Author: Joe Jackson
Published December 5, 2022
Published December 1, 2022
Manufacturing is the fourth largest segment of the U.S. economy. Counted by itself, manufacturing in the U.S. would be the eighth largest economy in the world. Manufacturing created 11% of value added to the U.S. GDP in 2021. In 2020, U.S. manufacturing output was $2,345 billion. Manufacturing directly accounts for 8.6% of the U.S. workforce (about 12.2 million people), 60% of U.S. exports, 55% of patents and 70% of research and development (R&D) spending, according
to the National Association of Manufacturers (NAM) and a McKinsey & Company analysis of U.S. Bureau of Economic Analysis (BEA)and U.S. Bureau of Labor Statistics.
However, manufacturing relies on inputs from other sectors in the U.S. and global economies: energy from fuels and utilities; materials from mines and mills; machines, tools and equipment for production; packaging and freight services for our raw materials and final products; accounting; and other services. All of these are important inputs to manufacturing success. Purchases of these inputs by manufacturers lead to an enhanced final demand in the broad economy. This is called the economic multiplier and the U.S. B.E.A. calculates that one dollar’s worth of final demand in manufacturing results in an additional $2.68 of total impact to the overall economy. Manufacturing investment leads growth.
In the U.S. Midwest, we tend to think that manufacturing is just another word for metalworking. In fact, chemicals, computer and electronic products, and food, beverage and tobacco products are the top three manufacturing sectors
by dollar output. Aerospace and other transportation equipment, motor vehicles and parts, and machinery are segments that we serve — and these all have greater sales than our sector.
Fabricated metals, classified as NAICS 332000, is the name of the industry in which our precision machining/
contract manufacturing shops are classified. It is the seventh largest sector in manufacturing — in 2019, fabricated metals products output was $161.2 billion.
Precision machined products (our industry segment) is classified as NAICS 332721. In 2018, which is the latest data available from the U.S. Census, our industry sales were $20.8 billion, or almost one-eighth of the output of the fabricated metals industry. Our top 10 largest markets served, according to 2018 U.S. Census data, are shown above.
Manufacturing is important. It is the fourth largest segment of the U.S. economy. Arguably, nothing in our economy would function without the critical technologies that our precision machined components enable — machinery, mobility, aerospace and medical. I am fond of quoting Lothar Horn, CEO at PMPA technical member company Horn USA, who stated, “No car runs, no aircraft flies and no hip replacement is fitted by a doctor without precision tools having previously been in use.”
Precision tools are skillfully employed by precision machinists at precision machining contract manufacturing shops like yours. What you make matters. Your decisions on part quality and acceptance make a difference. A difference that matters. We make parts for “can’t fail” applications. Applications where critical human safety is the expected outcome — and one that we take for granted every day. Our production may be just one-eighth of the seventh largest manufacturing industry, which is itself the fourth largest sector of the U.S. economy. But, every day, people live well because we are the hands of the physician, the enablers of mobility and transportation, and the suppliers of essential and critical infrastructure to keep our economy thriving. Economics may be a dismal science, but this peek into the economy of manufacturing makes me proud of our performers, their talent and their accomplishments. Precision machinists — we make the things that make a difference. About $20 billion worth each year!
Miles Free III is the PMPA Director of Industry Affairs with over 50 years of experience in the areas of manufacturing, quality and steelmaking. Miles’ podcast is at pmpa.org/podcast. Email Miles
Published December 1, 2022
The manufacturing workforce is a challenge. That is not news. That fact is decades old and, with our current economic environment and unemployment at a record low, it is probably not likely to change anytime soon. If you search online, you will find article upon article with ideas of how to retain a skilled workforce (yes, I write articles on it, too) and all the perks which can be offered. But with all those ideas, how do you choose the ideas that are best for you?
A Slew of Ideas
Here is a list of ideas (in no particular order) I have accumulated through discussions with PMPA members and articles I have read:
• Free snacks/free coffee
• Flexible schedules
• PTO awarded for good attendance
• Mini golf course on the roof
• Monthly fun days (lunches with activities)
• Bonuses
• Salary incentives
• Employee of the Month with parking spot
• Indoor golf simulator
• Decked out breakroom with video games
• Sponsor fantasy football league
How to Choose?
It is obvious you can’t do everything on that list (if you build the mini golf course, please send me an invite.) And just because you can do something doesn’t mean you should do something. Find a good fit. You know your employees. If you don’t know them well enough, then talk to them. What motivates them? What would they consider a perk? Remember, the people you currently employ are also the type of people you are looking to recruit and incentives play a large part in recruitment.
You don’t have to go big — I’m always amazed at what people will do for a free T-shirt or food — but find a great fit. Do you have people with school-age children? They may appreciate the flexible schedule over a breakroom with video games. Many of the incentives also promote team building (fun days and fantasy football league.) In addition to considering what would motivate your employees, you need to take into account the budget, available space and schedule. You need to find a balance and be flexible. It’s the old chicken and the egg dilemma. The company exists to make parts. You can’t make parts without employees. Studies show that happy workers are good workers (Oxford University’s Saïd Business School, 2019), so finding that balance is worth it. In short, determine your objective, nd a perk or perks that t into your culture, budget, schedule and space, then make it happen. The perk for the company? Happy, productive workers who stay.
Carli Kistler-Miller, MBA has over 25 years of experience with
communications, event/meeting planning, marketing, writing and
operations. Email: gro.apmp@rellimc — Website: pmpa.org.
Published December 1, 2022
The parts that our precision machining shops manufacture for the industrial machinery manufacturing industry provide essential functionality to the machinery producing our food, printing, textiles, furniture, paper and semiconductors.
Top 5 Companies
Published December 1, 2022
Interviews:
Access to All PMPA Podcasts
Access to PMPA Knowledge Centers
Published November 30, 2022
Timestamps:
1:00 – Advantages of having a family business/working with family
7:00 – The team at Graff – Pinkert
11:00 – The history of Graff – Pinkert
20:00 – Keys to seeing hidden value in used equipment
28:00 – Having a unique look at who is coming into the machining business
34:00 – Graff – Pinkert’s content production
39:00 – Machining shops going up for sale
43:00 – Thoughts on the future economic impact and workforce for machining businesses
53:00 – Final thoughts
Published November 28, 2022
Published November 21, 2022
While our shops continue to sell at elevated levels and schedule overtime to remain competitive on deliveries, the world is changing. Supply bottlenecks are easing, some input prices are declining, and the rate of Inflation seems to be declining as well. The markets that our shops serve are not yet in recession, but the rate of change of the rate of change is signaling slowing growth in Industrial production, housing starts, heavy truck and automotive. Light vehicle and Small arms are contrary to the general trend.
It is easy to be hypnotized by the incessant news about inflation, the FED, war in Europe, increasing tensions with China- there is much to fuel our worries. But as business people the data presented here remain a call to commonsense- make smart investments and maintain adequate cash, be disciplined on your receivables- so if something bubbles up in the constantly changing flow of bad news- it will not derail your plans.
The Institute for Trend Research (ITR) quarterly reports focus on major areas of economic growth and decline in key market segments for the Precision Machined Products Industry. They are provided to PMPA members as part of the association’s overall business intelligence program and are used as a management tool to help PMPA members plan for what lies ahead and which markets they should focus on in a complex manufacturing environment.
Published November 1, 2022
