A Candid Look At Our Industry

PMPA's Outgoing And Incoming Presidents Look At Our Industry

The past year has been a turbulent one for the precision machined products industry. Parts producers watched as their market share waned in the face of a down market and an increase of imports from Pacific Rim and European countries. Consolidation continues to be a significant issue for our industry as well.

All of these factors appear to be leading to substantive changes for the industry and the Precision Machined Products Association. In comments preceding the following interview of PMPA's two top officers, they emphasized that the current threat of offshore competition is unlikely to go away, and members of the association need to quickly tackle that issue head-on. As a solution, companies need to undertake a three-pronged approach:

• Seek niche markets that are less susceptible to off-shore competition
• Embrace the latest technological advancements
• Train their workforce to operate more efficiently

Outgoing PMPA president Dave Knuepfer of DuPage Machine Products, Inc., Glendale Heights, Illinois, and his successor, Pete Rosenkrands of A.B. Heller, Inc., Milford, Michigan, sat down in the PMPA offices recently to talk about the future of the association, its members and the industry in general. Both men provided their views on the challenges facing the industry, as well as what the PMPA will do to help its members meet these challenges.

Dual Challenges From The Far East

Both men looked to the East, and specifically the Pacific Rim and India, as the most critical competitive challenges that PMPA members will have in the coming years.

Indeed, Mr. Rosenkrands said India, maybe more so than the Pacific Rim countries, will be a force with which U.S. producers will have to contend because of that country's increasing growth in manufacturing information technology. "They are, in my mind, potentially more of a long-term threat because of the fact that they have a democracy that will foster continued growth, as opposed to China, which has to deal with a form of government that has never been compatible with this kind of economic activity," says Mr. Rosenkrands.

As a result, Mr. Rosenkrands says PMPA members need to have a "sense of urgency" of the competitive changes that will be coming. "There are, I'm sure, many members who are hoping that this problem will go away when the economy recovers, but unfortunately many of us are going to find that certain problems are here to stay."

Mr. Knuepfer agrees, noting that, "Competitive pressures coming from the Pacific Rim and India are different than those the industry faced recently from the European Union. In many cases, European-produced parts that made their way to North America did so due to the strength of the dollar. With the recently strengthened Euro, North American producers have now become more competitive with Europe."

According to Mr. Rosenkrands, "Simultaneous to the manufacturing growth that occurred in the Pacific Rim and India, was that the world was getting smaller because of the proliferation of the Internet. The advent of free markets and the Web, as well as the more frequent use of the Web, has made it such that it's become a world market. That has exacerbated the situation here. It was going to happen, but it's coming so fast that unless we move quickly, we're going to lose membership, we're going to lose people and we're going to lose a considerable amount of manufacturing in the United States."

To combat the pricing pressures and the potential loss of precision machined parts manufacturers in North America, Mr. Knuepfer suggests members need to consider moving away from commodity-type business where possible. He thinks members should look to get into some value-added process where they are doing some assembly, or other value-added processes that differentiate them rather than just low cost, low price.

Education And Information Are The Key

Mr. Rosenkrands, however, believes that technology and information exchange— one of the primary issues in the PMPA Strategic Plan—can help members in the long run remain competitive.

"Technology exchange can be two things," he says. "It can be the machine-tool-side ­of things or it can be the exchange of information about better technology or management techniques. For example, with the PMPA, one of the greatest single enhancements to our association has been the advent of the listserve, which lets our members get answers to problems from other members in minutes. It's like having access to a huge library of practical and technological expertise."

Both men agree that to be competitive with low-cost, low-price producers, the industry needs and must rely on a well-educated workforce. With more computer-controlled equipment today than 5 or 10 years ago, Mr. Knuepfer and Mr. Rosenkrands say the level of training that is offered as continuing education by the industry, as well as the initial training available in high schools and technical schools, must be improved.

"We want to attract more highly qualified young people into our industry," Mr. Rosenkrands emphasizes. "One strong selling point is our pay scale. In my home state of Michigan, slightly over 20 percent of the population is in manufacturing, but manufacturing accounts for 45 percent of the state's payroll."

Mr. Knuepfer says he doesn't "have any easy answers for this but we need to do a better job of promoting and doing training. Sometimes we give it a lot of lip service, but when it comes time to do something about it—and I'm not talking about a particular company, I'm talking about our industry in general—we don't invest the time, effort or resources to do that."

Mr. Knuepfer thinks the time to begin that training is not after a company hires an individual, but at the secondary and technical school levels. That begins with educating teachers and guidance counselors, as well as parents, who often don't consider manufacturing as an alternative for their children's careers.

"It's a battle we fight continuously," Mr. Rosenkrands says. "There's no question about it. So we've gone to several different programs. We have apprentice programs that we work on with the local schools. We also offer scholarships for kids coming out of high school and continuing education help for people already in the workplace. We have active education and training programs in-house and we try to ensure that we have the use of classrooms every week for some type of program. We are constantly training."

Our Standards Are Going Higher And Higher

Both see manufacturing becoming less people-intensive in the years to come. As a result, those going into the precision machined products industry will need to be better trained, they say. "So what we're looking at as we reduce the number of people is that we're also going to increase the caliber of training for them," Mr. Rosenkrands says. "That means as you bring the caliber up, you can afford to pay them more and then continue to set your standards higher and higher. At one time, we had 220 employees producing at about the same level as we do now with 165, and that was just through improvements in processing and finding ways of making people more productive."

As the presidential baton is being passed from Mr. Knuepfer to Mr. Rosenkrands, the former president looks back upon his term heading the PMPA with both satisfaction and disappointment, he says. Mr. Knuepfer defines his greatest satisfaction as "working with the experienced and dedicated staff that we have here at the PMPA, as well as working with the executive committee, and knowing that we all share the same vision for the PMPA."

On the down side, Mr. Knuepfer says he has not been able to carry through on the strategic plan the association developed in April 2001 as much as he had hoped. "That's probably my biggest disappointment, because the strategic plan is a blueprint for the growth and development of the association for future boards and officers to follow."

However, Mr. Knuepfer notes that, "In late September, the Strategic Planning Committee got the momentum going again by reviewing the current plan and making recommendations and changes for a future plan." Mr. Rosenkrands agrees and is looking forward to leading this charge in the future. "I would like to continue the direction that Dave has taken with working on how to deal with the issues of the Pacific Rim and the implementation of the strategic plan," Mr. Rosenkrands says.

"Part of this is awakening our membership to the threat that exists so we don't get swallowed up," Mr. Rosenkrands emphasizes. "If we put our heads together, I think that we will be able to develop a road map and come up with some ways to deal effectively with this issue."