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strategic planning

Apprenticeships May Help Your Service Center Fill Skills Gaps

March 5, 2017 / , , , , , , , ,


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:

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? 

strategic planning

Aerospace May Offer Opportunities to Industrial Metal-Cutting Companies

March 1, 2017 / , , , , , , ,


As we reported in last month’s blog, experts consider aerospace to be one of the strongest industries. In one report from the Metal Service Center Institute, Richard Aboulafia, vice president of analysis at the Teal Group Corporation, said that aerospace was the only industry that saw growth acceleration through the recession and that the civil aviation sector in particular offers “major opportunities for long-term growth.”

This, of course, is good news for industrial metal-cutting companies serving this sector, and prospects continue to look good for the near future.

Set to Soar

According to a report from Defense News, the aerospace and defense industry set a new record for international sales in 2016, delivering $146 billion in exports. The article went on to say that 2017 could be “another banner year” for the defense and aerospace industries thanks to some anticipated government orders.

As reported by Defense News in December, the U.S. State Department approved in the first quarter of this fiscal year foreign military sales worth an estimated $45.2 billion dollars, which is said to be more than the total foreign military sales for all of fiscal 2016. “If approved by Congress and manufactured this year, some of those purchases could help rack up the export total for 2017,” the article states.

Deloitte’s 2017 Global Aerospace and Defense Sector Outlook is also optimistic. According to the Executive Summary, Deloitte expects industry revenues for the global aerospace and defense sector to resume growth, driven by higher defense spending. Following multiple years of positive but subdued rate of growth, Deloitte forecasts that sector revenues will likely grow by about 2.0 percent in 2017.

Forecasts from industry leader Boeing show similar trends. According to a January report from Reuters, Boeing expects to deliver between 760 and 765 commercial aircraft in 2017, topping 748 deliveries in 2016. Honeywell, on the other hand, forecasts a slight decline in 2017; however, the company expects deliveries will begin picking up in 2018 due to the strength of several new aircrafts entering service, AINonline reports.

This could spell opportunity for many industrial metal-cutting companies. As an article from IndustryWeek states, the aerospace industry is a good business in which to be competitive because the underlying drivers of demand are very strong. “Since the end of the Great Recession, new commercial aircraft orders have typically been double, and in some years, triple the number of annual deliveries,” the article states. “This reflects explosive growth of air traffic in the emerging world as rising incomes and declines in ticket fares make air travel affordable for increasing numbers of households.”

Equipped for Growth

As a critical part of the supply chain, there is no question that metal-cutting companies could reap the rewards of aerospace’s success. However, companies serving this sector need to be sure they are doing what it takes to win the business of both existing and potential aerospace customers, even if that means investing in advanced metal-cutting tools designed to meet the unique demands and shifting trends within the industry.

For example, as reported here by The Fabricator, Superior Machining & Fabrication has upgraded its 110,000-sq.-ft. machine shop to better serve the aerospace sector. “Changes include the addition of CAD/CAM software, a larger 5-axis bridge mill for hard metals, and a 5-axis SNK bridge mill,” the article states. “The company also has tripled the size of the quality room, added an assembly room, created a staffed tool/fixture room, introduced lean manufacturing/5S throughout the shop, and segmented the shop into cells with their own leaders/supervisors to help improve product flow.”

Shops should also be sure they are equipped to handle the material demands of customers, including the growing use of titanium in aerospace components. In a recent interview with American Metals Market, Rich Harshman of metals supplier Allegheny Technologies, Inc., says he sees a significant mix shift happening within the aerospace industry. Specifically, he says there is a “growing demand for our differentiated next-generation alloys as well as growing demand for our isothermal and hot-die forging and titanium investment castings.”

For metal-cutting operations, this means having a carbide-tipped band saw blade. Since titanium and other high-performance alloys are stronger and harder, they need more than the average bi-metal blade. Using a carbide-tipped band saw blade not only allows for the successful cutting of hard metals like titanium, it simultaneously offers longer blade life and faster cutting as well, according to the white paper, Characteristics of a Carbide-Friendly Bandsaw Machine.

Final Approach

In today’s unpredictable market, the truth is that no one really knows what the future holds for aerospace. However, industry leaders know that it pays to be prepared. Tailoring your operations and processes to meet the unique demands of the industries you serve will not only position you as a valued supply chain partner, but as an agile, industrial metal-cutting leader that is ready to fly when demand takes off.

strategic planning

Capital Spending to Increase as Machine Shops Seek Productivity

February 20, 2017 / , , , , , , , , , , , , , , ,


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:

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.

strategic planning

Three Ways Fabricators Can Build Stronger Supplier Partnerships

February 10, 2017 / , , , , , ,


For most fabricators, supplier relationships are the building blocks of success. While there are still some companies that base their supply chain on price, as customer expectations for both quality and delivery continue to increase, many industry leaders are taking the time to form strong supplier relationships that are built on a lot more than an affordable product or service. In many cases, suppliers are becoming strategic partners.

Data confirms this trend. As reported in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, a survey conducted by Tompkins Supply Chain Consortium found that 80 percent of supply chain professionals believe that the supply chain is an enabler of business strategy. “A majority of companies also felt that the supply chain is a source of business value and competitive advantage,” the eBook states.

How can you form strong supplier relationships that provide real value? The eBook offers three best practices:

1. Schedule on-site visits. Like any relationship, communication is key. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.

2. Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.

3. Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.

Of course, maintaining strong supplier relationships doesn’t come without its challenges. According to the 2017 Manufacturing Outlook Survey conducted by ASQ, 83 percent of manufacturers experienced problems with suppliers last year. However, only a third felt concern that those issues would spill over into 2017. In addition, 66 percent of those surveyed said they are working with current suppliers to fix previous concerns—an indication that the majority of manufacturers see the value of working closely with existing suppliers to address challenges they face. As an article from Supply Chain Drive notes, “…a consistent cycling of suppliers can harm long-term performance as relationships take time to cement.”

ASQ does warn, however, that manufacturers should be prepared for those moments when suppliers don’t come through. The key is to openly communicate with existing suppliers to determine any potential risks and, more importantly, to have back-up plans—and back-up suppliers—to alleviate supply chain disruptions. Ultimately, the goal for any manufacturer should be to turn vendor relationships into strategic partnerships. By taking the time to build trust and value into the supply chain, suppliers can become an integral part of your business strategy and, more importantly, your shop’s success.

In what ways can your fabrication shop get more out of its supplier relationships? 

strategic planning

Measuring the Cost of Quality in Your Metal Service Center

February 5, 2017 / , , , , , , , ,


Keeping costs low and quality high are the top goals of just about every industrial metal-cutting operation. What’s interesting, however, is that many companies treat these two areas as independent variables. A recent series of articles from IndustryWeek (IW) shows why it is important for managers to look at quality and cost together. More specifically, it recommends that companies quantitatively measure the cost and benefits of quality.

“Tracking the financial impact of any support function is necessary in order to illustrate its value and garner continued support and resources from senior management,” the IW article explains. “This struggle is vitally important for quality management departments that continue to struggle with competing for resources. Once organizations get clarity on the financial impact of quality, the next step is to understand what practices and applications help improve the financial value.”

Unfortunately, this seems to be easier said than done. Based on the results of a 2016 survey conducted by the American Society for Quality (ASQ) and the American Productivity & Quality Center (APQC), approximately 60 percent of organizations say they don’t know or don’t measure the financial impact of quality. According to a report on the survey’s findings, “this lack of measurement may be attributed to not having a common method for capturing the financial impact.”

Many companies also do not understand the benefits of measuring quality and, instead, simply use it as a means of “compliance” or to keep customers happy. This is especially true in today’s market. As stated in the white paper, The Top 5 Operating Challenges for Metal Service Centers, customers continue to expect higher quality and tighter tolerances from their metal-cutting suppliers.

However, the IW article states that quality should be about more than “checking a compliance box” or basic due diligence. “Developing a solid foundation of quality assurance for continuous improvement, risk mitigation, and compliance provide immeasurable value,” the article states. “However, once that solid foundation is established, organizations can then leverage quality for the benefit of the customer and enhance brand image, thus serving as a competitive differentiator.”

In fact, based on ASQ and ASQC’s survey findings, “organizations that leverage quality as a strategic asset were more likely to report higher levels of financial gains from their quality program.” In other words, companies are using quality to drive profitability.

For more information on how to start measuring the cost of quality, click here to access IW’s four-part series. The articles look at the relationship between financial benefits and the following areas:

How are you measuring the financial impact quality has in your service center?

strategic planning

Customer Outlooks Create Optimism for Industrial Metal-Cutting Organizations

February 1, 2017 / , , , , , , ,


Although there is still a lot of uncertainty surrounding the economy, many metals companies and experts are fairly optimistic about the short term. According to the January 2017 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies expect strong business conditions throughout the next three months.

Much of this optimism is based on positive forecasts for end-use markets. At the Metal Service Center Institute’s Forecast 2017 Conference, for example, economists and industry experts shared positive outlooks for several customer segments, giving the metals supply chain an idea of where to place their focus this year.

Below is a summary of segments that show some growth potential for industrial metal-cutting companies this year, as reported by MSCI. (You can access the full report here.)

While these are broad-based outlooks, they should provide metal-cutting companies with some confidence as they invest in existing customer segments or consider branching out into new markets. Knowing where the growth is located is a critical part of strategic planning.

Of course, the other key element is knowing how to best serve those customers—both new and existing. As reported in the news brief, “Strategies for Improving Customer Service and On-Time Delivery in Industrial Metal Cutting, on-time deliveries are no longer enough. Today’s customers are looking for trusted suppliers that go the extra mile. “Whether offering a new, value-added service or investing in certification, metal-cutting companies have several opportunities to cultivate a strategic customer relationship built upon premium service,” the brief states. (For some specific strategies for improving customer service, you can download the full news brief here.)

It is far too early to tell how this year’s market will shake out, but as the above forecasts show, there are several segments that offer growth potential for industrial metal-cutting organizations. With a little strategic planning and a strong focus on customer service, companies may find they can make this year one of their best.

strategic planning

Creating a Team Atmosphere in Your Forging Operation

January 25, 2017 / , , , , , , , , ,


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.):

  1. 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.
  2. 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.
  3. 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? 

strategic planning

Best Practices for Selecting Cutting Tools for Your Machine Shop

January 20, 2017 / , , , , , , , ,


In any manufacturing operation, having the right tool for the job is critical. The challenge is that there will always be instances when the “right tool” won’t be a clear-cut decision.

For example, in metal-cutting, bi-metal band saw blades have been traditionally used for easier-to-cut metals such as aluminum and non-ferrous metals, carbon and structural steels, and some alloy steels. However, blade technology is evolving, and there are now carbide-tipped band saw blades on the market that have been designed specifically to cut aluminum and non-ferrous alloys. This begs the question: Is the new technology worth the investment, or would it be smarter to stick with a tool operators already know?

Answering those types of questions is never easy and takes careful consideration, especially when there is some investment necessary. In today’s competitive market, even a simple tooling decision is strategic.

To assist managers with the task of selecting the best machine tools for their operations, the LENOX Institute of Technology offers the following tips:

      1. upfront costs against overall operating and maintenance costs
      2. long-term productivity of a machine and its intended use
      3. equipment and blade life, as well as cost per cut

 

What best practices does your team follow when choosing a new machine tool? 

strategic planning

Supply Chain Trends Impacting Metal Service Centers in 2017

January 5, 2017 / , , , , , ,


As metal service centers and other industrial manufacturers find new ways to stay competitive, the role suppliers play is becoming more and more critical. Now more than ever, manufacturers need to be in tune with what is happening within their supply chain.

One major trend companies need to be aware of is the shifting dynamic within the supply chain, much of which has been caused by cost pressures. “Competitive pressure to reduce costs is forcing changes in supply chain operating models, creating more complexity and dependence in the value chain,” notes PricewaterhouseCoopers (PwC) on its website. “The number of entities and interdependence between parties is increasing and expectations regarding reporting are also becoming more burdensome.”

Another trend is increased collaboration with suppliers. Many service centers are looking to form strategic relationships with suppliers that can provide value, not just low-cost services or products. A white paper from the Lenox Institute of Technology discusses how this is happening within industrial metal-cutting:

“Operations managers increasingly find that to be successful, they must establish a collaborative vendor relationship that moves far beyond the sale of a product. By leveraging all of the assets their vendors can bring to the table, companies can form strategic partnerships that not only help fulfill their customer demands, but that also help optimize other aspects of the business such as cost management and employee training.”

A recent article from ThomasNet confirms this trend, stating that supplier collaboration will be crucial in 2017. The article, which you can access here, lists three more trends worth noting:

  1. Increased Emphasis on Ethics and Transparency. In 2016, many companies came under fire due to a lack of ethical practices within their supply chain. As consumers become more environmentally and sustainability conscious, supply chain professionals will be under enormous pressure to ensure that their products are safe, ethical, and environmentally friendly. As a result, procurement teams will invest in technologies that provide greater visibility into their suppliers.
  2. Digital Will Become Standard. For years, the supply chain has been shifting away from the paper-and-technology model of information management to an all-digital approach. In 2017, that shift will go from optional to essential.
  3. The Supply Chain Will Get Agile. Today’s intricate, global supply chains are inherently risky, so supply chain managers need to be able to plan ahead and react quickly when a disruption does occur. Thanks to the advent of real-time data, it’s now possible. Leveraging data, supply chain professionals can make quick decisions that can resolve potential crises.

Of course, only time will tell how much of an impact these trends will have on your service center this year. Some of them may have no impact at all. However, for those companies that want to have an edge up on the competition, it is critical to keep a pulse on every aspect of your business, including your supply chain.

strategic planning

Engaging Employees Is Key to Continuous Improvement in Your Ball and Roller Bearing Manufacturing Operation

December 30, 2016 / , , , , , ,


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:

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?

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