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Keep on humming

At the recent In-Tech 2007 open house at TRUMPF"s facility in Swabia, Germany, BusinessWeek and the German news magazine Der Spiegel reported that "machine manufacturing has recorded its fourth boom year in a row. Companies are operating at full capacity and want to invest ... But a shadow lay over In-Tech, darkening the mood of organizer and visitors alike: the American subprime mortgage crisis, whose aftershocks have reached as far as provincial southwest Germany ... Many TRUMPF clients would love to buy new machines, if only their bank would play along.

That quote makes me wonder: Could the credit crunch trigger a slowdown on the shop floor this side of the Atlantic? Based on conversations I"ve had with U.S. manufacturers, no such trigger has occurred yet. In fact for many, business continues to hum along nicely.


But what will it take to keep humming, to weather whatever economic climate may be over the horizon?

Mark Ernst, a business consultant with Ernst Enterprises, Lake Zurich, Ill., has some ideas about this. At this year"s FABTECH & AWS Welding Show in November, Ernst gave a presentation on developing business strategies. The essence of it: Managers should gather teams who sit down, ask some hard questions, and ultimately develop a roadmap to carry the company through good times and bad.

As a central part of a business strategy, Ernst said, teams should perform a SWOT analysis, which helps reveal a company"s strengths, weaknesses, opportunities, and threats. What do we do best? [As for threats], what"s going on out there that might cause somebody to take our customers and take our market position? As for strengths, he said, try asking, Why do people buy from us? Why do they come back year after year? Why did we win this business? Is it just price? How do we differentiate ourselves? What do people not like about us?

From this SWOT analysis and other business-planning elements come goals that can help a business visualize its future, Ernst said, adding that these goals should be quantifiable. Providing the best customer service is a subjective statement and difficult to measure. On the other hand, a measurable goal might be: We need X" amount [of revenue] coming from new sources."

Still, does a company have the resources and structure it needs to work toward that goaland to keep humming through good times and bad? Regarding this, Ernst recalled a story about Jack Welch"s first nine months as CEO of General Electric. He knew that to compete, GE needed continued innovation, and yet he saw a bureaucratic process that stifled it. Employees sent new ideas through multiple levels of management. Though ideas weren"t killed overtly, many never made it to Welch"s desk. As Ernst put it, Managers would ask, What"s Jack going to think about this?" The result: A lot of proposals ended up in a drawer. To counter this Welch started a policy where employees could send new ideas directly to him.

These efficiencies bring about competitive advantage, and it"s my hope that advantage helps keep more companies healthy and humming no matter what economic environment lies ahead.

About the Author
The Fabricator

Tim Heston

Senior Editor

2135 Point Blvd

Elgin, IL 60123

815-381-1314

Tim Heston, The Fabricator's senior editor, has covered the metal fabrication industry since 1998, starting his career at the American Welding Society's Welding Journal. Since then he has covered the full range of metal fabrication processes, from stamping, bending, and cutting to grinding and polishing. He joined The Fabricator's staff in October 2007.