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A RETURN TO FORMER GLORY? PRODUCTION MATERIALS INC. MUSES ON THE FUTURE OF US MANUFACTURING

Manufacturing in the US has always been the lifeblood of the nation. From the nostalgia evoking 60s when the production sector was in full swing to the image of picturesque suburbs with blue collar workers, everything related to this domain and its glory is held sacred by economists hankering for a rejuvenation post the recession onslaught.

Over the past few years, some positive trends have been cautiously observed and experts have issued the statement: A comeback is imminent!

THE HARD NUMBERS

According to the Bureau of Labour Statistics and that of Economic Analysis, the ROI on manufacturing is a decent 37% and is poised to improve if the promise of growth actualizes. On an average this sector contributes 12% of the GDP which is about $2.09 trillion. Most importantly, one out of every six private sector vacancies hails from manufacturing and the number is rapidly rising as 60,000 new jobs are introduced every year.

But perusing data is rather like observing the symptoms of a change without investigating the forces at play beneath the surface. There are logical arguments based on facts which support the numbers and despite scepticism from many lobbies, it does seem that the US factories and units are all set for a grand revival.

DELVING DEEPER:

The following global events have influenced the expansion and strengthening of the manufacturing domain and need to be taken into consideration if the possibility of a true-blue comeback is to be evaluated.

  • The rising awareness amongst consumers and governments of the often difficult conditions in which workers from South and South-East Asia are forced to labour. As a result of the expansive effect of the American dream, employees in China have negotiated for themselves pay-hikes that have bumped their remuneration to. The tax and cost benefits responsible for luring business away from the US have eroded considerably in value and in conjunction with logistics and transportation the recurring investment gap for manufacturers has reduced to a mere 4%.
  • The discovery of new oil reserves and the feasibility of shale drilling. The price of both oil as well as natural gas in the US has plummeted and is expected to drop further. Peers in Germany need to spend twice as much on fuel and power as their American counterparts. This is an immense advantage and the journey back home (or reshoring) is being led by stalwarts like General Electric (GE).
  • Elimination of quality testing hassles. Buyers are empowered with knowledge and as a result they expect the very best from their purchased products. Items sourced and created off-shore are tested under relatively ‘alien’ conditions. Such goods may react unpredictability when exposed to radically different surroundings. This effect is particularly pronounced on electronic equipment and vehicle spare parts. Instead of investing millions in simulating the ‘right environment’, manufacturing R&D teams are suggesting re-shoring as a way to ensure robust performance and lasting value.

A host of issues such as lead-times and logistics within the supply chain when operating offshore has also provided impetus to reshoring and thus a subsequent boost to manufacturing. However the real story will be unveiled by time and Production Materials Inc. is proud to contribute to the upcoming transformation of the economy.

Reshoring

Posted on: May 11th, 2015 | Posted in: manufacturing

The U.S. manufacturing sector has seen a revival in recent times, with an increase in outputs and an increase in jobs. The Great Recession saw the manufacturing sector take a massive hit, and while the current condition of the manufacturing sector is still not back to the levels of the start of the millennium, it is in the middle of a comeback, and has great promise for the future.

Reshoring and Asian Expansion

Part of the manufacturing comeback is an increase in jobs on the shores of the United States. This is coming mainly in two forms – reshoring, and Asian expansion. Reshoring refers to American companies bringing jobs back to the country. This has been encouraged by the increase in wages in the countries traditionally used for offshoring and the rationalization of the costs of logistical support.

The expansion of Asian companies, in particular Chinese companies, has also helped. In 2012, Chinese foreign investment in America eclipsed American foreign investment in China for the first time. Mergers and acquisitions are part of this, with Chinese companies taking over American companies. However, in some cases, it is a matter of the Chinese companies moving jobs to American shores. Companies such as Shandong Tranlin Paper, the Keer Group, SANY and Lenovo either have already developed new manufacturing plants on U.S. soil or are in the process of building them.

Growth of the Job Force

Another factor in the comeback of U.S. manufacturing is the changing dynamics of manufacturing jobs and the required skill set of the work force. Aside from the cost factor, an additional reason behind offshoring was the lack of qualified manufacturing workers in the United States given the rapid changes in technology and consumer expectations. During the late 20th century, manufacturing was unjustly labeled as a “dirty” job. An entire generation of potential manufacturing workers pursued other directions.

The comeback has been partially fueled by a push to improve STEM education and shrink the skills gap, as we have talked about in previous blogs. Another reason for the change is that the work force is beginning to see that manufacturing is not an inherently “dirty” sector. Finally, many are finding out that there is plenty of room in the manufacturing sector for innovation and technological advances, that it is always evolving and rarely stagnant. This has caused an increase in interest at all education levels.

As the U.S. manufacturing sector continues its comeback, we at Production Materials look forward to help keep it moving. Our customers are continually looking for ways to lower costs and offer innovative products. As American manufacturers continue to improve their ability to quickly adapt to these requirements through investments in technology and upgraded labor skills more of the products we require can be procured right here in the good old USA.

Illinois Manufacturing Facts

Posted on: April 13th, 2015 | Posted in: manufacturing

Manufacturing in Illinois is alive and well. Recent total manufacturing output from Illinois was $92.4 billion with the industry’s share of gross state product at 13.3%. The state is responsible for the production of a range of products from machinery and chemicals to food, beverage and computer products. In 2011, machinery manufacturing accounted for over $16 billion of the total manufacturing output of the state. The industry also provides well-paying jobs to the residents of the state, averaging over $78,000 annually and over $20,000 more than the average non-farm payroll job. Additionally, 9.3% of the workforce in Illinois is employed in the manufacturing industries, with employed individuals at almost 600,000 by 2011.
The manufacturing industry in Illinois is not only vital to the economy of the state, but also the nation. Manufacturing’s share of Illinois exports is 93%, and employment due to the export of manufactured goods from Illinois is 284,300. Goods manufacturing in Illinois are not only exported to states, but globally. Exports with free-trade partners (FTA) exceeded $35.8 billion in 2011 and accounted for 56.5% of total exports from the state. International exports support many of the jobs in the state, with almost 285,000 jobs associated with the export of products from the state. Large companies are not the only exporters. In fact, 90.3% of Illinois exporters are small business (2011).
Illinois will continue to be a hub for manufacturing, and its economy will be deeply connected to the growth of various manufacturing sectors. In this context Production Materials continues to support manufacturing in the state by sourcing a significant portion of our primary and secondary product requirements through many of the small and medium size businesses that provide employment and revenues to the local and state economy.

Options for Safer Products

Posted on: January 12th, 2015 | Posted in: manufacturing

At Production Materials, we pride ourselves on supplying safety oriented products. So, with this in mind, we have decided to share information on two types of safety items: earthquake proof anchors and high grade steel bolts.

Quake Resistant Bolts

We serve industries that endure geographic anomalies. One such place is California, which requires quake resistant bolts due to being located near fault lines. We provide products that will be able to withstand the numerous challenges that buildings may face in those areas—we supply anchor bolts that are built to withstand earthquakes. These bolts anchor into concrete floors, or specially made material, to help make storage systems “quake resistant.”

High Strength Steel Bolts

In addition, we provide bolts in higher strong steel, which offer a higher level of protection against wear and load fluctuations. In addition, corrosion resistant finishes can be added for even greater reliability. The strong steel helps agricultural and construction businesses meet the end user’s safety requirements. Where required, our products will be tested to meet the safety standards of UL and CSA.

We strongly believe that safety should be practiced all throughout the year, not only in the procedures we follow, but in the products that we use to build our homes and work environments. Doing business with Production Materials Inc., gives you options in getting the materials that help improve the safety level for your products and for your customers.

Resourceful Organization, Parts Rationalization is an Important Part of Manufacturing

As manufacturing transitions its way into a new age, an adjustment period is necessary. Those who have been in business for decades—much like Production Materials—are working on perfecting automation systems and keeping up with the latest trends. But for many businesses, re-evaluating the present is equally as important as looking forward, which is why parts rationalization is critical in the manufacturing industry.

It unstable economic times, especially, it’s often feasible to simplify purchasing inventory and production by looking for part commonality and consolidation. As part of our quotation process, we evaluate our customers’ specifications and offer a “standard” lower cost alternative. We also look through the customers’ portfolio of parts we sell them and make recommendations for possible consolidation.

Going a step further, we’ve noticed an increase of manufacturers aiming to create one solid templated product to embrace. Instead of creating hundreds of individual pieces and parts for a machine, one uniform product can fit all. This means one part can do the job of three separate components, and companies can order these in bulk rather than ordering the bits and pieces when needed.

It’s clear manufacturers are becoming more resourceful with their purchasing, and we’re happy to help out. For more information on our components, contract packaging and secondary operations, head over to our website

The Outdoor Power Equipment Market Is Growing

Grass Cutting Lawn Outdoor equipmentWarm weather is the time for trimming hedges, cutting the grass, and pulling the weeds at home, but here at Production Materials, we’re thinking about outdoor power tools at the manufacturing and service parts level.

As providers of component solutions for this industry, we have a first-hand look at customers’ forecast, so we can see trends. The continued demand for lawn and garden equipment is evident—along with steady growth in the replacement parts segment as well.

In the next five years, the U.S. demand for this equipment is expected to rise an annual 4 percent, which could add up to $10.6 billion. After tracking a slight decline in demand from 2007 to 2012, we are encouraged to see these projected numbers.

As the economy and GDP accelerate, consumers will spend more money on upgrading older equipment. Increased recreational activities requires the upkeep of greens and fairways as well as parks and resorts, which means groundskeepers need state-of-the-art equipment to maintain these venues.

As the industry continues to evolve with more innovation in the equipment’s technology, we at Production Materials will be there to provide many of the components and the subsequent benefits for consumers and our customers.

More Opportunities for Domestic Manufacturers

Posted on: January 21st, 2013 | Posted in: domestic manufacturers, manufacturing

If we take an objective, eagle’s eye look at the manufacturing sector in America right now, what we see is – to put it politely – chaotic. While we are still (just barely) the world’s largest manufacturing center, we have rising industrial superpowers which compete directly with American manufacturing of all stripes. Indeed, many once-iconic North American industries have been outsourced in recent decades in favor of cheaper production methods available overseas. Whether it’s the powerful leather industries of countries like Vietnam, Ethiopia, or Colombia; or the massive steel and electronics manufacturing bases that help drive the economies of countries such as China, Taiwan, Germany, South Korea, or India; America has a lot of world-class competition on her hands – much of it of her own creation. And that list isn’t meant to be comprehensive; that’s just to name a few of the contestants.

Not only that, but these are lean economic times. While we’ve made headway in recovering from the Great Recession of 2007, it’s hardly the pretty picture any of us wants to see. We still have millions of skilled and unskilled workers unemployed, and that’s not an issue that can be swept under the rug by anyone, as far as we’re concerned.

On the other hand, 2012 saw a sea-change in the way a lot of American companies think about our nation’s capacity to build. Both major political parties made the revival of U.S. manufacturing (particularly small business manufacturing) a cornerstone of their respective platforms. And now the mainstream market seems to be following suit: American and Canadian companies are adjusting their inventory strategies to match leaner demand; and this, in turn, requires a more efficient supply chain. The larger production orders issuing out of China or Indonesia are being – in many instances – curtailed in favor of smaller, specialized orders produced by local shops right here in Illinois, Texas, or North Carolina. Also, with international freight charges being what they arethis creates an added incentive for American companies to “re-source” their manufacturing back to the States, since the higher wages in the U.S.A. may neutralize the costs of shipping, large inventories, and (possible) poor quality issues.

We may be beginning to experience the transition to a manufacturing revival in America. It’s a long road ahead of us, but it’s nice to see things looking up again. PMI is proud to be a part of this moment in history, by working with our customers to better match their supply with actual demand.

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