he trade war and COVID-19 pandemic have sent huge shock waves into the U.S. economy and manufacturing, but original equipment manufacturers are playing small ball by looking to shorten supply chains, as well as reduce processing runs and inventory—the little things that could add up in the long run.
“Even prior to COVID-19, there was an emerging trend to bring manufacturing back to this country,” says John Mazurek, director of sales and marketing for Metcam, the 2018 Georgia Manufacturer of the Year. “Based on the impetus of what the current administration was doing, far more people were looking to repatriate business here. COVID has sped that up dramatically.”
Regional and local fabricating have certainly gained favor versus overseas production due to trade tensions followed by the unprecedented pandemic paralysis. Nearly 1,400 companies announced the return of 145,000 manufacturing jobs, according to the 2018 Reshoring Initiative. OEMs and other manufacturing customers naturally want to minimize risk, which means getting more control. They want easier access to their vendors, which has led to a push for domestic sources all the way down to the county and city levels.
Two big new business wins for Metcam help illustrate this trend. The world’s largest construction equipment manufacturer has reacted to the economic adversity by seeking a partner that allows them to shorten production runs and carry less inventory. In the past, the major OEM may have ordered in the thousands, but now it purchases units in the hundreds. Following a just-in-time manufacturing approach, the company has Metcam hold inventory and ship parts as needed. The result is more efficient production and reduced response times.
“We filled a niche for low volume, high mix,” says Mazurek, meaning that Metcam handled orders of anywhere from one to 100 parts, but with a “multitude,” now approaching 1,000 parts, in the given category. “We’re able to do shorter runs, hit their marks and, of course, be profitable in the process.”
Metcam’s other new client, which was sourcing many of its parts from China, really warmed to the fact that the fabricator’s Alpharetta, Georgia, plant is 20 minutes away. The OEM can view and modify production while relying on full-service offerings, including assembly and logistics support. A huge advantage is not having to hold an abundance of inventory with Metcam stocking and shipping weekly.
“The added value that Metcam brought was introducing experienced engineers that took cost out of their products and made them more manufacturable,” Mazurek said. “In addition to that, we were able to come up with a new product version, a new design for them that they absolutely love.”
The value-add approach of the experienced engineering team strives to maximize output by aligning the form, fit and function of the customer’s product. It might involve altering materials to reduce costs and/or to add viability to the product. Design changes that eliminate production steps also help extract cost. Overall, the team at Metcam conveys its know-how to the customer regarding what is realistically manufacturable and repeatable.
Business is about elevating efficiency and reducing risk, but the trade war and especially the pandemic were hard for manufacturers to prepare for. Staying agile and flexible with supply chains means even more now as 2020 comes to a close.