Do you have to grow in order to sustain a healthy manufacturing company?
Years ago, most businesses did not have a vision or a mission for their companies. It was simply a matter of “blocking and tackling” your team through wins as the company grew (you buy more machines as the customers come). Now, many businesses are caught up in the Wall Street mindset that if you are not growing, you are dying.
Should every manufacturing company have this mindset or can we do better?
Do you have at least a loose vision or mission for your company?
Where do you see the company in 5 years or in 10 years?
How do you define growth? - # of machines, sales, profit, employees, customers?
For me, the metrics are sales (of course), profit (gross and net), % of vending integration systems that we are serving and customer retention.
Do prospective customers look at your business in terms of size and gauge whether they want to do business with you?
Jim and I discuss the wrong ways to grow in order to look at these from the opposite perspective:
- You use supplier credit to grow. Instead: Have a financing plan for growth, talk to your bank, and learn about the proper way to borrow money in order to achieve your goals.
- You take on low margin business to build your business or to just get in the door at a particular customer. What happens?
- Can’t make money on the job
- Late on the job
- Quality is subpar
- Can’t do the job efficiently
According to Jim, end-user customers have become smarter about simply bidding out jobs for the lowest cost. End-users are now working with their existing suppliers to find out where they can partner and be strategic to remove costs out of the manufacturing processes (another good subject for the future).
In our Manufacturing News segment, we again discuss women in manufacturing. There is a push in the Milwaukee market for welders. A 24-year-old single mother with no intention of getting into manufacturing pursues a job in the field. ”This is so cool, I am actually creating my own art.” She is enjoying what she is creating, making good money and able to support her family.
In our Metalworking Tools segment, we discuss the Widia Victory versus Value lines and why a company would utilize this model during pricing pressures.