SBT Reporter
After sliding for more than a year, manufacturing employment in southeastern Wisconsin may be rebounding.
Employment numbers for the first five months of the year reveal a relatively static situation, and as of April, manufacturing employment in the state was down 4% from a year ago.
But according to a June 12 report from the Federal Reserve’s Seventh District in Chicago, manufacturing activity in the region has "improved modestly," driven in part by vehicle sales. Reserve analysts warned, though, that as automakers work to restore profitability by removing incentives, sales may lag. New orders for heavy trucks were, according to the Fed, strong as buyers hurry to beat the clock on Environmental Protection Agency regulatory changes scheduled to take effect Oct. 1. The Fed said demand was also growing for construction and agricultural equipment, but sales figures were still below those of a year ago.
The Fed concentrates on the health of original equipment manufacturers (OEMs) that produce branded products. But southeastern Wisconsin’s economy is driven as much by the job-shops that produce the OEM’s dies, machine tools, parts and components as they are by the OEMs themselves. While the first whiff of a recovery is good news to job-shops, small businesses run on cash flow, and foundries, tool-and-die shops and sheet metal shops must take care so the personnel and material costs of new orders do not sink them.
Lean means green
Smaller manufacturers are still bending backwards to squeeze productivity and profit from their operations. Job shops, including tool-and-die, sheet-metal shops and foundries, are fine-tuning their processes to survive in a market that even after recovery will remain changed forever by overseas competition.
A handful of manufacturing executives, owners and quality control professionals gathered at a roundtable session on lean manufacturing in the job-shop environment one afternoon in May during a Wisconsin Extension Manufacturing Partnership conference in Milwaukee. Each participant acknowledged that businesses in their sector are getting squeezed hard. And while lean manufacturing principles are almost mandatory to stay solvent, each reported challenges in the market.
Lean is a discipline that helps manufacturers increase efficiency by eliminating unnecessary steps and delays in the production process. Use of lean principles can be easier in a long-run manufacturing environment than in the short-run world of foundries, sheet metal shops, tool-and-die shops and other jobber firms.
But jobbers are trying to use as many lean principals as the realities of their businesses allow. Lean is probably more important for one southeastern Wisconsin business than most others. Sypien Metal Fabrication was started Jan. 2 by Joe Sypien and Paula Weiss. Both bailed from Menomonee Falls-based metal fabricator Arcron, Inc., to found the sheet-metal shop in 1,500 square feet of manufacturing space at W208 N16947 N. Center St. in Jackson. The troubled Arcron was recently purchased by IEA, Inc., a competing Kenosha-based fabricator.
Starting the business in the midst of a manufacturing recession has its advantages and disadvantages, according to Weiss.
"We both have experience in the field," Weiss said, pointing out an advantage that would have served them well in good times or ill. "One advantage – while times are terrible and there is no way out of that – you can get equipment cheap. But the downside is you still have to get the work."
Weiss said that incorporating lean principals into the company’s practices and policies right at start-up will save time and expense down the road.
"Being as we are new, we obviously can’t implement some of the processes," Weiss said. "But we want to start off with principles that will allow us to implement them right from the start."
Weiss said the company is landing orders, and in the months ahead expects to double its facility size.
"We are looking for the same type of space we have now but 3,000 square feet – not too big because we have to watch our overhead," Weiss said. "We are doing material handling, returnable skids, tanks and reservoirs. We have one client company in Chicago that builds shuttle-table equipment. They need specialty guards."
Shuttle tables are tools used to feed material on and off equipment, Weiss said.
Doug Haag, executive vice president at Premier Aluminum Foundry, Inc., Racine, said his company is bending over backwards to make up for the slack created by down times.
"My long-term existing customers are down," Haag said, adding that his billings were down by 10% over the previous year. "My stability comes from the new orders that we have, including some major defense work. I am getting some orders from bankrupt foundries. One of my new customers had a relationship with a foundry that is out of business. They come to my Web site."
In a refrain that became familiar among jobbers more than long as a year ago, Haag said his foundry was receiving a lot of requests for quotations, but few actual commitments.
"Quoting activity has increased after the first of the year," Haag said. "People are not making commitments. If I were a real optimist, I would say the commitments would come in the third quarter. They are ready to go ahead but they aren’t ready to make the full commitment."
July 5, 2002 Small Business Times, Milwaukee
