Manufacturing Industry (5)
Insight and reflections from a successful small business that has been part of the manufacturing industry for over 30 years. Contributed by various employees of Matrix Tooling, Inc. & Matrix Plastic Products.
For anyone in manufacturing today, we have had the luxury of being handed a rich tradition in how to make things. For over 125-years, the United States has honed its skills as a manufacturing destination for making products sold world wide. Add in the knowledge gained by being thrown into two World Wars, where many businesses were asked to support the military effort. These wars required a rapid response and high volume production from our existing manufacturing plants, it was truly a national effort to support our military.
Today, we are faced with global competition that has a younger work force, one willing to work at greatly lower wages, and they are using the same equipment and software that we use. While this seems to be a competitive threat that would be tough to beat, we have one huge advantage over them. Our legacy of making world class products here is something significant, and not to be squandered. Much of China's manufacturing base in high end products is less than twenty years old. Having the latest and greatest equipment gets you just so far. The ability to win an endurance race such as the Indy 500 is more about the best and brightest technicians building an engine that not only performs well, but does it under the most grueling circumstances. While a stock engine might make it thru the race, someone committed to winning will only accept the best. And the fact remains that the best tooling comes from countries with long traditions of making things. Not the most populous regions with large groups of young people using the latest technology.
We have a duty to continue the legacy of manufacturing that was handed to us. What was passed on to us must be passed on to the next generation. We absolutely must invest in our youth, in our infrastructure and equipment. If not, the one huge advantage we currently enjoy will be gone. And once it's gone, playing catch up will be tougher than anything we've faced in the way of competition thus far.
Like other contract manufacturers, plastic injection molders and toolmakers have unique challenges when it comes to obtaining comprehensive, affordable product liability insurance. First, we serve a wide variety of markets, from medical to electronics to consumer products, and cannot predict what type of products we will be making from one month to the next. Second, we usually make only a single component part of our customer’s product, and thus may not know how the completed product will be used or what its risks are. These two factors alone make it hard for an insurer to properly evaluate its exposure for the products of a typical contract manufacturer.
Suppose you make a plastic “clip.” A diligent insurer will ask where that clip is going - on a pen, in a car, on a blood vessel? An insurer may refuse to cover a risk it does not understand, or may only cover it to a very limited degree and at a very high price. Not disclosing or mischaracterizing to your insurer what you know about the nature of your product could be a big problem in the event of a claim. On the other hand, if you have disclosed it and the insurer then declines to cover you, how would you like to tell your customer that? If the coverage is available but the premium is astronomical, can you add that cost into your quoted price and still be competitive? These questions may not have easy or pleasant answers, we’ve found. But simply ignoring them could have far more unpleasant consequences, so we think these are things every contract manufacturer needs to ask.
It's been said that training is the lifeblood of an organization. Yet over the last few years, finding money for training and educational purposes has been a challenge. As our economy struggles to its feet, it's high time we realize that the only way an American manufacturer is going to thrive (or even survive) is to throw every available resource towards ensuring that his employees are better coached than the competition's. We can't wait for our government to level the playing field when it comes to free (and fair) trade. The core of the free market concept is rooted in competition driving us to improve
quality and innovation, lower prices, and thus be able to sell more and grow. Our competitors in low cost manufacturing locations are using the same equipment that we do. In many cases, their workforce
is younger, more hungry, and certainly more plentiful. How do you compete with that? By making sure your employee is thoroughly trained, in both the latest technology, and old world craftsmanship that can be
passed down from the senior toolmakers and designers who built tooling prior to the age of computers. Old world craftsmanship is often not available in these low cost manufacturing countries.
The opportunity to get involved at the ground floor is an opportunity not to be missed. Apprenticeship programs are struggling, and if they are allowed to fail, we have failed. Opportunities abound in local vocational and career training programs for mentoring, donating time and resources, and ensuring that there is an influx of future talent for hire. Our company is active in numerous trade associations, including the Tooling and Manufacturing Association (TMA), the American Mold Builders Association (AMBA), Society of the Plastics Industry (SPI), Society of Plastics Engineers (SPE), Illinois Manufacturing Association (IMA), the American Society for Quality (ASQ) and the Manufacturers Association for Plastics Processors (MAPP), to name a few.
So as manufacturers, we are left to our own devices to stay in the game. But without training, we are certain to have a more difficult time competing in the future than we currently do today.
I’ve been involved in high school career education programs for much of the last 15 years. A good portion of that time was spent talking to educators and parents about careers in precision manufacturing being a viable alternative to the typical 4-year college program being pushed on our kids. Colleges have done a very good job of convincing us (and especially the parents) that the only way to a successful and rewarding career is to get a degree. I, for one, don’t agree. An apprenticeship can offer a young person another option; and the fact is that college is not necessarily the best choice for many high school students. Most teachers will agree with this logic. They know first hand which of their students are good candidates for advanced degrees and which are more likely to struggle. Most apprentice programs are struggling to attract talented young people, who by that time have had 12+ years of people telling them that they will need to get a degree in order to get a good job.
I know that the U.S. is not the only country with this problem. Much of Western Europe suffers from the same shortages. Many look down on those who work with their hands, but eventually, someone will need to learn and become the next batch of journeyman plumbers, electricians, toolmakers, etc. If not, homeowners better get ready to learn these skills or be ready to open up the checkbook.
I read an interesting article back in the mid 1990’s. In Germany (where an apprenticeship in a trade is still considered a viable career choice), the graduating number of architects outnumbered the number of apprentices from all skilled building trades combined. Think of how many architects it takes to build a home versus the number of workers needed from the various trades, and you’ll realize that something is seriously out of whack. Apparently the Germans, too, have spread the word that working behind a desk versus working with your hands is the way to go.
Hitting closer to home, we’ve struggled with finding quality candidates. Toolmakers today require skills far different than what was needed prior to the computer age, and the fact that few are training today makes for an unsustainable labor situation.
Much is published about currency manipulation, unfair trading practices, and low cost offshore labor as primary reasons for the large loss of high paying manufacturing jobs in the USA. One thing rarely mentioned is the concept that the introduction of computer controlled machines and automation have had a significant impact on USA companies need for manual labor. Requirements for labor today are far different than in days past as manufacturers now need higher skilled people, but less of them. Special interest groups often look for easy targets when determining the reasons for job losses, but the bottom line is that in many cases, companies need fewer people to do the same amount of work as before. And as labor costs continue to climb, it’s the first place a manufacturer will look to reduce his overhead expenses.