by Mary Scianna
If you’ve been in business for more than a decade,
then you have a pretty good sense of the economic turbulence under which North American manufacturers operate. And if you’ve been in business much longer, then you know that this cycle has been repeating itself for a long time.
Economies undergo change constantly. There are highs and there are lows and many periods of uncertainty in between. The old rule of thumb of “buying low and selling high” isn’t as easy to apply to a manufacturing business as it is to selling a home or purchasing stocks.
The only way to survive in a changing economy is to become skilled at riding the economic pendulum. There are, of course, a multitude of strategies manufacturers employ to remain competitive during good and bad times. Here are a few of the strategies I’ve witnessed in visiting and speaking with many manufacturers through the years.
• Don’t scale back on technology investments.
Like any business, manufacturers need to generate revenues, so when sales start to decline, the natural reaction is to scale back on planned technology investments, such as machinery, accessory tooling and manufacturing software systems. The truth is, this is the opportune time to invest in technologies. While there is an upfront cost, the long term benefits of better productivity and improved efficiencies will generate high cost savings in the long run. More importantly, it will create a more competitive business.
• Foster business relationships.
Strong relationships with customers and suppliers are the key to long-term success for manufacturers. Some businesses make the mistake of only focusing on their customers during tough times to ensure they don’t lose important business. They often turn supplier relationships into adversary ones in which they push for lower costs and turn to other suppliers if their needs aren’t met. Suppliers can be a business’ best partner and often can help a company strategize ways to remain competitive.
• Treat your employees right.
Good employees are important assets in a business but in uncertain economic times and sliding sales, it’s understandable that businesses may look to reduce manpower to reduce some costs. While it can be a considerable cost for some to maintain good employees, the loyalty you show them in retaining them even when business slows down will likely pay off by generating productive workers who often, when asked, will have a solution to help reduce costs in their respective areas of operation.
• Don’t stand still.
One of the most admirable traits I see among successful manufacturers is perseverance. These businesses don’t sit back when economies falter. Instead, they become more aggressive in pursuing new avenues of growth, in investing in their businesses, and ultimately positioning themselves more competitively, ready for the economic swing of the pendulum. SMT
