2011 Mid-Year Report: Question 2
Manufacturing leaders share their views on the economy’s warning signs and what still needs to be done.
Question 2: Where are the warning signs? What still needs to be done?
Mohamed AbuAli, University of Cincinnati
Warning signs include an unemployment rate that remains high and number of jobs created that remains low. Growth is on the horizon, but it may not be enough. Manufacturing jobs, which tend to be well-paying jobs, have been declining because of productivity gains and outsourcing. At one time, the U.S. was the global leader in electronics manufacturing and, now, very little of it is done within the U.S. Similar trends are seen in the automotive market where Mazda recently closed their manufacturing facilities and moved them all to Japan. This trend in outsourcing is a great warning sign. What still needs to be done? Bring manufacturing back.
William Gaskin, PMA
Most metalforming companies are generally cautious about the future. A significant increase in new government regulations and a new emphasis on enforcement of existing regulations at both the state and federal levels is a growing concern. Many business owners are fed up with the lack of a cogent manufacturing strategy in Washington and with the inability or unwillingness of our elected leaders to aggressively reduce the budget deficits, reform corporate tax laws, develop a sensible energy policy to reduce our dependence on foreign oil, and promote manufacturing in America as a way to create jobs and to grow the economy.
Andy Gravitt, Schneider Electric
The U.S., as a mature economy with an older infrastructure, needs to be even more energy-efficient. Emerging economies such as China depend more on mobile phones and less on land lines. Here in the U.S. we have the mentality of privilege. We assume we will have power, electricity, etc., and we expect the capacity will be in place. In China, and Asia in general, they plan to have no power at certain times of the day. In the U.S., we think about our energy supply within our own four walls but not as part of a complex infrastructure.
Manufacturers need to provide innovative ways to streamline access to data, utilizing mobile technology, and preventative maintenance capability and remote access. This will pave the way for simpler ways to view and manage energy consumption.
As an industry, we need to understand the incentives and rules better so we can help our customers take advantage of them. We need to be a trusted advisor financially, as well as with our solutions. Energy efficiency incentives mean tax reductions, which will help the American economy to revive. The future is bright in that new technologies open new opportunities.
Joe Martin, Martin Control Systems
Washington and state governments need to curtail their spending, without penalizing wage earners at any level. If the wealth of this nation is taxed any more than it is, manufacturers may be the first to tumble. All this debt and taxation can only lead to slower consumer spending, which will cut deeply into the manufacturing industry.
Tsutomu Nakamura, Japan Institute of Plant Maintenance
It is clear that, depending on their past experience, there is a large difference between businesses in terms of restoring and supporting supply chains. I have no doubt that risk management will become increasingly important in the future, not only in maintenance but also in production management.
Mike Pulick, Grainger
As more manufacturers begin to understand the bottom-line impact of managing indirect materials, it’s opening up additional opportunities for productivity improvements. We see our customers exploring new ways to remove waste from the indirect procurement process, and others are asking us to manage their MRO inventory for them so they can focus on their core business.
Jason Speer, Quality Float Works
Every bubble has to burst. The amount of loans being handed out and the rising housing markets were unsustainable—both serving as clear warning signs of trouble ahead.
Early on, Quality Float Works began to notice customers were ordering less frequently and placing orders for smaller quantities of product with quicker delivery times. What we realized was they didn’t want to carry a stock or lock into long-term purchase agreement deals. We also experienced longer lag time in payment processing of customer orders as banks started tightening up their lending policies impacting customers’ access to credit.
Though things have been improving, to really “right the ship” we need to see overall less regulation and more free enterprise. This is what makes our country so great. As I mentioned early, navigating the hurdles of the rough economy the past few years led us to exploring new markets and showed us how much business opportunity there is working with customers across the globe. There are Free Trade Agreements (FTAs) pending passage right now that could lead to even greater opportunities for the manufacturing industry.
Dave Tilstone, NTMA
Uncertainty with forecasting business levels over the next several months continues to plague our members. Our members’ customers are hesitant to release medium or long-term contracts with few exceptions. Our members have found success by designing their facilities and workforces to be lean and more flexible.
Return to 2011 Mid-Year Report: Grading on the curve.
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