By Ahmed Tahir
Production machining and job shops are the foundation upon which the manufacturing industry rests, providing services necessary to support all other production and manufacturers. With the recent increase in reshoring efforts, machine shops can increase their value and boost the overall strength of domestic manufacturing from the bottom up. In fact, reshoring efforts added close to 400,000 manufacturing jobs to the North American market in 2022, hinting at the incredible economic opportunity available to domestic machine shops.
The services machine shops provide are vital to the success of the manufacturing industry. While many large manufacturers and OEMs would love to produce everything themselves, often, this just isn’t feasible. They often subcontract some of their machining to various suppliers, creating a complex and risky value chain — especially when suppliers are offshore. One study found that over a decade, international supply chain disruptions can cost a company as much as 45% of a year’s profits.
Recent supply chain issues, combined with a need for small-order and niche manufacturing, make machine shops an essential part of the manufacturing hierarchy. Here are a few of the ways creating a stronger base of domestic machine shops can support the reshoring and nearshoring initiatives of many large and small OEMs and impact the manufacturing industry:
Offset supply chain issues
With the supply chain issues caused by COVID-19, the manufacturing industry is improving but still faces a shortage of resources, labour, and production, as well as high costs. Although they are equally affected by these shortages, local machine shops offer an opportunity for manufacturers looking to rebuild supply and boost domestic production.
Some manufacturers have long-standing supply relationships they want to maintain. However, diversifying and qualifying additional machine shop suppliers provides high-quality products that offer large manufacturers a safety net to keep production moving in case of supply issues.
Support large manufacturing
Machine shops allow large-scale manufacturing operations to offset their specialty, small-scale, and one-off production to smaller and more flexible companies.
By eliminating the need for a completely in-house manufacturing operation, larger manufacturers focus on key value drivers while relying on machine shops for smaller or niche jobs.
Provide niche services
Machine shops make up the base of the manufacturing value pyramid through their flexibility and ability to fill in the cracks in larger operations.
Providing niche products helps support the manufacturing supply chain and provides machine shops with less competitive work.
Not only do machine shops support larger manufacturers, but they also support machinists by providing jobs and opportunities. Machine shops are an essential part of the manufacturing labour force, providing niche skill opportunities and potential for worker development.
For those looking to add value and seize the work opportunities currently available in manufacturing, the time has never been better to start. However, before you do, it’s important to know how to succeed in this highly competitive industry.
The machine shop industry is full of shops looking to make their mark. With new jobs arriving daily, you must differentiate yourself from the pack. That’s why keeping your operation updated, flexible, and open to reshoring opportunities will help you boost your business’ value bottom line.
Invest in flexibility
There are a number of ways your business can improve its value through flexibility. How you choose to stay flexible will depend on your current operation, but some common value drivers include:
• Tools: Investing in up-to-date tools, machinery and automation such as hybrid manufacturing gives your shop a competitive edge over competing shops with outdated machines.
• Materials:With material constraints, being able to work in high-quality and specialty materials is key to adding value to your machine shop.
• Labour force capabilities: A limited workforce creates a need for more cross-functional team members. Workforce constraints aren’t going away any time soon, so diversifying your team’s skill set will improve value and capabilities.
• Product offerings: The more products you offer to clients, the better your odds of getting contracted.
• Scale: Investing in lights-out manufacturing improves your operations manufacturing capabilities by limiting the need for labour and active operation. Adding automation and robotics also improves your labour costs while boosting your throughput.
Stay up to date with trends
Constant re-education helps you understand manufacturing trends, needs, and solutions. Look for what customers want and adapt to fit those needs. Some of the top qualities customers are looking for in a machine shop include: Efficiency, Reliability, and Quality.
Focusing on operational efficiency allows your shop to create products quickly for customers while maintaining maximum profit from each job. Staying up to date with the latest trends and technologies allows you to stay ahead of businesses with significant sunk costs and an unwillingness to pivot.
Take advantage of reshoring
With an influx of reshoring jobs, machine shops have the opportunity to increase their work significantly.
By supplying quality, efficiently made products to clients, machine shops solve the need for niche and high-quality products. This need for specialization and flexibility, combined with the push for domestic production, make machine shops a competitive and lucrative field for those willing to take the leap.SMT
Ahmed Tahir is the Global Vice President, Strategy & Marketing at Master Fluid Solutions.