January 25, 2015 / best practices, continuous improvement, Employee Morale, human capital, lean manufacturing, LIT, maintaining talent, operator training, skills gap, strategic planning
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.
December 5, 2014 / best practices, Employee Morale, human capital, maintaining talent, operator training, resource allocation, skills gap, strategic planning
Metal service centers, just like every other segment of the manufacturing industry, are facing a huge challenge that is only going to intensify in the years to come. That challenge is the skills gap, and if you aren’t facing this issue head on just yet, you will be soon.
As stated in a previous blog post, skilled production workers are one of the largest workforce segments facing retirement in the near future, which will have an impact on the number of experienced workers on the shop floor. Meanwhile, the next generation of workers just isn’t interested in pursuing manufacturing careers. Large corporations like GE are trying to change that, but shifting cultural perception isn’t something that happens overnight. This is leaving manufacturers with a small pool of talent from which to choose.
Many experts believe that actively attacking the skills gap will require managers to adjust the ways they both hire and maintain talent. While larger company goals and expectations should never be compromised, part of the solution will be for your service center to adapt to a new generation of operators. In other words, it will serve you better to embrace—not fight—the generational traits of Millennial workers, which includes taking into account their upbringing, their strengths, and their weaknesses.
What are some of these traits? In a recent article published in Forward magazine, Neil Howe, president of consulting firm 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.
According to Howe, companies need to re-brand their operations with these tendencies in mind if they want to attract a new generation of operators. For example, Howe says managers should focus on creating teamwork-oriented activities—a tactic that fits well within the premise of lean manufacturing. “Give Millennials shared responsibilities, the chance to learn from peers, and let them collaborate on design and production work,” Howe suggests.
These types of strategies, combined with community efforts such as plant tours and working with local universities, will not only help your service center close the skills gap, but just as importantly, prepare you for a next-generation of customers as well.
August 28, 2014 / blade selection, bottlenecks, continuous improvement, Cost Management, human capital, material costs, operator training, productivity, skills gap, strategic planning, value-added services
With this year’s International Manufacturing Technology Show (IMTS) just wrapping up, investment decisions about production equipment and technology are at the forefront of just about every manager’s mind. While unstable market conditions make it tempting for companies to keep their dollars close, demands for faster delivery and a shortage of skilled workers are making it hard for most metal-cutting companies to keep up without some capital investments.
For many companies, those investments will be in equipment and tooling. According to the 2014 Metalworking Capital Spending Survey by Gardner Research, U.S. metalworking facilities will spend $7.442 billion, an increase of almost 19%, on new metal-cutting equipment in 2015. The same report forecasts that tool sales will be at their highest level in more than a decade.
Another report from market researcher IBIS states that “private investment in metalworking machinery has been improving and demand has been steady.” IBIS also predicts continued growth over the next few years due to renewed demand from machine shops and an upturn in automobile sales.
Meanwhile, experts are saying that managers need to start spending more time and money on their human capital. As this white paper from the LENOX Institute of Technology (LIT) discusses, today’s metalworking executives need to optimize every aspect of their operation. While it is easy to rely heavily on equipment and tooling to improve efficiency, more and more companies are finding that it is just as important to account for—and correct—the human variables that can contribute to productivity. This could include everything from working with colleges to secure new talent to instituting ongoing training and incentive programs.
To help companies get a bigger picture perspective on where they should put their money, LIT asked two industry experts to share their thoughts on industry trends, the benefits of technology, and what they think it will take for metal-cutting companies to stay competitive. Read as Don Armstrong, national accounts manager at Marvel Manufacturing Company, Inc., and Rick Arcaro, vice president of Sales & Marketing at Hydmech, weigh in.
What technology advancements have helped metal-cutting companies address the challenges they face in today’s marketplace?
Armstrong: I think the problem of how to increase productivity without adding personnel has been greatly helped by the amount of automation that is available in today’s machine tools. In addition, the advances in cutting tools have given our customers the ability to process more product with fewer machines. The concern over the availability of skilled workers has been offset to some extent by user-friendly controls, preprogrammed settings, and the ability to network machines.
Arcaro: New machines and blades have improved productivity and lowered cost per cut, and simple controllers have allowed companies to hire a lower skill level of operator to run them. Machines that are simple to maintain with the availability of parts off-the-shelf when needed have also helped customers get parts out the door faster with lower processing costs.
How have these advancements contributed to the bottom line?
Armstrong: The highest cost for any business is generally people, i.e. salaries and benefits, so whenever you can increase productivity without increasing your workforce, the bottom line will benefit.
Arcaro: Companies that have adopted continuous improvement management have reduced processing bottlenecks, kept their operations and workers as efficient as possible, while lowering operation costs and increasing the bottom line.
What is one up-and-coming advancement that industrial metal-cutting companies should know about or should consider as today’s market evolves?
Armstrong: I think a trend that metal-cutting companies should keep an eye on is the increasing use of composites and other materials in areas where metal was once used. This trend has been most noticeable in the automotive and aerospace industries.
Arcaro: Service centers need to continue to invest in value-added processing. Several factors are fueling investment in new equipment today: automation and computerized controls that make the latest machinery much more efficient, productive, easy to service, and user friendly. Companies should also look for machines and technologies that will extend tool life and reduce tool-change downtime.
What practical tip would you give an industrial metal-cutting company trying to compete in today’s marketplace?
Armstrong: I would advise them to build on their most valuable asset, their employees, by emphasizing training and ongoing education. I would encourage employees at all levels to get to know their customers in order to better understand their needs and help provide solutions for them. And, finally, I would remind them to look beyond traditional manufacturing processes for new ways to apply the knowledge that they have gained in metal cutting.
Arcaro: Knowing your place and position in the market is key. Trying to be good at everything is impossible—be great and profitable at something.
August 25, 2014 / best practices, continuous improvement, human capital, LIT, maintaining talent, operator training, productivity, resource allocation, skills gap, strategic planning
Forges, just like every other segment of the manufacturing industry, are facing a huge challenge that is only going to intensify in the years to come. That challenge is the skills gap, and if you aren’t facing this issue head on just yet, you will be soon.
As stated in a previous blog post, most manufacturers are trying to address two key gaps. First, skilled production workers are one of the largest workforce segments facing retirement in the near future, which will have an impact on the number of experienced workers on the shop floor. Meanwhile, the current talent pool isn’t what is should be. Streamlined production lines and more process automation have changed the nature of manufacturing work, and the incoming generation of workers lacks the skills and technical knowledge required.
As far as the forging industry is concerned, this issue is already affecting most of your peers, according to Forging magazine’s 2014 Business Outlook. When the magazine asked its readers what would have the greatest impact on the future of the forging industry, a little more than half said the “availability of qualified workers.”
However, don’t be discouraged. An article from the Economic Policy Institute argues that most of the skills required of your operators are well within the reach of most people. In other words, the talent is out there; you just need to find, train, and maintain them. The following are a few tips for doing just that:
- Find. Part of filling the skills gap will require your company to partner with outside sources to make sure that you have access to good talent. In an editorial published earlier this year, Dean Peters, editor at Forge magazine, promotes a collaborative relationship between industry and academia—something he says is already happening within the metalworking sector. According to Peters, there are plenty of technical schools, community colleges, and universities out there that are promoting the manufacturing industry to students. By actively working with these schools, you can help administrators provide graduates with the skills you actually need them to have, giving you a pipeline of skilled employees.
- Train. Another necessary step is establishing a strong, formal training program that caters to both new and existing employees. As highlighted in the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, operator training needs to be ongoing. This is especially important in operations that have multiple shifts and/or an unequal level of talent on the shop floor. By instituting regular operator training, managers can level the shop floor talent and add consistency to production procedures. This also encourages a spirit of continuous improvement among experienced operators who often resist change.
- Maintain. A final strategy will be finding ways to maintain and motivate your current operators. How you attack this will depend on a lot on your company culture, but in most cases, your strategy should be centered around keeping employees focused on improving performance and growing the bottom line. Most managers agree that getting operators to care about what they are doing is critical to success on the shop floor. As this article from Inc. confirms, goal setting, accountability, and rewards/incentives are all effective motivational strategies. It is also important to ask employees for their feedback. How do they think their process area could run more efficiently? What will help them be more successful? What challenges do they encounter on a daily basis? Showing operators that you value what they do can go a long way in getting them to value what they do.
July 28, 2014 / best practices, continuous improvement, lean manufacturing, LIT, productivity, skills gap, strategic planning, value-added services
There is no question: Lean manufacturing has forever changed the way the world makes products. However, as the market changes and demands shift, the manufacturing industry is starting to embrace strategies that either challenge or go beyond traditional “lean” principles.
And, really, that is what leaders should be doing. The world is much different than it was 25+ years ago, when manufacturers first starting implementing Toyota’s lean strategies. In industrial metal cutting, for example, the ultimate goal will always be to move more metal, but as this white paper from the LENOX Institute of Technology suggests, global competition, talent shortages, and an unstable market have created a whole new set of challenges that a simple lean tool won’t be able to fix.
Today’s market requires leaders to keep a pulse on “what’s next” so they can create innovative, strategic solutions that balance internal efficiency with external demands. Below are just a few leading-edge trends we found that are stretching the traditional notions of best-in-class manufacturing. Not all of these strategies will be directly applicable to every metal-cutting organization, but they certainly provide new perspectives and alternative approaches that could just change manufacturing as we currently know it.
- Micro-factories. There are several experts that believe custom manufacturing is making a comeback in the U.S. While there will always be a need for large-scale manufacturing, an article from Inc. states that there is a rising demand for small, custom “micro-factories” that can offer faster turnaround and higher quality than a low-cost, mass manufacturer can offer. While some smaller metal-cutting shops may already be taking this approach, the article also suggests that now is the time to amp up your branding message. “Build a reputation for quality products and friendly service,” the Inc. article states. “If you do, you will command premium pricing, rather than the commodity pricing of an anonymous supplier.”
- Co-Creation. Building off the notion of micro-factories, some industry leaders are enlisting the help of others to help innovate, drive, and implement new ideas. In mid-May, GE launched the global co-creation community FirstBuild.com. With this new online platform, the manufacturing giant will give participants the opportunity to help identify market needs, directly participate in the product development, and watch via social media as ideas speed from mind to market at the manufacturer’s newly opened FirstBuild micro-factory in Louisville, KY. Using a combination of co-creation and micro-manufacturing to design, engineer and build new products, GE believes it will “create a new model for the manufacturing industry.” How could this impact industrial metal cutting? In a recent editorial, Robert Brooks, editor of Forging magazine, says he isn’t convinced the co-creation model will replace the current supply chain model or the “obvious need for engineered goods like forgings,” but that doesn’t mean companies shouldn’t be on alert. “If such an development and organizational strategy takes hold for an industrial powerhouse like GE, the incentive will be set for others, including investors and lenders, for similar compressions of production time and cost,” he says.
- Single-Cavity Production. A recent article from Forbes challenges the notion of mass production, stating that making things in batches isn’t always the most efficient way. Quoting lean manufacturing evangelist Ted Duclos, the article argues that “America can revitalize its manufacturing base by making things one at a time.” Specifically, the article discusses single-cavity production and how that strategy has already shown promising results at big-name manufacturers like Chrysler. You can read the full Forbes report here.
July 5, 2014 / best practices, human capital, LIT, maintaining talent, operator training, productivity, quality, Safety, skills gap
Too many manufacturing executives underestimate the power of investing in their operators. As this 2012 study from PwC confirms, metal executives have traditionally preferred to invest more in technology than in their talent. However, that is slowly changing.
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 truly invaluable. Employee “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 don’t “buy-in” or feel disconnected, those same business areas can be negatively affected. High turnover is both expensive and time consuming, especially in light of the current skills gap. Finding, training, and maintaining talent are some of the biggest challenges facing today’s service centers, not to mention the manufacturing industry at large.
As this article from Reliable Plant points out, employee engagement is a complex, two-way process. “Companies must engage employees in their principles, programs and policies, and encourage them to respond through participation,” the article says, adding that this creates “loyalty, pride and a sense of identity and community.” This may start with basic actions like creating a safe and enjoyable workplace for operators, as well as more appealing incentives such as continuing education and bonuses. But it shouldn’t stop there. Investment needs to go both ways. In fact, according to Forbes, part of the goal should actually be to keep employees dissatisfied:
“Dissatisfied employees are actually more likely to deliver higher performance. I don’t mean dissatisfied with their job, their company or their boss, but dissatisfied with their own performance, their team’s performance and their company’s performance. One of the most important jobs of the mid-market CEO is to create an environment in which the team is dissatisfied with the current state of things and are striving to become more satisfied.” (Forbes, “Why You Need Dissatisfied Employees, 08/03/2012)
So how to do get your operators to be both (dis)satisfied and invested? Below are a few best practices and resources that may help answer that million-dollar question:
- Encourage Innovation. As this Modern Metals (MM) article states, urging operators to take ownership of their jobs and actively participate in improvements creates a culture of success. The key, the article states, is to inspire everyone to be an innovator. Service Center Metals, a metal service center featured in the MM article, asks workers to come up with new ways to improve their processes, reduce costs, and increase safety and quality. “We expect everybody to come up with ideas to make us better,” Scott Kelly, the president and CEO, told MM.
- Don’t Underestimate Incentive. In today’s competitive market, incentives and benefits often feel like an added cost, but they can also provide employee motivation and loyalty. At least that is the case for Schupan & Sons Inc. In a Q&A with Forward magazine, CEO Marc Schupan said that one of the reasons many of his staff members have a long tenure is because his company intentionally tries “to do the right thing” for its employees. For example, when fuel prices got out of hand, Schupan said he instituted a gas allowance for all hourly people. “We have a philosophy here: They know when we do well, they’ll do well,” he told Forward. “And when things are tough, we’ll suffer through it together.”
- Build Trust. According to the Harvard Business Review (HBR), trust is essential to boosting employee engagement, motivation, and candor. This is critical in smaller operations, but it is also important in larger operations, where there can be a greater separation between plant-floor employees and management. Building bridges of trust between operators, supervisors, and the executive office creates a more team-oriented atmosphere and fosters communication—both of which can help improve productivity. Check out the full HBR article here [LINK] for a great list of trust-building principles and action items, including a discussion on transparency and giving credit when credit is due.
- Provide Training. Perhaps the greatest benefit you can give your operators is knowledge. Investing in their skills empowers them to invest right back into the company. The most obvious way to do this is through a strong training program that caters to both new and existing employees. Yarde Metals, a leading metal service center featured in this series of case studies, has new employees follow a formal training program that requires signatures from both the trainee and supervisor when the training is complete. The signed certificate is then placed into the employee file. The same procedure is followed any time the company purchases a new blade or piece of equipment so that operators are not only properly trained, but held accountable if there are problems down the line. Metal Cutting Service, Inc. (MCS), another leading metal-cutting company, goes one step further and pays for any continuing education operators want to do on their own time. According to MCS president David Viel states, “Ongoing training shows an interest in the people, and they know that education is important and that we have invested in them.”
May 10, 2014 / best practices, continuous improvement, Employee Morale, human capital, industry news, LIT, maintaining talent, operator training, quality, root cause analysis, skills gap
There is no question that the skills gap is one of the most pressing issues for industrial metal-cutting companies and, of course, the manufacturing industry at large. According to a recent article from the U.S. News & World Report, it is estimated that more than half a million skilled manufacturing jobs remain unfilled due to the labor skills gap in the U.S., and that number will likely increase as more and more Americans age out of the workforce.
As we covered here, this has prompted industry leaders like GE and industry associations like the Society of Manufacturing Engineers (SME) to take action. Just last week, JPMorgan Chase & Company announced a $5-million commitment to the city of Dallas to help shrink the skills gap within several industries. The move is part of a five-year, $250-million national initiative Chase launched in December to provide job training and fund local research to identify the areas most in need. As this video explains, the banking giant is using real data to identify real needs and then investing in those needs to fill the actual gaps.
While these types of large-scale initiatives might be left to large-scale companies, Chase’s strategy is one that just about any fabricator can apply to their own operations. Like Chase, fabricators that want to make a real difference in their business need to identify the actual gaps within their own company walls. This is especially true if a large number of your workers are headed for retirement. Once you have identified the gaps within your organization, you can determine the skills that are needed and then adjust your training and hiring programs accordingly.
The following are two strategies that can help you determine if (and where) there are skills gaps in your operation:
- Map them out—literally. Marlin Steel, featured in a profile on thefabricator.com, is using a Skills Matrix to ensure that its shop always has someone available to perform the necessary skills. In a Q&A with the trade publication, Marlin Steel President Drew Greenblatt explains that the Skills Matrix is essentially a Microsoft Excel spreadsheet that identifies each worker’s skill set. Each skill is awarded a point value and, in essence, ranks workers by their skill level. This helps the shop identify strengths, gaps, and individual opportunities for improvement. It also encourages cross-training. To make it a win-win situation, Greenblatt provides financial compensation every time a worker adds a skill. (You can read the rest of the interview here.)
- Identify problem areas. Another method for identifying skills gaps in your fabrication shop is to evaluate your workers on the job to determine whether or not they are causing avoidable errors or inefficiencies. Here are a few tactics described in a white paper from LIT that can help managers identify problem areas:
- Conduct a time analysis to measure shop floor efficiency. You can read the specifics on how to conduct an analysis here. Once the analysis is performed, managers can review the results to identify inefficient workers, patterns when certain tasks are performed (i.e., cutting different grades of material), and baselines for improvement. Ideally, this is performed without worker knowledge in order to get a more accurate picture of performance.
- Take a close look at inventory levels. Even if an organization is meeting customer orders, high levels of inventory can indicate “hidden” inefficiency and quality issues. Waste and remnants are often the result of operator errors such as incorrect machine settings and improper blade usage—both of which point to a lack of training or knowledge.
- Implement some form of process control. Without a paper trail, it is difficult for managers to find the source of operational issues, including problem operators. By having processes in place to hold operators accountable such as daily checklists, maintenance reports, defect reports, and signatures to hold operators accountable, executives can quickly and easily pinpoint the cause of workflow bottlenecks, increased tooling costs, and other issues that can impact business performance.
As the skills gap is proving, investing in your human capital is just as critical as investing in your technology and equipment. Taking the time to identify strengths and weaknesses within your operations staff—and then encouraging and rewarding improvement—is one way industrial metal-cutting leaders can equip themselves for today, as well as the future.
April 20, 2014 / continuous improvement, human capital, industry news, LIT, maintaining talent, operations metrics, operator training, performance metrics, skills gap, strategic planning
Here’s the good news: Data continues to show that 2014 will likely be a year of growth. Gardner’s most recent metalworking business index (MBI), for example, showed that conditions in the metalworking industry expanded in March for the third straight month and the fourth time in five months. According to Modern Machine Shop, this was the fastest rate of growth since March 2012. Additional MBI findings revealed positive trends in several key business areas, including new orders and production, capacity utilization and spending, employment, and supplier deliveries. You can read the full report here.
All of this good news, however, comes with some uncertainty. As reported in LENOX Institute of Technology’s (LIT) 2014 outlook, most metals executives are only cautiously optimistic about the near-term future. Political issues, pricing pressures, and talent shortages are issues weighing heavily on industrial metal-cutting companies, leaving executives with no choice but to focus on continuous improvement as they attempt to strategically approach a shaky marketplace.
For machine shops, taking the time to make improvements is a challenge in itself, especially if business is starting to pick up. However, leading-edge shops know that in today’s demanding market, optimization is the only way to stay competitive. In other words, they are making time.
While you may not have the resources to undergo a major improvement initiative in 2014, the following are two key trends today’s machine shops need to consider:
- Data-Driven Manufacturing. Yes, “big data,” the Internet of Things, and digital manufacturing have all become industry buzzwords. But as this article from Modern Machine Shop Editor Mark Albert suggests, behind all of this terminology is a trend that can’t be ignored: Today’s machine shops need to make decisions based on information. In fact, Albert says this is the only way that production can move forward. “Facts and figures determine the path a manufacturing process should take, and they propel it ahead,” he states. “To drive manufacturing, factual information has to be available so that people, as well as computers, can use it.” Whether you are manually measuring cut times or implementing cutting-edge monitoring software, the point is that today’s manufacturing decisions need to be based on real, quantitative data.
- Closing the Gap. For years, experts have been warning manufacturers about the skills gap, but it is just now starting to have an impact. Case in point: Prime Advantage Corporation, a buying consortium for midsized manufacturers, recently conducted a survey of CFOs from its member companies. According to the results, 65% of those surveyed said they have open positions that they are seeking to fill, but are having difficulty filling the jobs because of a lack of qualified labor. Other reports are revealing similar trends. To close this gap, companies are discovering that they need to start investing in their human capital. This is a change from the last few years, when metals executives invested more in technology and equipment. In addition to addressing the skills gap, 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.
To read more about trends we expect to see in 2014, check out LIT’s 2014 Industrial Metal-Cutting Outlook.
April 5, 2014 / best practices, continuous improvement, human capital, industry news, KPIs, LIT, maintaining talent, operator training, performance metrics, skills gap, value-added services
As the industry heads into the second quarter, uncertainty remains. In fact, as we state in our 2014 Industrial Metal-Cutting Outlook, uncertainty may be the only thing that is certain right now.
Like most sectors of the metal-cutting industry, metal service centers have experienced little if any growth in 2014. January started off with a much-needed improvement over December, with small increases in shipments and reduced inventory levels. However, February wasn’t as strong as many had hoped. According to the latest figures from the Metal Service Center Institute, U.S. service center steel shipments in February 2014 increased by 0.4% from February 2013, and 2014 year-to-date steel shipments increased by 0.2% from the same period in 2013. When looking at total volume from January to February, service centers’ shipments of steel and aluminum actually declined, reports IndustryWeek.
In other words, we aren’t quite there yet. Experts like the Manufacturers Alliance for Productivity and Innovation (MAPI) are hopeful that the rebound is coming, but until then, there are several industry trends that we feel will be key for metal service centers in 2014. Here are a few to keep in mind:
- Diversification. Shrinking profits and political issues like budget sequestration are making diversification a key strategy for service centers. In a recent column appearing in the March/April issue of Forward magazine, business journalist William P. Barrett stresses that this is especially important for companies that service the military. He states, “But it also seems prudent, in these times of daffy congressional budget strategies, to diversify as much as possible to dilute the risk that haunts the business of military contracting.” In some cases, this may mean forming new customer relationships, or it could mean offering existing customers a few value-added services (e.g., sawing, laser cutting, and parts fabrication) for a more predictable stream of revenue. You can read a great case study of one metal-cutting company’s successful “reinvention” here.
- The Skills Gap. We’ve all heard about the skills gap, and at this point, we may even be sick of hearing of hearing about it. But the issue is real, and like every manufacturer, service centers need to address it. For example, the latest U.S. Total Manufacturing Index revealed that manufacturing job openings for the latest three months is 16.1% above the year-ago quarter, and the rates-of-change are improving. According to analysis from IndustryWeek, this means that manufacturers should “expect upward pressure on wages as skilled labor becomes even harder to find.” While finding and training new employees is a large part of addressing the gap, as this white paper from LIT points out, it is just as important for today’s industrial leaders to focus on maintaining and improving their existing workforce.
- Metrics, Metrics, Metrics. Continuous improvement is the mantra of most manufacturing leaders these days, and as any lean consultant will confirm, this requires measurement. There is no question that industry buzz words like “metrics” and “KPIs” will continue to be important tools for industrial metal-cutting leaders; however, knowing where to start and what to measure can be a daunting task. Although the “right” KPI will vary by organization, as this blog discusses, there are a few simple guidelines managers should follow to determine the most effective performance measurements for their metal-cutting operation. For those who want a more in-depth look at metrics, MESA International is offering a webinar, “Manufacturing Metrics that Really Matter” on April 16. Based on a 5-month research study by MESA and LNS Research, the webcast is targeted at manufacturing executives, continuous improvement team members, and plant managers/supervisors that want to use metrics to optimize their business performance.
February 15, 2014 / productivity, skills gap, training
At this point, most industrial metal-cutting executives are aware that the manufacturing industry is facing a tremendous workforce challenge. A widening skills gap is threatening U.S. businesses at large, and, according to Forbes, even the best firms are feeling the effects.
For manufacturers, the issue is two-fold. First, skilled production workers are one of the largest workforce segments facing retirement in the near future, which will have an impact on the number of experienced workers on the shop floor. In fact, recent reports say the mass “boomer exodus” has already begun.
Meanwhile, the current talent pool isn’t what is should be. Streamlined production lines and more process automation have changed the nature of manufacturing work, and the incoming generation of workers lacks the skills and technical knowledge required. What’s worse is that most young workers aren’t interested in working anywhere near a production line.
All of this is especially disheartening at a time when many companies are trying to bring manufacturing back to the United States. Industry associations like the Society of Manufacturing Engineers and major players like GE are attempting to get ahead of the problem by working closely with universities and government bodies to provide the necessary training and education to encourage students to pursue careers in manufacturing. And while these types of initiatives are certainly encouraging—and necessary—what can manufacturers do right now to help close the skills gap within their own operations?
For many companies, managing the skills gap will require changing the way they train and maintain talent, whether that means beefing up training programs or rethinking their employment strategies. This will mean different things for different companies, but here are a few of the talent strategies being used by some forward-thinking manufacturers:
- Develop existing employees. A recent article from Modern Machine Shop argues that your current employees are likely your best means of developing new skills. Just like existing customers are often the greatest source of new business, the underdeveloped potential of existing employees could be your greatest source of new talent. Huntington Ingalls Industries, a shipbuilder featured here in IndustryWeek, has found that investing in leadership training has made a huge impact within their operations. Specifically, the manufacturer has focused on leadership training of foremen in particular, which has made it easier to get the rest of the line workers on board. As a result, the company has been able to maintain its quality goals, even with a fairly inexperienced staff.
- Consider new employment options. In the war for new talent, a lot major corporations have started to offer flexible work arrangements—an option that doesn’t quite fit with most manufacturing jobs. Or does it? This report from McKinsey & Company suggests that one way for manufacturers to deal with the loss of skills and institutionalized knowledge of retired workers is to offer them part-time employment options. According to the report, this is a common strategy used by Toyota Motor in Japan, which “aggressively recruits” its retired employees for half-time roles at the company and its affiliates.
- Leverage multigenerational strengths. According to Modern Metals, by 2020, companies will be challenged with balancing five generations in the workplace—a task that, at face value, appears to be a human resources nightmare. However, MM suggests that when managed correctly, a multigenerational workforce can actually be an asset. For example, as this white paper from the LENOX Institute of Technology explains, while younger, less experienced workers may lack industry knowledge, they are typically more technology savvy and more willing to embrace new techniques. Seasoned workers, on the other hand, may be resistant to both change and technological improvements; however, they typically have a vast amount of experience and loyalty and may be able to mentor new employees. When leveraged appropriately, companies can use this diversity as an opportunity to improve operations and create new and innovative solutions to traditional problems.
The skills gap is a daunting issue for sure, and there is no “silver bullet” solution. However, manufacturers that fail to tackle this challenge now will find themselves facing bigger problems in the future. The next generation of manufacturing may offer a new set of talent challenges, but as proactive companies are finding, it also presents a new set of opportunities.