May 2008 Edition

straight talk

Metalworking:

The Old Gray Lady, she ain’t what she used to be

By Stan Modic

Metalworking jobs that went offshore in search of cheap labor are coming back. At least some of them are.

Francine Petrucci of BA Die Mold Co., Aurora, IL, tells me some of the customers they lost to China are starting to come back. She hears the same from others in the industry.

"It’s not all that much better, but at least now we are getting a chance to bid on jobs," says Petrucci. "But it is still extremely competitive. They call it free trade, but it is far from a fair and level playing field."

A big factor, she explains, is the speed of delivery.

"If you don’t have a spot on a timely ocean freighter, you have to use air freight that eats up the cost difference," Petrucci says. "Plus, there is less domestic competition, as it’s estimated some 200 mold and die makers throughout the Midwest have closed their doors."

Rob Akers, recently promoted to the executive director’s job at the National Tooling and Machining Association, hasn’t seen as much business moving overseas as he did earlier. A lot of the jobs that were chasing cheap foreign labor are now coming back to the United States, he says.

"It’s really a delivery time issue," says Akers. "Fast delivery of jobs has become much more of a factor. Price is still a factor, but time and reliability are the big competitive factors today."

Never the same

Still, the industry will never be the same. That cheap off-shore competition caused the number of precision job shops to shrink to a fraction of its original size.

I checked in with the American Mold Building Association, which a few years ago started to be decimated with mold and die jobs going to China (T&P, June 2003). Gauging from the drop in its membership, it estimates that the industry may have shrunk by some 30 percent.

"Manufacturing is changing but it will never dissolve in this country," says Akers. "We are going through a new industrial revolution with how we operate as manufacturers and metalworkers. We just have to get back into the race. We got complacent. We lost focus on adapting some of our innovation."

‘Education is the key to the survivability of manufacturing in this country.’— Rob Akers

Roy Sweatman, who was recently installed as chairman of the NTMA, says the industry must be more creative.

"If you are in business today in the precision custom manufacturing area and you don’t invest in new technology and automation to make yourself more productive, you are not going to be competitive," says Sweatman.

"Garage" machine shops are pretty much a thing of the past.

 

"You can’t, as a manual machinist or tool and die maker, go into business today and expect to be successful doing things like you did 25 years ago," says Sweatman. "Years ago, big companies would work with about anybody who could give them a lower price. But they now tend to be more competitive themselves by consolidating their supplier base."

Sweatman is president and majority owner of Southern Manufacturing Technologies (SMT), which is based out of Tampa, FL. His theme during his term in office will be "Technology for the future: one more piece of the business success puzzle."

He apparently walks his talk. He bought SMT some 22 years ago, a 30-year-old small machining company with five employees, moved it to Tampa, and now has 100 employees, running modern equipment and making precision parts for the aerospace and defense markets.

Challenges stay

The challenges to the manufacturing and metalworking companies, posed by the globalization of the business world, won’t go away.

"We are butting heads with China, and before that, it was Mexico, and before that, Japan, and it isn’t over," says Akers. "China will not be the last stop. We are running into problems of outsourcing with India and Vietnam.

"We are witnessing both operational and generational changes," he explains. "We are in a dynamic time in manufacturing now, when technology is taking new leaps and bounds. We are in a generational change spurring new ways of thinking.

"We have the power of the Internet, an ease to communication, and different buying tendencies. This all represents a huge structural shift in industry and business. Those companies that are maintaining the way we used to do things are going out of business — not only internationally, they won’t be able to compete domestically."

‘You can’t go into business today and expect to be successful doing things like you did 25 years ago.’— Ray Sweatman

The key to success in manufacturing in the United States, Akers says, is education.

"We must emphasize the importance of manufacturing in the U.S. and reassert our competitive advantage in the global marketplace," he says.

Some of that is already starting. Sweatman says the closings of companies that began around 2001 have since stabilized in recent years. He admits there are still some pockets that are hurting, especially those serving the auto market.

Akers says the contraction of the precision custom machining industry represents some consolidation of companies and not all are necessarily closing their doors. There are bigger shops buying smaller ones and manufacturers acquiring a job shop to fill a need.

They are starting to form partnerships with other types of companies. Companies are diversifying.

"You have to reach out, to know what needs your customers have, and how you can deliver a solution to whatever that need is," says Akers. "It often goes beyond machining. It may be assembly, or some other type of tooling work, or engineering. The most successful companies will be those that provide solutions."

And all that will entail a great deal of change and disruption.

What do you think?
Will the information in this article increase efficiency or save time, money, or effort? Let us know by e-mail from our website at www.ToolingandProduction.com or e-mail the editor at dseeds@nelsonpub.com.