April 21, 2015 / best practices, continuous improvement, human capital, industry news, LIT, maintaining talent, material costs, operator training, root cause analysis, strategic planning
Will 2015 be a year of growth for machine shops, as many are predicting? Recent data is sending some mixed signals. Gardner’s most recent metalworking business index (MBI), for example, showed that conditions in the metalworking industry expanded in March for the 15th consecutive month and the 17th time in 18 months. New orders and production increased have also increased for the 18th month in a row.
This of, course, is good news. However, as Modern Machine Shop reports, compared with one year ago, the MBI index has actually contracted for three straight months. “So, the metalworking industry is growing but not as fast as it was at the beginning of 2014,” the industry publication says.
Meanwhile, industrial production decreased 0.6 percent in March after increasing 0.1 percent in February, according to the Federal Reserve. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009.
But not all hope is lost. Many experts are still anticipating growth in industrial production this year and next year. As the LENOX Institute of Technology reported in the 2015 Industrial Metal Cutting Outlook, the Manufacturers Alliance for Productivity and Innovation (MAPI) forecasts that manufacturing production will grow by 3.7% in 2015 and 3.6% in 2016.
Also, according to Shopfloor, the blog of the National Manufacturers Association (NAM), manufacturers remain mostly upbeat about additional demand and production in the coming months. “We have started 2015 on a softer-than-desired note,” the blog states, noting that a strong U.S. dollar, weakened economic markets abroad, lower crude oil prices, the West Coast ports slowdown, and weather have all eased growth in activity. The blog concludes, “Hopefully, we will see better production numbers in the months ahead.”
Regardless of how the year shakes out, the fact is that machine shops need to continue to optimize their operations. Continuous improvement does in fact mean continuous, regardless of business conditions. The goal is to strategically approach those improvements with industry trends and forecasts in mind.
How can you be successful in 2015? A recent article Production Machining offers three strategies for increasing your chances for success this year:
- Recalibrate Your Plan. According to the article, most customers, suppliers, and competitors are planning for a year of growth. This should play a huge role in how you operate. “Are you prepared for growth, or are you still in hunker-down, play-it-safe mode?” the article asks. “You need to calibrate your plan on the emerging reality that we really are in an industry-led economic recovery.”
- Invest in Training Your Talent. If there is one consistent message in manufacturing right now, this is it. As the article states, there are two things that help manufacturers create unlimited wealth—eliminating root causes of problems, and deploying unused employee talent and creativity. “It is up to us to equip our people with the knowledge they need so they can achieve their highest and best potential in, and for, our shops,” the article states.
- Plan for Mill Leadtime Issues. This is perhaps one of the trickiest challenges metal-cutting companies face. However, the article states that there is a way to “intelligently” manage the risks associated with raw materials. “Losing half a year waiting for raw material is not a plan for success,” the article states. “Neither is speculation and hoarding of materials for price hedging purposes. The key, the article suggests, is identifying critical materials that are likely to be unobtainable in an up market—as well as those materials with historically long leadtimes—and taking steps to assure continuity of supply.
There is no crystal ball for what will happen in 2015, and as the last few years have taught manufacturing executives, nothing is ever certain. But hoping for a better year isn’t really a plan. To strategically approach today’s market, managers need to consider what is happening in the market, while also proactively improving what is happening inside their doors.