America’s Small Manufacturers Talk About Their Challenges and Opportunities

November 20, 2019

At last month’s National Association of Manufacturers (NAM) Fall Board of Directors meeting in Washington, D.C., the Small and Medium Manufacturers (SMM) Group held a two-day executive roundtable. The participants focused on several subjects of top importance not just to that group, but to manufacturers of all sizes nationwide.

 

Nicole Wolter took part in the event. As President and CEO of HM Manufacturing, Inc., a machine parts fabricator in Wauconda, Illinois, that specializes in power transmission components such as pulleys, gears, splines and shafts, she’s on the front lines of everything that was discussed. “It was interesting to hear people from all around the nation talking about the same topics,” she said.

 

While the discussion was wide-ranging, several core themes emerged: the skilled labor challenge, the factory of the future, reducing regulatory red tape, and emergency preparedness.

 

The skilled labor challenge: Getting enough workers into manufacturing was a central concern, particularly the ongoing challenge with difficulties in recruiting skilled workers. “NAM’s Creators Wanted campaign was very intriguing,” said Wolter. “It’s a $10 million dollar effort with the Manufacturing Institute and others in the industry to go on tour and engage youth and their parents, to help change the perception of manufacturing.” The year-long campaign has numerical goals in such areas as increasing enrollment in technical schools and apprenticeship programs, along with raising the percentage of parents who would encourage their children to pursue a career in manufacturing.

The group agreed that local efforts can make a big difference here too. “I feel like I genuinely have an advantage as a small, family-owned business,” Wolter mentioned. “I can lead efforts at local high schools, offer shop tours, and bring on interns – we’re currently offering four to six-week paid internships. Big companies struggle to offer insight on their daily processes and work environment. There will always be challenges, regardless of size, like organizing interns and giving them the best work experience in the industry as possible, but I make it a priority to have them shadow each division.”

 

The factory of the future: While much is being written about automation, AI, IIoT and Industry 4.0, these can be a tough subjects for smaller producers. “For HM, automation is difficult,” Wolter explained. “We do 11 to 12 changeovers a day – it just doesn’t work for that. There are lots of smaller manufacturers where high-tech isn’t a fit just yet so in the mean time I’ve invested in IIoT for the factory floor. I believe it’s important to continue to update with technology as it’s evolving.” Even basic technology can be a challenge – but can also be an opportunity. “Our new employees get the new technology and programming we do have,” she said. “But they may not get the basic operations. If older workers can’t understand the newer technology, then pairing and cross training their jobs with the younger workers sets them up to learn from one another.”

 

Reducing regulatory red tape: One of the little-covered aspects of U.S. production being sent overseas is the reality that our safety, environmental, and other regulations, as well as our tax policies, are part of what makes domestic manufacturing less competitive. While nobody wants to go backwards in protecting workers and our environment, many people believe there’s been substantial regulatory overreach in recent years. “Everyone’s talking about what’s happening with the Presidential candidates,” said Wolter. “I look at our recent tax reform and what it did for us. HM was able to buy $550,000 worth of capital equipment as a result of that reform. That’s three additional machines for our production, and which means more jobs for local workers. And the impact to R&D spending is critical too. That’s going to be extremely important to how we set ourselves up for the future.”

 

The recent rollback of the EPA’s waterway oversight was announced at NAM headquarters by EPA Administrator Andrew Wheeler. The move was pilloried by most of the national media, but the rule had been challenged for years by NAM as a blatant example of an extra-legal, onerous and overly costly regulatory burden on American producers.

 

Recent minimum wage moves have also given pause to manufacturers. “The impact of a $15 per hour minimum wage across the U.S. was a big subject,” said Wolter. “If we’re forced to give $15 to someone who’s completely unskilled, what’s the impact to the skilled worker who make $18 an hour? That certainly doesn’t help us get the work force where we want it to be in the near future, which is encouraging high level careers, not minimum paying jobs.”

 

Emergency preparedness: “A lot of smaller producers don’t have much of anything in place for events like floods and tornadoes and other natural disasters,” Wolter stated. “One of our members has reached out to a competitor and is forging agreements for mutual support when disaster strikes. But it doesn’t have to be competitors – it could be with suppliers or other non-competing manufacturers.” Contract manufacturers are also a good place to turn to for emergency back-up production capability.

 

While the SMM group had wide-ranging discussions describing the challenges manufacturers face during the two-day executive roundtable, Wolter sees a lot of positives coming out of the meeting. “Manufacturing is growing,” she said. “We’re working collaboratively with educational leaders at high schools and technical colleges to help build the workforce of the future and to bring people back to seeing manufacturing as a strong career path. We’re anxious but excited about where manufacturing will be in the next five to ten years, and with how we make sure it stays relevant.”

 

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