On a roll

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by Mary Scianna

Manufacturers gearing up for growth

The manufacturing industry is undergoing a renaissance.

Finally, it seems, government and industry leaders are paying more attention to the sector, recognizing the important economic engine of growth that it is.

In the past year, Canadian and American government bodies have publicly announced support for the industry. In Canada, the Federal government announced support measures for the manufacturing industry in its 2013 budget released in March. More recently, Federal Finance Minister Jim Flaherty outlined details of one the measures noted in the Federal budget: it reiterated its support for manufacturers by announcing a two-year extension of the Accelerated Capital Cost Allowance (ACCA) which will allow manufacturers to continue to write off investments in new equipment and machinery.

In the US, which recently celebrated its second annual “Manufacturing Day” on October 4 to showcase the importance of manufacturing to the country’s economy, President Barack Obama announced the launch of the Advanced Manufacturing Partnership Steering Committee “2.0” aimed at creating high quality manufacturing jobs in the country and making the sector more globally competitive.

Buoyed in part by the government’s recognition of the manufacturing sector’s value to the economy and in part to improving market conditions, manufacturers are feeling more confident about the future and most are looking to expand their operations and hire more people, according to results from Shop Metalworking Technology’s 2nd annual Business Outlook Survey.

This year’s survey included 130 participants and was conducted on September 16 and September 23. More than 30 per cent of participants are OEMs, with the remaining being job shops. One third are involved in metal fabrication, another third in chip and the remaining are involved in both chip and fabrication, including welding processes. Close to three quarters of survey participants say approximate sales of their business in 2013 was $500,000 or more with another 29 per cent noting 2013 annual sales in the $100,000 to $500,000 range.

Within the next five years do you expect to:Gearing Up For Competition
What stands out in the results this year is that manufacturers are paying more attention to investing in technologies to become more competitive. Asked what processes and technologies they currently use and what they are considering purchasing, only 8.62 per cent say they currently use automation, but 42 per cent say they are considering automation, defined as robotics, automated loading/unloading, pallet systems and shuttle tables.

The numbers are also reflected in machinery and equipment purchasing intentions for 2014. More than half of participants indicate they plan on investing under $100,000, but close to 30 per cent say they plan to invest $100,00 to $500,000, with 18 per cent saying they would invest $500,000 or more in capital equipment.

Investing in technology is only one strategy in how manufacturers are becoming more competitive. Increasingly, engaging in closer relationships with partners and focusing more on service are becoming popular tools for success.

Asked about strategies companies use to ensure competitiveness, nearly 70 per cent of respondents selected collaborative designs with customers and half said just-in-time deliveries were key. One surprise result was that more than half, 53 per cent, said investment in research and development is a key strategy.

What machining processes and technologies  are you considering using?

Addressing Worker Needs
Given the shortage of qualified skilled trades people, retaining highly qualified staff on the plant floor is important. Shop Metalworking Technology asked survey participants their opinion about the most important aspects of a job. Close to 60 per cent of the participants identified themselves as a manufacturing business owner and 37 per cent identified as full time shop floor workers. Asked about hourly pay, 41 per cent say their pay is in the $20-$30 range, while 32 per cent selected $30 to $40 range. More than 14 per cent of participants say their hourly pay is $60 or higher.

While we would have expected “competitive salary” to be the top choice as the most important aspect of a job, it was second choice, with 43 per cent saying it was the most important aspect. Close to 70 per cent said “professional development” was most important, while the third most important aspect was “flexible work hours” at 41 per cent.

What specific machining or fabricating and welding  equipment investments do you plan to make for 2014?

Quality: Not Leaning On Lean
Survey participants were asked about manufacturing practices, as they relate to quality, currently in use in their operations. Of note was that only 41 per cent selected Lean, although participants were given options to select other Lean-related management systems. The top manufacturing practices were production maintenance/preventive maintenance (61 per cent) and Just-in-time (51 per cent). That was followed by quality certification (42 per cent), Kaizen (28 per cent), Kanban (24 per cent) and Overall Equipment Effectiveness (OEE) at 18 per cent.

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