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In the 51�Թ���’s new “Forge Your Path” series, which aims to provide exclusive insights and inspirational leadership perspectives for small and medium-sized manufacturers, HORST Engineering President and CEO Scott Livingston shares what makes his leadership style successful, the accomplishments he’s the most proud of, where he see his company in the next five years and more.

Q: What is one lesson or insight you’ve gained in leadership that you haven’t widely shared before but that has been a key part of your and/or your company’s success? How did you come to this realization, and how has it impacted your leadership?

Livingston: “My leadership approach is borne out of my experience with family business. It’s hard to explain how much knowledge you absorb when you grow up in an entrepreneurial family. You soak in the knowledge without even realizing it. When people ask me why our family is high functioning and harmonious, I cite the humility of my father as one of the keys. He was fortunate to experience the transition from Generation 1 to Generation 2 as the successor and that informed him when it came time for our transition from Generation 2 to Generation 3.

My leadership approach is a blend of styles learned from my grandfather, father, uncle and mother. I worked with all of them, plus many fantastic nonfamily team members and was able to develop my own approach. Twenty-four years ago, our family business consultants helped me understand an important lesson. My grandfather put business in front of family and then ranked his personal well-being last. My parents and uncle put family first, then the business and their personal well-being last. These are generational differences, but I learned early on that if I focused on my personal success, that would translate to family success, which would result in business success. In my opinion, that is a better order.”

Q: Can you share a quote or mantra that defines your approach to leadership? How has this mantra influenced your decision-making and leadership?

Livingston: “‘Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.’― Dr. Seuss, ‘.’ I keep several copies of ‘The Lorax’ in my office and around the factory. I believe that any business, including manufacturing, has the potential to create unintended environmental side effects, making it challenging to achieve true sustainability. However, you can lead a responsible business. This ethic was espoused by Yvon Chouinard of Patagonia, but Dr. Seuss summed it up. I apply the mantra to my conservation- and environmental-oriented mindset, but also to my broader philosophy about business and leadership. The idea is embedded in HORST Engineering’s core purpose that includes the phrase ‘we help people fly safely,’ as well as in our core values.”

Q: What accomplishments at your organization are you the most proud of and why?

Livingston: “I’m proud of our family business ownership model that has lasted three generations. Our values are built into the DNA of the culture. I’m proud of the people who have been promoted to positions with more responsibility because they are making an impact. I’m most proud of our incredibly high quality. We are constantly striving for zero defects. That is a lot harder to achieve than most realize. We manufacture some of the most precise small parts from the most difficult materials, in quantities so low that it would seem impossible to succeed. We still find a way.”

Q: Where do you see your company in the next five years, and what are you hoping to achieve?

Livingston: “We have much to accomplish. We emerged from the COVID-19 pandemic with a renewed focus on process improvement and diversification. We were booming in 2019, launched a factory expansion and then the aerospace industry got hammered by the pandemic-induced recession, inflation and supply chain challenges. Thankfully, we are well-positioned with a new factory completed in 2021 that has room for growth. We are investing heavily in people development, innovation and industry diversification. Aerospace and defense will remain the mainstay of our part offerings, but success will be achieved when we balance that with business from other mission-critical industries. Even though our product portfolio is a crazy mix of low-volume parts, we will find ways to automate and streamline. Also, in five years, we will be doing career pathing while graduating people from our own training programs. This includes critical roles like CNC machinists and quality inspectors. We will build a company that is more resilient to future down cycles, which are sure to come.”

Q: What are the past three books that you’ve read or podcasts that you’ve listened to that you would recommend to your peers and why?

Livingston: “I absorb a lot of content from all angles on a variety of topics. Books I’ve read or listened to recently are ‘Titan,’ ‘The Boys in the Boat’ and ‘Unreasonable Hospitality.’ ‘Titan’ is the fascinating life history of John D. Rockefeller and Standard Oil. My brother-in-law, who is a rower, lent his copy of ‘The Boys in the Boat’ to me. It’s about the 1936 Olympic gold medal–winning crew from the University of Washington. The Great Depression–era history was fascinating, and the human story was amazing. I’ve had a long endurance sports career and draw inspiration from stories like this. ‘Unreasonable Hospitality’ taught me some wonderful business lessons related to people management and customer service.

I listen to a lot of podcasts, mostly on my commutes (by bike) to work. Three highlights include ‘The Rich Roll Podcast,’ the ‘Consummate Athlete Podcast’ and the ‘Check 6 Podcast.’ The first is about many things, but you could generally refer to it as ‘personal development.’ The second is specific to endurance sports, particularly running and cycling. The third is one of my favorite aerospace industry shows. Oh, and I just listened to a multi-podcast series on Freakonomics Radio about the insane cost of higher education and the college admissions process. Our oldest child is a high school senior and in the middle of this process, and I found the topic to be super-interesting.”

The Conference Board Leading Economic Index for the U.S. fell 0.5% to 99.7 in September, following a 0.3% decline in August. Over the past six months (March to September 2024), the LEI has decreased 2.6%, which is worse than the 2.2% decline in the prior six months (September 2023 to March 2024). Weakness in new factory orders continued to be a significant drag on the index.

In addition, the yield curve remained inverted, building permits declined and consumers had a tepid outlook on future business conditions. Although the LEI signaled a recession is likely imminent or underway again in September, the index has been a poor predictor of recessions in the past few years. While it has been inaccurate in forecasting where the overall economy is going, the index includes several manufacturing-specific components that illustrate the recent weakness in the manufacturing sector.

Meanwhile, the Coincident Economic Index inched up 0.1% in September to 112.9 and rose 0.9% over the past six months. On the other hand, the Lagging Economic Index declined 0.3% in September to 118.9 and contracted 0.2% over the past six months.

Existing home sales dropped 1.0% in September and fell 3.5% from September 2023. Housing inventory rose to 1.39 million units, reflecting a 1.5% increase from August and a 23.0% boost from last year. The median existing home price was $404,500, up 3.0% from last year, with all four U.S. regions reporting price increases.

Single-family home sales edged down 0.6% from August, with the median price increasing 2.9% from September 2023 to $409,000. Condo and co-op sales dropped a more significant 5.1% in September and were down 14.0% from the previous year, with the median price up 2.2% from the prior year to $361,600.

Homes were typically on the market for 28 days in September, up from 26 days in August and 21 days in September 2023. First-time buyers made up 26% of sales, matching the all-time low from the previous month and down from 27% in September 2023. All-cash sales accounted for 30% of transactions in September, up from 26% in August. Meanwhile, investors or second-home buyers represented 16% of homes purchased in September, down from 19% in August. Distressed sales represented 2% of sales in September, just slightly above the rate of 1% the prior month.

The S&P Global Flash U.S. Manufacturing PMI rose from 47.3 in September to 47.8 in October, signaling a deterioration in business conditions for the fourth consecutive month but at the slowest rate since August. The largest negative contribution to the PMI came from new orders, which fell for the fourth straight month but at a slower rate than the prior month.

Suppliers’ delivery times lengthened for the first time in three months, due to freight-related congestion and weather-related disruptions. Manufacturing input cost growth cooled to a seven-month low thanks to lower fuel prices, reduced buying and competition among suppliers. Inventories fell at the sharpest rate in 14 months. Production and employment also fell but at reduced rates from September. While business conditions improved slightly in October, future optimism in manufacturing hit a nine-month high.

Manufacturing activity in the Fifth District remained sluggish in October. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia. Although it remained negative, the composite manufacturing index improved from -21 in September to -14 in October. Among its components, shipments increased from -18 to -8, new orders rose from -23 to -17 and employment improved from -22 to -17. The vendor lead time index increased from -4 in September to 6 in October, and firms continued to report declining backlogs. Companies also grew slightly less pessimistic about local business conditions, but the index remained in negative territory. The average growth rate of prices paid decreased in October, while the rate of prices received increased slightly.

Expectations for future shipments and new orders both increased further into positive territory, suggesting that firms still anticipate improvement in these areas over the next six months. Expectations for backlogs improved and became positive. Meanwhile the outlook for future local business conditions improved dramatically, rising from -6 to 21. Firms continue to exhibit a more cautious approach to equipment and software spending, as expectations remained negative. Similarly, spending on capital expenditures declined further into negative territory. In sum, businesses in the Fifth District remain optimistic about consumer demand improving in the near future but remain cautious about their own expenditures.

Manufacturer sentiment fell in the third quarter of this year, according to the 51�Թ���’s , out Wednesday.

What’s going on: Results of the survey, which was conducted Sept. 5–20, reflect “preelection uncertainty,” 51�Թ��� President and CEO Jay Timmons —but also larger economic concerns.

• “The good news is that there is something we can do about it,” said Timmons. “We will work with lawmakers from both parties to halt the looming tax increases in 2025; address the risk of higher tariffs; restore balance to regulations; achieve permitting and energy security; and ease labor shortages and supply chain disruptions.”

Key findings: Notable data points from the survey include the following:

• Some 62.9% of respondents reported feeling either somewhat or very positive about their business’s outlook, a decline from 71.9% in Q2.
• A weaker domestic economy was the top business challenge for those surveyed, with 68.4% of respondents citing it.
• Nearly nine out of 10 manufacturers surveyed agreed that Congress should act before the end of 2025 to prevent scheduled tax increases on manufacturers.
• The overwhelming majority—92.3%—said the corporate tax rate should remain at or below 21%, with more than 71% saying a higher rate would have a negative impact on their businesses.
• More than 72% said they support congressional action to lower health care costs through the of pharmacy benefit managers.

The last word: “When policymakers take action to create a more competitive business climate for manufacturers, we can sustain America’s manufacturing resurgence—and strengthen our can-do spirit,” Timmons said.

• “This administration and Congress—and the next administration and Congress—should take this to heart, put aside politics, personality and process and focus on the right policies to strengthen the foundation of the American economy.”

Building permits fell 2.9% in September and are 5.7% lower than September 2023. Permits for single-family homes were 0.3% higher than August but were down 1.2% in the past year. Permits for buildings with five or more units plummeted 10.8% from August and are down a significant 17.4% in the past year.

In September, housing starts decreased 0.5% over the month and 0.7% over the year. On the other hand, starts for single-family homes were up 2.7% from August and 5.5% from September 2023. Meanwhile, starts for buildings with five or more units declined 4.5% from August and were down a dramatic 15.7% from September 2023.

Housing completions in September were down 5.7% from August but up a significant 14.6% from September 2023. Single-family home completions were down 2.7% from August to 1 million but up 1.6% over the year. Completions for buildings with five or more units dropped 8.7% over the month but were 41.9% higher than September 2023.

U.S. import prices declined 0.4% in September, following a 0.2% decrease in August. This is the largest one-month drop since a 0.7% decline in December 2023. Over the past year, import prices have edged down slightly (down 0.1%). U.S. export prices fell 0.7% in September, extending the 0.9% decline in August. While nonagricultural export prices contributed to the decrease (down 0.9%), agricultural export prices rose 0.6%. Over the past year, export prices fell 2.1%.

Fuel import prices decreased 7.0% in September, after declining 2.9% in August. Over the past year, fuel import prices have fallen 17.3%, the largest 12-month drop since August 2023. While petroleum prices declined a significant 16.7% over the year in September, natural gas prices fell an even more dramatic 57.4%.

Nonfuel import prices ticked up 0.1% for the third straight month in September. Higher prices for nonfuel industrial supplies and materials, consumer goods and automotive vehicles in September more than offset lower prices for foods, feeds and beverages.

After declining 2.1% in August, agricultural export prices advanced 0.6% in September. Over the past 12 months, agricultural export prices dropped 5.3%. On the other hand, nonagricultural export prices decreased 0.9% in September, with lower prices for nonagricultural industrial supplies and materials and automotive vehicles more than offsetting higher prices for capital goods, consumer goods and nonagricultural foods. Over the past year, nonagricultural export prices fell 1.8%, the largest annual decrease since December 2023.

In October, Philadelphia’s regional manufacturing activity expanded overall. The index for current general business activity rose from 1.7 to 10.3. More than 24% of firms reported increased activity this month, while 14% reported decreases and nearly 57% reported no change. The indexes for new orders and shipments also increased and turned positive. On the other hand, firms reported a decrease in employment after rising last month, with the employment index falling back into negative territory at -2.2.

Both price indexes edged down but continue to indicate overall increases in prices. The prices paid index declined from 34.0 to 29.7 but remains at an elevated level that reflects the notable portion of firms experiencing higher input costs. The prices received index also fell and remained significantly lower than the prices paid index at 17.9, exhibiting how manufacturers are eating a portion of those higher costs paid.

Looking ahead, most future indicators increased. The index for future general business activity rose markedly to 36.7, indicating growing optimism among firms. A higher proportion of firms still expected increases in activity. Additionally, the new orders, shipments and future employment indexes also rose. On another positive note, the future prices paid index decreased, while the future prices received increased. On the other hand, the future capital expenditures index moved down slightly.

Manufacturing activity in New York state retreated in October after rising in September, with the headline general business conditions index falling 23.4 points to -11. The new orders index dropped 19.6 points to -10.2, after climbing to a multiyear high last month, while the shipments index fell 20.6 points to -2.7, exhibiting a decline in both orders and shipments. Unfilled orders edged down to a slightly negative reading of -2.2, while inventories shrank from 0 to -7.5, indicating inventories are in decline again. Delivery times were somewhat shorter, while supply availability deteriorated slightly.

Despite the decline in business activity, employment increased, with the index for the number of employees rising 9.8 points to 4.1. The average employee workweek also improved some, signaling a slight increase in hours worked. Input and selling price increases remained modest, as reflected in the prices paid index rising 5.8 points to 29.0 and the prices received index moving up 3.4 points to 10.8. Since prices paid continue to increase at a faster pace than prices received, manufacturers still face rising costs while operating in a weakened pricing environment.

Despite weak business conditions in October, firms felt much more optimistic about the future. The future business activity index rose 8.1 points to 38.7, a multiyear high, with nearly 55% of respondents expecting conditions to improve over the next six months. The capital spending index also reversed its losses from September, rising to 9.7 in October.