Oct 01 2015

China’s Manufacturing Confidence Drops to 6.5 Year Low; What That Means to You


China’s Manufacturing Confidence Drops to 6.5 Year Low; What That Means to You

Last week the Purchasing Manager’s Index* for China dropped again after another similar drop last month. The drops were led by new orders falling off considerably. Clearly manufacturers in China see a slowdown which is more surprising when you know that last month’s production numbers include early Christmas builds and strong demand for the new iPhone production. Without those 2 factors, the Chinese PMI would have been much worse. That means 2 things to US manufacturers:

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Sep 16 2015

Copy THIS China!


Copy THIS China!

This week I had the chance to catch up with John who runs a successful high tech manufacturing company. Years ago we helped him reverse engineer a large chassis to reduce costs significantly. These days, John has made huge steps to upgrade his management team and as a result he has had impressive sales growth. This summer has been slower than expected for both of our businesses. It’s expected as most decision-makers leave for their summer vacations, but it still leaves us owners wondering how much business will return. John is not worried about foreign competition for three reasons.

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Aug 27 2015

How This Week’s Stock Market Drop Will Affect You


How This Week’s Stock Market Drop Will Affect You

Earlier this week the stock markets plunged and we were all flooded with stories of the billions lost in just one day. We all immediately flashed back to the 2009 recession and how business virtually stopped. There are a lot of indicators that a crash was coming including stock market highs, record breaking M&A activity and increasing expansion of government subsidies. Will the market crash affect industrial production? Most importantly, we’ve been here before and we’ve rebounded nicely. Below is the S&P 500 index for the past 12 months from Marketwatch.com. In mid-October of 2014, the market dropped to almost the same level as this week before climbing again. Manufacturing remained steady throughout the down turn and actually increased since then. I have attached a graph from the same time period from the Fed’s Industrial Production Index that shows strong growth after the October 2014 the market dip. While this is hopeful, we should expect some amount of slowdown in manufacturing if the market uncertainty remains.  As you can see below, overall there is a strong correlation that industrial production does lag a market downturn. The silver lining might be that industrial production softens, but does not drop compared to the market.  

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Aug 21 2015

Speak Softly and Carry a Big Stick; You Will Go Far


Speak Softly and Carry a Big Stick; You Will Go Far

“Speak Softly and Carry a Big Stick; You Will Go Far” was popularized by Teddy Roosevelt as a description of his foreign policy. Here at ETM we have hired Jonathan Bowen who is just about the most soft spoken man I have met. Yet, in the two months he has been working here, we have seen a dramatic change. Not only does the shop look better, but we are starting to implement long postponed improvements. More importantly, on-time delivery has gotten much better. How does Jonathan do it?

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Aug 07 2015

Four Main Reasons to Outsource Overflow Work to ETM


Four Main Reasons to Outsource Overflow Work to ETM

This past week has been a busy week with overflow customers – these are customers that make their own products, but are so busy, they are willing to pay extra to build outside. We consider this a great compliment. The folks that do this work every day have decided to trust ETM to make parts as good as they do. Even more importantly, they are willing to pay more than their internal costs. Why would they do that? Here are the four main reasons:

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Jul 31 2015

What To Do When Your Lead Time is Slashed


What To Do When Your Lead Time is Slashed

Last week Gail called me frantic. “How quickly can you modify some enclosures in production?” she asked worriedly. “What’s going on, Gail?” I asked. It turns out her customer’s customer just pulled in the deadline by more than a month! This meant that she needed 2 custom cabinets in a week. The only way she thought she could do it was modify other cabinets we have in production. “Well, we’d have to make a new door without louvers, add a window in the side and – by the way – change the dimensions of the cabinet.” I joked with her. “Oh, yeah, I forgot about that.” she said quietly.

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Jul 16 2015

One Way to Save $100,000/yr


One Way to Save $100,000/yr

I was visiting a customer’s factory the other week, hoping to meet Derek. He had just taken over the business unit, and was walking me through his big plans to improve operations. I decided to plant a seed to help him see another idea. We walked over to his loading dock and saw his outbound product shipping in two layers – on the floor and mid-way on a shelf. “Derek, every week we ship your parts on just the bottom of the truck. Two thirds of our trucks (the upper two thirds) are shipping empty.” Immediately Derek saw the cost savings.

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Jul 08 2015

In Search of Excellence


In Search of Excellence

My sixteen year old daughter, Nina, is at a wonderful time in her life where she is exploring who she wants to be and how she wants to get there. It is fascinating to see her try out her ideas of jobs, locations, colleges, and living situations. We have created a safe place for her to experiment with what it means to uncover her passion and explore it. Her journey so far has been awesome and inspiring to me at the same time. Last night she introduced me to a documentary series, Chef’s Table, she discovered about some of the world’s best chefs and their pursuit of their passions. Despite the establishment’s criticisms, they remained steadfast in their commitment to their craft which ultimately transformed the establishment’s perception of great food. Nina knows she does not want to be a great chef, but she does aspire to excellence. I find that remarkable at her age.

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Jun 24 2015

Six Things Every Buyer Should Know Before Taking a Factory Tour


Six Things Every Buyer Should Know Before Taking a Factory Tour

A few months ago Tom and his business partner visited our sheet metal shop to tour the facility and discuss the ramp up of his new product line. He spent almost 4 hours sharing his vision of our partnership and how we can work together. We did a lean tour of our facility where he stopped to see our process improvements and even interviewed some of our sheet metal experts. He left our sheet metal shop leaving us thinking we were a great fit to help him with a fast, efficient ramp up. Then nothing happened. I circled back with Tom this week and learned how we could have improved the tour.

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Jun 16 2015

What 15 Years Running Factories in China Tells You


What 15 Years Running Factories in China Tells You

Last week I had lunch with Richard Ellert from Onshore Advisory Group.  Richard spent 15 years running factories in China both in the apparel and toy industries.  About 2 years ago, he saw changes happening and decided to move back to the US so he could help local companies bring manufacturing back home.  Richard is currently working with one of our customers that is rapidly growing and desperately wants to keep manufacturing local.  While I probably visited China a dozen times over the years, it is nothing like living there.  Here is what I learned: Quality is still an issue While I was working at Staples, we insisted all of our suppliers pay for initial product testing as well as random testing.  We used a third party lab to test to our specifications and if there was an issue, production was shut down.  This was helpful, but Chinese culture being what it was, there were ways to avoid getting shut down.  Running a Chinese factory, Richard knew all the ways to pass third party testing and how it would ultimately hurt his company’s reputation.  He ended up putting in his own quality team that pulled random samples directly from the production line to ensure on-going adherence to product specification.  Too many China custom metal fab outsourcing novices expect quality to stay the same and get burned. Standard of Living is increasing and so are labor costs One of the things that surprised me the most when I first traveled to China was that most factories had their own dormitories.  Labor was already scarce in southern China, so kids from central China would travel to the south for work, but needed a place to live.  During Richard’s tenure, conditions improved from 16 people per room to 8 people per room.  The Taiwanese owners were angry at doubling the overhead costs until Richard’s customers praised the improved standard of living.  Unfortunately, workers are traveling home during Chinese New Year’s, learning from their friends about places with better standards and not returning to their previous employer.  To quickly replace the folks that don’t return, some employers are forced to pay a higher wage. World Class manufacturing requires world class managers Lean, Six Sigma, Digital Manufacturing have all migrated to China and the best Chinese factories can compete with the best factories from around the world.  When Richard tours local manufacturers in New England he knows their lean program is nowhere near as strong as the lean programs he had in his Chinese factories.  American workers are not as hungry to learn and improve as a Chinese migrant worker.  Great factories need great managers, not matter where they are located in the world.  Richard’s focus with US companies on-shoring is to work with the managers, improve their leadership skills, and their employees will find the motivation to improve that works for them. My lunch with Richard was a great trip down memory lane and it re-affirmed that our competition everywhere is always improving.  There is no time to wait.  I think the custom metal fab work we have done at ETM Manufacturing to improve customer service, delivery and quality is admirable, but we need to get better.  Stay tuned for some exciting announcements in the next few weeks regarding are commitment to improvement.

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