Editor’s note: Welcome to So That Happened, our editors’ takes on things going on in the manufacturing world that deserve some extra attention. This will appear regularly in the Member’s Only section of the site.

Morgan Stanley Calls Bottom on Machinery Stocks

We don’t usually spend a lot of time on analyst calls here but this one feels worthy of mention.

Spending on industrial machinery and equipment will—finally—turn up in 2025, analysts at Morgan Stanley said earlier this week in upgrading the machinery sector to “attractive” and lifting their price targets for key players such as bearings maker Timken Co. and agricultural gear titan CNH Industrial NV.

Driving the call by Angel Castillo and colleagues: Demand trends that are starting to show that the U.S. truck manufacturing cycle bottomed this year and that the beleaguered ag equipment sector will begin to turn up next year. Coupled with uncertainty around tariffs and the rising impact of a strong U.S. dollar, the Morgan Stanley team recommends investors lean toward companies with greater exposure to the North American market.

In addition to stocks such as Timken, the analysts also like truck names Cummins Inc. and Paccar Inc. as well as aggregates companies Martin Marietta Materials Inc. and Vulcan Materials Inc. A spending cycle that boosts the fortunes of those companies just might lift the long-suffering PMI from its doldrums.

—Geert De Lombaerde

Last-Minute CHIPS Funding Lays It on Thick

On Friday, Bosch Corp. announced it had finalized a deal with the U.S. Department of Commerce to receive $225 million in CHIPs and Science Act funding for the overhaul of its closed Roseville, Calif., production facility. The plant is slated to manufacture silicon carbide semiconductors for renewable energy and electric vehicle applications to boost efficiency in recharging. Roseville would be the first U.S. semiconductor manufacturing plant for Bosch.

It’s part of a last-minute Biden administration push to lock in funding for U.S. semiconductor manufacturing before President-elect Donald Trump takes office.

Pop open that Pringles can and claim your most lumbar-bolstering armchair—political jockeying around this funding promises to be riveting. Trump lambasted the CHIPS Act during campaigning. Vivek Ramaswamy, head of Trump’s as-yet unofficial bro-named economic enforcement agency, DOGE, recently tweeted: “Wasteful subsidies under the IRA & CHIPS Act are being rapidly pushed out before Jan 20. DOGE will review every one of these 11th-hour gambits & recommend that Inspectors General scrutinize these last-minute contracts.”

Meanwhile, some serious CHIPS Act funding is slated for red states like Ohio, Idaho and Texas, and Republican Congressfolk including Ohio’s Jim Jordan have already stated they support CHIPS grants.

In just the past three weeks, these CHIPs Act signings have taken place under the direction of outgoing Commerce Secretary Gina Raimondo:

Taiwan-based manufacturer GlobalWafers will receive up to $406 million for reaching certain milestones in building Texas and Missouri plants. The plants will produce high-volume advanced 12-inch silicon wafers in the United States—used in the manufacturing of advanced chips—and 12-inch silicon-on-insulator wafers for defense and aerospace. Construction is already underway.

U.S.-based Micron is slated to receive up to $6.2 billion for manufacture of advanced memory chips in New York and Idaho.

Texas-based Coherent finalized a deal to receive up to $33 billion. German-based X-Fab has approval for up to $50 million for its U.S. operations in Lubbock, Texas.

Skywater Technology, a semiconductor engineering company in Bloomington, Minn., is approved for up to $16 million.

Intel was approved for $7.86 billion in late November for manufacturing and advanced packaging facilities in Arizona, Ohio, New Mexico and Oregon. This is down from an $8.5 million preliminary CHIPS grant because Intel has delayed construction of its Ohio chipmaking operations—to 2030, instead of 2025. A lot has happened since $7.86 billion announcement: Intel CEO Pat Gelsinger has retired (and tweeted that the country should pray for Intel) and Intel announced it is considering spinning off its foundry operations--not great for optics around the last-minute grants.

Another Taiwanese company, TSMC, received a promised $6.6 billion in November for three advanced wafer plants in Arizona.

New York-headquartered chipmaker GlobalFoundries (incorporated in the Cayman Islands) received a $1.5 billion contract for manufacturing facilities in New York and Vermont.

JMA Wireless, a 5G wireless hardware manufacturing firm, received a $44 million CHIPS Act grant on Dec. 12 for a new production line and expanding testing capabilities for 5G open radio access network technology in Syracuse, New York—open RAN allows non-proprietary subcomponents to be used in mobile network architecture.

Final note: If fast-food loving Trump is at all considering grants for potato-chip startups, we recommend Great Lakes Potato Chips out of Traverse City, Michigan.

—Laura Putre

OT Cybersecurity Know-How

Cybersecurity firm Dragos released today a new report that really gets into the weeds about cybercrime activity in Q3 2024, listing active ransomware groups and the various tools they use to breach security and move around within the networks they access.

For more casual observers of industrial cybercrime, the report also marks the high-profile industrial hacks from Q3:

• CDK Global paid a $25 million ransom in Bitcoin to restore operations after a ransomware attack that severely disrupted retail auto sales operations, leading to a substantial decline in share value.
• Halliburton suffered a financial impact of $35 million due to a ransomware attack that disrupted the ability to process invoices and manage orders. 
• Arntz Optibelt Group, a manufacturer of high-performance belt drives based in Höxter, Germany, suffered a ransomware attack that impacted operations.

According to the report, North America suffered 304 ransomware attacks in Q3, followed by 119 attacks in Europe and 66 in Asia.

IoT cybersecurity firm Forescout also today released a new report on OT/industrial control system (ICS) cybersecurity threats. 20% of all attacks targeted engineering workstations that run Windows O/S and dedicated engineering software like Siemens TIA portal and Mitsubishi GX Works, both of which were specifically targeted by threat actors. This sort of engineering software manages programmable logic controllers (PLC).

According to the report, threat actors get access to these engineering workstations either through infected USB drives or through infected IT systems. The best ways to protect against these attacks are to identify every single workstation that connects to your OT network and make sure their security is up to date, make sure engineering workstations are not connected directly to the internet, and of course, monitor your OT constantly for infection.

—Dennis Scimeca

Kentucky-Based Elf Workshop Customizes Toys for Local Kids With Disabilities

Toys with special features customized to various abilities enable an inclusive play experience, so in order to spread some holiday cheer, a team of GE Appliances’ mechanical and electrical engineers, dubbed the “Elf-gineers,” has adapted and donated over 100 toys to meet the needs of children with disabilities.

GE Appliances Heads Into the Holidays Without a New Labor Contract

It’s business as usual at GE Appliances in Louisville, Kentucky, despite union workers earlier this month roundly rejecting a tentative collective bargaining agreement negotiated between the appliance manufacturer and IUE-CWA Local 83761. The union represents approximately 5,000 production workers at Appliance Park. GE Appliances is owned by Chinese manufacturer Haier.

The current four-year contract expires on December 31.

The vote followed two months of negotiations between the two parties. When the count was done, 73% of the voters rejected the contract, according to the Louisville Courier Journal.

Few details were released about what led to the overwhelming rejection. Topics on the table included wages, healthcare and work practices, GE Appliances outlined in a negotiations fact sheet.  

GE Appliances spokesperson Julie Wood said both parties have agreed to return to the bargaining table on January 6.

“While disappointed in the outcome of the vote, we are committed to working with the IUE-CWA to negotiate a fair contract that recognizes employee contributions and allows the company to continue to reinvest in our future,” according to Wood.  

—Jill Jusko

Mulling a Merger of Honda and Nissan

Several news organizations, led by Nikkei, this week reported that leaders of Honda and Nissan have started talks to set up a holding company that would pool the companies’ resources and give them a better shot at competing with Chinese electric-vehicle manufacturers and other rivals. The discussions also include Mitsubishi—Nissan is that company’s largest shareholder—and could go as far as a full merger, which would create a car company that ranks behind only Volkswagen and Toyota.

But without wholesale business-model changes, would such a tie-up actually make much of a difference? A careful combination that prioritizes combining the strengths of each company likely won’t be enough, experts said.

“We’re no longer in the age where carmakers would join together, churn out profits through economies of scale and then reinvest them in a five-year restructuring plan. They have no time for that,” Sanshiro Fukao of Tokyo’s Itochu Research Institute said as part of a range of comments collected by Reuters.

Nissan is the party more in need of a full partnership here—hence its shares popping more than 20% on this news—but Honda also has been losing ground in the EV space, although it has an edge when it comes to hybrid engines. Speed and scope would be key to any merger, which would of course bring company-culture issues to negotiate. Count the analysts at S&P Global among those skeptical Honda and Nissan’s bosses will mash the gas pedal forcefully enough.

“It will be difficult for them to produce significant effects quickly through expanding the scope of their collaboration to include batteries, software, and autonomous driving,” the S&P Global team wrote.

—Geert De Lombaerde