Many Wisconsin manufacturers are planning for growth in 2006, according to an annual survey by The Paranet Group, a professional networking group for manufacturers based in Brookfield. The Paranet Group has about 200 manufacturing companies in its membership, ranging from Green Bay to Racine and Madison. More than half of those companies completed this year’s survey.
This year, most of those companies will be hiring new employees, launching new products and increasing production, according to the survey results. Most give credit to principles of lean manufacturing, quality staff, increased sales, finding new markets and diversification of their products for expected future growth.
At the same time, many manufacturers are worried about the difficulty in finding quality workers, the costs of raw materials such as steel and petroleum-based resins, rising energy costs and rising transportation costs.
Many are also still concerned about health care costs, the economy and even the weather, the survey reports.
"2006 looks like it will be a good year for manufacturing in our area," said Linda Kiedrowski, president of The Paranet Group. "Companies are planning to hire more people, purchase capital equipment, expand into new markets, explore the possibilities of manufacturing on a global basis, do what it takes to attract and keep good people, implement lean (manufacturing) throughout the organization, and be open to change."
Milwaukee Electronics Co., which manufactures and tests custom electronic assemblies, will be expanding in 2006, due to aggressive marketing and sales, and to increasing outsourcing of work by other companies, which the Milwaukee-based firm has been able to tap into. The company currently employs about 250 people in Milwaukee, Oregon and Mexico. By mid-year, Jim Winistorfer, general manager of Milwaukee Electronics, expects the company to employ about 300, including some new positions in Milwaukee.
Milwaukee Electronics has been successful lately because so many other companies are looking to outsource work like electronic assemblies and engineering, Winistorfer said.
"We see a lot of companies spending money on (research and development) to move their project schedules ahead," he said. "They’re willing to spend money outside their own engineering departments to make sure their projects stay on schedule or to get outside expertise."
That trend has Winistorfer feeling good about Milwaukee Electronics’ future, largely because of the potential to increase the amount of engineering and design work it takes on for other companies.
"Design is where we’re staking our future," he said. "It drives all we do in manufacturing."
Milwaukee Broach Company Inc., a Menomonee Falls-based manufacturer of hand tools and precision parts for the automotive and airline industries, is projecting 20 to 30 percent growth for 2006, some of which has already been realized. Michael DeBakker, president of Milwaukee Broach, said the increased business is due to both the company’s dedication to quality and some of its competitors closing up shop.
Wisconsin Precision Casting Corp. (WPC), an East Troy-based metal parts maker, plans to increase business between 8 and 10 percent in 2006. Cliff Fischer, vice president of manufacturing with WPC, said that growth is performance-driven, because the Wisconsin company is able to deliver better quality, faster delivery and shorter order turnaround than foreign competition, especially those from China.
Several years ago, WPC changed its operations because so many of its customers were looking to China for parts and metal fabrication.
"We changed our model to be high-performing, a more highly engineered casting supplier," Fischer said. "It took us a couple of years to get our boat changing course. We’ve proven to our customers that we can perform with shorter lead times, (smaller) inventory programs and they can get their parts faster."
WPC has also started to partner with some of its customers, cooperating on engineering some parts, adding value to their relationships.
"We’re co-engineering some parts at the front end," Fischer said. "And we’ve got ultra-short lead time. Because of that, we’ve had a surge in business. Some of our customers are coming back from China in some aspects, because of the long lead times, communications problems and because costs are rising there."
Fischer said his company has had to pass on some of its high energy costs to customers. Instead of rolling those into general price increases, energy costs are added as surcharges on invoices, so clients can see what the extra prices are paying for.
"We don’t want our customers to think we’re just rolling them in with a price increase to them," Fischer said.
Milwaukee Broach has dealt with rising materials costs by purchasing in bulk for more than one customer as early in the year as possible, DeBakker said.
"Sometimes we’ll even buy ahead of time and keep stuff on the supplier’s floor," he said. "For (General Motors), we usually know what we need for a year and we can lock in a price."
Prices rise when a new client places an order or even when an existing customer asks for something unanticipated, resulting in costs that need to be passed along to the customer.
"Our quotes used to say they were good for 30 days," DeBakker said. "Now they’re good for seven days."
WPC is planning to hire more employees, but finding skilled, qualified workers is difficult, Fischer said. The company has partnered with a staffing agency, which is on-site three to five days per week.
To minimize the need for additional employees, WPC is installing more principles of lean manufacturing, including increased reliance on automation and cellular manufacturing, Fischer said.
DeBakker said Milwaukee Broach is also growing and hiring new people. To deal with the difficulty in finding qualified workers in the Milwaukee area, his company has opened a small manufacturing facility in Pembine, near the border of Michigan’s Upper Peninsula. That facility started with one person and grew to five employees in 2005. Ultimately, that satellite facility could have 10 to 20 employees, DeBakker said. The slower economy in that area of the state, combined with experienced employees looking for work, made it an ideal place to add a small operation, he said.
"People are more willing to drive to and from where they can work," he said. "We had people standing in line there, and qualified machinists were willing to work part-time."
Milwaukee Bearing & Machining Inc., based in Menomonee Falls, has plenty of demand for its products. But the company has been held back, largely because it has also been unable to find qualified workers to hire.
Ken Chybowski, president of the company, said it could have grown as much as 20 percent more than it did if it had been able to hire qualified workers.
One of the biggest problems, Chybowski said, is that major educational systems don’t seem to be telling students that they can earn good wages and have solid careers in the manufacturing field.
"They (schools) are failing the manufacturing sector something terrible," Chybowski said. "They’ve got to stop telling our kids they will be a failure if they enter the manufacturing field. If the government doesn’t start to recognize manufacturing, we will be in a service economy with nothing to service."
Manufacturing jobs are different today than they were in the past, Chybowski said, with workers needing to have skills much more focused on precision and emerging technology. Educators aren’t telling students that and also aren’t talking about the types of wages that can be earned in today’s manufacturing jobs.
"Some of the people earning college degrees are struggling to make $35,000 to $40,000 per year," he said. "I’ve got guys in my shop that are earning a lot more than that in a short period of time."
Milwaukee Bearing & Machining Inc. will be able to deal with some of its employee shortages through principles of lean manufacturing and increased automation, Chybowski said. An acquisition could also help it find additional employees, he said.
While many manufacturers continue to worry about the high cost of health insurance, some have found solutions.
Milwaukee Broach has kept costs level and improved employee coverage largely because the company has pooled with other companies and shopped around. DeBakker said the company has been able to increase coverage for employees without any cost increases for this year.
Fischer said WPC has been able to control its health care costs through employee education and shopping around for carriers. Over the past two years, the company’s premiums have lowered, with no decrease in benefits.
"We’ve been very lucky (with health care)," he said. "We’ve been working very hard to educate our employees to take personal responsibilities."
Milwaukee Bearing & Machining Inc. has also been able to keep premium increases low by shopping around. Chybowski said his company was dissatisfied with its carrier two years ago, and was able to get a very small increase with another carrier. When that carrier proposed an increase this year, the company shopped around again, only to arrive back to its former carrier, with another very small increase.
"This is how stupid the whole insurance industry is," Chybowski said. "It’s close to the same price we started out with. We’re shopping all the time, making sure we’re doing the best thing for our organization."
Poised for Growth
Highlights of The Paranet Group’s 2006 manufacturing survey:
- Almost 80% of southeastern Wisconsin manufacturers surveyed plan to grow their business this year.
- 59% plan to add skilled workers this year.
- 40% plan to add unskilled workers this year.
- 51% plan no increase to employees’ health care contribution this year.
- Only 15.6% plan to move any portion of their operations offshore this year.
- Outsourcing of some operations has become attractive to some manufacturers – 25% of those surveyed plan to outsource design and drafting, and 23% plan to outsource information technology.
Highlights of a survey of Milwaukee-area manufacturers by QPS Companies:
- 81% of manufacturing companies surveyed plan to increase employees.
- The biggest issues of concern for area manufacturers are cost of materials, difficulty in finding qualified or reliable employees, lack of skilled employees, insurance costs and fuel costs.
- 92% said they do not envision their companies relocating in the next five to 10 years.
- 76% will increase employees’ salaries.
