9-12 Months For Japanese Supply Chain Recovery…What Can We Learn in the Meantime? (Part 3)

If you'd like some real world examples -- and to see a bit of the banter that occurs when you get Paul Martyn and I into the same room to discuss our favorite business topic (aside from where to open a real east-coast deli or soul food kitchen in Chicago at some point in the future) -- check out the first two posts in this series (Part 1 and Part 2) looking at a number of the modified strategies companies may pursue from a global sourcing perspective given the Japanese crisis. In this final post in this mini-series, I'll reference another of Paul's prediction and offer our own take, especially on the US manufacturing jobs/production scene. To wit, Paul suggests "for certain segments of U.S. manufacturing, there's a window of opportunity for new growth." Among other reasons for this opportunity, Paul believes that we could see increased demand for industrial equipment (in Japan and elsewhere).

Localizing supply chains based on rising fuel costs/surcharges may also provide a boost to US industry looking to improve margins. Yet "favorable transportation rates" aside from associated bunker charges may make sense from an export perspective as regional demand in Japan may "provide the catalyst needed to activate lines" on our shores. And no doubt, "the logistical challenges posed by the closing of several key harbors in Japan and the impact of those challenges on total landed costs may in fact drive some manufacturers to bring production back on-shore." But where our own research may differ from Paul's in this prediction is when he notes that "overall, U.S. manufacturing still has the skills needed and the capacity to ramp to meet new demand."

Our own research and recent interviews with local Chicago manufacturers suggest the skills picture may be different than what some believe. In reality, we have a shortage of key skills, such as skilled machinists and skilled welders, in many regions in the country. There's also a lack of willingness of a new generation of high school graduates (and drop outs) to learn by doing if it involves getting their hands dirty. Here is what our sister site MetalMiner recently found interviewing two manufacturers looking to fill positions:

"Plastics molding company -- 'We are specifically looking for a good tooling engineer, direct sales person, customer service people and efficient molders.' When we asked the question, 'Are there any skills shortages and if so, where?' our contact replied, '[The] shortage is in tool room personnel. It's hard to find someone with experience, or willing to get their hands dirty. Younger people want to work with computers and manage the department, but not really get in there to fix things.'"

"Power plant spare parts manufacturer -- 'I have noticed that many manufacturing companies in Chicago are hiring -- specifically, companies involved in large capital products (locomotives, large diesel engines, large industrial pumps, etc.). Here at our firm, we are hiring and have over 20 positions open for manufacturing management, engineering, estimating and skilled machinists. Machinists with CNC experience are very hard to find. Also, engineers with turbine component experience are extremely difficult to find.'"

Ironically, I had a discussion with a BravoSolution customer at one of their events a couple of weeks back. This company is a CPG organization/manufacturer. One of their sourcing team members told me that much of their capital equipment is so old and specialized and that since so many of their suppliers have gone out of business over the years, that when something needs fixing, it often requires procurement getting involved by finding the right suppliers (i.e., machine shops) to custom engineer parts/components to do the job. And you can be sure they're paying top dollar based on skilled labor constraints in the US.

All of which begs the question, if we want to focus on developing a vibrant and resurgent manufacturing economy -- to support everything from global exports in clean-energy/clean-tech to service parts -- in the US, why don't we put skills and training first?

Jason Busch

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