“Manufacturing- It's Baaak!
Manufacturing is back! Although many of us in the industry would say it never left; China just got more attention! Nevertheless, the overall business climate for manufacturing is undoubtedly improving. After some really tough years, most manufacturers are experiencing increased sales and the need to hire more employees. Over 500,000 manufacturing jobs were created in the last five years according to Time Magazine in their April 22, 2013 issue.
The past several months alone have seen some surprising reversals:
Apple is building one of its Mac computer lines in the U.S..
Wal-Mart will increase spending with U.S. suppliers by $50 billion over the next 10 years.
Airbus will be building jets for JetBlue Airways in Alabama.
Ashley Furniture is investing $80 million in a plant in North Carolina.
What’s behind the surge? Well, a couple of things,
most of which have to do with technology and increased productivity.
No More Dungeons
First of all, most of the dirty, dark and stinky plants of yesteryear are gone. The plants of today are clean, well lit and pretty nice to work at. Owners have finally gotten the idea that having a plant that you can show off is a great sales tool. If you want to do close precision aerospace or defense work, you won’t even get a chance to bid without a clean plant that looks like someone took some time to organize it. Sure there are some holdovers with dingy plants but they likely aren’t getting the higher profit margin jobs.
CNC Is Everywhere
Secondly, more and more plants have transitioned to modern CNC machines that are more accurate, quicker and of course clean (at least when they are new!). What that means is a manufacturing environment that can do closer tolerance jobs at lower costs. What owner wouldn’t want that to offer to their existing or potential customers? There is one drawback in that it takes a more skilled employee to maximize the returns of these new machines and they are getting harder to find at any price.
China Luster Fading
Third, the companies that have sent jobs off shore to get made are re-evaluating their decisions. When the full cost to purchase a part in China, for instance, is evaluated, the numbers are looking more attractive to bring jobs back to the USA. Wages in China are up, quality can be an issue and the 3am phone calls to discuss problems add to the true cost of the process. All in, China is not necessarily the low cost solution it was just a few years ago.
Another fun fact to know and tell:
Cost to ship 40ft. container from China to the U.S. West Coast: now $2,302, up from $1,184 in 2009.
Technology Changes Everything
Fourth and not the le
ast, is that new technology is coming as well. I recently saw an inexpensive 3-D printing machine that can duplicate a metallic part in plastic in a couple of hours. While it's not quite ready to make parts to final B/P tolerances in all materials, this technology will be fully capable in a few short years. Rapid prototyping of all kinds of shapes is possible now with the future looking very bright for manufacturing of smaller lots of finished parts. Other advances in CNC technology are allowing manufacturers to use one machine to turn, drill, mill and even cut gears in one chucking of the part. Yes, these machines are sophisticated and a bit more expensive, but they allow a shop to offer services in-house that they would ordinarily
have to farm out.
One Problem Though!
The one limiting factor touched on above, is the lack of experienced workers to run these fancy machines. In future months, I’ll talk about some ideas on how a shop can overcome this problem. It’s not easy or inexpensive but it CAN be done. Stay tuned!
Check out our new "Exhaust Notes" video using the link under the picture of my 1967 Chevelle to the right. In this month's video, I'll talk about the resurgence of manufacturing in the U. S. and how important manufacturing is to our future.
To check out our Profit Power video series, click on this link. http://tinyurl.com/age9a9n In the coming months, look for more and exciting content that will surely help you improve your business in this very competitive industry.
Please feel free to explore my website at www.topgunconsulting.com and see how we can help you improve your efficiency and get you on the road to higher profits and greater success!
I look forward to talking with you soon at 602-510-5998 or email me at email@example.com
Your Profit Driver