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Picking your battles
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By Rick Berg, December, 2009
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Rick Berg, Managing Editor
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Our cover story this issue focuses on retraining the workforce with 21st Century skills. That’s clearly one of the major battles to be fought by manufacturers trying to make sure they’re able to succeed in a competitive global market, but Mike Klonsinski of the Wisconsin Manufacturing Extension Partnership notes that there are plenty of other battles.
Klonsinski had some sobering words for members of the NEW Manufacturing Alliance at the recent New North Summit in Green Bay. Referring to WMEP’s Next Generation Manufacturing survey, Klonsinski says most manufacturers in Northeast Wisconsin place a high value on competitive factors like innovation, talent management, continuous improvement and global engagement, but relatively few are doing much about improving their performance in those areas. For example:
• 80 percent of New North respondents rated customer-focused innovation as important or very important to their organizations’ success, but only 22 percent have invested more than 5 percent of their sales revenue in new product development.
• 89 percent said talent recruitment, development and retention were important or very important, but only 35 percent have invested more than 20 hours per employee in annual training.
• 94 percent rated systemic continuous improvement as important or very important, but only 18 percent had senior staff monitoring process improvements.
• 81 percent said global engagement was at least somewhat important to their companies’ success, but 70 percent had no sales or distribution outside the United States.
The lack of involvement in global markets is the most disturbing indicator to Klonsinski, who notes that “roughly three quarters of world purchasing power and almost 95 percent of world consumers are outside America’s borders. Manufacturers who understand this reality and the opportunities it brings will gain competitive advantage and become stronger, more profitable firms.”
Klonsinski adds that export diversification offers a hedge against market volatility and reduces geographic risk.“International sales drive top and bottom-line growth during periods of rising global demand as well as during weak economic activity in the U.S.,” he says. “Many manufacturers that sell into global markets weathered the recession better than those that depend entirely on domestic demand.”
John West, president of Fox Valley Metal-Tech in Ashwaubenon, says each manufacturer has to weigh the relative importance of global engagement within the context of his or her own company. For example, in the “New markets” story on page 13 of this issue, Ariens Company President Dan Ariens notes that export sales have been crucial to his company’s success for decades. West, on the other hand, says his company’s custom metal work is heavily dependent on proximity to the customer.
“Almost all my customers are local or regional or at least in the U.S.,” says West, “so my perspective on global engagement is not necessarily going to be the same as Dan Ariens’ perspective. That doesn’t make one perspective right and the other wrong. They’re just different business models, with different criteria for success.”
As for the results in WMEP’s Next Generation survey, it’s not that hard to understand the apparent disconnect between what manufacturers say is important and what they are doing about it, according to West.
“I would have expected that kind of result,” says West, who was a survey participant. “We all know what’s important, but we also have a limited number of resources available, and we have to make decisions about where we’re going to expend those resources.”
In this or any other economy, he says, it’s a matter of picking your battles.
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