Things are looking up: Our annual editorial advisory board meeting
July 22, 2010 by Vanessa Chris
The manufacturing sector is battered and bruised, but it’s fighting. And it’s fighting hard.
That was the consensus at Manufacturing AUTOMATION‘s fourth annual editorial board roundtable. The board brought a variety of perspectives to this year’s table, namely from the education, government, association and private sectors, and each seemed relatively certain that a recovery is upon us, albeit a slow one.
"Last year around this time, people were cautiously optimistic. This year, there’s a pretty solid sense of optimism out there," says Al Diggins, president and general manager of the Excellence in Manufacturing Consortium (EMC). "Companies are starting to hire people back, work share is winding down. Things are looking up."
Cheryl Jensen, vice-president of technology, apprenticeship, and corporate training at Mohawk College agreed, saying that the hiring of grads and co-op students is one of the college’s best barometers for feeling out the state of the economy – and companies are starting to hire again.
"Last year we saw a drop in the number of co-ops that were available for traditional manufacturing jobs," she says. "This year, demand is coming back – and much more quickly than we thought it would be."
While things weren’t rosy last year, Jensen believes the situation wasn’t as grim as the recession in the mid-1990s – at least from a co-op standpoint.
"In a downturn, co-ops are the first to go," she says. "We didn’t see that this year. Most companies knew they needed their young people to stay with them and they went to great lengths to do that."
While this recession isn’t the worst on record, it caused quite a bit of devastation. Many manufacturers who weren’t able to adapt to the new global marketplace didn’t survive the downturn. Others were forced to employ less popular measures to stay afloat – including reducing payroll. Even more continue to cling on for survival.
This notion of survival seemed to be the unofficial theme of the discussion. What are the things that companies can do today to not only make it through the remaining portion of this recession, but thrive as well? Below are our board’s thoughts.
1. Get to know your customers better.
In an effort to trim costs, many manufacturers have opted to reduce the amount of product sitting on their plant floors. The problem with this strategy is that instead of "just-in-time", reduced staff and inefficient production processes have resulted in "not-quite-in-time" delivery. This has put a lot of strain on the supply chain.
"Right now, we can’t get parts. Suppliers are reducing inventory and they’re short on parts," says Bill Valedis, manager of automation and training for Precision Design, Build and Services Inc. "We’re not even talking specialty items – it’s the off-the-shelf items we’re having trouble with. The supply chain isn’t communicating – companies aren’t listening to their clients."
The board recognizes that, while it doesn’t make sense to keep an over abundance of product in stock when times are tough, enhancing communication lines would go a long way. Many members believed that suppliers should be on top of their clients’ forecasts and stock their shelves accordingly, if they’re going to reduce their inventory.
Getting to know your customers a little better can help your business thrive in other ways, too.
"Companies have to know who their customers are and what their needs are," says Sherman Lang, industrial technology adviser at the National Research Council Canada. "The more successful companies have taken that understanding of their clients and uncovered new markets with it."
Uncovering new markets – whether they’re geographical or another client base – is one of the most cost-effective means of survival. You’re essentially producing the same product for a different group of customers without dishing out a lot of extra cash, Lang says.
Understanding customer needs and markets could also lead to new partnership opportunities – a chance to reach a brand new market by combining your efforts with another supplier and offer a completely unique experience.
2. Hire more students.
While more companies are opting to hire co-op students, that number should be higher, according to the editorial board. The thinking is that those companies that are going to survive this downturn – and the changing manufacturing landscape in general – are going to need access to a fresh set of eyes, and individuals with a lot of working years ahead of them.
Fresh out of school with no previous habits to unlearn, students see things differently. They can shift your organization’s thought processes outside of the box.
"If you want innovation, hire more students," says Valedis. "It shouldn’t be something companies are afraid of."
Lang agrees. "Many companies are underinvesting in IT right now. Young people are the perfect solution to this," he says. "They excel at navigating social media and Enterprise 2.0."
Some of the board members recognized that it’s not always easy to hire students – especially when co-op programs don’t coincide with varying economic climates.
"It comes down to timing – and getting the right people at the right time," says David Green, managing partner at Stratmarc Associates. "Often, by the time you get students out of school it’s a downturn and you’re unable to hire them."
Jensen agrees, but said that colleges are constantly working toward finding a solution to this common problem.
"Colleges need to be more responsive to the changes in the economy. I think right now colleges are good, but they need to be better," says Jensen.
She adds that Mohawk – along with other colleges – is working on becoming more responsive to changes in the economy. To truly succeed at this, however, a strong partnership is needed between education and industry. She encourages companies to get involved with their local colleges.
Jensen has seen the benefit of this cooperation first hand. Through this type of partnership, Mohawk has tweaked its programs – and launched new programs – to ensure local industry is getting the type of students it needs. A couple of examples of strategic partnerships include the Golden Horseshoe Strategic Energy Alliance – where Mohawk is collaborating to make Southern Ontario the nation’s solar sunbelt – and CANMET, Canada’s largest research centre for clean, renewable energy.
3. Invest in your existing workforce.
While it’s important to bring new blood into a company, investing in your existing workforce is important too. And that’s something companies are beginning to realize as they slowly emerge from this recession.
"We realize that over the last year and a half a lot of things had to be put on hold," says Valedis. "Companies are finally realizing that they needed training yesterday."
Training employees – whether it’s on new equipment, safety practices or skill sets – is important not only to ensure a smooth-running company, but for employee engagement as well. Whether you opt for a private training company or the "continuing education" arm of a local college, allowing your employees to learn updated skills can increase their productivity and give them a new perspective on their jobs.
Similarly, more companies are opting to enrich the jobs of upper management by joining associations like the EMC – where they have the opportunity to learn about lean best practices and other business strategies from other member companies.
"We’ve seen a lot of new members recently – maybe a 12-15 percent bump in membership," says Diggins. "This is an indication that people are starting to see the value in sharing ideas – in sharing best practices."
4. Take advantage of government programs.
While they appear to be laden with more red tape than they’re worth, government programs can help your company save a lot of money and prepare for the future.
"All those improvements your company made during the recession qualify for the SR&ED program," says Lang. "A lot of companies find that, while it’s quite a bit of effort to apply for the program, in the end it forces them to put more discipline into record keeping and documentation, which only helps their business in the long run."
The EMC offers resources for its members to help them make successful SR&ED claims – oftentimes helping their members get more money back than they would get with a large accounting firm, primarily because the association has a deep understanding and experience with manufacturing-based businesses.
Other programs – such as AIME (Achieving Innovation & Manufacturing Excellence), which is a joint effort by the Yves Landry Foundation and the Ontario government – offers added incentive to companies.
Jensen, who is an assessor of proposals for the project, thinks it’s a great way to encourage companies to move forward on the innovation front.
"Essentially the program offers maximum $50,000 grants to qualified applicants," she says. "Companies can submit proposals regarding how they’d like to make their company more efficient and productive through innovation. They have to show what they’ve committed to the cause themselves – whether it’s through training in lean manufacturing or investing in new equipment. We’re seeing a lot of well-executed programs."
While a recovery is definitely on its way, members of the editorial board agree that it’s not going to be a fast and easy one. Many believe we won’t see pre-recession levels anytime soon, due to the extreme decimation that ensued over the last year. That being said, confidence is up – and confidence, it seems, is contagious.