The need to adapt, no matter what happens

January 12, 2010

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When I saw the words manufacturing and boom in one headline, I had to do a double take. An AllianceBernstein economist was especially optimistic, predicting that manufacturing may be gearing up for the biggest turnaround seen in 25 years.

"The evidence points to a 20 percent jump in output in the fourth quarter, as there finally has been an end to the inventory reduction process that has gripped the industry for most of the past two years," said Chris Kuehl, economist for the Fabricators & Manufacturers Association, in a Monday e-newsletter. "The key point for Alliance is that new order growth is far outstripping the current inventory levels, and that is a recipe for growth under most circumstances. If this trend holds, the economy is in for some solid numbers in the months ahead."

It looks like manufacturing is indeed leading the charge, even as exports from China surge. I can understand why, going by recent conversations with shop managers. Inventories were down to historic lows, so we're now catching up. The question on everybody's mind: Is this sustainable?

I'm an optimist here. I say yes, but not because I think the overall economy will be just dandy. We really don't have a good playbook when it comes to recovering from this kind of recession. It's because modern manufacturers have an uncanny ability to adapt. If a company isn't lean and flexible, it probably didn't survive the two downturns over the past decade, or it's extraordinarily lucky.

Consider Olympic Steel, a service center with a contract metal fabricating operation in Siler City, N.C. Sales plummeted last year as its OEM customer base put the brakes on orders. So what did Olympic do? It took matters into its own hands by introducing a product line and launching a new subsidiary to sell it, Zeus Metal Works.

As part of its 5S efforts, the company was looking for a sturdy shop cabinet, one with a capacity of more than 1,000 pounds. They couldn't find one for the right price, so they designed their own with unique features, and launched the new product at last year's FABTECH® Intl. & AWS Welding Show. You can read more about the story in the February print edition of The FABRICATOR.

So how long did it take managers at Olympic to launch the new product line? If you can believe it, they pitched the concept, tweaked the design, and developed a marketing strategy all in a matter of weeks. How's that for being flexible?

As for the economy, I've got a feeling we'll see some good things in the months ahead, but let's be real: No one really knows what will happen. Regardless, I'm a bit more confident that companies like Olympic Steel, organizations that adapt quickly to a changing marketplace, will survive and succeed no matter what lies ahead.


FMA Communications Inc.

Tim Heston

Senior Editor
FMA Communications Inc.
833 Featherstone Road
Rockford, IL 61107
Phone: 815-381-1314
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