On to something new

Dec. 28, 2009
As 2009 fades out, there are random indicators of economic recovery: the Federal Reserve Bank reports modest improvement in consumer spending since October; the U.S. Dept. of Labor indicates the rate of unemployment has slowed; and November ...

As 2009 fades out, there are random indicators of economic recovery: the Federal Reserve Bank reports modest improvement in consumer spending since October; the U.S. Dept. of Labor indicates the rate of unemployment has slowed; and November U.S. manufacturing orders increased almost 2%, the Institute for Supply Management says.

There are no boldfaced conclusions from these data points, but perfect clarity is rare. It was clear enough 15 months ago that the global economy was failing at some fundamental level, and before long it was clear too that everyone would be affected. Since then, nothing has seemed clear.

One of the signifying characteristics of this recession has been its thoroughness: no market segment, no organization, no worker has been unaffected. All of us have been on edge waiting for the next calamity. We’re unified in confusion and doubt, so we’re dubious that any small detail can undo so much damage. No one makes a move, so everyone is stuck.

Getting “unstuck” won’t be a unified effort. It demands individual initiative. Sooner rather than later each of us must acknowledge the confusion and reserve the doubt, and proceed using as much confidence and understanding as we can muster. Most economic advice involves managing perceptions anyway: why not assign all the bad news to 2009 and move ahead with confidence?

A more practical way forward is to understand better how and why the manufacturing market has changed, and how it continues to change. Tim Hanley, a Deloitte & Touche expert on manufacturing and industrial products markets, identifies six big factors in his industrial outlook:

• Federal stimulus spending (aimed at increasing bank lending and accelerating industrial spending) is disguising actual demand levels, so manufacturers cannot commit to capital spending plans.

• Manufacturing supply chains and manufacturers’ “footprints” have become confused and less reliable thanks to cost cutting, geographic shifts and uncertain consumer demand.

• Commodity and energy prices are volatile, so manufacturers cannot forecast their needs and are fearful of future spikes when/if the global economy strengthens.

• Persistently weak and uncertain economic recovery means that manufacturers must continue to reduce structural costs, straining productivity.

• Improved global competition and weakened global demand limits producers’ abilities to pass costs to customers.

• A shrinking pool of affordable and capable workers, engineers, and executives complicates longrange planning and limits growth potential.

This may be his 2010 outlook, but other than the federal stimulus, each of these factors was in place prior to 2009. It’s a reminder that the world rarely changes in an instant: It evolves, and so must we.

The machining world is evolving too, of course. OEMs are assigning more of their precision manufacturing work to job shops, which is pressuring the shops to perform to higher standards. It’s also changing what they demand from machine tool builders, tooling manufacturers, software developers, and other dedicated suppliers. None of it is sudden, or certain, but it’s a change that’s happening apart from (and in spite of) all that confusion that we associate with 2009.

The way to overcome confusion is to identify your strength and be an expert at it. In this issue you’ll read about a machine shop that designs and manufactures custom tooling, and its creative effort to adapt to changing market conditions. The company president acknowledges they’re trying to change the way their market sector works. No shortage of confidence there.

This report, as we hope with every report in this and every issue, addresses the fact that every day presents machine shops with a series of challenges to their progress. More to the point, every day delivers reminders that we must use the resources and skills we have to improve our performance — or else, find the tools we need to improve. It’s not easy, but it’s progress.

Robert Brooks
[email protected]

About the Author

Robert Brooks | Content Director

Robert Brooks has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries. His work has covered a wide range of topics, including process technology, resource development, material selection, product design, workforce development, and industrial market strategies, among others. Currently, he specializes in subjects related to metal component and product design, development, and manufacturing — including castings, forgings, machined parts, and fabrications.

Brooks is a graduate of Kenyon College (B.A. English, Political Science) and Emory University (M.A. English.)

Latest from Shop Operations