July 20, 2017 / continuous improvement, Employee Morale, lean manufacturing, LIT, maintaining talent, operator training, productivity, quality, strategic planning
Like most industrial manufacturing segments, metal forges have embraced lean manufacturing and the benefits it can bring. Although not every operation has the resources to undergo a total lean transformation, industry leaders like Jorgensen Forge have adopted simple lean tools and practices to eliminate waste, lower costs, and improve customer responsiveness.
One lean manufacturing tool that continues to gain popularity among operations managers is “going to the Gemba” or taking a “Gemba walk.” This practical lean tool gives management a clear view of what is happening on the plant floor and, more importantly, reveals areas for possible improvement. As explained in the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, “Gemba” is the Japanese term for “actual place,” but has been redefined by lean thinkers as the place where value-creating work actually occurs. In a manufacturing environment, this is typically the shop floor. Many lean experts advise manufacturing executives to make time to visit this place—known as taking a “Gemba walk”—so they can see their operation from the front lines.
There are several ways managers can “go to the Gemba.” According to a Target Online article from the Association of Manufacturing Excellence, there are three types of Gemba visits:
- Leadership Gemba Visits. In these visits, the focus is on the culture, developing trust, learning more about the operations, and finding ways to improve the working conditions of the team members. These Gemba visits are typically conducted by managers and executives (individually or in pairs). They don’t usually have an agenda or follow a prescribed process. The leader simply goes to the Gemba to engage with the team members in a meaningful way and searches for opportunities to make their work less frustrating and more fulfilling.
- Leader Standard Work Gemba Walks. These Gemba walks typically have an agenda or a theme and occur on a regular cadence. These are structured and can be done individually or in groups. Many management teams have standard processes for visiting team huddles, checking hour-by-hour charts, doing 5S audits, or doing safety observations. Others visit the Gemba with a specific theme in mind for the walk, such as reviewing autonomous maintenance practices, learning about kaizen activities, discussing safety procedures, reviewing visual management practices, etc.
- Problem-Solving Gemba Visits. Typically, the purpose of a problem-solving Gemba visit is to go to the source of a problem in order to observe it first-hand, talk to those closest to the problem, and determine if countermeasures are needed while working to determine the root cause of the problem. This is also a great opportunity for leaders to talk to team members about the problem-solving process and root cause analysis.
Why are Gemba visits so important? This article from The Leadership Network lists a few ways Gemba visits can be beneficial:
- First-hand knowledge is the highest form of information. A regular Gemba walk will give managers transparent and unmediated knowledge that is needed to challenge and validate assumptions made by data.
- Perspective is gained through experience. A regular Gemba walk allows managers to understand the challenges employees need to overcome on a daily basis to deliver the results that are being promised in the boardroom.
- Both people and process matter equally. A regular Gemba walk will help develop a culture that fixes the problems in a process and not one that blames the people performing the process.
If Gemba visits aren’t currently part of your management strategy, perhaps it is time to explore the ways in which it could improve your operation. To read more about this lean manufacturing tool, check out the slideshare presentation, Gemba 101, or read this overview article from iSixSigma.
July 10, 2017 / best practices, continuous improvement, Cost Management, industry news, LIT, maintaining talent, operator training, productivity, quality, skills gap, strategic planning
Historically, the trend has been for metal companies to put process over people. The manufacturing industry’s shortage of workers with the necessary skills (also known as the “skills gap”), however, is forcing companies to allocate resources back to their workforce.
For many companies, this means changing the way they train and maintain talent, whether that means beefing up training programs or rethinking their hiring tactics. Rockwell Automation, for example, is working to recruit military veterans and leverage their unique skill sets. “We’ve been able to develop a truly groundbreaking program that will help solve a challenge critical to fueling the future growth of the manufacturing sector,” Blake Moret CEO of Rockwell Automation, states here in a press release. “Military veterans possess a unique combination of technical savvy and core work skills that makes them well-positioned for careers in today’s advanced manufacturing environments.”
Companies are also reevaluating how they are maintaining their talent. As lean manufacturing expert Jamie Flinchbaugh says here in IndustryWeek, you can’t “just hire talent and then leave it alone.” Continuous improvement applies to all areas of an operation, including training and maintaining talent.
According to Flinchbaugh, when it comes to building a strong team, manufacturers should consider the following:
- Put the right talent in the right place. Hiring is part of this, but so is organizational design. Too often Flinchbaugh says he sees organizations reward talent by taking them out of the place they perform the best. That’s like taking your best hitter on the team and making them a team coach before their retirement as a reward. So top salespeople become sales managers, and top engineers become engineering managers. Is that the best use of their talent?
- Talent is responsible for its own improvement. Your talent should hold the primary responsibility for their own development. A lean thinker should be encouraged to improve their talent in any skill that matters, whether personal or professional.
- Coach and train. Making the development of talent a core part of your business means integrating it into your management systems. This is not something to delegate to human resources. The hardest part of this is how you leverage your top talent. While not everyone is suited to coaching and training, leveraging your top talent to build more talent is the long-term play.
In a metal-working environment, it is also critical that operators and other employees feel valued. While the idea of empowering employees sounds a bit cliché, a growing number of managers are finding that operators who take ownership of their process or work area are invaluable. According to the brief, “Strategies for Training and Maintaining Talent in Industrial Metal-Cutting Organizations,” operator “buy-in” can positively affect all aspects of an industrial metal-cutting operation, including quality, productivity, and in the end, the bottom line. Similarly, when employees feel disconnected, those same business areas can be negatively affected. Strategies such as collecting feedback, goal setting, and incentives are good ways to encourage employee ownership from the start.
As the skills gap has proven, investing in talent is just as important as investing in technology and process. Metal-cutting companies—not to mention the manufacturing industry at large—can’t afford to neglect one of its greatest assets. In the end, building and cultivating high-quality talent is necessary for building and cultivating high-quality services and products.
May 10, 2017 / best practices, continuous improvement, customer service, human capital, industry news, maintaining talent, productivity, skills gap
Based on expert forecasts and industry sentiment, the outlook for 2017 continues to be hopeful. As stated in LIT’s 2017 Industrial Metal-Cutting Outlook, metal fabricators and other industrial metal-cutting organizations are getting more and more optimistic about the near future, and recent market data looks promising.
While the latest outlook from the Manufacturers Alliance for Productivity and Innovation (MAPI) expects “relatively sluggish” output growth for the manufacturing industry as a whole, the near-term forecast for Fabricated Metal Parts is positive. Specifically, MAPI forecasts that output growth for the Fabricated Metal Parts sector will register 1.8 percent in 2017 and 3.4 percent in 2018. In addition, March data from the U.S. Census Bureau shows that both new orders and shipments of Fabricated Metal Parts were up 5.5 percent compared to 2016.
Recent data from the Institute for Supply Management (ISM) is also encouraging. As stated here in a press release, economic activity in the manufacturing sector expanded in April. According to the Manufacturing ISM Report on Business, 16 out of 18 manufacturing industries reported growth in April 2017, with the Fabricated Metal Products sector nearing the top of the list. In fact, one survey respondent from the Fabricated Metal Products sector stated, “Business is definitely improving. Profit margins are increasing.”
This type of optimism seems to be prevalent throughout the industry. The first quarter Fabricating & Forming Job Shop Consumption Report from Fabricators & Manufacturers Association International (FMA) revealed that 61.9 percent of metal fabricating managers and shop owners see improving conditions for the coming quarter and another 34.3 percent expect things to stay the same. A mere 3.7 percent expect things to get worse. “This is the most confident the sector has been in a while,” says Chris Kuehl, FMA’s economic analyst.
That’s not to say that fabricators don’t have some concerns. After attending FMA’s Annual Meeting in March, Kuehl reports here that he noticed three key trends among attendees, including:
1. Cautious optimism. According to Kuehl, most fabricators appear to be optimistic but many remain cautious. “The years of an administration that was at best ambivalent toward business and at worse downright hostile are over,” he writes. “There are definitely mixed opinions about what happens under Trump, but thus far the promises are looked upon as encouraging. That said, there is doubt that many of the promises will be kept because of fierce opposition from many quarters and lack of faith in Trump’s diplomatic skills. Still, there is hope that some of the big issues will get the attention deserved—trade patterns, regulation, and taxes at the top of the list.”
2. People will stay at the top of the list of worries. The manufacturing skills gap continues to be an issue for most fabricators, according to Kuehl’s analysis. “It is harder than ever to find the employees needed,” he says. “Manufacturers aren’t finding qualified and eager job seekers no matter what they offer to pay. The powers that be have not yet addressed this problem, and that is immensely frustrating.”
3. Concerns about the future. Even with some renewed confidence, Kuehl says that fabricators and manufacturers are still concerned about the future and whether the industry is ready for developments it hasn’t seen in over 10 years. “Interest rates will be higher for the first time in over a decade, and inflation will be rearing its ugly head sooner rather than later,” he writes. “Add in the ramifications of a trade war or two, and the concern many have expressed [is] that the progress seen thus far could come to a screeching halt.”
Even with some potential challenges ahead, most fabricators remain focused on growth. Over the last few years, automotive has been a huge growth market for fabricators, but some experts believe that sales are slowing and the market is stabilizing. However, as stated in a blog post from Branam Fastening, there is still plenty of opportunity for growth in the following customer segments:
- Construction. The non-residential construction market is expected to grow an additional 6% in 2017. Metal roofing, HVAC, steel supports, and other complementary building products will also see an increase in demand.
- Oil. The price for a barrel of oil is expected to exceed $60 in 2017. Many experts believe that once it surpasses this threshold, it becomes advantageous for domestic oil producers to reignite exploration and production operations. New pipelines, rigs, storage containers and other metal fabricated products are expected to be in greater demand throughout the industry in 2017.
- Electronics: The electronics industry is expecting a 3.1% positive bump in domestic production in 2017 and 5.3% growth in 2018. This paves the way for an increase in metal fabricated products like custom encasements.
- Infrastructure: Estimates predict infrastructure budgets to grow between $275-$500 billion over the next 5 years. A big part of this spending will comprise airport repairs and construction, road repairs, bridges, railways, new stations, and waiting platforms. Opportunities for metal fabricators can be found throughout.
A Bright Future
Does the future look bright for metal fabricators? According to MAPI, there are certainly “glimmers of light,” and recent data certainly reflects that assessment. However, preparation and continuous improvement should still be a top priority for fabricators. As stated in the white paper, Best Practices of High Production Metal-Cutting Companies, industry leaders need to remain focused on optimizing every aspect of their internal operations—regardless of market conditions—so they can be ready for whatever the future holds.
In what ways can you position your operation for growth in 2017?
April 1, 2017 / benchmarking, best practices, continuous improvement, Cost Management, industry news, LIT, maintaining talent, operations metrics, optimization, performance metrics, productivity, skills gap, supplier relationships
While no one would likely call it a “boom,” recent months have provided good news for industrial manufacturing. Reports have been positive, and business confidence among metal-cutting companies and other industrial manufacturers is up. Experts admit that some challenges and risks remain, but most believe that growth will continue in 2017 and well into 2018.
There is no question that uncertainty has plagued the manufacturing sector for the last several years. Hints of recovery followed by sluggish growth have made it hard for many companies to trust that business was fully rebounding. Last year, terms like “cautiously optimistic” were being thrown around, but many were still wondering — “Are we there yet?’”
Reports and forecasts indicate that we are at least heading in the right direction—both globally and within the U.S. The JP Morgan Global Purchasing Managers’ Index (PMI) has remained above the neutral 50.0 mark throughout the past 13 months and registered 53.0 in February and March—its highest level in 69 months. According to the bank, the expansion in March “remained broad-based by product type, with PMI readings for the consumer, intermediate, and investment goods sectors all signaling further solid growth.”
Forecasts from Manufacturers Alliance for Productivity and Innovation (MAPI) also point to growth, although slower than some would like. According to the latest outlook, manufacturing growth is expected to be 1.2% in 2017 but then accelerate to 2.6% in 2018. Average annual manufacturing output growth is expected to be 1.5% between 2017 and 2020.
Recent data show U.S. manufacturing expanded in March, following a very strong February. The Institute for Supply Management Purchasing Managers’ Index (PMI) hit 57.2% in March, a 0.5 percentage point reduction from a record-setting 57.8% in February 2017. Of the 18 manufacturing industries, 17 reported growth in March, including Fabricated Metal Products and the Primary Metals industries. According to one survey respondent from the Fabricated Metals segment: “Regional business is strong. Hiring qualified team members has improved.”
Cliff Waldman of MAPI says that March data adds to mounting evidence that U.S. manufacturing output performance is on track for moderate improvement, relieving the factory sector from the sluggish growth that has plagued it since 2013. “Data on actual manufacturing output from the Federal Reserve are basically in sync with the recent ISM data as they show an acceleration of growth in U.S. manufacturing since the beginning of 2017,” Waldman said in a blog post. “However, the year-over-year improvement thus far is moderate. Nonetheless, the reasonably broad-based nature of factory sector growth in both January and February suggests growth stability.”
Business confidence among industrial metal-cutting companies and other manufacturers is also up. The first-quarter Manufacturers’ Outlook Survey from The National Association of Manufacturers (NAM) revealed that manufacturers’ optimism rose to a new all-time high in the survey’s nearly 20-year history.
According to NAM, the rising confidence stems from the hope that the new administration in Washington, D.C. will bring much-needed regulatory relief, as well as tax code reforms and a significant infrastructure package. “Indeed, business leaders are cautiously hopeful that pro-growth policies from Washington will allow the country to emerge from the sluggish expansion seen in the years since the Great Recession,” the association said in the report.
Metal companies are confident as well. According to industry leader ArcelorMittal, global apparent steel consumption is estimated to have expanded by 1% in 2016. Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption to grow further in 2017 by between 0.5% and 1.5%.
In the U.S., Mittal says that apparent steel consumption (ASC) declined in 2016 by approximately 1.0% to 1.5%, driven in large part by a significant destock in the second half of 2016. “However, underlying demand continues to expand and the expected absence of a further destock in 2017 should support ASC growth in the U.S. of approximately 3.0% to 4.0% in 2017,” the company said in its 2016 Annual Report.
Sentiment about customer markets is also positive. Mark Millett, president and CEO of Steel Dynamics Inc., told Modern Metals that he expects growth in the energy sector and continued growth in construction spending, “especially for larger public sector infrastructure projects.”
And although there have been reports that automotive manufacturing peaked in 2016 and will decline in 2017, metals companies don’t seem too worried. AK Steel told MM that a richer product mix, including the premium pricing that can be obtained on newer, more specialized or custom grades, should help offset declines. “Our volumes are going to be fairly stable, and fairly steady compared to what they were last year,” Kirk Reich, AK Steel president and COO, said in the MM article.
Trends to Watch
That’s not to say that companies don’t still have some concerns. In late January, M. Robert Weidner III, president and CEO of the Metals Service Center Institute (MSCI), urged the new Trump administration to take serious and immediate action to restore growth and to help the industrial metals supply chain fully recover from the lingering effects of the Great Recession and government policy.
“The industrial metals sector needs action now,” Weidner said, noting that service center aluminum shipments are registering 20 percent below their pre-Great Recession peak, and carbon steel shipments from service centers are still down 30 percent. “The erosion in the U.S. industrial metals supply chain hurts our communities; erodes local, state, and federal tax revenue; and reduces the pool of well-paying U.S. jobs,” Weidner continued.
The strong dollar and reduced capital spending are also concerns. “Signs of wide, yet modest, improvement in global growth are the key drivers of better performance in U.S. manufacturing,” Waldman of MAPI says. “Unfortunately, the problems of a high dollar, a long-term capital spending malaise, and significant policy uncertainty remain to challenge the magnitude of the U.S. manufacturing improvement, even as the world finally provides much-needed support for U.S factories.”
Many industrial manufacturers also remain risk averse. In a recent PwC survey, only 30 percent of U.S.-based industrial manufacturing senior executives said that their companies were planning to increase spending on information technology in the subsequent 12 months. “There is a remarkable opportunity here,” PwC says in a blog post. “Yet the industrial manufacturing sector remains risk averse, unwilling to spend on new machinery, software, and talent during a period of protracted slow growth and limited proven solution.”
According to PwC, there are six actions industrial manufacturers can take to be more profitable in 2017. You can read the full list here, but the following four strategies are the most applicable to industrial metal-cutting companies:
- Leverage data and analytics in a new business model. By upgrading their technical capabilities, industrial manufacturers can bundle a variety of services enabled by connectivity and data, replacing the increasingly outmoded model of selling one big complex machine under warranty and a service agreement for maintenance and repair.
- Develop strategic partnerships. Industrial manufacturers must become more active players in the technology ecosystem, seeking expertise outside the industry in order to develop equipment connectivity, data analysis, and software that are beyond their current abilities.
- Mine operational data. If connected machines—the primary components of the Internet of Things (IoT)—are to be the backbone of industry in the near future, industrial manufacturers will have to figure out how to manage the data coming from an avalanche of sensors, integrated equipment and platforms, and faster information processing systems. There is a critical need to hire people who can mine these bits and bytes of information and work more closely with customers to use the data to improve equipment performance and open new revenue streams.
- Create strategies for talent development and retention. industrial manufacturers must purposefully map out an exciting technology strategy with specific benchmarks and achievements anticipated for the next 18 to 36 months—and then communicate this story clearly to job candidates. Even companies that have not yet felt the shortage of technology-savvy staffers need to take steps to prepare for it as the number of job openings in this field will continue to outpace the number of available hires for the foreseeable future.
Of course, a major technology overhaul may not be possible for every shop, but there are always improvements that can be made. As stated in the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, thriving in today’s market requires companies to embrace change and focus on continuous improvement in all areas of their business.
“Whether implementing a lean manufacturing tool to improve processes or investing in training to develop people, proactive leaders are focused on making positive changes in their operations so they can quickly respond to today’s changing customer demands,” the eBook states.
Yes, the sentiment among industry players and experts is positive, but that doesn’t mean companies should put improvement activities on the backburner. Industrial metal-cutting organizations that keep a close eye on mega trends while continuing to optimize their internal operations may not only do well in 2017, but exceed expectations.
March 25, 2017 / best practices, continuous improvement, human capital, industry news, lean manufacturing, LIT, maintaining talent, operator training, optimization, productivity, Safety, strategic planning
For years, manufacturers have relied on lean processes to improve productivity and to reduce waste. This is certainly a good thing from an operations standpoint. However, from a safety and health perspective, lean manufacturing can have a few drawbacks.
For example, lean practices make jobs highly repetitive. As pointed out in this article from Industrial Engineer, repetitive jobs often eliminate critical rest time for employees. “The repetitive jobs take their toll on employees as stressful postures and high forces are repeated over and over throughout the day,” the article says. “In the long run, the financial savings from the productivity gains and quality improvements are used to pay for the higher cost of workers’ compensation claims.”
This is why many forges and other industrial metal-cutting organizations have incorporated ergonomics into their production processes. According to the U.S. Occupational Safety and Health Association (OSHA), ergonomics is defined as fitting a person to a job to help lessen muscle fatigue, increase productivity, and reduce the number and severity of work-related injuries. Strategic equipment placement and improved ergonomics not only keep employees safe and healthy, but they are key aspects of high productivity and optimized workflow. The fewer times an operator touches a material, the fewer chances for injury and human error, both of which contribute to productivity.
Not sure where to start? An article from IAC Industries describes possible workplace risk factors and suggested solutions. For example, there are at least six different types of musculoskeletal risk factors operators may face:
- Forceful exertions and motions.
- Extreme or repetitive exertions, postures and motions.
- Duration of exertions, postures, motions, vibration and cold.
- Insufficient rest or pauses.
- Work factors (for instance, close performance monitoring, wage incentives, machine-paced work).
- Environmental factors.
The article then goes on to describe an example of an ergonomic workstation design. According to IAC, incorrect working height is often responsible for extreme postures and motions at the workstation. Recommendations for the appropriate working height are as follows:
- Six inches above elbow height for fine work such as proofing documents or inspecting small parts.
- Four inches above elbow height for precision work such as mechanical assembly.
- Same height as elbow for writing or light assembly,
- Four inches below elbow for coarse or medium work such as packaging.
Of course, this is just one of the many ways a manufacturer can improve ergonomics within their operation. Another article from Ergonomics Plus, an Indianapolis, IN-based company, offers a 10-point checklist to help managers create a framework for building a successful ergonomics process. According to the company, a solid ergonomics process doesn’t have to be complicated to be successful, but it can be challenging to get all the right pieces in place and achieve sustainable results. You can review the entire checklist here.
If these suggestions feel overwhelming or you don’t quite know where to start, you may want to consider bringing in some professional help. Earle M. Jorgensen Company (EMJ), a metal service center featured here in a white paper from the LENOX Institute of Technology, decided to perform an in-depth ergonomic study at one of its metalworking facilities. With the help of a third-party resource and input from its shop floor employees, the company made several changes to the shop floor to eliminate unnecessary handling and transportation of material. Ergonomic improvements ranged from repositioning band irons to adjusting the height of staging tables. By optimizing the workflow, EMJ has seen a reduction in employee injuries, improvements in operator efficiency, and increased output. The service center has also seen an increase in shop floor morale, as operators feel they are playing a critical role in helping the facility succeed.
In what ways could you incorporate ergonomics into your forging operations?
March 5, 2017 / best practices, industry news, LIT, maintaining talent, operator training, productivity, quality, skills gap, strategic planning
Data from the U.S. Labor Department continues to show that the skills gap is real. As reported here by the Wall Street Journal, the number of open manufacturing jobs has been rising since 2009, and 2016 registered the highest number in the past 15 years.
Why does this continue to be an issue? According to the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, there are several layers to the current workforce challenge. First, skilled production workers are one of the largest workforce segments facing retirement in the near term, which will have an impact on the number of experienced workers on the shop floor.
Meanwhile, the current talent pool isn’t what it should be. Streamlined production lines and more process automation have changed the nature of manufacturing work, and the incoming generation of workers either isn’t interested in working anywhere near a production line or lacks the necessary skills and technical knowledge.
The question continues to be, then, how can companies fill the gap? While the issue is too complex for one “sure-fire” solution, many believe that training and, more specifically, apprenticeship programs are an effective way for companies to fill their employee pipeline and build their team’s skill set.
An article from IndustryWeek argues that while colleges may turn out students that may know things, manufacturing companies need students that can do things. This is why apprenticeships are key. “Perfectly positioned at the intersection between knowledge and training, apprenticeship programs are ideal talent incubators,” the article states. “The positive outcomes of skills training are many: stronger communities, a skilled and confident workforce and an increase in the number of career opportunities for our young people.”
The U.S. Department of Labor defines apprenticeships as “an employer-driven, ‘learn while you earn’ model that combines on-the-job training, provided by the employer that hires the apprentice, with job-related instruction in curricula tied to the attainment of national skills standards,” according to its web site.
With hands-on jobs like metal-cutting, it’s hard to argue against the benefits of on-the-job training. However, the problem is that many companies don’t want to pay for it. The apprenticeship model typically involves progressive increases in an apprentice’s skills and wages, which can be viewed as costly to organizations, especially if they are afraid employees will take their skills elsewhere.
The good news is that there are several new initiatives out there that are trying to alleviate that cost by joining the industry and government together. Below are two examples:
- One initiative, called Incumbent Worker Training, is funded by the Workforce Innovation and Opportunity Act. The program is helping Kentucky companies like metal stamper Tower International cover training and apprenticeship program costs. The program reimburses 50 to 90 percent of training costs, depending on the size of the company, for in-demand sectors and occupations, including manufacturing, technology, healthcare, food and beverage production and transportation, distribution, and logistics. Employers can qualify for as much as $10,000 per year to cover costs such as non-company instructors, tuition, curriculum development, textbooks, supplies and more. Tower has used the money to help cover training costs for three employees in the company’s registered apprenticeship programs. You can read more about the program here.
- Another proposal, called “Toward a New Capitalism” from the Aspen Institute’s Future of Work Initiative, is based on the idea of “pay for performance.” According to an article from The Atlantic, the government-backed corporate retraining program is set up to help companies pay for training, but only for curricula that raise a worker’s wage. For example, if a company spends thousands of dollars to train an employee on a specific skill that results in a pay raise, the company gets reimbursed by the government for the training costs, even if the employee decides to leave. “By training workers, businesses are essentially buying a small equity stake in their future wages,” the article explains. “If their wages rise, the company gets money, while the worker gives up nothing, purely benefiting from the training program.” You can read more about the program here and here.
While apprenticeship programs aren’t by any means a new idea, they could be exactly what manufacturing needs—again. For an industry that has spent a lot of the last few decades focusing on process and efficiency, it’s time to place the focus back on people. By investing time and resources into building a highly skilled workforce, you are ultimately investing in your company’s long-term success.
How is your company building a skilled workforce? Could an apprenticeship program help close the skills gaps in your operation?
February 28, 2017 / best practices, Cost Management, Employee Morale, human capital, industry news, LIT, maintaining talent, operator training, ROI, skills gap
The idea of investing in your employees sounds good in theory. In fact, many would say that this is a trend among manufacturers as they try to find ways to address the widening skills gap.
But as any metals executive knows, theories don’t pay the bills. Resources designated to employees may offer some “soft” benefits like improved morale, but is there any financial benefit to investing in employees?
Research shows that the answer is yes: Investing in employees does offer a good return on investment (ROI). In an article published by Harvard Business Review, Alex Edmans, professor of Finance at London Business School, says that research of stock market data clearly reveals that the benefits of investing in employees outweigh the costs and that employee satisfaction improves firm value.
“I studied 28 years of data and found that firms with high employee satisfaction outperform their peers by 2.3% to 3.8% per year in long-run stock returns—89% to 184% cumulative—even after controlling for other factors that drive returns,” Edmans writes in HBR. “Moreover, the results suggest that it’s employee satisfaction that causes good performance, rather than good performance allowing a firm to invest in employee satisfaction.”
According to Edmans, the findings have major implications. “For managers, they imply that companies that treat their workers better, do better,” he writes. “While seemingly simple, this result contradicts conventional wisdom, which uses cost control as a measure of efficiency.” (You can see all the details of Edmans’ findings here.)
Research conducted among forges and other industrial metal-cutting organizations show similar results. A benchmark study conducted by the LENOX Institute of Technology provides evidence that investing in human capital is critical for improving on-time customer delivery and driving higher revenue. Specifically, the survey of 100 industrial metal-cutting operations found the following:
- 64% of organizations that cite their operator turnover is decreasing year over year also report that on-time job completion is trending upwards—a critical correlation.
- 51% of organizations that reported reduced levels of operator turnover also said their revenue per operator had increased.
With data like this, it is hard to argue against the value of investing in employees. And while most executives think of pay raises when they think of employee investment, the good news is there are several ways forges can invest in employees. The following are just four possible approaches that go beyond pay:
- Listen. Operators that work with equipment every day are a valuable source of information. Be intentional about collecting feedback and implement some of their ideas.
- Equip. Invest in an employee’s future with incentives like continued education or management training. This shows employees that you value their personal success and provides them with new skills that can benefit your operation in the long run.
- Communicate results. Regularly share performance reports with employees by either posting them or discussing them in staff meetings. According to the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, sharing report results encourages accountability, provides motivation, and reminds operators that they are a critical aspect of the company’s success.
- Reward. Studies continue to show that goal setting and incentives are effective motivational strategies. Empower your operators by letting them set their own goals. This also holds them accountable for their work and promotes long-term “buy-in” and loyalty.
Investments of any kind usually present some risk, but in the case of human capital, it seems unlikely that there are any real threats or disadvantages. As research confirms, pouring resources into the very people that keep your company running is just good business—in theory and in practice.
How is your forging operation investing in employees?
February 20, 2017 / agility, best practices, blade failure, blade life, blade selection, Cost Management, customer delivery, industry news, LIT, maintaining talent, operator training, productivity, quality, resource allocation, skills gap, strategic planning
Thanks to an unstable marketplace, capital spending among machine shops and other metalworking companies has been down for the last several years. However, new reports suggest a rebound in the near future.
According to data from Gardner Business Intelligence (GBI), machine tool consumption peaked at $7.5 billion in 2014, and then contracted 3 percent in 2015 and 7 percent in 2016. Based on GBI’s Capital Spending Survey, projected total machine tool consumption in 2017 will be down an additional 1 percent. However, as reported here by Modern Machine Shop, the survey also shows that demand for core machine tools will increase in 2017 by 9 percent. In addition, GBI’s new econometric model for machine tool unit orders indicates that the rate of contraction in overall machine tool demand bottomed in July 2016 and will improve through the end of 2017.
Steven Cline, Jr., director of Market Intelligence at GBI, says the driving force behind the projected rebound is the need for increased productivity. “Shops need to increase productivity in order to remain competitive in a global manufacturing marketplace and to counteract the much-talked-about skills gap,” Cline writes in Modern Machine Shop. “More and more shops are turning to lights-out and/or unattended machining to achieve this increase in productivity, but new equipment, including machine tools, workholding and automation, is needed to run lights-out.”
As reported in the news brief, “Strategies for Training and Maintaining Talent in Industrial Metal-Cutting Organizations,” industrial metal-cutting companies have spent the last few years investing a lot of time and resources into their workforce. This has helped boost productivity and address some of the skills gaps, but the GBI survey suggests that shops are seeking a balance that requires investments in both human capital and equipment.
For example, Speedy Metals, an online industrial metal supply company and processor, recently upgraded its band saws to improve efficiency. “We had been searching for a reasonably priced, high-production band saw to add to our saw department and boost our production,” Bob Bensen, operations manager, tells Modern Metals. “We needed a reliable band saw that was going to stand up to the rigors of our fast-paced environment.”
Bensen went on to say that the new band saw, which has nesting capabilities and allows his operators to cut a variety of metals, has improved productivity. This, he adds, has given Speedy Metals a competitive edge and allows his company to continuously offer same-day shipping on quality parts and customized saw cuts that meet the closest tolerances.
Similarly, metal-cutting companies like Aerodyne Alloys are investing in new metal-cutting tools to further improve efficiency. Working with hard-to-cut metals like Inconel 718 and Hastelloy X, the metal service center decided to upgrade from bi-metal blades to carbide-tipped blades to get higher performance out of its band saws. After upgrading to a carbide blade, Aerodyne was able to tackle hard, nickel-based alloys, while also improving cutting time on easier to cut materials like stainless steel. According to a case study, this helped improve operational efficiencies at Aerodyne by up to 20 percent.
Of course, not all capital investments offer a good return. If your shop is considering investing in new equipment or tools this year, be sure to measure cost against productivity. According to the white paper, Selecting the Right Cutting Tools for the Job, managers need to weigh the following:
- upfront costs against overall operating and maintenance costs
- long-term productivity of a machine and its intended use
- equipment and blade life, as well as cost per cut
There is no question: Staying competitive in today’s market is tough. Demands for high quality and quick turnaround continue to increase, while cost pressures and issues like the skills gap remain. How will your shop respond? As the GBI survey suggests, it may be time to consider making some capital investments to ensure that your team is fully equipped to meet demands.
January 25, 2017 / best practices, continuous improvement, emplo, Employee Morale, lean manufacturing, LIT, maintaining talent, productivity, skills gap, strategic planning
Teamwork is essential to any manufacturing operation. Most experts agree that it is the cornerstone of any successful improvement initiative, and many of today’s industry leaders understand that collaboration and decision-making go hand in hand. From the shop floor to the executive office, everyone’s input carries value.
Unfortunately, building strong teams isn’t as easy as sitting a bunch of people in a room together once a week. As one article from IndustryWeek points out, just because a company works in teams doesn’t mean it is good at teamwork. Simply building a team isn’t enough. The goal has to be building an effective team.
What does this look like in a forging environment? For many companies, it starts with creating a sense of unity. According to an article from Reliable Plant, the goal is to remove the barriers that often exist between the departments by taking a one-plant, one-team approach. Specifically, the trade publication suggests removing any team or function name that directs the function of the team to one specific department or function. For example, change the name of total quality management to total quality manufacturing and then develop improvement teams consisting of personnel from each department within the plant. “This begins to create a common workplace interest and supports a one-plant, one-team environment,” the article states.
Another important step is for managers to consistently ask employees for input and, more importantly, to make some of their ideas a reality. According to the white paper, The Top Five Operational Challenges for Forges that Cut and Process Metal, communicating with shop floor employees and actively including them in operational decisions promotes a team atmosphere, and, therefore, motivates employees to achieve company goals. To see this principle in action, check out this video, which shows one manufacturing floor operator’s reaction to implementing a high-performance team culture in his organization.
An article appearing in the Harvard Business Review confirms that effective teams are hard to build, especially in today’s diverse, dispersed, and digital world. However, it is possible. Quoting research from J. Richard Hackman, a pioneer in the field of organizational behavior who began studying teams in 1970, HBR says there are three “enabling conditions” that lead to strong, thriving teams. The following is a quick summary of those conditions, as described by HBR (You can read the full article here.):
- Compelling direction. The foundation of every great team is a direction that energizes, orients, and engages its members. Teams cannot be inspired if they don’t know what they’re working toward and don’t have explicit goals. Goals should be challenging enough to motivate, and they also must be consequential: People have to care about achieving a goal, whether because they stand to gain extrinsic rewards, like recognition, pay, and promotions; or intrinsic rewards, such as satisfaction and a sense of meaning.
- Strong structure. Teams also need the right mix and number of members, optimally designed tasks and processes, and norms that discourage destructive behavior and promote positive dynamics. High-performing teams include members with a balance of skills. Every individual doesn’t have to possess superlative technical and social skills, but the team overall needs a healthy dose of both.
- Supportive context. Having the right support is the third condition that enables team effectiveness. This includes maintaining a reward system that reinforces good performance, an information system that provides access to the data needed for the work, and an educational system that offers training, and last—but not least—securing the material resources required to do the job, such as funding and technological assistance. While no team ever gets everything it wants, leaders can head off a lot of problems by taking the time to get the essential pieces in place from the start.
The HBR article goes on to describe a fourth condition—shared mindset—which is similar to Reliable Plant’s suggestions for creating a one-plant, one-team environment. This condition requires managers to facilitate shared information among departments and to be intentional about building bridges among team members.
Like any company-wide initiative, building an effective manufacturing team takes time, intention, and a little trial and error. By encouraging unity, fostering collaboration, and implementing strong foundational elements such as diversity and incentives, today’s forges can create a team-centered manufacturing environment that truly benefits everyone.
How are you creating a team environment in your forging operation?
Engaging Employees Is Key to Continuous Improvement in Your Ball and Roller Bearing Manufacturing Operation
December 30, 2016 / best practices, continuous improvement, Employee Morale, LIT, maintaining talent, operator training, strategic planning
There is no question continuous improvement is critical to succeeding in today’s market. Case in point: two of the three industrial metal-cutting companies featured here in a case study on top performers listed continuous improvement as an imperative operational strategy and best practice that sets their operations above the rest.
It’s also widely accepted that continuous improvement efforts require “buy-in” from the top-down to truly be successful. This isn’t always an easy task. Articles like this one from IndustryWeek discuss the challenges improvement teams face in getting upper management on board. Perhaps the larger challenge, however, is getting operators and other employees committed to improvement efforts. While upper management support is needed to secure resources, employees are the ones carrying out the efforts, making them absolutely critical to success.
The key, one expert states, is to intentionally engage employees. “For any effort directed towards continuous improvement or innovation to succeed, your employees must feel that their suggestions…are genuinely wanted and in fact encouraged,” Chris Ruisi, leadership expert, writes here in a blog published by the Association for Manufacturing Excellence (AME). “They must willingly take ownership in the future of their organization—continuous improvement is everyone’s responsibility.”
To facilitate this, Ruisi offers the following strategies:
- Review Outcomes. Ruisi suggests that managers adopt his “study your game films” approach. At the end of every important project, regardless of the outcome, teams should meet and ask questions that encourage improvement: If we had to do this again, what would we start doing; stop doing; do more of or do less of? This simple process ensures that you learn something from every event to make you better the next time.
- Explain the Big Picture. Most employees know what they must do, when to do it, and how to do it. Many do not know why they do it, who they do it for, and where it fits in to the total picture. Armed with the “why, who, and where,” they are better able to identify and suggest ways they can improve and contribute to the company’s larger goals.
- Gather Feedback Regularly. Start meeting with small groups of your team members on a regular basis to actively solicit their feedback on how their work is produced. Start with only one question: What’s one thing we can do today to produce a better result tomorrow? Take the same approach with your better customers. They have a lot to offer as long as you ask and show them that you sincerely want their feedback.
- Encourage Ownership. At the end of every staff meeting, ask “what’s one thing we could do better?” Once an idea is identified, ask the person who suggested it to “own” that project. This encourages feedback and empowers your team members to take ownership in the continuous improvement effort.
If your ball and roller bearing operation is dedicated to continuous improvement, it may be worthwhile to consider some of Ruisi’s suggestions. In addition to helping continuous improvement efforts stick, taking the time to engage employees often builds new levels of trust among employees and management—trust that can provide invaluable benefits like improved morale and employee loyalty.
Does your current continuous improvement plan actively engage employees?