How can a fabricator be successful these days? The common answer is that if a shop reduces labor costs, it can compete with the world. The story’s subtler than that--and a just-released financial benchmarking survey from the Fabricators & Manufacturers Association reveals these subtleties. This year, 36 fabricators anonymously shared some in-depth financial ratio data. Together, those responses helped FMA produce a valuable business tool: the 2012 Financial Ratios & Operational Benchmarking Survey.
Posts Tagged ‘inventory turnover’
Metal fabrication financial benchmarking: The survival of the fastest
August 7th, 2012
By: Tim Heston
By: Tim Heston
Turnaround time versus on-time delivery rates
July 24th, 2012
By: Tim Heston
By: Tim Heston
For years economic growth has been stuck in neutral. Economists are lowering their already low GDP growth projections for 2012. Regarding this, Julia Coronado, chief economist at BNP Paribas, gave Bloomberg an intriguing insight. “Things are so lean and mean, there aren’t a lot of excesses that need to be reduced.” Although such efficiency hasn’t been able to pull the economy into high gear, it also has insulated the economy from a dramatic downturn.
That’s good news--sort of. Neutral is better than reverse, I suppose. But it does mean that the economy probably won’t be pleasant for companies that aren’t lean and mean. The good news: Plenty of fabricators I’ve seen are lean.
The race for stateside manufacturing
May 31st, 2011
By: Tim Heston
By: Tim Heston
My dad was the first to call when I got home. He’s a retired history professor, so he usually doesn’t have that much input on my job-related travels, but last week was different. I had driven to Advanced Technology Sales & Service, a Mitsubishi dealer in Greensboro, N.C. ATS held its grand opening of its new facility on May 25, and Joe Gibbs gave a speech for the event.
Did I mention Dad is a lifelong Washington Redskins fan?
As it turned out, so were many fabricators who turned up for the event last week. The former NFL coach heads Joe Gibbs Racing (JGR), an organization that has had a partnership with Mitsubishi since 2005. JGR now has Mitsubishi laser cutting and EDMs on the shop floor in nearby Charlotte. More racing teams, including JGR, are bringing manufacturing processes in-house, and for good reason. Race cars are a little like consumables used in manufacturing. Each race puts serious wear and tear on many parts, and outright destroys others.
At the end of the day, communication wins races. The driver tells engineers and other team members how the car feels and responds, and then engineers and shop floor machinists and fabricators work together to design and fabricate new components in a matter of days, in time for the next race. As Gibbs and his son J.D., president of JGR, explained, this is why choosing the right people--those who can communicate and work effectively as a team--is so vital.
(more...)
Inventory, cash, quarters, and economic growth
August 26th, 2010
By: Tim Heston
By: Tim Heston
If you work at a Chicagoland shop and need to drive downtown, bring a few extra quarters for parking.
According to a recent BusinessWeek article, the Windy City’s government received $1.15 billion from a deal with Morgan Stanley, Abu Dhabi Investment Authority, and Allianz Capital Partners. In return, these investors now have the right to run the city’s 36,000 parking meters for the next 75 years, and they formed an entity called Chicago Parking Meters to run the operation. And thanks to some aggressive parking fee hikes, the group apparently will make more than $9 billion profit before earnings, taxes, and depreciation. Now that’s a chunk of quarters.
According to critics, the city essentially gave away future revenue to pay its bills today. The story says a lot about the importance of cash. The Chicago government needed it, the investors could get it for them, and officials apparently were willing to give up billions in future profits to get that cash immediately.
In the metal fabrication arena, one thing tends to help free up cash more than anything else: inventory reduction. And a recent survey from the Fabricators & Manufacturers Association supports that claim.
