2012 State of the Industry: Tooling

Forecast: Look for the strong demand in high-end, high-tolerance applications to continue growing well into the future as increased demands surface for the next generation of tooling, aircraft and medical devices, where tolerances will be tighter than ever.

Erik Gershwind
President, MSC Industrial Direct Co., Inc.
Distributor of metalworking tools and MRO industrial supplies, with over 600,000 products from over 2,000 suppliers.

CURRENT STATE OF BUSINESS
As we begin the New Year, our business is growing. I believe this also to be the case for our company’s target market, which is the metalworking portion of the manufacturing industry. To help put it in perspective, we generated a 20 percent sales growth as well as crossed the $2 billion mark for the first time in company history during its fiscal year 2011. While no one knows what the future holds for the markets, I am optimistic that we will continue to grow throughout 2012.

While we’ve seen some slower growth within the lower end segments of the manufacturing industry, the high-end sectors, such as aerospace, energy and automotive, are experiencing a lot of activity thanks to investments in innovation. As a result, the best opportunities exist within high-end product applications. And because the aerospace, energy and automotive sectors involve close tolerance work, the demand continues for highly advanced metalworking machinery, cutting tools and abrasives – which is the sweet spot of our product portfolio.

MAJOR TRENDS
I see tremendous innovation in American manufacturing during the coming years. In order to stay competitive on a global scale, our nation must find more efficient methods to manufacture products by way of emerging technologies and lighter, more durable and flexible composite materials.

Transitioning over to newer machining technologies and lighter, more durable composite materials means there will be an increasing demand from our customers for newer, more advanced high-precision tools, machinery and services.

The last thing I’ll say about innovation is not really about product innovation, it’s about business model innovation. Manufacturers are rethinking their processes as the industry is increasingly challenged on a global scale to discover new, more efficient ways to manufacture existing products as well as new products emerging from new advanced technologies. Successful companies are using new materials to reduce cycle times, new processes to accelerate time-to-market and, therefore, by taking more costs out of the process can become more globally competitive.

CRITICAL ISSUES
I see three critical issues impacting the manufacturing industry within the coming year: a shortage of skilled metalworkers, lack of economic investment and supply chain management deficiencies.

First of all, there are hundreds of thousands of job openings in the manufacturing sector right now. However, these positions are for skilled machinists and operators, and unfortunately such craftsmen and women are practically extinct in the United States.

Secondly, I believe just-in-time supply chains require more consideration. With the high levels of uncertainty in today’s economic climate, manufacturers can’t always predict the level of work coming down the pike. As a result, they can’t afford to keep cash tied up in inventory, which means their suppliers and distributors need to step up to the plate and continually offer higher service levels.

Lastly, it’s no secret the economy has seen better days. And until the manufacturing industry can stabilize its efforts on a global scale, companies will continue to hesitate to invest in new jobs and new skills that will ultimately fuel further growth.

In terms of the unskilled labor issue affecting the manufacturing industry, everyone involved in this sector needs to band together to educate the public at large that being a skilled machinist can be a rewarding and profitable career path. Today’s modern manufacturing facilities are clean and high-tech – not the dark, dirty places the general public believes them to be.

When it comes to improving supply chain management, we have one of the most advanced supply chain systems in the world and work very closely with our customers and suppliers to fully understand the opportunities and challenges they face. Our expertise in this area allows us to help our customers reduce their production costs and increase speed to market. Furthermore, our next-day delivery across 600,000 items allows us to help our customers free up cash and accelerate their supply chain.

PERSONAL INSIGHTS
I believe it’s a great time to be part of the metalworking manufacturing market. For years, discussions have surrounded the decline of quality and productivity within American manufacturing, as well as jobs moving offshore. But today U.S. manufacturing is experiencing an amazing resurgence, fueled by innovation and a greater focus on high-end technology. In fact, we are proud to work with customers who continually drive that innovation and pave the way for an even brighter future in U.S. manufacturing.

MSC Industrial Direct Co., 75 Maxess Road, Melville, NY 11747-3151, 516-812-2000, Fax: 800-255-5067, www1.mscdirect.com/cgi/nnsrhm.

Andreas S. Weber
President, REGO-FIX Tool Corporation
Manufacturer of Swiss precision tooling and tool holding systems.

CURRENT STATE OF BUSINESS
I believe the current state of the manufacturing industry is stable and increasing. After all, there has been a sharp increase in machine tool sales over the past few months, resulting in a higher demand for corresponding components, such as cutting tools, tool holders, tooling fixtures etc., as well as an increased need for new employees to operate the machines.

Aerospace, medical and any other sectors requiring tight tolerances seem to be experiencing the most activity; thus, providing high-end, high-tolerance product applications with increased opportunities. This is evident when you consider China is handling most of our country’s easy work where tolerance levels aren’t as critical so that we, as a nation, can focus on keeping difficult, close tolerance work stateside.

I anticipate high-end, high-tolerance product applications will continue to grow well into the future as increased production demands start to surface for the next generation of tooling, airplanes and medical devices where tolerances will be tighter than ever.

MAJOR TRENDS
Within the coming year, I see the manufacturing industry continuing to trend towards utilizing higher end machine tools to stay on par with the country’s focus on close tolerance work. The five-axis multi-tasking machines currently on the market offer significant advancements over the previous generation of machine tools. Such high-tech improvements now provide manufacturers with higher levels of productivity, tighter tolerances and a better quality product overall – all things necessary to stay competitive in today’s marketplace.

Our customers realize the importance of embracing technology advancements as a way to build a better product and stay competitive. They understand they cannot compete with China when it comes to the mass production of low value-added products or low tolerance work. As a result, our customers are taking advantage of today’s technology and opting to use high-end machine tools and advanced tooling to produce intricate parts as well as make larger parts better and faster.

In order to meet the ever-changing needs of its customer base, we make research and development our top priority. In fact, our goal is to continually offer new tooling for the next generation of machines.

CRITICAL ISSUES
A lack of skilled workers is a critical issue that is negatively impacting the manufacturing industry today. Right now, there are hundreds of thousands of job openings in our industry, but they are for skilled machinists and operators that just don’t seem to exist.

Finding someone to push a button is easy, but with today’s advanced breed of high-end machine tools, you need someone who is a critical thinker and has a high level of computer experience. And, I am convinced that our industry is dealing with this unfortunate scenario because of all of the misconceptions surrounding manufacturing.

When people hear the term manufacturing, they often think of a dark and dirty plant with nothing but greasy work – a thought that couldn’t be further from the truth. Most people have not been in a modern manufacturing plant to know that they are clean, organized, well-lit environments that utilize advanced technology. In fact, some medical manufacturing facilities are so clean that you can eat off the floor.

Furthermore, a lot of parents automatically assume their children need to go to a four-year college to make a decent living. When in reality, a trade school education can be just as rewarding—if not more. There is a high income potential for a skilled machinist as well as a high level of job security, especially nowadays.

When it comes to dealing with the industry’s unskilled labor dilemma, we are working hard to change people’s negative perceptions of manufacturing and machinist work. However, in order to really combat the problem, it is going to require the entire manufacturing industry sending a collective message to the general public that we are a high-tech sector with lucrative career opportunities.

PERSONAL INSIGHTS
I am a firm believer in you get what you pay for. That’s why I think it’s important to reiterate the fact that when manufacturers use better machine tools, better inserts, better tool holding, better coolant, etc., they are going to be able to produce a higher quality, more competitive product that will ultimately make them more money. Those who choose to go the low-end route with commodity machine tools and equipment will find themselves less competitive with a low quality, inaccurate product.

REGO-FIX Tool Corporation, 7752 Moller Road, Indianapolis, IN 46268, 317-870-5959, Fax: 317-870-5955, [email protected], www.rego-fix.com.