Business Briefing
By Art Raymond, A.G. Raymond & Co., Inc. (araymond@raymondnet.com)
Political Economics
With the election campaign gathering steam, let’s look at the economic issues being bandied about on the stumps…
- The Economy – Despite overwhelming data to the contrary, many of President Bush’s opponents would have you believe that the economy remains in a recession made by GW himself. The facts are:
- The Budget – One remedy for the last
recession was a dose of tax cuts and incentives that reduced government
revenues. Two further factors, (1) the recession-driven drop in
tax receipts and (2) the wars against terrorism and Iraq, combined
with those tax cuts to return the federal budget to deficit. Many
have forecasted that deficit as large as $500 billion in fiscal
2004. But latest reports by the ISI Group, one of Wall Street’s
most respected investment houses, show the deficit in 1Q2004 running
at only $340 billion. Last year total federal spending was 19.9%
of GDP. Compare that to an average of 20.7% during the 90’s.
In inflation-adjusted dollars last year’s deficit was only
$267 billion, the fourth largest deficit since 1990. When the
economy grows, rising tax revenues shrink the deficit.
- Manufacturing – The National Association
of Manufacturers sees U.S. production of goods growing 6.1% this
year vs. a paltry 1.4% in 2003. This bullish forecast stems from
a projected 9% rise in exports plus a 13% increase in business
capital investment. Even at 2002’s depressed level, goods
production was just over 39% of GDP. The highest that measure
got was 35.5% in the 40’s, 34.9% in the 50’s, and
33.6% in the 60’s. When the economy grows, the manufacturing
sector grows.
- Jobs – Yes, the unemployment rate appears
stubbornly stuck at around 6%. This situation is true for most
economic recoveries. As the economy improves, businesses seek
to get the most from existing workers before adding new ones.
Thus the unemployment rate is a trailing indicator. Two factors
have combined to exacerbate the job situation in this recovery:
(1) a glut of capacity worldwide and (2) fantastic productivity.
In the late 90’s many industries built new capacity. In
the U.S. capacity utilization is only 74% vs. a norm of around
80% from 1972 to 2002. Since the construction and start-up of
new plants is a huge stimulus to hiring, the U.S. won’t
get that bonus until existing plants are full. Plus those plants
running only 30-35 hours a week must get back to full schedules.
As for productivity, U.S. plants are simply making more with fewer
workers. And that achievement is great for our economy.
1. The Conference Board, a well-known economic advisory firm,
issued data revisions in mid-January showing that the recession
began as early as September 2000 under Clinton’s watch.
2. 4Q2003 GDP rose at a 4% annual rate on the back of the 8.2%
rate in the third quarter.
When the economy grows, everything else follows.
One productivity example is the telecommunications industry. In 1970 421,000 switchboard operators were employed in the U.S. to handle 9.8 billion long distance calls. Today we make 98 billion calls with only 78,000 operators at a fraction of the cost of those 1970 calls. Using old technology we would need 3% of our labor force to staff long distance calling. Would employing those workers in that way be good for the economy?
Remember, too, that U.S. economy is in transition. Import-vulnerable industries like furniture, textiles, and apparel are in decline. In addition, evolving technologies are causing massive restructuring. A case in point is Kodak’s recent announcement to eliminate 15,000 jobs and shutter 1/3 of its plant space as it moves from film to digital photography.
What about all those computer programming jobs moving to India? According to the Bureau of Labor Statistics 2.62 million such jobs existed in 1999 at an average wage of $26.41 per hour. In 2002, 2.77 million programmers were employed at an average hourly wage of $29.63. Specific data are unavailable for 2003, but information industry payrolls rose by 4.9% last November. If the U.S. were really losing jobs offshore, employment would not have risen from 136.5 million jobs in November 2002 to 138.6 million last November. Real disposable income is also rising, up 3.9% last year.
Note, too, that the BLS’s Household Survey shows a net gain of 700,000 jobs since January 2001. That’s a long way from the 2.3 million job losses reported by the Payroll Survey, the source more frequently cited by TV talking heads and opposition politicians. The latter survey, while larger, usually underestimates hiring by new and small firms in the early stages of recovery. When the economy grows, hiring eventually grows.
In our history, real and perceived economic ‘woes’ disappear when the economy grows. And growth has just begun.
Bottom Line: When judging the economy, do your homework. Think logically. Cut through the chaff and find the kernels of economic truth.
Economic Factoid - Of the 100 largest “economies”
on the globe, only 47 are countries. The remainder is multinational
corporations. Only 20 of the world’s 220 nations have gross
domestic products that exceed the annual revenues of Exxon Mobil,
the world’s largest company. Multinationals now employ 90
million people around the world, pay more than $1.5 trillion in
wages, produce 25% of the gross world product, and pay $1.2 trillion
in taxes.
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Sector Situation Report
Latest news from the wood products industry by sector…
Office Furniture – BIFMA reported that November 2003 orders and shipments declined by 1% year-over-year vs. the same month last year. Further evidence that the sector is not recovering is the 5% decline in orders vs. October. Analysts continue to project a recovery “a quarter or two away,” while pointing out strong GDP growth and a small rebound in corporate capital spending.
- Steelcase reported 3Q2004 revenues down 3.3% versus the same quarter last year and announced the closing of its wood furniture plants in Fletcher, NC, and New Paris, IN, idling 480 and 160 workers, respectively.
- Herman Miller noted that 2Q2004 sales were down 7.6% versus the same quarter last year. The quarter, however, was the third consecutive period of sequential sales growth. In spite of a lower gross margin, operating profit grew by 1.4% due to continuing efforts to rationalize the company’s cost structure.
- Hon Industries announced the purchase of Paoli Inc. from upholstery producer Klaussner Furniture Industries. Paoli, with annual contract furniture sales of $80 million, will continue to build its strong brand position while benefiting from Hon’s lean manufacturing expertise.
Kitchen Cabinets – Cabinet sales rose a torrid 22% in December vs. the same month in 2002 according to the KCMA’s Trend of Business Survey. For 2003, cabinet sales were up 13.1% following on 10.9% growth in 2001 and 12.4% in 2002. Sales of custom and semi-custom cabinets rose 24.8% and 19.5%, respectively, in 2003. This performance is evidence of the importance of producing what the consumer really wants. By doing so, the cabinet industry is defending its market from low cost imports.
Importantly, experts predict that spending on kitchen remodeling will rise 11.1% in 2004. Nearly three out of four kitchen jobs is a remodel.
- American Woodmark, the second largest U.S. cabinetmaker, reported sales growth of 17% for their 2Q2004, but gross margin fell to 20.2% from 24.3% in the same quarter 2003. Management blamed the decline on higher lumber, pension, and medical costs as well as increases in overtime. Operating margin also suffered, falling to 8.1% from 10.5%.
- Masco, the largest U.S. cabinetmaker, reported better performance in their cabinet divisions during their 3Q2003. Cabinet sales increased nearly 9% to $802 million with operating margin slipping slightly from 15.4% in 3Q2002 to 15.2%.
Home Furniture – The anti-dumping petition against Chinese bedroom furniture producers has moved one step closer to the imposition of import duties. On 9 January the International Trade Commission made a preliminary determination of injury to U.S. bedroom manufacturers. This ruling ratifies the December 2003 ruling by the Department of Commerce and initiates a full investigation into the dumping allegation. DOC is scheduled to announce its determination on 5 May with any import duties following quickly.
In response, Chinese manufacturers have raised nearly $1.6 million for legal fees to oppose the petition brought by 31 U.S. producers and five labor unions. The Furniture Retail Group, 60 retailers who oppose the petition, announced that any duties would result in higher bedroom prices, lower sales, and the loss of retail jobs.
More background detail on this petition can be found in the December Business Briefing.
On the retail side Wal-Mart, the world’s no. 1 merchant, is now the leading seller of furniture in the U.S. The company with furniture sales of $1.24 billion is the first non-conventional furniture retailer to head the Furniture Today rankings since Sears held the top spot in 1993. Other non-conventional furniture retailers in the top 25 include Office Depot, Sam’s Club, Staples, Costco, Kmart, OfficeMax, Lowe’s, and Big Lots. The growth of these non-traditional channels highlights the changing distribution scene for furniture in the U.S.
At the producer level…
- Furniture Brands International 4Q results included total revenues of $616.9 million (up 3.6%), gross margin of 27.6% (even), and operating profits of $39.2 million (down 21%). Management noted improved sales trends across all product lines and price points. FBI’s Drexel Heritage division announced the closure of two North Carolina furniture plants, idling nearly 400 workers.
- Casegoods maker Stanley Furniture reported FY2003 sales of $269.6 million, up 8.8%, and operating profit of $26.2 million, up slightly from the prior year. Imported product accounted for about 20% of sales, and management expects that segment to reach 30% in 2004.
- Ethan Allen reported 2Q2004 sales of $241 million, up 5% over the prior year. Gross margin declined by 4.4% while operating margin remained steady at 16.2%.
- Hooker Furniture announced record sales of $309 million for their FY2003. The company has turned in eight consecutive quarters of increased sales. The acquisition of Bradington-Young, the leather upholstery specialist, added $44 million to Hooker’s 2003 top line. Additionally, shipments of their imported products grew by over 40% vs. the prior year. On the negative side, lower demand for their domestically-produced wood furniture declined. As a result net income fell by 4.4%. Utilization of the four remaining wood plants is expected to rise as total furniture sales increases in 2004.
- High-end producer Stickley of Manlius, NY, has announced a $6 million expansion program for their case goods plant. The project includes a 30,000 sq. ft. addition to their finished goods warehouse, a new finishing line, and new rough mill equipment. The expansion was spurred by the acquisition of John Widdicomb in mid-2002 and the relocation of its production to Manlius.
- Integrated manufacturer/retailer Bassett Furniture reported a 2% decline in FY2003 sales and a loss of $470,000. The company reiterated its primary focus continues to be expanding its retail store program. Bassett has reduced its number of plants from 13 in mid-2001 to seven.
- The growth of imported product continues to affect U.S. furniture companies’ domestic operations. Richardson Brothers, Sheboygan, WI, wood case goods producer, is closing its 300,000 sq. ft. plant and furloughing 125 employees. The company is replacing its domestic product with imports from China and Bolivia. The plant will be converted to an import warehouse. Samuel Lawrence Furniture of Phoenix, AZ, is also forsaking domestic production and closing its 264,000 sq. ft. case goods plant. Orleans Furniture announced the implementation of a warehousing program in Vietnam to support its growing imports. This resource will enable its customers to ship mixed containers direct from their Vietnamese supplier plant.
- RTA producer Doxey Furniture of Aberdeen, NC, has ceased operations, closed its 200,000 sq. ft. plant, and terminated their work force. When fully producing, the plant employed about 150 workers.
- Canadian producer Dorel Industries is closing its Carina Furniture plant in Brampton, Ontario, and terminating 300 jobs. The company’s more efficient Cornwall plant will assume production of the Carina line.
Wood Flooring – For 2003, strip flooring shipments were up 1% over 2002. The year ended weakly with November and December shipments each down 1% from the same months in 2002.
Wood Dimension & Components – WCMA, the sector’s trade association, reported that shipments in 3Q2003 rose 8.2% year-over-year. July and August sales were up over 10% each. 2003 year-to-date shipments were up 7.8% vs. the prior year. Member companies are predicting growth of 10% in 2004. This solid performance combined with an optimistic forecast may indicate that this sector has recovered from its dependence on the furniture industry.
For the last Business Briefing article, click here: Furniture
Civil War.
Public Policy
Saving American Manufacturers
By John Satagaj, WMMA® Legislative Counsel, (email@jsatlaw.com)
Perhaps it was three years ago, but I can recall standing in a hotel hallway at a Woodworking Industry Conference with Frank York. Frank was asking me, "John, who in Washington is doing anything to save American manufacturers." I can recall answering Frank, "Frank, forget about finding somebody who is doing something, I cannot even list five people who are thinking about the long-range future of manufacturing in America." We both agreed it was a sad state of affairs.
From there we moved into a public policy session, and other members of WMMA® joined the debate. Collectively we agreed we needed to do more to bring this issue to the forefront. The story from that point is about the "little engine that could." The Board, the Public Policy Committee, and many of you joined the effort. In an example of association executive leadership at its best, your Executive Vice President Ken Hutton, heard your message and used any bully pulpit available in the manufacturing association community to cajole, urge, push, and pull the community to be more aggressive in raising alarms about the future of manufacturing in the U.S., the need for visionary thinkers and then, of course, the need to provide specific recommendations. The last part is an important element, often lacking in such campaigns. Often times, great tomes are created that document the problem, but concrete solutions are seldom put on the table.
You probably have heard about it already, and may have read about it, but last month we observed the first serious blossoms from our efforts. The United States Department of Commerce released a report, "Manufacturing in America." It offers a state of the sector summary, a vision for the future, and specific recommendations for action. While I am not saying it is a direct result of WMMA®'s efforts, I am confident WMMA® did more than most will appreciate to get the train rolling that ultimately led to the issuance of this document.
Now we need to turn the blossoms into fruit. While we may not agree with every recommendation, if we could secure enactment of half of the recommendations in the report, we would have accomplished something.
The recommendations are divided into the following six sections:
• Enhancing Government’s Focus on Manufacturing Competitiveness
• Creating the Conditions for Economic Growth and Manufacturing Investment
• Lowering the Cost of Manufacturing in the United States
• Investing in Innovation
• Strengthening Education, Retraining, and Economic Diversification
• Promoting Open Markets and a Level Playing Field
Some of the recommendations will require major congressional efforts such as enacting job education programs or simplifying the tax code. Others are more doable and perhaps not as glamorous. For example, one recommendation calls for the creation of an Office of Industrial Analysis. According to the report, "Through a new Office of Industry Analysis, the assistant secretary would be responsible for assessing the cost competitiveness of American industry and evaluating the impact of domestic and international economic policy on U.S. competitiveness, particularly in the manufacturing sector." WMMA® has complained for years that the government needs to provide better, timelier, and more comprehensive data on industries.
In my opinion, the report falls short in a couple of areas. The recommendations call for class action reform, medical liability reform and asbestos liability reform. It does not call directly for product liability reform. It does state, "In addition, the administration and Congress should undertake a long-term effort to ensure an appropriate balance in the tort system between plaintiffs’ and defendants’ interests. As questions of tort liability are frequently adjudicated at the state level, any such effort would ultimately require close cooperation with the states to ensure the best approach and a higher degree of consistency."
I would like to have seen it deal more directly with China, in particular the currency issue. Also the report mirrors the Administration's commitment to the value of Free Trade Agreements. I am not sure the underlying premise of opening up all markets at any cost remains a valid thesis today. Perhaps some sectors benefit, but is there a net gain to the United States? As the years go by, the notion that U.S. companies will win more market share abroad than we lose at home may not be true. But I want to caution that I am not saying agreements should be opposed, rather I am saying I am not sure the answer is an automatic "let's do it." A "free trader" at heart, my instincts are to promote export activity, but I have not seen any compelling analysis that we know the true impact of the free trade agreements that have been implemented.
All that aside, it is a wonderful document and in the current vocabulary of the campaign trail, it gives us plenty of "red meat" to chew on. Unfortunately, this is a congressional and presidential year, so I do not expect much action. However, you do have the opportunity to challenge the presidential candidates and your congressional candidates on their vision for manufacturing in America and specifically what would they do to ensure we remain a diverse and stable economy with a vibrant manufacturing sector. The report can be found on the Department of Commerce's website, www.doc.gov.
To read last month’s Public Policy article on Energy Policy, click here http://www.wmma.org/ce0104_pg2.htm.
To learn more about WMMA®’s Public Policy efforts, click here http://www.wmma.org/members/commpub.htm.
For other news on Public Policy, Members can click here.
International Business Development
WMMA®'s Export Trade Certificate: Opportunity
to Join
By Harold Zassenhaus, WMMA® Export Director, zemg@erols.com
Since February 1989, the US Department of Commerce has granted anti-trust protection for members of the WMMA® that elect to be covered under the WMMA® Export Trade Certificate (ETC).
Each year, the WMMA® goes through an amendment procedure that allows those members that are not currently ETC members to join. (Current members must complete a separate form being mailed to them directly). There is no cost to sign up. Interested members must complete the form found on the WMMA® website (http://www.wmma.org/members/mpdf/etc.PDF), required by the US Department of Commerce, and return it to Harold Zassenhaus, WMMA® Export Director, no later than March 1, 2004.
Background The Export Trade Certificate is issued under the Export Trading Company Act of 1981. Under a provision of the ETC Act, which is implemented by the US Department of Commerce, US exporters can obtain anti trust immunity from federal and state criminal and civil prosecution for export activities. The Act also can provide reduced anti trust liability in private actions against exporters.
Practical Application The WMMA® is the sponsor of the WMMA® Certificate. Under the protective umbrella of the ETC, firms that are listed under the certificate can join together, without the threat of most anti trust regulations, to reduce export related costs and/or increase effectiveness in export operations. The following are examples of activities that can be initiated with a competitor company listed under the WMMA® Certificate:
Joint Bidding and Selling Arrangements Any number of ETC members may join together even if they are domestic competitors and submit a single bid on a particular export project or tender. They can use the same overseas representative, agree to sell separate products as a unit, prepare joint catalogs, and allocate sales that result from joint bidding or selling arrangements.
Pricing Policies Two or more members may agree to establish minimum uniform prices for particular products. They may engage in joint negotiations on prices and terms of sale with foreign buyers.
Service and Promotional Activities Certificate members may jointly engage in a variety of activities that will promote or support their export sales. These can include establishing joint warranty service and training centers, conducting joint trade shows or missions and joint advertising.
If you would like to add your name, please go to http://www.wmma.org/members/mpdf/etc.PDF,
complete the form and return to Harold Zassenhaus. All information
is held in strict confidence.
Click here for last month’s Export article, Tips
on Translation.
For more information on WMMA®’s international business development endeavors, click here http://www.wmma.org/members/commexpo.htm.
Trade Adjustment Assistance for Firms
Program (TAA)
By Harold Zassenhaus, WMMA® Export Director, zemg@erols.com
(For more information, visit www.taacenters.org)
Here is a program that you may want to check out. This little known program, provided by the Economic Development Administration (EDA) of the US Department of Commerce, was created in 1962 to assist US manufacturers get back on their feet because of foreign competition. We are not talking about unfair or illegal foreign competition --- the program provides matching funds for companies whose revenues or employment have been adversely affected by imports for at least two years. (Please don’t confuse this program with the Trade Adjustment Assistance for Employees Program administered by the US Department of Labor which provides benefits workers who are unemployed or underemployed due to foreign competition.)
TAA offers 50/50 cost sharing of projects aimed at improving a manufacturer's competitive position up to a maximum of $150,000. Specifically, these matching funds are applied toward the cost of consultants, engineers, designers or industry experts for improvement projects in areas such as:
• Manufacturing (e.g., CE certification, product development,
inventory management)
• Engineering (e.g., product engineering, product design
and testing)
• Marketing (e.g., export development, market research,
brochure development, distributor search, sales force training
and development)
• Information technology (office automation, EDI, custom
programming, integrated manufacturing systems)
• Quality (e.g., quality assurance, product/process certification).
• Financial and General Management (e.g., succession planning,
profit planning, cash management, organizational analysis)
The assistance is not limited to one specific project nor is it limited to the listing above. For each manufacturer, a tailored plan is developed by the TAA staff. Furthermore, import competition does not have to be the major concern. A firm may be eligible if it experienced sales and employment declines at least partially due to imports over the last two years.
The program is administered by 12 regional not for profit centers which simplifies a firm's participation in the program by preparing the application and guiding a firm through each phase of the program.
As with many federal programs there are some concerns. Funding is only about $10.5 million resulting in a backlog at many of the regional centers. Not all centers handle its caseload in a similar manner and for this reason it makes good sense to contact one of the TAACs listed below to discuss their backlog and how it is administered before getting your hopes up that you could receive assistance in the near term.
Regional Trade Adjustment Assistance Centers
Trade Adjustment Assistance Center Director Phone
Great Lakes Trade Adjustment Assistance Center, 734-998-6213
Indiana, Michigan, and Ohio
Mid-America Trade Adjustment Assistance Center, 816-246-1555
Arkansas, Kansas, and Missouri
Mid-Atlantic Trade Adjustment Assistance Center, 610-666-7800
Delaware, District of Columbia, Maryland, Pennsylvania, Virginia,
and West Virginia
Midwest Trade Adjustment Assistance Center, 312-368-4600
Illinois, Iowa, Minnesota, and Wisconsin
New England Trade Adjustment Assistance Center, 617-542-2395
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island
and Vermont
New Jersey Trade Adjustment Assistance Center, 609-292-0360
New Jersey
New York State Trade Adjustment Assistance Center, 607-771-0875
New York
Northwest Trade Adjustment Assistance Center, 206-622-2730
Alaska, Idaho, Montana, Oregon, Washington
Rocky Mountain Trade Adjustment Assistance Center, 303-499-8222
Colorado, Nebraska, New Mexico, North Dakota, South Dakota,
Utah, and Wyoming
Southeastern Trade Adjustment Assistance Center, 404-894-3858
Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina,
South Carolina, and Tennessee
Southwest Trade Adjustment Assistance Center, 210-458-2490
Louisiana, Oklahoma, Texas
Western Trade Adjustment Assistance Center, 213-743-2732
Arizona, California, Hawaii, and Nevada
For more information visit their website, http://www.taacenters.org
Education News
WMMA® Member Enjoys Engineering Support
as a Result of Scholarship Program Relationship
By Todd Herzog, Accu-Router, (THERZOG@BLOMAND.NET)
Accu-Router has parlayed two WMMA® scholarship awards into a multi-faceted engineering support program from Tennessee Tech University. Needless to say, we are thrilled about this development.
We will benefit from 21 Mechanical Engineering seniors working on their "senior design project." They will break into three groups of seven, and tackle three current Accu-Router engineering projects. Accu-Router will retain all intellectual rights. The students began their work in January with the start of the spring 2004 semester. Our cost is simply to provide whatever materials the three groups will need for prototyping, a commitment we would make anyway within our own company.
The instructor at Tennessee Tech is the interim Dean of Mechanical Engineering, Dr. Hoy, so we have the University department head behind this.
This benefit is a result of the relationships we have established through the WMMA® Scholarship Program. Tennessee Tech is now assisting Accu-Router with projects that have been in our queue. A little investment of time and interest on our part has yielded progress for our company and exciting learning opportunities for college seniors.
All of this is possible through one of the most understated WMMA® programs – and you have to believe that the rewards are great. Now it is your turn to realize the benefits of the WMMA® Scholarship program. To learn more about how you can create your own scholarship program with proven power for your company, click here http://www.wmma.org/members/eduhowto.htm.
You will also have the opportunity to hear about the program from the student’s point of view at the WMMA® Business Session during the 2004 Woodworking Industry Conference in Tucson, Arizona, on Friday, April 23rd http://www.wmma.org/wic2004.htm.
To read last month’s Education article entitled, Member
Enters Second Round of Student Sponsorship – A Win-Win Situation,
click here http://www.wmma.org/ce0104_pg9.htm.
WMMA® Offers Members Customized Economic Forecast Reports at Affordable Prices
BONUS
Sign-Up Before March 19, 2004 and receive FREE Consultation at WIC this April. |
WMMA® members have the option to tap into the expertise of the Institute for Trend Research (ITR), a professional research firm that provides market/economic trends and has a long history of accurately projecting when those trends will change.
Secure information specific to your own business!
Have ITR perform a customized analysis of your individual business
and provide you with a valuable look into the future. The analysis
will examine the unique characteristics of your business and
provide you with a report and commentary using the leading economic
indicators to your business. The cost to WMMA® members
has been reduced to $400. (That’s
a $2,000 Value)
What’s involved?
Follow the easy step-by-step process outlined below to secure
your own Customized Report:
1. Contact ITR directly using one of the three convenient methods
below:
- Phone ITR offices at (603) 226-9331
- E-mail Alan Beaulieu - alan@ecotrends.org
- E-mail Erin Hennigar - erin@ecotrends.org
- Visit their website at - www.ecotrends.org
2. Identify yourself as a WMMA® member.
3. Supply ITR with Sales/Shipments/Revenues (whichever term
you use) for one company data series, either in units or dollars.
a. Data must be submitted to ITR in an Excel spreadsheet.
b. Data should be monthly, although quarterly is useable.
c. The data history must go back a minimum of five years. Generally speaking, the longer the history the better the results.
4. Provide contact information for the person who ITR should contact within your company should questions arise.
- ITR will identify the industry and leading indicator trends with which your company has a demonstrable relationship.
- ITR will provide the charts used in the analysis via Excel.
- ITR will provide your company with commentary of what each chart means to future trend probabilities. The information is sent electronically to your company.
- ITR will invoice your company directly for this service.
BONUS: Sign-up for this service before March 19, 2004 and register for WIC and you can receive scheduled face-to-face time with economist Alan Beaulieu from ITR, during the WIC Contact Table program on Friday, April 23, 2004. He'll answer your questions and assist you with interpreting your report data. (This BONUS is limited to the first 15 companies who respond on a first-come, first-served basis.) ACT Quickly! For information, contact Bill Norton at 215-564-3484, ext 235. |
Manufacturing Strategies
Change Management Ignore Your People, and Your Lean Journey Will Run Out of Gas
By David Berger, (david@wmc.on.ca)
David Berger is with Western Management Consultants, and
will be facilitating two workshops at the 13th Annual Woodworking
Industry Conference, on Saturday, April 24th, 2004. The topic
of his discussions will be, “Increasing Profitability
through Lean Manufacturing.” The hands-on workshop applies
the principles of Lean, and presents the benefits of incorporating
a Lean strategy over traditional improvement philosophies,
tools and techniques. Please set aside time in your schedule
on Saturday to participate in this session. The article below
is a contribution of Mr. Berger to “Advanced Manufacturing
Magazine” and is a sample of advice which he will personally
offer at the WIC.
One of the greatest challenges management faces in implementing
lean manufacturing is ensuring that real behavioral change
takes place at all levels of the organization. Even the most
well-intentioned, fair and respected management team, without
the enthusiastic embracing of the changes contemplated, will
watch their plant revert back to old and familiar ways. Without
a solid change management program weaved into the lean manufacturing
initiative, as well as strong leadership, the project is doomed
from the start.
The term lean manufacturing itself can be problematic in that
some workers see lean = job loss. Unless management identifies
and deals openly with this and other significant barriers,
real change can never be sustained.
Management must see the world through the eyes of those being
asked to embrace the lean initiative, and answer the simple
question on each stakeholder's mind: What's in it for me?
Research has shown that the person most likely to credibly
answer this question for the line workers is their immediate
supervisor.
Unfortunately, the first-line supervisor is usually the most
ill-equipped to provide the answers. This is because typically
first-line supervisors get little management training especially
in the area of change management. They are also tightly sandwiched
between the performance expectations demanded by senior management
and the day-to-day pressures of dealing with the front line
resources.
Here are 10 tips to assist line employees and their immediate
supervisors understand and fully embrace the changes required
for lean to succeed:
1. Develop a shared vision of where the corporation
is headed over the long term, and make it clear how the lean
manufacturing initiative supports that vision.
2. Ensure there are strong signs of top management support such as showing up for meetings, allocation of proper funding, and ensuring actions are consistent with words. This support should translate into commitments by middle and front-line management, such as change management training and involvement in project planning and communication.
3. The implementers of the change, ie, the front line, must understand and embrace the change. Understanding and readiness for the change can be tested at key milestones in the project through formal interviews and surveys, and / or informal channels such as meetings with first-line supervisors.
4. Senior business people with solid leadership skills should be removed from their regular duties to focus on implementing the lean program. They should be properly trained in lean techniques and given adequate support such as internal and external project resources.
5. Allow sufficient time for implementation, typically six months to several years. This should not be confused with the very short-term focus of a given Kaizen blitz or the coming and going of a given manager.
6. Establish performance measurement targets to define what a successful lean implementation looks like.
7. Create a communications plan that provides regular updates to all stakeholders, and provides a feedback mechanism for those managing the lean program.
8. Education / training must be provided for each stakeholder group, with respect to the nature and benefits of the changes anticipated.
9. Anticipate resistance to change, especially if there is a history of poorly implemented changes. Develop a plan for managing that resistance. Make sure that the pain of implementing lean is seen to be less of a pain than the status quo.
10. Offer rewards for the early adopters
of lean manufacturing, and consequences for those that continue
to resist. Rewards can be as simple as pizza brought in for
lunch when performance targets are met. Consequences such
as peer rejection or isolation can be effective when someone
does not try to make a change work.
A regular contributor to Advanced Manufacturing, and other
manufacturing journals, David Berger P. Eng. is with Western
Management Consultants. You can reach him at (416) 362-6863
or by email at: david@wmc.on.ca.
Safety News
Wood Dust: Lung Health and the Tulane
Study Take Center Stage
Courtesy of American Furniture Manufacturers Association,
AFMA (www.afma4u.org)
WMMA® is one of 18 associations representing all sectors of wood and wood products industries which have funded a six-year health study of wood workers and the effects of wood dust. The purpose of the study is:
- To examine wood dust exposures and respiratory health
- To determine whether an exposure-response relationship exists
- To provide sound, scientific basis for ensuring the continued health and safety of those who work in our industries
This Tulane Wood Dust Study is due to conclude in December 2004. The following article was published by another sponsoring association, AFMA, in a recent member newsletter. This article is part two of a two-part series on wood dust.
Last month, we traced the history of the wood dust issue, and the concerns over nasal cancer that drove regulatory thinking about wood dust for several decades. This month, we examine the current focus on non-cancer health effects, and discuss the pending Tulane University study with lead researcher Dr. Henry Glindmeyer.
The American Conference of Governmental Industrial Hygienists (ACGIH) began reviewing the scientific literature on wood dust in the mid-1990’s, with an eye to updating their recommended exposure limits. The ACGIH levels, called Threshold Limit Values (TLV’s) are advisory, but in practice carry great weight with OSHA and other standard-setting bodies.
In the course of their deliberations, members of the ACGIH panel expressed increased interest in non-cancer effects such as declines in pulmonary (lung) function by workers exposed to wood dust. Unlike the extremely rare nasal tumors that guided previous standard-setting activity, declines in lung capacity over a working lifetime are as pervasive as aging itself. The pace of decline can be accelerated by obesity, cigarette smoking and other health factors. Any credible effort to characterize the effect of wood dust exposure on pulmonary health effects would need to account for such “confounding” factors.
Unfortunately, the existing research studies uncovered by ACGIH were flawed on this and other fronts. Most involved one-time (“cross sectional”) measurements that provided a glimpse of the employee’s respiratory health at that moment, not what it had been in the past. Most studies involved small numbers of workers, and many provided only qualitative estimates of wood dust exposures rather than precise measurements. All of these shortfalls had the potential to overstate the risks of wood dust exposure and lead standard-setting bodies to adopt unnecessarily stringent exposure limits.
Recognizing this, wood industry leaders organized to fund a six-year (“longitudinal”) study of several thousand workers that would provide a reliable basis for standard-setting. Costs were shared by over a dozen associations, including AFMA, the American Forest & Paper Association (AF&PA), the Wood Machinery Manufacturers Association (WMMA®) and the Kitchen Cabinet Manufacturers Association (KCMA). Tulane University Medical School was chosen from among the handful of research bodies that had conducted studies of this scale. Dr. Henry Glindmeyer of Tulane, the lead researcher, had overseen a similar investigation of the respiratory impacts of cotton dust in textile mills.
From the outset of the study in 1999, the Tulane team utilized the newest available technology. Employees at the ten plants, four of which are operated by AFMA companies, are fitted with small dust sampling modules which can be clipped onto their clothing. The same employees are tested for lung capacity at least once a year, using a machine which measures forced expiration of air into a tube. The sampling and breathing devices were designed to prevent false results caused by tampering or misuse. The resulting data is encoded to protect the identity of plants, and transferred electronically to a high-security computer at the medical school. In addition, the dust samples are being analyzed by spectography (exposure to light of various wavelengths) to determine their species of origin.
(In late 2003), staff from AFMA’s Government Affairs and Technical Services offices were briefed on the progress of the study by the Tulane research team. While at the lab, we posed a few questions to Dr. Glindmeyer about the project and its significance for the wood industry. By way of background, Dr. Glindmeyer holds a masters degree in mechanical engineering and a doctorate in biomedical engineering. He teaches at Tulane’s Medical School, Engineering School and School of Environmental Sciences. His 25 years of research on the respiratory health of industrial workers have been relied on by key regulatory bodies to identify appropriate occupational exposure levels.
Hank, what were the deficiencies you found in earlier
studies of wood dust & pulmonary health?
Long-term studies on non-cancer respiratory health were lacking. The vast majority of existing studies were cross-sectional, with poor dose-response information. The current study is designed to fill this important data gap.
Can your research isolate the impact of wood dust exposure from other influences that play a role in respiratory health?
The study is designed to account for a variety of influencing factors. These include confounding exposures unrelated to wood processing-- factors such as cigarette smoking, environmental tobacco smoke, age, gender, weight, past infections and the impact of childhood respiratory diseases.
Can you describe the technology being used to collect the data?
The current study uses the latest technology available
for both exposure monitoring and health assessment. The
exposure monitoring device (the Respicon © particulate
sampler manufactured by TSI Inc.) provides precise estimates
of individual exposure at various workstations. These are
broken down by particle size. New technology developed and
validated by Tulane scientists allows us to estimate the
proportion of wood dust in these samples, as distinguished
from other airborne substances such as diesel particulates.
On the health assessment side, lung function measurements
can be incorporated into the employee’s regularly
scheduled physical and conducted by the plant nurse. Participants
are asked to exhale forcefully into a respirometer, a device
that measures the volume and velocity of air generated.
We utilize the latest computer networking capabilities to
collect and assimilate this data from remote manufacturing
facilities (minimizing the presence of outside personnel
in the plant).
Is the pending study the type that would provide
a sound basis for
standard setting?
The current study (involving 1500 workers) is the largest of its kind on wood dust, and will provide data that can better inform decisions on workplace standard-setting.
AFMA will continue to monitor the progress of this project, the data collection for which should be completed by this time next year. On behalf of the entire industry, we express our appreciation to the companies and employees who have participated in this important industry effort.
Contact: Russell Batson (batsonr@afma4u.org) or Bill Perdue (bperdue@afma4u.org).
To read last month’s first report, click here Wood Dust Study Status Report.
Product Liability Workshop, February 24-25 in Chicago: Avoiding the Mistakes That Cost You in Court
Does your company face any greater risk than a product liability lawsuit?
You understand the stakes and how small things can come back to haunt you. After all, you live with this problem every day. You also know what you can do to help protect your company now, before there is a problem.
The NAM and Perkins Coie have been cooperating for 12 years to provide this training program to manufacturing executives. The program is updated every year to keep current with the latest developments in product liability law.
The program is for anyone who makes decision s, drafts instructions or warning, or responds to product problems. You may want to consider recommending the workshop to some of the other employees in your company. After all, what they don’t know can hurt you in the courtroom.
One NAM member company has sent eight employees to these seminars in the past. That will be eight of their thirty-two employees. The NAM is proud to offer this seminar at a price that allows even small companies to educate every critical decision-maker.
The workshop will be held February 24 from 8:00 am to 5:00pm and February 25 from 8:30 am to 3:00 pm at McCormick Place in Chicago, IL. NAM member cost is $399 for the first registrant and $375 for each subsequent registrant. To register for this workshop, complete the enclosed registration form and fax it back to the NAM at (202) 637-3442.
For more information on NAM Product Liability Workshops, click here
Thomas Moser to Keynote Chicago CWB Conference, March 24-25
Renowned custom woodworker Thomas Moser, founder and owner of Thom. Moser Furniture of Auburn, Maine, will deliver the keynote address at the 2004 Chicago CWB Conference & Woodworking Show. The event, which also features a one-day Cost Estimating workshop and six other educational seminars, is scheduled for March 24-25, 2004 at Marriott's Lincolnshire Resort, Lincolnshire, IL.
Moser will discuss the steps, as well as come missteps, he took in building up highly successful high-end furniture company. Over the last three decades, Thos. Moser Furniture has grown from just Moser and his wife, Mary, to a thriving custom woodworking business employing more than 125 people. The company also operates showrooms in five cities including Chicago.
The Chicago CWB Conference will kickoff with a full-day Cost Estimating seminar on Wednesday, March 24, presented in special cooperation with the Architectural Woodwork Institute. The session will be presented by Anthony Perno of Caseworks Technologies Ltd., Albuquerque, NM. The Cost Estimating seminar is of benefit to new and veteran estimators who want to learn or hone their estimating skills.
The conference will also feature six 90-minute seminar sessions split among three concurrent sessions on Thursday, March 25. Anthony Noel, popular CWB columnist, will present two of the sessions: Training & Motivating Employees and Cost Accounting: Am I Making Money? Others topics include Integrating Computers in the Custom Shop and How to Target New Customers, Project Management and Exploring the Closet/Home Storage Market.
Attendees will also be able to network with fellow custom woodworkers and key industry suppliers during informal networking receptions at the conclusion of each day of the conference and show. Tabletop exhibits hosted by key industry suppliers of hardware, veneers, software, equipment and more will round out the two-day affair. Display tables are available on a first-come, first-served basis.
To receive more information about attending or exhibiting, contact the CWB Show Management Office toll-free at (888) 903-9663 or (630) 323-7214; e-mail cwb-chicago@bacon-hedland.com. For the latest updates visit www.chicagowoodworkingshow.com.
WMMA® Welcomes New Associate Member
| Company Name: | Gladu Tools Inc. |
| Company Address: | 2115, Saint-Cesaire
Street, Marieville, Quebec, J3M 1E5 Canada |
| Phone: | (450) 460-4484 |
| Fax: | (450) 460-0249 |
| Toll Free: | (800) 363-9117 |
| Website: | www.gladu.com |
| Email: | gladu@gladu.com |
| Number of Branches/Locations: | One (1) head office
and two (2) branch locations, Total of three Gladu Beauce 3020, 95th street St-Georges, Quebec G6A 1K8 Canada Gladu S.W. 4647 Leston Ave. Suite 603 Dallas, Texas 75247 USA |
| Total Number of Employees: | Three hundred (300) |
| Key Contacts: | Michael Glenn Mihalovic Marketing Director Annie De Serre Assistant, Marketing & Communication Jean Gladu President |
| Founded in (year/location): | 1969 / Marieville, Quebec |
| Founded by: | Jean Gladu |
| Description of Business: | We design, manufacture, sell and service tooling for the secondary wood transformation industry. Our tools cut, profile drill, route and plane solid wood and engineered wood panels. Tooling is also available for plastic sheet, various composites and non-ferrous materials. |
| Key Product Lines: | Circular saw blades tipped with tungsten carbide or PCDiamond. All forms of router bits and cutter heads tipped with tungsten carbide or PCDiamond either in braised or insert format. Other complementary products. |
What makes your business or products “different”
or “noteworthy?”
Our approach has consistently taken into consideration more
than just the cutting tool. Our intent is to optimize the
cutting operation; both upstream and downstream of the operation
so that it becomes more efficient and profitable.
How would you describe the company’s business
mission or philosophy?
We offer a global solution to help manufacturing companies
cut materials more efficiently. We assist companies to become
more competitive by optimizing their machine tools.
What are your company’s primary concerns
in the woodworking industry?
The apparent erosion of the North American manufacturing
base.
Have you been affiliated with the WMMA® or
any of its members before?
Yes. We have developed strategic alliances with machine
tool builders as well as commercial relationships with non-competing
cutting tool manufactures.
How did you come to join the WMMA®?
An existing member suggested we join.
How do you hope to benefit from your WMMA®
membership?
By networking
Any other “messages” for your fellow
WMMA® members?
Compete! Implement manufacturing innovations as soon as
you are able.
Request for Machinery to Build National Woodworking & Lumberman Museum
James Henager of Bucksin, Indiana is continuing his parents’ tradition of collecting American folklore, and has turned to WMMA® members for contributions.
Henegar’s Memories & Nostalgia is adding a National Woodworking and Lumberman Museum to the already existing museum, which includes exhibits from sources such as:
• Whirlpool Corporation
• U.S. Postal Service
• Veterans of Foreign Wars
• Porter-Cable Company
• Georgia-Pacific Company
• United States Air Force, Marines, Navy, and Army
Mr. Henager is seeking to add hand tools, machines, photos, and the like – any equipment used from the beginning of the logging process to a finished piece of furniture or cabinets.
Please see the attached file for additional information,
and feel free to contact James Henager directly at 812-795-2230.
Henager’s
Memories & Nostalgia General History & Background
and Local Newspaper Article.
