Fabricate locally, deliver globally

When Jim Hawkins told attendees at The FABRICATOR’s Leadership Summit that global infrastructure demand was driving growth at his employer, Caterpillar, his statements weren’t unusual. As the director of Cat’s Machine Design Center in Mossville, Ill., explained, “The growing middle class will drive tremendous demand for energy, commodities, and infrastructure--and nowhere is this effect greater than in China.” He added that Caterpillar plans to expand its manufacturing presence to meet worldwide demand.

But at the end of his talk, Hawkins added one important coda: Yes, Caterpillar is a global manufacturing company, and yes, it may make sense to place certain plants close to customers in Asia and elsewhere in the world. But Caterpillar doesn’t make cars. Making a mining truck or large earthmoving machine is incredibly capital-intensive. Plant start-up and manufacturing machinery costs are immense, and volumes simply aren’t high enough for every Cat product to warrant building all plants close to customers. That’s why it still makes economic sense to open plants stateside and export globally--and this includes a future Cat plant to be built in Athens, Ga., an announcement that came a few days before the Feb. 29-March 2 conference.



Hawkins’ keynote set the optimistic tone of this year’s Leadership Summit, the 7^th Annual Metal Matters, organized by the Fabricators & Manufacturers Association and held in Scottsdale, Ariz. Co-located with FMA’s Toll Processing conference, the event drew more than 200 manufacturing executives and focused on the state of the industry, economic growth, and the challenges fabricators face meeting the demands of that growth.

Quick response and local sourcing have become a mantra at OEMs. “We’re constantly analyzing our supply chain network,” Caterpillar’s Hawkins said. “We want everybody within a day’s drive from a plant. The reality is that we’ll probably never get there. But the vision is clear. We want a supply base that’s as local as we can possibly get.”

In a nutshell, that’s why I feel manufacturing has a tremendous future in this country.  America has one of the largest consumer markets in the world and, at least relative to some emerging powers, a fairly stable and easy-to-work with government. (Again, that’s a relative statement.)

It makes sense for Caterpillar and others to build here. It’s not about labor costs. It’s about quick response--the ability to deliver on time, every time, for the right price. The manufacturing industry has stepped up to the challenge--as conference keynote speaker Don McNeeley aptly pointed out. McNeeley is a Ph.D. who’s also president and CEO of Chicago Tube & Iron in Romeoville, Ill. “Last year our sector grew more than three times the overall GDP,” he said. “If people would want to be in any sector of the economy, they should want to be in ours.”

I wholeheartedly agree.