Not a day goes by that I don’t remember how lucky I am.
OK, I’m lying.
Most days I don’t give it a second thought, though I know I should. My parents got a second mortgage so that I could leave college without having to worry about paying back student loans. How could they do this? Well, dad was a professor with tenure; that’s about as close as you could get to guaranteed employment.
Talking with contract metal fabricators, I find that many are pining away for modern manufacturing’s version of tenure. I’m not talking about the middle of the last century, when the middle class blossomed and union workers stayed on the job for decades, with great health care and pensions. I’m talking about what many shop owners now long for: a long backlog.
Some shop owners I’ve talked to over the past few months said they’ve experienced a significant uptick in business. Economists and analysts attribute this to rebuilding inventories, which reached historic lows last year. At The FABRICATOR’s latest Metal Matters conference, March 3-5, some spoke of unsteady work. Dick Kallage, principal of KDC & Associates, a consultancy, pointed out that “we’ve only seen spotty rebuilds. The inventory rebuild has been muted to a great extent by [lean], just-in-time manufacturing. Low inventory levels are the new norm.”
On Monday the Federal Reserve reported that manufacturing production fell 0.2 percent in February. The slight downtick was blamed on a rough winter. Various fabricating-related subgroups fared similarly, slightly in positive or negative territory. For instance, fabricated metal products edged down 0.1 percent, while machinery production edged up 0.3 percent. Meanwhile, manufacturing’s overall capacity utilization slid 0.1 percent to 69 percent, about 10 percentage points below the norm. These numbers seem to prove what everybody’s thinking. We’re approaching slightly positive territory, but we’re going to see a long, gradual growth curve ahead.
Of course, no matter how much we grow, the manufacturing business may be forever changed, and I can understand why many aren’t happy about it. I totally relate to a shop owner who’s wishing for the days when business was a bit more predictable, when he could look out months on end and know work would be coming in the door.
The evolution to low inventories and short backlogs was unavoidable. Nobody can afford to keep as much inventory on hand as they once did. After all, you don’t make payroll with inventory; you make it with cash, obtained when that inventory is used and sold to the next company in the supply chain, or the consumer.
I think short backlogs are one of those side effects of lean manufacturing that’s good and bad, depending on how you look at it. The old way created a more predictable, stable business. The new way demands a dynamic, aggressive organization that can ramp up and ramp down to match varying customer demand. It’s this kind of environment that flexible manufacturing was designed for. Fabricators thrive on jobs requiring low to midvolumes and quick response time.
In other words, they can thrive during times like this tenuous economic recovery, when business owners know what consumer demand is today, but have a harder time predicting what consumers will do six months from now. This may create some unwelcome instability, but it also creates a work environment that changes every day.
We’ve gotten off the carousel and onto the roller coaster for good. It’s the new normal, so we might as well enjoy the ride.