Out of Every Crisis Comes a New Era

One of the key themes business leaders have grappled with in recent months is “uncertainty.” While we can’t be sure of what lies ahead, along the way we can monitor trusted sources for relevant information, while also taking appropriate steps to be as prepared as possible for the future. I personally have been encouraged by the information I’ve been consuming as of late, and courses of action are becoming clearer.

A New Era for Manufacturing

At a recent global meeting, the President of Okuma Corporation – Dr. Atsushi Ieki – made a prediction based on historical evidence: “Out of every crisis comes a new era.” The new era for manufacturing will be led by companies that become much more efficient than they are today.

Retool and Reinvent

Dr. Ieki contends that companies will need to retool and reinvent themselves. This means letting go of the “way we’ve always done it” mentality and embracing an attitude of “how can we do it differently and better?” In times of plenty there’s no impetus for this kind of dramatic change; however, times of crisis cause industries to be transformed…because they don’t have a choice. The companies that survive and ultimately thrive will adopt an attitude that they must evolve their businesses.

Monitor Insights from Economic Forecasts

Our leadership team here at Okuma America attends sessions held by Brian and Alan Beaulieu of ITR Economics, a leading economic forecaster in the U.S. I value the information they share because they base everything on actual data rather than emotional or subjective analysis. Their overall forecast accuracy since 1985 is 94.7% at one year out, which demonstrates the credibility of their information.

The Economic Fundamentals are Good

In a recent webinar Brian and Alan shared several data points observed through the late spring/early summer time frame. Following are just a few of the interesting points from this presentation:

• In a review of U.S Economic Leading Indicators, 8 were positive.
• Retail sales were on the way back, and better than expected for June.
• Single unit housing is continuing its long recovery.
• They observed that the pandemic is not a systemic economic problem, “it’s a natural disaster.”
• “Beware the Headlines – Look at the Trends”: They encouraged people to look at the actual data that represents our economy rather than getting caught up in news reports.
• The data tells us that the economic fundamentals are good.

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Diversify Your Supply Chain

Given our current environment, what can individual shops be working on right now to ensure their best future? I think solving supply chain issues is the main challenge shops should be addressing. In some cases, it will make sense to pursue reshoring, though it’s unrealistic to think we can reshore 100% of any given supply chain. A better goal is to work toward a diversified supply chain, where you have a variety of sources, and backups where possible.

Reduce Labor and Increase Efficiency

As shops diversify supply chains, the overall cost of goods is likely to increase. There will be some resources you’ll simply have to pay more for, which means you’ll need to look for other areas of the business where you can squeeze out costs. I believe the only way shops of the future will remain competitive is by learning to automate. There are two sides to this equation, the first being the reduction in labor that automation brings. The other is utilizing data from your manufacturing processes to become intelligent about where you can become more efficient and more streamlined.

Remain Viable in an Ever-Changing Business Environment

The goal is not to become the lowest cost producer of parts for your industry. That’s always been a “race to the bottom”, and therefore not a healthy long-term strategy, especially in times of uncertainty. The goal is to remain viable in an ever-changing global business environment (through a diversified supply chain) and become more efficient through advanced technologies such as automation and data-driven process enhancements.

A Time of Transformation

The crisis we’re enduring is a catalyst for adopting new technologies. While some companies in the past may have thought that evolving their technology was optional, cost prohibitive, or something they weren’t quite ready for, these are no longer viable positions. We’re currently in a time of transformation for all shops, because today we don’t have a choice. The good news is, right now we have a solid economic foundation to work from, and the technology exists that can support the needed evolution. The key is to embrace the change that will take your shop to the next level of success.

About Jim King
Jim King is President and COO, Okuma America Corporation.
Connect with Jim on LinkedIn.