Three opportunities created by COVID-19 for manufacturers

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Manufacturers saw their share of challenges from the coronavirus pandemic. From new health concerns to demand changes to scrambled supply chains, 2020 has been full of disruptions. But those challenges also create opportunity for an industry that’s always looking to improve.

A group of Six leading executives from across southeastern Wisconsin will discuss how their companies are preparing for 2021 at the BizTimes Media Next Generation Manufacturing Summit, which is sponsored by the Wisconsin Manufacturing Extension Partnership, BMO Harris Bank, CG Schmidt, CLA, Davis & Kuelthau and Vistage.

The event, to be held virtually on Oct. 15 from 7 to 10:30 a.m., will start with a one-on-one discussion with Aaron Jagdfeld, chairman, president and chief executive officer of Generac Holdings Inc. It will also include a panel discussion with Keith Everson, CEO of Sussex IM; Mike Kryshak, owner of Rebel Converting; Rick Ruzga, president of Power Test Inc.; Jeff Schwager, CEO of Sartori Co.; and Keith Smith, president of Vonco Products.

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While the pandemic creates immediate challenges and opportunities, companies also face changes brought on by long-term trends outside of their own control. A few years ago, Generac began taking a closer look at climate change at a time when 99% of its products involved an internal combustion engine.

“What happens tomorrow if we wake up and, because of climate change, all internal combustion engines are too expensive. … What would happen to our business?” Jagdfeld said. “You talk to it with that kind of stark terminology, it starts to create action within the company.”

That kind of thinking has pushed Generac to broaden its offerings into services and solutions, including a push into clean energy, instead of only offering a manufactured product.

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Here are some of the other opportunities that panelists are looking to take advantage of:

Supply chain disruptions

For some, the pandemic will bring products back to the U.S. that were previously made in Asia. Everson said Sussex IM now makes wall-mounted hand sanitizer dispensers for a customer that was forced to rent Boeing 747s to fly the products to the U.S. from China when H1N1 hit more than a decade ago.

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“We’re going to see more and more people wanting to have their stuff made here in the United States,” he said.

Smith is already seeing the demand after Vonco moved to quickly design a plastic gown, a product it previously didn’t make.

“That supply chain will change forever,” Smith said. “There will be more domestic sourcing of these PPE products. We (as a country) just got way too over our skis in the low-cost areas.”

Others, like Schwager and Kryshak, are having to react quickly and creatively to supply chain shifts. While Sartori’s suppliers, primarily dairy farmers, have been reliable, the company’s customers have seen disruptions from other parts of the supply chain.

“We have to be more nimble than what we were before,” Schwager said. “What used to be pretty consistent monthly schedules … now it’s we get a call today and they need product tomorrow.”

Kryshak is relying on the experience of his team to find other ways of getting materials for disinfectant wipes, including trials with paper converting machinery and an automotive fabric supplier. Rebel Converting also has an equipment manufacturer it purchased machinery from running the equipment because it has no room left to expand.

“Our supply chain has been breaking apart left and right,” he said.

Workforce woes

When the pandemic hit, Power Test divided its production team into two shifts and three zones within those shifts. It was a move to prevent an outbreak from grinding the company to a halt, but it also required finding new leaders on the shop floor.

“Some of the people that maybe had been the quiet ones were the ones that stepped up and kind of took the lead on their shift,” Ruzga said, adding that others that seemed like potential leaders didn’t succeed and the company now has a better idea of gaps it needs to fill next year.

With unemployment jumping from historic lows to historic highs during the pandemic, manufacturers have found new opportunities to address their workforce needs, but several panelists noted the challenge in keeping employees coming from other industries.

“The people that we’re hiring, they don’t last,” said Schwager. “They’re not accustomed to working hard.”

Jagdfeld said Generac has had to push its starting wages up 30% to $17 per hour over the past six months, adding that the available workers are coming from other industries like retail or hospitality.

“They’re not used to careers in manufacturing and a lot of them, frankly, don’t really desire that. They like serving people in that kind of economy that’s more a services economy than a goods economy and that’s a big difference. And so, I don’t think our available manufacturing employment pool really changed that much,” he said, adding that Generac will likely need to continue investing in automation to address its labor challenges.

Technological changes

One of the most universal business changes brought on by COVID-19 has been the adoption of remote work tools like Microsoft Teams or Zoom. Ruzga said Power Test has seen internal and external benefits from using Teams that will likely continue after the pandemic.

Internally, production employees now use iPads on the shop floor to find an online engineer and consult them when issues come up, saving them 20 or 30 minutes by not having to locate them within the company’s facility.

Externally, Power Test is using virtual tools for the training and commissioning of its equipment, especially since international travel is currently limited.

“We’ll never go back to full onsite training and support like we had in the past,” Ruzga said. “Everybody is trying to get their business done in new ways.” 

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