October 1, 2015 / Employee Morale, industry news, LIT, maintaining talent, operator training, skills gap, strategic planning, value-added services
All year long, the manufacturing industry has had its sights set on a healthy 2015. As we reported in April in our 2015 Industrial Metal Cutting Outlook, all signs pointed to a full economic recovery. According to the latest data from MAPI, GDP is growing and will continue to grow in 2016.
The good news is that many manufacturers and industrial metal-cutting companies have felt the benefits of the improving economy and experienced increased demand; however, others are a little disappointed with the way the year is turning out.
According to the Institute for Supply Management’s September PMI report, economic activity in the manufacturing sector expanded in September for the 33rd consecutive month, and the overall economy grew for the 76th consecutive month. However, 11 industries, including primary metals and fabricated metal products, contracted in September. One fabricated metal producer told ISM that it had “concerns about the China downturn and its effect on our consumer confidence.” Another manufacturer in the primary metals segment said that it continues to feel the impact of the oil and gas market slowdown. “Aerospace demand has also been slower than expected,” the company added.
Meanwhile, factors like the upcoming presidential election and unstable foreign affairs continue to feed into uncertainty, leaving manufacturers conflicted about how they should manage their operations. Should they prepare for increased demand or play it safe now that growth has been slower than expected?
Of course, there is no silver bullet answer to this question, but there are some ways that companies can strategically navigate the ups and downs of the market. Below are just a few ways industrial metal-cutting companies can adjust to market “ups” and expand when needed, while also preparing for the potential “downs” and changing conditions.
When business is booming and orders are up, it’s easy to get overwhelmed by increased demand—especially after several slow months. However, there are ways manufacturers can adjust. U.S.-based automaker Ford, for example, recently cut its traditional two-week summer break short to meet demand.
IndustryWeek offers five ways manufacturers can take advantage of the uptick without making any monumental changes to their operation:
- Round up your top talent. A shortage of skilled talent is a business risk for one-third of businesses, according to manufacturing.net. Case in point, training and maintaining talent is one of the three operating challenges in industrial metal cutting, according to this white paper from the LENOX Institute of Technology. Establishing ongoing operator training can help balance the skill level on the shop floor and across shifts. Enlisting your top performers and asking for their input on projects will go a long way when it comes to motivation and morale.
- Stick to what you know. Although it’s tempting to start adding new specialties when demand is up, don’t be too quick to jump on the bandwagon. Be selective and choose projects that can easily be added to your line-up and offer the most profitability.
- Pick your projects carefully. Again, don’t accept work for the sake of work. Accept projects that you can execute quickly and easily without huge disruptions in your current production processes and workflow.
- Revisit recognition. Ensure motivation stays high by recognizing those who go above and beyond expected responsibilities. A simple “thank you” goes a long way.
- Create incentives. Hard work pays off—make it a reality for your team. Tie rewards to specific goals, timelines, or projects and be timely with the reward.
In a cyclical business like manufacturing, a slowdown is inevitable. However, most manufacturers don’t know how to prepare for market shifts and, as a result, fail to strategically adapt when conditions change. The answer, according to one Forbes article, is to embrace uncertainty.
“In our experience, the most effective leadership teams develop a clear and actionable portfolio of strategic actions that balance commitment with flexibility,” Martin Toner, a partner at Bain Insights, writes in the Forbes article. “Instead of relying on a planning exercise defined by conditions at a discrete point in time, they commit to a cycle of ‘execute, monitor and adapt,’ redirecting the company toward the best opportunities over time.”
Toner goes on to offer four ways companies can form a strategy around uncertainty:
- Define uncertainties. Make a list of the uncertain things you face and then prioritize them.
- Create probable scenarios. Imagine how the future might look. Discuss the possible threats and opportunities of each.
- Develop strategic options. For every scenario, plan an action that would help balance threats while maintaining flexibility to adjust to others.
- Identify signals. Determine what indicators signal market changes and know when to start making those scenarios a reality.
How do you navigate the ups and down of the market? What strategies do you find are the most successful?