SensrTrx. When any of these three are disrupted for any reason, machine downtime occurs. Machine downtime can be due to a number of reasons including regular maintenance and servicing, cleaning, changeovers, repair or unexpected equipment failure. Sometimes, companies have no control over downtime such as in the cases of extreme weather or power outages.

Regardless of the cause, unplanned downtime can mean a major financial impact on your company. Downtime can cost companies tens of thousands of dollars in lost production, if not more. Think about your production capacity. For simple math purposes, let’s say you produce 500 units an hour at a cost of $50 a unit. That’s $25,000 per hour. If your equipment is down for 4 hours, that’s a loss of $100,000 in potential revenue. That doesn’t even take into account decreased staff productivity, rescheduling costs and equipment replacement costs, not to mention decreased customer trust, according to Machine Metrics.

While an average cost of downtime is often factored into the price of manufactured goods, most companies often underestimate the cost of downtime and are surprised by their losses. Machine downtime is an unpleasant fact of life in manufacturing, but here’s what you can do to minimize loss.

Reduce Machine Downtime for Maximum Performance with These Tips:

  1. Perform a Risk Audit. Evaluate your current processes and equipment to spot potential problems before they lead to a downtime event. Ask yourself questions such as: How old is current equipment? How often is equipment serviced and maintained? Are parts reasonably available or do they take weeks to arrive? This regular audit will help you make more informed maintenance decisions and avoid costly repairs down the road, according to the blog BusinessTech.

  2. Create a Preventative Maintenance Schedule. Every piece of equipment needs to be repaired or replaced at some point. Without regular preventative maintenance, those unavoidable repairs and replacements will come at the most inopportune time. Instead of leaving it up to chance, be sure to schedule regular maintenance on integral pieces of equipment before they break.

  3. Use Quality Tools. To ensure maximum performance, use the right tools for the job. Using cheaper cutting tools or equipment may seem like a bargain at first, but those lesser-quality tools will result in more changeouts costing you time and money. The old saying of “you get what you pay for” has never been more accurate than when it comes to tools of the trade.

  4. Install Sensor Technology. When profit depends on your equipment running smoothly, you’ll want to be alerted the minute something is wrong with that machine. Sensor technology is available that can detect changes in vibration, temperature, heat and light and may offer you just enough time to address the issue before it leads to equipment failure, according to Sage Automation.

  5. Re-evaluate Data Collection Systems. Are you accurately tracking your operational data? Data is great for helping to make better business decisions, but only if that data is reliable and available. Uptime and downtime data are pretty arbitrary if your data isn’t accurate and timely. Consider implementing software that can help you collect and analyze data for real-time reporting, helping you make reduce production downtime.
     
  6. Regularly Train Operators. Even with the best maintenance program, human error is unavoidable. While it would be great to be able to blame equipment failure on a system breakdown, sometimes it’s all operator error. Avoid unnecessary downtime by investing time into a regular training program for all employees, both new and veteran workers. Successful programs should include operational training, as well as education on how to safely and effectively perform lockout tagout procedures before repair or maintenance. Training should be available to all affected and authorized employees for maximum safety and performance.

In your facility, work doesn’t stop. That’s why you need a company that can keep your operations running smoothly, both day and night. You need a partner that can help improve productivity and reduce downtime, so that you can focus on doing what you do best. M&M Sales & Equipment can audit your current processes and uncover opportunities that can not only help you do more for your customers, but run more efficiently and profitability as well.

Contact us by phone, visit our website or stop in one of our four locations to learn more.

How to Choose the Right Drill Bit for Your Application

Drill bits. One of the most useful and versatile tools that exist. You may be surprised to know that using the wrong one can not only hinder production, but could be costing more than you may think. That’s why it’s important to choose drill bits that are optimized for the application. Otherwise, you’re likely to be replacing the bits and the tools too often. Not only that, but you risk damaging the workpiece and having to start over.

Machinists and fabricators use drills daily, and proper drill bit selection can save both time and money. If you are looking to get the best machining result, here are some things to consider when choosing a drill bit for your next project.

Choosing the Right Drill Bit for the Job

Morse Cutting Tools – HSS

There are countless drill bits on the market today, making selection both difficult and time consuming. Two main categories of drill bits include standard bits used with handheld drills or drill presses and boring machine bits that are used in automated machinery like drill banks and CNC machines. Here are some brief explanations of various types of drill bits.

Twist Drill bits are the most common and can be used in a variety of everyday tasks from drilling woods, metal and plastic. They are made from High-Speed Steel or Carbon Steel.

Counterbore bits create a flat bottom blind hole with a smaller diameter center hole. These are often used to create a recess that can hide a fastener head.

Countersink bits create a tapered surface hole with a smaller center hole to allow fastener to sit flush with the material.

Flat Bottom Boring bits are similar to counterbores, but do not have a center drill.

Specialty bits are essentially all bits that don’t fit into the above categories and can be used with glass, tile or other specialty materials.

Coolant Through Drills have coolant ports that run through the drill and feed coolant to the cutting edge, allowing for faster cutting and improved chip evacuation. Used in high performance drilling operations.

Exchangeable Tip Drills have replaceable carbide heads or tips that saves time when changing tools and saves money over larger solid carbide drills. They also boost productivity in many machining applications.

Spade Drills have spade inserts that allow for cost effective drilling of deep holes and large diameter holes. They also run well on older machines and at lower speeds than high performance carbide drills.

Inserted Drills have multiple carbide inserts that handle the metal cutting. They are faster than HSS and cobalt drills, are cost effective and many can be used to “turn” the hole to a larger diameter than the drill size, much like using a boring bar in a lathe.

Understanding Drill Bit Materials

Drillco Drills

Certain tooling and machining operations require specialized drill bits that allow for effective drilling, without burning out too quickly.  Below, you’ll find some common drill bit materials and their uses.

Cobalt (HSCO): Despite being more brittle than HSS, cobalt drill bits are ideal for drilling harder steel as well as stainless steel grades. They are often more expensive than other drill bits but tend to last longer.

Carbide (Carb): Carbide is considered the hardest and most brittle drill bit material and can cut hardened steel, stainless steel and aluminum with ease. Ask if the CoroDrill 860 from Sandvik Coromant is right for you.

Diamond: These bits are effective for drilling tile, stone or other hard material and the use of water is recommended to prevent damage to the workpiece or tool. These are costly, so they are recommended for use in very specific tasks.

High-Speed Steel (HSS): High-Speed Steel bits are harder, more resistant to heat and can drill metal at greater cutting speeds than high-carbon steel. Ask about our HSS drills from Morse or Drillco that are available in a variety of lengths, including jobber and stub/screw.  

How Flute Design Impacts Cut

Flutes are grooves that are cut into the body of the drill bits to provide cutting surfaces, permit removal of chips and allow cutting fluids to reach cutting surfaces. There are different variations of flutes, but here are some common ones you should know.

Standard: Standard flutes are the most common and have a circular cross section.

Parabolic Design: This refers to the open geometry and faster spiral of a twist drill bit. It offers improved chip evacuation, increased feed rate, shorter cycle times and reduces the need for a peck cycle. It’s also less likely to jam and break.

Straight Flute: Used when drill rigidity is more important than chip evacuation, especially in short chipping materials. Also, can be used when the workpiece is spinning instead of the drill itself.

Source: CNC Cookbook

Drill Point Coatings Explained

Coatings reduce friction when drilling. That reduction of heat helps to protect the drill bit and improves the flow of material out of the hole. See below for a brief explanation of various drill point coatings.

Black Oxide is a black surface coating that improves heat resistance, reduces friction and increases chip flow.

Bronze Oxide coatings help to increase tempering and relieves stress on the bit.

Bright drill points do not have a coating, but they are polished for increased chip flow and can be used in plastics, woods and aluminum.

Titanium Nitride (TiN) coatings help drills run faster and increases tool life because it increases the hardness of the bit. Look for drill points to be gold in color.

Titanium Carbonitride (TiCN) is ideal for stainless steel, cast iron and aluminum as it is harder and more wear-resistant than other coatings. Look for drill points to be a blue-gray in color.

Titanium Aluminum Nitride (TiALN) is ideal for use in high-alloy carbon steels, nickel-based materials and titanium, but should not be used for drilling aluminum. Look for drill point color to be violet.

“Man must shape his tools lest they shape him.”

Choosing the wrong tools can impact your productivity and profitability. With so many options out there, choosing the right cutting tools can be overwhelming — but it doesn’t have to be. We take pride in the level of knowledge and experience the M&M Sales & Equipment team has to offer our customers.

If you’re looking to improve production in your facility, but don’t know where to start, give us a call or stop in at one of our four locations. We offer a variety of quality drills from top-rated brands like Drillco, Morse, Guhring and Sandvik Coromant. Whatever your production needs are, M&M Sales & Equipment can help you get it done. Contact us today.

SPI: Limited Time Offers! – through August 31, 2019

From July 1-August 31, 2019 SPI is offering limited-time pricing on:

SPI Promo - Limited Time Offers through August 31, 2019
  • CO-AX Centering Indicators
  • IP54 Digital Tire Tread Gage
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  • IP54 Digital Rotor Gage

Mention SUMMER PROMO when ordering. Offer expires 8/31/19.

Give us a call at your preferred branch location:

Download the SPI 2019 Limited Time Offers flyer now.

Contact us for more information.

U.S. and Texas Economic News Roundup

We think it’s important to stay up to speed on the news that impacts us all. It’s easy to get tied up in the daily grind and not notice what’s happening in the world around us. That’s why we check the headlines every day and when we come across interesting stories, we’ll share them with you. Plus, we want to hear from you. Feel free to drop a comment below.

We hope you’ll be able to leverage this economic and trend information to your advantage. Here’s a bit of what’s happening here in Texas and the U.S right now.

U.S. Cutting Tool Consumption

Earlier this month, the U.S. Cutting Tool Institute (USCTI) and AMT — The Association for Manufacturing Technology announced cutting tool consumption in the U.S. was up 1.3 percent in April, totaling $206.3 million. The number is down 1.9 percent from March’s numbers and includes data reported by companies that participate in the Cutting Tool Market Report. The report is a good representation of cutting tool consumption, and the analysis is a leading indicator of upturns and downturns in our manufacturing industry at home. There’s reason to believe the growth rate is slowing and reduced Boeing 737 production rates and unsettled trade agreements could be to blame. According to Mark Killion, Director of U.S Industries at Oxford Economics, although numbers are remaining above last year’s, new orders decreased in April. This aligns with slowing business investments and weakness in the motor vehicle sector.

Texas Employment Trends: Oil & Gas Trend Down

Employment is ramping up and unemployment falling in Texas. That’s pretty good news. According to recent data from the Federal Reserve Bank of Dallas, the Texas employment rate has seen an increase of 2.1 percent in May, following a 3.1 percent increase in April. And gains were pretty widespread in May, but manufacturing, hospitality, and oil and gas employment did fall, and shops are beginning to cut overtime. Texas lost four rigs, bringing total rig counts to 463. This may be why we are seeing some softening in the local economy. Interestingly, the information sector has been the only one to cut jobs this year. Employment gains were also spread throughout Texas’s major metro areas with the exception of San Antonio. Austin led the charge with 7 percent growth. 

Overall, unemployment numbers are down to a new record low of 3.5 percent in May, which aligns with the U.S. unemployment rate of 3.6 percent. Let’s hope those numbers hold on long term.

Texas Population Growth

Texas has some of the fastest growing cities in the United States. According to reports in late May from the United States Census Bureau, the largest population growth regions for the state include San Antonio (20,824), Fort Worth (19,552), Austin (12,504) and Frisco (10,884). Back in 2018, San Angelo surpassed the 100,000-population mark. Texas was also one of the four states that gained more than 50,000 housing units, with a whopping 172,000 new units added between 2017 and 2018. With population growth comes industry opportunity, and we’re seeing a surge here at home, as the Permian Basin has some of the best energy resources in the nation. While the outlook remains somewhat positive overall, it’s critical to remain cautious here at home as the economical terrain is starting to become a little rocky.

Energy Outlook

Pioneer Natural Resources is a company well known for drawing oil and gas from the Permian Basin using hydraulic fracturing. Back in 2014, it was projected that Pioneer could produce a million barrels per day by 2024. Today, Scott Sheffield, CEO of the company, says those numbers are doubtful due to their loss of investors. Investors know there are large amounts of gas in the shale formations; the question is how affordably can it be extracted. The company has already spent more than budgeted in order to meet that lofty goal and is in the midst of layoffs themselves.  We don’t have a crystal ball and can’t predict the future, but this certainly gives cause for concern of the future of fracking.

Texas Manufacturing Industry News

We happened upon some interesting news in The Texas Tribune. In April 2019, Senate Bill 649 passed the Senate and aims to increase the number of Texas plastic and paper manufacturers using recyclables as industrial feedstock to produce goods. It requires the Texas Commission on Environmental Quality and the Texas Economic Development and Tourism Office to increase demand for recyclable materials in the manufacturing industry. The bill won the endorsement of over 60 businesses, even the Texas Chemical Council. There have been talks about how to increase the use of recyclables in manufacturing; one idea is to place plants right at the source of the materials. This will obviously take more discussion and the plan will likely come from a third-party administrator. We’re interested to see how this pans out.

West Texas in the News

We pay close attention to state and national economic issues, but M&M Sales & Equipment has a soft spot for our hometown of Odessa. With abundant energy resources, infrastructure and a skilled workforce, Odessa is an ideal place for machinery, metal and chemical manufacturing facilities. Just recently, we read in the online publication Manufacturing.net that Facebook is planning a massive solar farm just north of Odessa. Called the Prospero Solar project, it will be Facebook’s first direct investment in renewable energy for its data centers and will have the capacity for 379 megawatts. You may be wondering why the social media giant is investing in solar. CEO Mark Zuckerberg says, “We set a goal for all our data centers and offices to use 100% renewable energy by 2020. These new solar projects will help us reach that goal.” Shell Energy North America and Facebook plan to share the power. As always, if you have questions and need expert advice on the cutting tools and supplies you need, just ask. M&M Sales & Equipment is here to help.