I just returned from a trip to the Midwest, visiting MFG.com Supplier customers. These small- and medium-sized manufacturers (SMMs) are still standing, and reaping some rewards in the form of more work and (somewhat) improved business conditions.
But they're still skeptical about recovery. While most say their customers are coming back to life and reengaging to ramp up production, resources in the form of credit and enough profits to lift employment in their companies just aren't there.
Among the examples I got from them this week:
- The improved volume of work from customers is attributable to several factors: fewer domestic competitiors, investments in technology and improved services offered.
- Optimism is cautious. According to one moldmaker in Kentucky, "Financial bailouts encourage the same behaviors. Manufacturers are self-correcting - if not, we go out of business." To a person, each principal/business owner I spoke with indicated that expected costs and regulatory requirements from the government (healthcare, increased taxes, "green" mandates, etc.) could stifle growth in their companies.
- These successful manufacturers all say they've adopted the sales and marketing philosophy of pursuing the customer rather than the "part." Relationships and partnerships sustained them through the downturn, and working hard to improve those relationships has helped them see more work quicker, they say.
- Most report seeing and hearing of more companies backshoring work to the US from low-cost countries to save money and improve quality for their own customers. Among the products/projects they cite are transfer pumps, high-tolerance machined parts, and molds/tooling and molded parts.
- All but one of the 9 SMMs I visited are lagging behind in sales/marketing on the Web (i.e., their Web sites, social media, etc.). That's not surprising, considering that priorities have focused on survival rather than "luxuries" over the past 2 years. But work is found and developed more and more via online channels, and to neglect them now when work is at a premium represents a troubling trend.
Bottom line: at this point, any improvement in business conditions is welcome. But uncertainty and weariness are preventing full-blown optimism in SMMs from Ohio and Kentucky.