Some saw it coming early. Others didn’t experience it until as recent as 2001. But whenever Wisconsin manufacturers experienced the effects of the recession, they often responded by seeking new efficiencies. And they expect things to stay tight through most of this year.
That’s the scenario presented by results of an annual survey conducted by the Paranet Group, a Brookfield-based membership organization for manufacturers.
According to Paranet President Linda Kiedrowski, some members saw the writing on the wall earlier than others.
"Some of our members could see this coming in 1999," Kiedrowski said. "Some could see it in early 2000. Others didn’t know until 2001, which is when the tidal wave hit. Hindsight is usually quite clear, but some members still say they did not see it coming."
The tidal wave, as Kiedrowski calls it, hit suppliers to OEMs the hardest.
"It happened slowly," Kiedrowski said. "The shipments start getting smaller. A lot of manufacturers wished for better forecasts from their OEM customers, but in many cases those OEMs didn’t know what was happening either. They were just getting more cautious."
In the survey, 80% of respondents reported a downturn in sales — with some experiencing as much as a 50% decrease.
"As a result, some manufacturers are doing things they shouldn’t — like laying off good people, which will bite you in the butt when things turn around," Kiedrowski said.
And things will turn around, according to survey respondents — the predicted timeframe being the last quarter of 2002.
Other manufacturers, according to Kiedrowski, had been trimming fat not only on the plant floor, but among their office and professional staffs — taking advantage of the opportunity to make cuts that are necessary but would have been unpopular in more prosperous times.
Some manufacturers are holding the line and not having to make drastic cuts. J.W. Speaker, a Germantown-based manufacturer of lighting products for off-road vehicles, told SBT that it had avoided layoffs — largely due to its use of lean manufacturing practices. They had not, however, been hiring new employees recently.
The movement toward lean manufacturing principles, which Kiedrowski said had been pronounced in Wisconsin even before the current downturn due to competitive and market pressures, has become even more important in tough times. The pressure to use lean principles intensifies down the supply chain, as OEMs expect their suppliers to implement the practices.
Organizational growth
Despite tight times in manufacturing, Kiedrowski said Paranet Group grew in 2001. "We grew somewhere between 5% and 7% this year," Kiedrowski said. "We were anticipating more pronounced growth, but my board of directors said I should be happy with any growth since manufacturers are finding ways to eliminate indirect expenses."
Kiedrowski said that, in hard times, manufacturers look even more to each other for ways to improve processes and weather the storm.
Sidebar — Kiedrowski identifies manufacturing trends
Here’s what will affect Wisconsin manufacturers this year, according to Linda Kiedrowski, president of the Paranet Group, a manufacturers organization based in Brookfield:
Jan. 18, 2002 Small Business Times, Milwaukee
