Mid-Year Report: Bullish on manufacturing
Investment in plants and people drives a stampede toward growth.
If no news is good news, then perhaps that explains why the good news in manufacturing is getting treated like it’s no news.
Even as manufacturers wrestle with tax and growth issues, there has been a stampede toward building and expanding facilities in recent months. From the Midwest to the Deep South, domestic and foreign companies are placing multi-million-dollar bets on new or expanded facilities. Expansion of plants and personnel continues, driven by hefty tax incentives but also by a firm belief that these investments make sense for today, and will turn into profits tomorrow.
For our annual Mid-Year Report, Plant Engineering talked with companies that either have announced major plant expansions in 2012 or have been making significant product introductions this year. They have one thing in common: they are bullish on manufacturing.
Why? Let them tell you...
Mike Morrison, executive director of manufacturing services, Dell
The manufacturing industry is a very, very large industry that is challenged on many fronts (cost pressures, global competition, innovation velocity, etc). Dell has learned a great deal from partnering with manufacturing customers over the years, and we have our own experience as a large, global manufacturer. We are bullish on manufacturing since we have seen many of our customers having to focus on pure survival due to the economic challenges of the past few years. With the recent upswing, those customers now have some capacity to start investing more into modern IT platforms that will create a more lean and efficient environment for their teams.
Tim Shuttleworth, president and CEO, Eriez Mfg. Co.
The company’s broad product offering for many diverse industries contributes to Eriez’s unprecedented sales growth. When one market is soft, we have the ability to focus on another market that is thriving. For example, right now sales of our recycling industry equipment are strong and steady, due in part to the considerable investment we’ve made in the past several years to new product development, personnel, our sales organization, and aggressive marketing efforts. Innovation has been a part of Eriez from the very beginning. We’re not innovating just to call a product new; we’re delivering serious improvements that will add to customers’ bottom lines. Like our customers, we’re investing to stay ahead of the curve. Our products match customers’ needs.
Vivek Jain, senior vice president of manufacturing operations, Maxim Integrated Products
We’re bullish on our future for three reasons. First, we have put high focus on integration of multiple functions onto a single piece of silicon. These high-integration Maxim products help our customers differentiate their products and win in the marketplace. Two, we’ve acquired 12 companies in the past 5 years that have added to our talent base and brought new technologies that we can leverage with our existing ones to create more differentiated products. And three, we have improved our supply chain to delight our customers. We have a very talented and committed workforce at Maxim to provide a competitive edge for new technology development and cost-effective manufacturing in the U.S.
Brian Papke, president, Mazak Corp.
We always knew that U.S. manufacturing would once again be on the rise. And contrary to popular opinion, we believe that the current upswing in U.S. manufacturing is not a short-term phenomenon. Many companies are reshoring work back to the U.S., further strengthening the manufacturing sector. While at one time offshoring seemed to be the fashion and a smart business practice, in actuality a bulk of the work should never have gone offshore in the first place. This work is now coming back as trade costs rise, as well as transport costs. Additionally, labor costs in other countries are also rising, making it more attractive to manufacture in the U.S.
Obviously, for some products, it is cost-effective to produce them offshore. But as products become increasingly more sophisticated, it makes better sense to produce them here in the U.S. Mazak, along with most U.S. manufacturers, has incorporated lean concepts that reduce the amounts of required inventory that must be carried, yet allow for broader product mixes to be produced. Companies can still generate high volumes, but in different styles to match market needs. Plus lean concepts allow for supply chains and processes to be more closely monitored and controlled.
Steve VanNostrand, vice president of human resources, The Raymond Corp.
The last recession was very demanding. During the recovery, a lot of manufacturing companies have become leaner and more cost competitive—which has helped our competitiveness, too, not just in the U.S. but globally. We are fortunate to have a highly skilled workforce so we can compete on a global level; this is based on our workforce’s capabilities and commitment to serving our customers. This period of time also has provided companies the opportunity to secure top talent that wasn’t previously available in the market place. Securing regional and national top talent will position us for the future.
Jeff Leclau, warehouse manager, Sovena USA
The market for our product has stayed relatively solid over the past 2 years in a period of economical volatility. For us, this is a good indicator that the business will do even better in a period of economic stability. We also make a top-quality product for which we have received several top-notch audit scores, and we have certifications that no other olive oil company in the U.S. has. In 2011, we experienced a growth increase of 12% to 15%, which was very encouraging.
Additionally, as we now have outfitted our facility to accommodate a growth rate of 10% to 15% over the next 4 to 5 years, we are optimistic that our location can handle our growing needs.
Dave Besser, senior vice president, Crown Equipment
One factor that is helping us meet the challenge is the close relationships Crown Equipment maintains with local schools and educational organizations. One example of this commitment is the recent virtual welding challenge we held for six area high schools. The challenge was conducted on the virtual welding training machine we use to train our employees. Teams were assessed on the accuracy and speed of their performance, as well as the angle closeness and overall quality of their welds. This sort of engagement is an important way for students to see how the skills they are learning in the classroom are applicable in manufacturing settings.
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Annual Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.