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human capital

How Machine Shops Can Be Successful in 2015

April 21, 2015 / , , , , , , , , ,


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.”

What Now?
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:

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.

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How Fabricators Can Prepare for Whatever 2015 Brings

April 10, 2015 / , , , , , , , , , , , ,


As we reported in our 2015 Industrial Metal Cutting Outlook, most manufacturers are expecting some growth in 2015, although no one expects it to be a banner year. “Modest improvement,” “slight gains,” and “steady” are just a few of the words being used to describe 2015 business prospects.

On Track
Based on recent data, those words seem fairly accurate. According to the latest report from Institute for Supply Management (ISM), activity in the manufacturing sector expanded in March for the 27th consecutive month, and the overall economy grew for the 70th consecutive month. However, it is worth noting that ISM’s readings for March were lower than February’s readings. Specifically, March PMI registered 51.5 percent, a decrease of 1.4 percentage points from February’s reading of 52.9 percent and, even more noteworthy, the fifth consecutive monthly decline. The New Orders Index registered 51.8 percent, a decrease of 0.7 percentage point from the reading of 52.5 percent in February. Even so, PMI and the New Orders Index readings were above the set thresholds of 43.1 and 52.1, respectively, which indicate overall growth.

Of the 18 manufacturing industries covered in ISM’s report, 10 reported growth in March, including fabricated metal products. As one respondent from the fabricated metal products segment told ISM, “Our business is still strong and on projection. Dollar strength is challenging for our international business.”

Planning for Growth
According to industry publication The Fabricator, most fabricators went into 2015 expecting steady growth, and many planned on investing in capacity-building equipment to prepare for increasing customer demand. “The fabricating industry is looking to add capacity to gear up for the unexpected,” the magazine said in its 2015 Metal Fabrication Forecast. “Custom fabricators are all too familiar with demand variability, and demand has become even more variable in recent years.”

Quoting findings from FMA’s 2015 Capital Spending Forecast, The Fabricator says most fabricators are planning to build capacity with more equipment. “Projected capital spending growth has slowed from the dramatic rebound seen postrecession—2015 projections are up only 3.5 percent over 2014—but the spending has shifted,” the magazine says. “Specifically, fabricators are expecting to spend much less on consumables and supplies (down almost 30 percent) and more on capacity-building machinery, especially in cutting and forming, where spending has jumped past prerecession levels.”

Ready for Anything
Regardless of whether or not you entered the year bullish or cautious, most industry leaders would agree that being proactive is the only way to approach today’s marketplace. While you may or may not be planning to add capacity this year, there are several other strategies you can use to prepare your operation for whatever 2015 brings.

In fact, a recent article from IndustryWeek suggests that there are five tests every manufacturer should run quarterly to gauge “factory readiness.” These include the following:

  1. Utilization versus capacity: Are utilization and capacity running even?
  2. Per-project profitability: Is per-project profitability acceptable?
  3. Client mix: Could the client mix be improved?
  4. Workload diversity: Will the current and expected workload allow for learning new skills and expanding the business?
  5. Sick time and personal time off: Are workers motivated to deliver exceptional work? If not, why not?
  6. As the IW articles notes, forecasting the future with any measure of precision is difficult under the best of conditions, and manufacturing tends to have less visibility than most industries. However, by regularly following and measuring your operation’s performance, fabricators can not only be better prepared for what might happen in the near future, but more importantly, be prepared to handle unexpected changes.

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    2015 Industrial Metal Cutting Outlook

    April 1, 2015 / , , , , , , , , , , , , , , ,


    Like most manufacturers, industrial metal-cutting companies went into 2015 with both optimism and caution. While all signs seem to be pointing to a full economic recovery, concerns surrounding an unstable political landscape, foreign markets, and pricing continue to keep many metals companies on their toes.

    Some Growth Ahead
    As we enter the second quarter of 2015, most experts anticipate growth in the metals industry. Early predictions painted a positive picture for the year, and recent reports are confirming that the industry will, at the very least, see slight improvements over 2014.

    According to the Manufacturers Alliance for Productivity and Innovation (MAPI), industrial production increased at a 3.8% annual rate in the fourth quarter of 2014 and posted 3.6% growth for the year as whole—over a percentage point higher than the 2.4% gain in the overall economy. The manufacturing outlook for 2015 and 2016 calls for a minor acceleration from the 2014 growth rate. According to the MAPI Foundation’s most recent U.S. Industrial Outlook, manufacturing production is forecast to grow by 3.7% in 2015 and 3.6% in 2016.

    MAPI’s outlook also predicts that 21 out of 23 industries will show gains in 2015. This includes growth in metals industries such as iron and steel products (5%), alumina and aluminum production and processing (7%), and fabricated metal products (3%). The top industry performer will be housing starts, which is expected to increase by 16%.

    Forecasts for steel demand are also positive, but growth rates will not be as strong as they were in 2014. According to the Short Range Outlook 2014-2015 from the World Steel Association (worldsteel), U.S. steel demand is expected to increase by 1.9% in 2015—much lower than the 6% growth the U.S. experienced in 2014. Globally, worldsteel forecasts that global apparent steel use will increase by 2.0% this year. This is a downward revision from previous forecasts, due to a slowdown in emerging economies like China.

    “Recoveries in the EU, United States and Japan are expected to be stronger than previously thought, but not strong enough to offset the slowdown in the emerging economies,” stated Hans Jürgen Kerkhof, chairman of worldsteel’s Economics Committee. “In 2015, we expect steel demand growth in developed economies to moderate, while we project growth in the emerging and developing economies to pick up.”

    Concerns and Challenges
    Buying into the positive forecasts, most metals manufacturers expect business to improve this year. According to an annual survey of metals executives by American Metal Market (AMM), 42% of respondents expect the economy to turn around in 2015 and 67% expected business to improve overall, mostly due to growth in the auto and energy sectors.

    However, AMM reports that respondents did have some reservations. Political events, cheap imports, and foreign markets were all causes for concern, as well as uncertainty about “where important industry segments like construction might be headed,” AMM states in its survey report.

    In his State of the Industry address earlier this year, Robert Weidner, president and CEO of the Metals Service Center Institute (MSCI), listed several trends that will affect the metals industry in 2015 and beyond. Below are the five challenges he outlined, as reported by thefabricator.com (You can read the full coverage here.):

    • Market Intelligence – Volatile markets and increasing competition have heightened the need for trustworthy data and analysis tools, as well as the need for cybersecurity resources and training to secure market intelligence.
    • Business Disruption – World events have an even bigger impact on local economies than before, creating a need for topic- and area-specific experts and information and enhanced vehicles and technology to provide information.
    • Congressional Gridlock – U.S. partisan politics have stalled action in the legislative branch, often resulting in extreme actions through regulators that have impeded manufacturing growth.
    • Safety and Risk Management – Slow market growth has left companies cautious to invest.
    • Skilled Labor and Changing Demographics – Attracting a skilled workforce remains a challenge for the industry.

     

     

    Strategic Approaches
    With both forecasts and anticipated challenges in mind, industrial metal-cutting companies can strategically approach the market from both a business and operational standpoint. In fact, as we reported here, it is critical for today’s managers to develop operational short-term plans that are effective in achieving the overall strategy set forth in the business plan. For instance, if the goal is continuous improvement, then make sure your metrics, your daily practices, and communication with your team all point to that overall strategy.

    As a global company serving the industrial metal-cutting industry, we at LENOX Tools have a unique vantage point of what is happening in the marketplace. We have watched some metal companies barely survive, while others have found ways to thrive. The difference, in most instances, seems to be the company’s commitment to making improvements. Whether investing in new equipment to improve cutting time and quality or investing in training to improve and empower their human capital, industry leaders are continuing to focus on making positive changes on the shop floor so they can be ready to respond to changing customer demands. In other words, the only way to offset external uncertainties is to focus on making internal improvements.

    Based on industry trends and our own experience, LENOX sees the following as key strategies for industrial metal-cutting companies that want to be successful in today’s marketplace:

    • Invest in Operators and Training. In light of the manufacturing industry’s ongoing skills gap, experts like MSCI’s Weidner are stressing the importance of employee safety and ongoing training as a means of attracting and maintaining workers. In addition, LIT’s benchmark survey of industrial metal-cutting companies provides evidence that investing in areas like training can provide additional benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs.
    • Embrace Proactive Care and Maintenance. No matter how efficient an operation, some machine downtime is inevitable. The key is to be proactive and minimize it as much as possible. This includes practices such as breaking in blades and regular coolant checks. By adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.”
    • Form Strategic Supplier Relationships. Whether you need help with training, gathering metrics, or de-costing, help is likely no further than your closest supplier. And if that’s not the case, you may want to rethink your supply chain. By utilizing value-added services from trusted suppliers and making them more of a partner than simply a supplier, metal-cutting companies can improve quality and productivity—both of which impact the bottom line.
    • Seek New Opportunities. Market trends such on re-shoring and an automotive boom could translate into new opportunities for your metal-cutting company. Are there value-added processes you can add to your operation to stay competitive? Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base? Is there new equipment or tooling that could help you better serve a certain customer base? Asking critical questions such as these may reveal new prospects for growth. Start brainstorming.

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    Five Ways to Optimize Your Machine Shop

    March 20, 2015 / , , , , , , , , , , , , , , ,


    In an age of information overload, most managers know how their shops should run. They’ve read case studies about successful lean initiatives, benchmarking studies confirming the benefits of preventative maintenance, and forward-thinking editorials endorsing the “smart” factory. Yet, in the midst of in the day-to-day grind, it is often difficult to find the time and resources to make any real improvements, let alone put a plan in place to make them happen. As a recent article from Canadian Metalworking quips, many shops are too busy working on their business to work on their business.

    However, taking the time to make strategic decisions for your shop is critical to its success. Maintaining status quo is no longer enough in today’s market. Modern machine shops need to have both short- and long-term plans, and they need to make the time to see them through.

    But where do you start? At this year’s The MFG Meeting, Laurie Harbour, president of manufacturing consulting firm Harbour Results, Inc. (HRI), shared five best practices for leaders who want to start making real changes in their operations:

    1. Strategic Planning. Do you have a strategic plan? It’s not a mission or a value   Your company needs a strategy that outlines what its focus is and why that focus is important. Additionally you need a plan with actionable one-year objectives that are communicated at all levels of your organization. And, of course, metrics need to be in place to drive each employee’s role and responsibility in meeting the plan.
    2. Market Intelligence. To be successful you must be informed. Companies can no longer afford to guess or rely on “luck.” It is critical that you gather and review both internal and external data. Triangulation of customer information, industry knowledge/historical performance/experience and external market intelligence are critical to a successful demand plan.
    3. Demand Planning. Although difficult, demand planning can lead to driving significant efficiency gains within your business. Utilize market intelligence; talk with your customer and implement demand planning in your facility. Those that are doing so improve throughput by 20 to 30 percent, making profitability soar.
    4. Manufacturing Efficiency. Rather than just improving the efficiency of one or more machines, you need to look at the entire system for optimization. Rather than scheduling each and every piece of equipment that supports making the product separately, it is critical to schedule the system and how all the pieces interact. Analyzing the entire manufacturing operation as a whole helps identify opportunities for efficiency gain and process improvements.
    5. Labor. The manufacturing industry is facing a skilled-labor shortage and it is only predicted to get worse. To be competitive and maintain a productive workforce, you need to have a plan and be prepared to attract, train and retain a younger generation.

    To help leaders take a deeper look at their operation, HRI also offers a Strategic Planning Worksheet, which lists some questions leaders can use to identify opportunities for improvement in each of these five areas. You can download the worksheet here.
    Are you addressing these five major areas in your machine shop? In what areas could you use some improvement? Taking the time to ask critical questions like these—and those listed in the HRI worksheet—is the first step in optimization and, even more so, putting you on the right path to becoming one of those shops you always read about.

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    A Fresh Look at Safety in Your Fabrication Shop

    March 10, 2015 / , , , , , , , , , ,


    Every fabricator knows that safety is important. Unfortunately, many companies fail to understand that safety needs to be more than just a priority. Instead, it needs to be viewed as a value—something that carries a cost. Injured workers can’t be productive, which means safety directly affects your operations and your profitability. In fact, some fabrication experts argue that safety is a primary component of operational effectiveness.

    And, of course, if you value your employees at all, then treating their safety as a value should really be a no-brainer.

    But how do you position safety as a value? How do you ingrain it into the culture of your fabrication shop? Below are a few strategies that should help get you and your operation on the right track:

    • Set goals. Like any strategic endeavor, it starts by looking at your goals. For example, according to a recent article from Occupational Health & Safety, if your goal is to hit zero injuries, then you may need to re-evaluate.  “Zero injury goals are often more fodder for company posters and financial and vision statements than real, meaningful direction for an organization,” the author states.  Instead, the article suggests that the real goal should be safety excellence. “Zero injuries are a qualifier of our safety improvement efforts, not the primary goal if excellence is our journey’s purpose,” the author says.
    • Lead by example. Positioning safety as a value also starts with leadership, according to an article from EHS Today. Quoting research from Jim Spigener, a senior vice president at consulting firm BST Solutions, the article states that culture is the ultimate predictor of safety performance, and senior leaders make or break the culture of the company.  “To create a safety culture, leaders must behave differently,” the article states. To do that, Spigener believes that leaders need to “’get connected to their value for safety.’” Is safety only about meeting OSHA standards, or do you, as a leader, truly understand its value?
    • Make it visual. Another strategy for keeping safety at the forefront of everyone’s minds is to create visual reminders. This tactic has been especially effective for the LENOX team. About a year and a half ago, LENOX implemented the Safety Sticker program, which visually displays whether or not its operation has had any safety incidents. Here’s how it works:  Sticker dispensing stations and a safety calendar are located at every entrance to the facility, and every employee is required to put on a green sticker with the number of days “accident free” written on it. When a recordable accident occurs, everyone in the facility changes from a green sticker to a red sticker for a seven-day period. After seven days, everyone reverts back to the green sticker. According Matt Howell, senior manager, the program has been effective in several ways. “This system is a good rallying point for the facility and builds energy around safety,” Howell explains. “It has a strong behavioral impact as well. It puts safety on people’s minds when they put the sticker on at the beginning of the day and when they take it off at the end of the day. This ultimately promotes thought on safety and prompts people to think twice before engaging in an unsafe behavior/act.” While Howell admits it is hard to quantify the exact impact of the program, he says that it has played a huge role in recent safety gains: Thanks to the sticker program and a variety of other safety/behavior-based programs, LENOX has reduced the number of OSHA recordable accidents in its facility in 2014 by 73 percent.
    • Talk about it.  Perhaps the best way to reinforce the safety message is to talk about it—a lot.  Structural Steel of California, a leading industrial metal-cutting company featured in a series of case studies from the LENOX Institute of Technology (LIT), is intentional about communicating to employees that safety is a critical aspect of the metal products it fabricates, and that consistent message has evolved into an overall culture of safety within the company’s two North Carolina facilities. To facilitate this, managers hold a safety meeting every morning with the operators and a safety committee meeting every month.

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    How Industrial Metal Companies Can Prepare for New GHS Chemical Labeling Requirements

    March 1, 2015 / , , , , ,


    As most manufacturers are now aware, new changes to the Occupational Safety and Health Administration’s (OSHA) Hazard Communication Standard (HCS) are bringing the United States into alignment with the Globally Harmonized System of Classification and Labeling of Chemicals (GHS). In fact, based on the compliance timeline (listed below), your employees should already be trained on the regulation changes. With the next compliance deadline just around the corner, the question remains: Is your industrial metal company prepared?

    Overview of GHS Labeling Requirements
    The history of HCS dates back to 1983, when OSHA first established the standard to help inform employees about the hazardous chemicals they were working around. HCS mandated that chemical hazard labels be applied to all chemical containers, material safety data sheets (MSDS) be distributed with each chemical, and workers undergo chemical safety training.

    The good news is that the new requirements don’t change the overall framework of the original Hazard Communication Standard but, instead, aim to harmonize them with worldwide chemical standards. OSHA provides the following explanation for the revised standard:

    “This update to the Hazard Communication Standard (HCS) will provide a common and coherent approach to classifying chemicals and communicating hazard information on labels and safety data sheets. Once implemented, the revised standard will improve the quality and consistency of hazard information in the workplace, making it safer for workers by providing easily understandable information on appropriate handling and safe use of hazardous chemicals. This update will also help reduce trade barriers and result in productivity improvements for American businesses that regularly handle, store, and use hazardous chemicals while providing cost savings for American businesses that periodically update safety data sheets and labels for chemicals covered under the hazard communication standard.”

    The government organization goes on to say that while the original standard gave the workers the “right to know,” the new Globally Harmonized System gives workers the “right to understand.” For a full overview on the new regulations, you can visit the OSHA website here; however, an archived article from thefabricator.com gives a great summary of the key changes:

    • Revised Criteria for Classification of Chemical Hazards. About 880,000 different hazardous chemicals are used in the U.S. Each one must be reclassified by the chemical manufacturer per the GHS standard. This reclassification helps with the United Nations’ goal of streamlining chemical hazards globally.
    • Specified Format for Safety Data Sheets. The MSDS is now referred to as a safety data sheet (SDS) and has a new format. The new SDS has 16 specified sections to help streamline the information provided and make it faster and easier for employees to find the information they need. Since every chemical is being reclassified, each will have a new SDS supplied by the chemical manufacturer. These will be filed and available for employee use.
    • Revised and Standardized Labeling Requirements. Each primary container’s chemical label must appear in the GHS format. This new format will include the chemical name and manufacturer, as well as four new elements: a signal word, hazard pictograms, hazardous statements, and precautionary statements.

    How to Prepare
    What does this new standard mean for your industrial metal-cutting operation? As a chemical user (i.e., coolants), OSHA states that you should continue to update your safety data sheets when new ones become available, as well as provide training on the new label elements and update hazard communication programs if new hazards are identified.

    If you haven’t done so already, Modern Metals offers the follow recommendations for modifying your hazard communication program to comply with OSHA’s revised HCS:

    • Create a list of work practices and job descriptions that involve exposure to hazardous chemicals and train those employees on the revised standard. You may want to be judicious and train your entire staff.
    • Document your training program.
    • Give employees an opportunity to ask questions. Collect signatures verifying comprehension of the updated information on labeling and hazard identification.
    • Save the new safety data sheets that arrive with procurement orders.
    • Set the expectation with your suppliers and vendors that your business is expecting the new SDSs with future orders.
    • Replace MSDSs with the new SDSs for your recordkeeping. If you maintain a hard-copy notebook, discard old MSDSs and insert new SDSs. If you use an electronic database, delete old MSDSs and save new SDSs.
    • Reassess uses and types of personal protective equipment at the business. Implement a PPE program that covers your hazards; the selection, maintenance, and use of PPE; employee training; and ongoing monitoring to measure effectiveness.

    Compliance Deadlines
    Based on the compliance timeline, your operation should have already trained your employees on the new label elements and SDS format. However, you technically have until June 2016 to update your labeling and hazard communication department (as needed) and complete any additional safety training (see below).

    OSHA compliance dates

    Chemical suppliers, however, need to be in full compliance by June of this year. This means they should have reclassified their chemicals and produced GHS-formatted labels and safety data sheets in the new expanded format. Distributors have until December to distribute old inventory that has already been labeled.

    Benefits of GHS
    In the end, OSHA believes that revised standard will benefit U.S. manufacturers and the 43 million workers who produce or handle hazardous chemicals across the country. By streamlining labels and data sheets, the modification is expected to prevent more than 500 workplace injuries and illnesses and 43 fatalities annually. OSHA also estimates that it will result in cost savings to American businesses of more than $475 million in productivity improvements, fewer safety data sheet, and label updates and simpler new hazard communication training.

    As this article from Production Machining points out, the new standard also gives metals companies the chance to apply continuous improvement to their hazcom training programs, whether that means better training documentation or ensuring that chemical safety data sheets are scanned and archived to back-up servers. “Use this change to improve your ability to provide evidence of your recordkeeping, training and evidence of effectiveness,” the article suggests.

    Perhaps the new HCS is a good reminder to everyone that safety isn’t a static issue, but like every other aspect of your operation, needs to be re-addressed and re-evaluated for possible improvements.

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    How Should Ball and Roller Bearing Manufacturers Allocate Resources for their Metal Cutting Operations?

    February 28, 2015 / , , , , , , , , , , , , ,


    Today’s cost-sensitive market makes it difficult for managers to gauge how they should strategically allocate resources within their industrial metal-cutting operations. Is it wise to make high-tech capital investments in an uncertain economy, or would manufacturers be better served to invest in their human capital to close the growing skills gap?

    These types of questions can be especially challenging in a mature market like ball and roller bearing manufacturing, where seasoned employees may be resistant to change, both in terms of company culture and technology. However, leaders need to be sure they are making strategic decisions that benefit both the company and their employees, and avoiding the trap of making allocation decisions because “that’s the way they’ve always been done.”

    To help ball and roller bearing manufacturers discern how to best allocate resources within their operations, below are some resources that discuss some of the trends and strategies today’s manufacturing leaders are using to get ahead in today’s market:

    • Be Smart about Getting Smart. The ideology that industry leaders use cutting-edge technology carries some truth, but that doesn’t mean that every manufacturer should go out and invest in the latest high-tech connectivity software. That is, not without at least doing a little research. Check out this article from IndustryWeek, which does a great job of explaining how managers can start to make a business case around “smart” manufacturing investments, including data capture, connectivity, remote control and analytics. In addition, business consultancy ARC Advisory Group has developed a handful of evaluation and selection guides to help industrial manufacturers determine which technologies they should adopt to get the best return on investment.
    • Small Upgrades Can Pay Off. Having the right tools for the job is critical in metal-cutting, which means that even a small upgrade in tooling has the potential to make a huge impact.  According to the white paper, The Top Five Operating Challenges Ball and Roller Bearing Manufacturers Face in Industrial Metal Cutting, managers should re-evaluate their tooling choices every few years, even if they feel satisfied with current results. While testing new blade technologies can be a time-consuming endeavor, it can certainly pay off if the end result is faster cutting times and lower costs. Recent advancements in tooth geometries, wear-resistant materials, and blade life are providing significant improvements in productivity and quality. For example, the tips of many precision circular saw blades are now made with cermet, a composite material composed of ceramic and metallic materials. These blades can cost more upfront, but they are said to offer longer blade life as well as provide exceptional heat and wear resistance when cutting solid, carbon-based metals.
    • Human Capital Counts. While manufacturers have historically invested in machines over people, the looming skills gap is starting to change that. As more baby boomers retire, industry reports like this one from Deloitte and The Manufacturing Institute have been suggesting that manufacturers focus on investing in their human capital, both in terms of training and recruiting. And according to a recent article from manufacturing.net, companies may also want to consider increasing the wages they pay their employees. The trend, the article states, is moving in that direction. “We have seen an increase in jobs, but not an increase in pay, but that is starting to change,” Traci Fiatte, president of General Staffing at recruiting firm Randstad, tells manufacturing.net. “Even in entry level positions, the salaries are staring to creep up, and that is what you would expect to find when demand is high and supply is low.” Regardless of how managers decide to address the skills gap, the overarching lesson it is teaching the manufacturing industry is clear: human capital counts.

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    Why Industrial Metal Cutting Companies Should Line Up Day-to-Day Operations with Business Strategy

    February 1, 2015 / , , , , , , , , , , , ,


    When it comes to industrial metal cutting, there are a host of functional strategies companies can use to get the most out of their equipment and tooling. Day-to-day activities such as constant coolant checks, proper speed and feed rates, and strategic blade choice are well-known best practices among industrial metal-cutting companies looking to prolong blade life and reduce downtime.

    However, operations managers need to be sure they don’t stop there. In today’s competitive marketplace, managers need to make higher level business decisions that strategically position their operations to address changing market demands. As this article from Chron explains, the goal is to line up long-term strategic goals with day-to-day operational decisions. Unfortunately, the Chron author says, many companies fail to do both:

    “In some instances, companies are very good at articulating or designing a strategic plan but fail to execute a short-term operational plan, which comprises the toolkit required to achieve the strategic plan. Likewise, having short-term plans without a long-term strategy results in a lack of direction or focus as to the corporate vision and values of the company. By combining these two planning components, a company is able to set a general path based on company values, goals and objectives, while having the ability to adapt to changing environments.”

    As the article explains, it is critical for today’s managers to coordinate operational short-term plans that are effective in achieving the overall strategy set forth in the business plan. For instance, if the goal is continuous improvement, then make sure your metrics, your daily practices, and communication with your team all point to that overall strategy. Here are two examples of what that looks like:

    • L.B. Foster Rail Technologies Corp., one of IndustryWeek’s 2014 Best Plant winners, has taken the idea of being “lean” and made it part of the company culture. In a recent article on the manufacturer, IndustryWeek notes: “You don’t actually see lean in action … as much as sense it.” Work groups and team collaboration are hallmarks of how the company chooses to function, and the results are visible, both on paper and around the company. “The focus is apparent in the lab, in the administrative and executive offices, and, of course on the plant floor,” the article states. “But more interesting is how continuous sustainable improvement efforts bridge the boundaries between and among the groups.”
    • A.M. Castle Company, a metal service center featured in a case study from The LENOX Institute of Technology (LIT), has made several operational decisions that line up with its overall goal to always improve. Glen Sliwa, the manager responsible for keeping the band saw and circular saw operations up and running at the company’s Franklin Park location, says continuous improvement starts at the plant level and requires input from everyone, including operators. “We are always doing something to upgrade,” Sliwa says. About 7 years ago, the operation underwent a lean transformation, including major changes in workflow and equipment placement as well as simple improvements like color-coding material. Sliwa says the facility continues to use the lean tool known as 5S, which eliminates waste by keeping work areas clean and organized. More recently, Sliwa and his team added extension tables to all of the machinery to hold more material and increase production during all three shifts.

    Of course, these are just two examples. If the goal is to decrease costs, operational strategies such as quarterly preventative maintenance checks can play a huge role in reducing maintenance expenses and costly breakdowns. If the goal is to increase productivity, perhaps regular brainstorming meetings with operators would be useful. Or if the goal is to keep quality high, ongoing training can help reduce instances of rework, according to LIT’s benchmark study.

    The point is that instead of simply implanting a series of best practices, managers need to be strategic, especially in the way they run the day-to-day operations. As the Chron article stresses, every operational decision should be made with the larger company goal in mind.

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    How Forges Can Attract Millennial Operators

    January 25, 2015 / , , , , , , , , ,


    As more and more Baby Boomers near retirement, many forges are faced with the challenge of replacing the lion’s share of their workforce, including senior management. Unfortunately, a lot of workers that should be the natural replacement—Generation X—never really took an interest in manufacturing, so many companies are now looking to Millennials to fill the gap.

    But how do you make a career in manufacturing attractive to an entirely new generation? The literal generational gap between Baby Boomers and Millennials means that today’s manufacturing companies need to get creative and even more so, be flexible, when seeking out new talent.

    As this guest editorial from Forward magazine explains, Millennial attitudes and behaviors are vastly different from those of the previous two generations. The author, Neil Howe of LifeCourse Associates, provides a few attitudes and behaviors that define Millennials:

    • They feel special and have been sheltered.
    • They want to be mentored.
    • They are team-oriented.
    • They want a “mainstream” job.
    • They feel pressured.
    • They are achievement-oriented.

    The good news is manufacturers can leverage some of these traits to their advantage. For example, being “team-oriented” is ideal for any operation looking to implement (or has already implemented) lean manufacturing principles. In fact, many of these characteristics point to one overarching theme: Millennials want to be engaged. They want to be acknowledged, active participants in their jobs.

    Here’s the bad news: Even with the lean movement, this isn’t the manufacturing industry’s strong point. According to this article from IndustryWeek, a Gallup poll showed that when looking at engagement among different occupations, “manufacturing came dead last, with just 24% of production workers rated as engaged.” That is below both clerical workers and government workers. Why the low rating? Gallup said the problem might be that “the management culture in these companies tends to focus on process ahead of people.”

    Back to some good news: The talent gap presents the perfect opportunity for managers to start creating an engaged work environment, both for Millennials and current employees. Using suggestions from the IndustryWeek article, here are a few ways managers can do just that:

    • Communicate the value of the work being performed in the plant.
    • Stress the necessity both for high achievement and for an environment that respects people.
    • Pay a fair wage and benefits.
    • Employ generous amounts of listening and praise.
    • Offer employees growth through training and participation in meaningful activities on the shop floor, in meeting rooms and in the community. According to the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, it is critical for industrial metal-cutting companies to have formal ongoing training programs for both new and seasoned employees.

    Perhaps the best news is that the Forging Foundation (FIERF) and the Forging Industry Association (FIA) are already working on multiple fronts to help reach out to the next generation’s workforce. According to this article from Forge magazine, the two organizations are teaming up with both academia and industry to tell the forging story and to provide resources to assist in their recruiting and retention efforts. For example, FIA is currently offering members “Forge Your Future Toolkits,” which include an array of ideas and resources for forges trying to develop relationships with teachers and students with the goal of becoming an “employer of choice” in the local community. (Click here for more information.)

    Clearly, gearing up for a new generation of workers will take time, combined efforts, and in most cases, some change. But like any area of your operation, hiring and maintaining talent requires continuous improvement—or at least it should. The future of your operation may just depend on it.

    human capital

    How Will Reshoring Affect Your Industrial Metal-Cutting Operation?

    January 15, 2015 / , , , , , , ,


    Industry reports continue to paint a positive picture for the future of U.S. manufacturing industry. As we reported in a previous blog, one trend that continues to gain traction is “reshoring” or “near-shoring”—the process of moving a business operation from overseas back to the local country. While China has been a common landing spot for outsourced manufacturing, rising labor and energy costs are quickly taking away the region’s cost advantage and many companies are bringing manufacturing back to their local countries.

    According to an article from Forbes, the greatest reshoring will likely occur in industries that benefit most from cheap natural gas and have access to global markets, as well as industries with products that change rapidly but whose product value/weight ratios do not justify air freight. This includes the apparel and technology industries, chemicals, and metal manufacturing and fabrication.

    That’s great news for the U.S. metals industry, but how can companies make the most of this opportunity?  In an editorial for IndustryWeek, Jim Moffatt, CEO of Deloitte Consulting LLP, says the key will be for companies “to think beyond costs and consider the ways that manufacturing in the U.S. can unlock value, unleash innovation, and create opportunities for growth.”

    As a key player in the U.S. metals supply chain, you too can create opportunities for growth. Below are a few questions to consider:

    1. Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base?  This article from thefabricator.com gives a great example of how one supplier of fabricated metal assemblies was able to win back old business.
    2. Could a little investment attract some new customers or industries that are starting to reshore? Appliance makers, automotive, and aerospace are just a few of the industries starting to reinvest in U.S. manufacturing. Check out A.T. Kearney’s 2014 Reshoring Index for a list of the top reshoring industries.
    3. How can you better serve existing customers? Are there value-added processes you can add to your operation to stay competitive? According to this white paper from the LENOX Institute of Technology, more and more service centers are relying on adding services like sawing, laser cutting, and parts fabrication for a more predictable stream of revenue and to gain an edge over the competition.
    4. Does your company have access to talent that could accommodate possible growth? A recent editorial published by Forward says that reshoring is heightening the need for recruitment. Are you prepared?

    Of course, there is no guarantee that reshoring will take off as much as everyone expects. In fact, there are several reports, including these from Manufacturing.net  and The Guardian, that say reshoring trends are overstated. There are also some very real challenges that American metals companies are up against when competing with the global market, most notably high U.S. steel prices.

    No one really knows the future, but right now, growth is happening—whether it is simply part of a cyclical recovery or the start of a manufacturing boom. Either way, it boils down to this: There has been a shift, and how you respond will dictate the impact it will have on your industrial metal-cutting operation.

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