Coping with uncertainties is something we are all going to have to get good at as the current business cycle plays out.
One thing is for certain—the start of 2009 presents us with uncertain economic times. A disturbing number of large banks, investment firms and many major corporations are in trouble. What about the manufacturing companies and machine shops that the national news media rarely cover? I called a number of the shops that I’ve visited recently to see how they are doing and how they are coping.
Fortunately, all of the shops I talked to said they were still doing pretty well, quite well in some cases. Nearby shops, they reported, were doing OK, too. Several mentioned that their backlog was shrinking or that repeat orders were coming in more slowly, but otherwise, they expected to stay rather busy. A few admitted being "nervous" about the latter part of this year.
In these informal chats, several themes recurred. One was the importance of being rather selective about customers. Having "quality" customers—ones who value service, skill and reliability, not just lowest price, pays off. "You lose the crap work first," one person told me. Two shops said that they had certain customers who only wanted to deal with shops not involved in automotive work.
Significantly, all of these shops have at least one specialty or capability that they have carefully cultivated and developed. Several shops said that being able to offer other value-adding services, such as assembly or packaging, was a useful buffer against being too reliant on a single niche specialty, particularly in a bumpy busines climate.
Going into this downturn, all the shops cited recent investments in new technology as an advantage that they were glad to have in place. The investments valued most were those that streamlined or "leaned out" operations such as automation for "lights-out" production, shopfloor control systems, tool crib control and setup reduction/quick-change facilities. One shop owner emphasized that plans to install an integrated tooling system to palletize his VMCs was definitely going ahead. "We need it now more than ever," he said.
All of my contacts agreed that spending to expand resources was just as important as efforts to cut costs at a time like this. Pulling back has to be balanced with pushing ahead, they said.
Only one person reported plans to expand his workforce significantly in 2009, but he made a point of reminding me that growth required "lots of discipline." However, this is a company that has made disciplined growth a habit for a long time.
The folks I talked to are all good people, and I’m glad they seem well-positioned to ride out the times ahead. It would have been disappointing to find that one of these shops was hurting, but the circumstances in that case might have been instructive. Was there a mistake, a misstep or simply bad luck to blame?
My aim in calling was merely to sniff the air a bit, not to uncover any findings or reach any conclusions. One thing did become clear: The ability to cope is a very human skill. It requires a finely blended balance of courage and caution, wisdom and wariness, patience and persistence, readiness and responisiveness. I hope there is enough of it to go around.