Three Reasons for Manufacturing’s Resilience
By Paul Hogendoorn
The manufacturing industry in North America has proven to be very robust, resilient and durable during the Covid crisis. Even before the pandemic, there was a concerted effort by industry to secure their supply lines by reshoring to North America, and the motivation to do this has only intensified.
Through the aggregated productivity data that my company gathers for many companies across all the major industry sectors (automotive, heavy equipment, food and beverage, wood products, steel and metal processors), I see that over all “value adding activity” has, by and large, returned to pre-Covid 19 levels. Because the services my company provides are essential to these operations, I have had opportunities to visit some of these plants and gain key insights that offer an interesting narrative to support that data. Though not scientific or empirical, I’d like to offer 3 reasons for the resilience of our manufacturing sector, and why some have come through it stronger.
- Demand for products. The demand for the products remains strong. North American manufacturers are primarily focused on ‘higher value’ products (as low value products have mostly moved to low-cost regions of the world in previous decades). The products produced include cars, other transportation vehicles and components, appliances, building materials, food and beverages, medical devices and many more high value items. These companies sustain many decent, middle class jobs, and the people they employ continue to have a secure, sustainable source of discretionary income. That discretionary income (from the still healthy middle class at large) is no longer being spent on vacations, entertainment and services, but on homes, home improvements, cars etc. – in other words, on high value “durables”.
- Employees are their customers. We, as consumers, buy what we make. Manufacturing produces more than simply the products consumer’s purchase; it produces the jobs which help create and sustain the economic wealth that then supports a marketplace of consumers able (and willing) to purchase their product. (Case in point: car producers in North America are not laying off people because people are continuing to buy their cars). The goal of a sustainable manufacturing industry must include the people that build, and buy, the products produced. After visiting a range of factories the last few months, I remained convinced that the leaders and owners of these companies are committed to their people, community and our society. About 20 years ago, when I was the chair of the London Region Manufacturing Council, I recall hearing Ray Tanguay, then president of Toyota North America, respond to a question about whether or not the value of the Canadian dollar would prevent them from opening their new Woodstock facility. His answer was simple: “we will build our cars (and trucks) where our customers are buying them.” Our factories create both the product and the market for the product, just as they did in Henry Ford’s day.
- Great people. Certainly, we’ve heard about how special our front-line workers are, (and they truly are), but our manufacturing people are pretty special too. They are inventive, creative, dedicated, dependable and loyal. In short, they are hardworking folks that deliver tangible, tactile results that meet the objectives set every week, day and shift. Everyone involved depends on others to do their jobs too, every hour, every shift. No excuses. The rewards of their efforts are not just their paycheck, but the satisfaction of building, making, finishing, achieving something, every day. When there is no crisis or pandemic, they deliver. When there is a crisis, they rise to the occasion, adapt, invent, and deliver even more.
On one recent plant visit, one worker shared with me that the world outside of the factory was pretty topsy-turvy. Life at home was different, he said; education was now at home, entertainment was curtailed, and social activity limited to ‘virtual’ connection (which is not really social at all). But, at work in the factory, life was pretty close to feeling normal. PPE was already a part of most jobs and interaction with others was already structured and limited to breaks. By their nature, most of his coworkers (he suggested) appreciate having their personal space and didn’t mind having it delineated a bit more. Changes in the workplace are there for sure, but comparatively, the workday has been a welcome period of near normalcy for many.
And lastly, I have to mention technology, and focus. Technology allows a lot of the administration and management to be done remotely, and most folks on the floor – those that add value to the product produced every shift and day – don’t mind that at all either. The companies that have come through this stronger have done so by sharpening their focus on their value adding activities, getting more done in less time, and by unleashing the adaptive, dedicated and innovative potential of their people.