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MD: In your experience, what are some of the challenges currently being faced by manufacturers?
One of the biggest things we see locally concerns the availability of the workforce. Many pockets of California are very expensive to live in, so sourcing people willing to work for a wage which is affordable for both themselves and manufacturers can be challenging. That being said, there are a lot of advances in terms of increased automation to help boost the workforce, but an access to a suitably trained workforce, especially at the middle-management level, remains an issue.
Many businesses were initially lured overseas thanks to lower labour costs and affordable international supply chains. What we are finding now is that the rest of the world is catching up, especially in Asia, through greater access to information, becoming more sophisticated and realising that they can command higher wages and benefits. We are starting to see costs rise overseas, including fuel charges for shipping, and that feeds into this recent trend of reshoring manufacturing.
One of things you notice when you start manufacturing overseas is how hard it is to keep control of the intellectual property (IP) related to your product. Not every country plays by the same rules and puts a similar emphasis on IP protection; essentially you have a very limited window to produce a particular product before ushering in its successor, because within one to two years, depending on how sophisticated the technology is, it will start to be replicated.
MD: How do you think manufacturers can turn these challenges into opportunities?
What’s happening is we are starting to see the rise of ‘clusters’, local companies coming together to create and support mutually beneficial relationships, ensuring the local workforce is trained to a high standard and sharing resources. Embracing community collaborations such as these really help advance manufacturing within a given area far more quickly than working individually, especially in terms of technology.
An additional benefit is that compared to sites located on the other side of the world, companies operating locally are far more capable of reacting quickly to factors which may be adversely affecting their businesses.
MD: How did you become involved in the East Bay Manufacturing Group?
The more time I spent with manufacturers, the more I realised that the East Bay is where a lot of them are based; but whenever they wanted to get together with peers or attend networking events, they had to come into San Francisco or travel further down the peninsula. San Francisco suffers from traffic congestion, same as any other city, so a networking event, such as a breakfast or lunch, consumed much of the day.
We saw the need to create something in the East Bay area for manufacturers to come together, at a time and place which is convenient for them. In January we held our first forum for the purpose of networking and sharing best practices, which was attended exclusively by C-level executives. This was to ensure that attendees weren’t being bombarded by other service providers trying to sell them something.
We have had four events so far, held on a quarterly basis and the topic for our last one, held in September, was ‘Social Media and Branding’. The majority of our speakers come from the group itself, with the exception of our second event which featured US Treasurer, Rosie Rios. Manufacturers best understand the issues being faced and what is required to resolve them. There is always an allotted time for Q&A, so there’s a real culture of learning being fostered.
MD: Have other local authorities had their interests piqued by EBMG’s success?
The East Bay Economic Development Alliance (EBEDA) as well as the City of Oakland’s office of Economic and Workforce Development have both shown a keen interest in EBMG. In fact, the EBEDA co-sponsored our event featuring Treasurer Rosie Rios.
There is also a similar group, SFMade, whose founder I spoke with at length which was truly beneficial, with the collobaration in fact ongoing. Additionally because of what we are both doing, a new organisation has sprung up called the Urban Manufacturing Alliance (UMA), a consortium of organisations just like ours from around the country who are trying to promote manufacturing in urban areas. We may not all have the same charter, but we all have the same mission, to keep manufacturing alive in the US.
MD: Since the economic downturn really took hold, many governments have refocused attention on industry as a way of securing future economic prosperity. Now it’s under the spotlight, what legislative measures would you like to see put in place to aid the growth of manufacturing?
I would definitely like to see an easing up of regulations at the state, local and federal levels. One of things I continually hear is the extensive cost to comply with these regulations, with some companies even having to employ someone fulltime whose sole responsibility is complying with the multitude of regulations that are imposed on industry. The majority of businesses are aware that they have to operate in a responsible fashion and understand that creating a safe environment, both internally and externally, will actually save them money. We are advanced enough as a society to understand the issues, and the high cost of complying with all of these regulations is driving some of the manufacturing out of the urban areas for sure; and potentially out of the country as a whole.
Another aspect would be to increase the incentives available, and maximise existing incentives, such as Enterprise Zone Credits, for those manufacturers looking to rejuvenate certain areas, especially in the urban environment. Allowing them to continue to invest back into their communities in a manner which isn’t cost prohibitive to them is a positive way of ensuring manufacturing can grow successfully within the country.
MD: What advice do you have for manufacturers looking to optimise the financial side of their businesses?
Cash-flow forecasting is critical, being aware of when your cash is going, where it’s going to and where it’s coming from. If you have a clear picture of your cash-flow over a period of say 12 months, you are going to be at an advantage as you’ll be able to manage your cash flow effectively. It will also help to secure long term capital needed during high growth periods which is essential to really drive your business forward.
MD: What were the influences on putting together your ‘Six Tips’?
They came from speaking with manufacturers themselves and understanding the tasks they have to perform, listening to their stories and frustrations, successes and advances. Attending EBMG events and hearing what is being discussed has really opened my eyes and enhances my understanding of the manufacturing community exponentially.
MD: Drawing on your wealth of experience and daily interactions, what do you see as the most important trend or culture driving the industry forward?
Operationally, ‘Lean & Green’ continues to be really important. What can manufacturers do to reduce the amount of waste being created, as well as the amount of effort required to produce goods? How can environmentally-friendly initiatives be implemented without costs being significantly raised?
From a product point of view, there is very big focus on health and speed, i.e. how can natural or organic materials be included, while removing potential harmful pollutants. Everyone would like to be able to do more in less time, so I see raising efficiency as a big focus at the moment, especially during product development.
Six Tips for growing one’s manufacturing business:
1. Reduce market uncertainty– investigate long-term contracts for raw materials and customers, even at reduced margins
2. Make safety a priority– implement improvements to decrease downtime and increase yield
3. Encourage innovation– empower and motivate employees to make product and process improvements throughout the organisation
4. Consider near-sourcing– reduce shipping costs and gain more control over manufacturing processes and costs by using suppliers closer to your manufacturing facility
5. Focus on value delivery– find out what your customers value and focus on delivering what matters; trim costs in areas which customers do not place value
6. Communicate– discuss costs and anticipated cost increase with customers; work together to increase and decrease prices as commodities fluctuate