The metalforming industry has seen steady progress since the late 2000’s, however government tax structures and work force concerns are still long-term issues facing the $113-billion industry. The Precision Metalforming Association (PMA) has been a leading organization for the industry and represents over 900 companies. Great American Packaging recently had a chance to talk to Bill Gaskin, President, to discuss the current state of metalforming.
What are the most prominent challenges the metalforming industry is facing right now?
“Near-term I think it’s the uncertainty of where the business is going and how we’re going to get there. The last couple of years have been very good for most of our members with the exception of those who have commercial construction and home building as their primary markets. But others, such as those serving automotive and other industrial markets have been doing well. I think we’re also concerned about what’s going on in Washington and what kind of tax structure we’re going to be working with in terms of our ability to get loans and the financing we need.”
“Long-term I think our primary concerns are oriented toward work force. There’s a lot of retirement coming in the next ten years and this is an industry that relies on skilled employees for things like tool and die-setting, machining, and other sensor technologies or electronic knowledge. Most of which doesn’t take an engineering degree, but it can be learned through an apprenticeship or years of on-the-job training.”
“We’re also concerned with what will happen with a lot of the large US Fortune 1000 companies if the business climate here doesn’t improve. Right now the US corporate taxes are higher than the rest of the world. We have an issue of a territorial income policy that that’s encouraged some companies to move their headquarters offshore. However that’s more of a long term concern. “
Do you see a way the industry can turn these challenges into opportunities?
“I think so. The good news is that we have some favorable things going for us right now, including the dollar. We’re competitive globally again. Because of the downturn in 2008 and 2009, companies got lean and have stayed lean so they’re very cost competitive again. If we have the right policies that encourage investment and capital we’ll continue to gain in productivity every year.”
“We’ve also seen movement by some of the larger companies growing. Most of our members are middle market companies that make component parts and sell them to other industries. It looks like we’re going to see a lot of growth and capacity for building automobiles in the US largely with new facilities by some of the Asian countries like Japan and Korea. We’re seeing some shift to Mexico and that’s very shippable from most states in the US. We’ve also been seeing some potential growth in Canada again which we haven’t seen in awhile. Apple even said they’re going to bring a line for Mac Books back to the US. That’s a good sign because electronics is usually sent offshore quite a bit.”
How well do you think companies in your industry have adapted online?
“The majority of some industries like electronics, automotive, and telecommunications have shifted to electronics for their business processes. They don’t get orders from fax anymore. The scheduling, releases, invoice payments, and shipping notices are all done over internet portals. So I think the back offices of our companies are very automated.”
“As middle market companies, I think most of our other members are not fully taking advantage of social media. Their websites typically are mostly brochure-like and lacking information. However they do usually have a private area for their customers to go in, which is important. I still don’t think they might be taking advantage of all the marketing opportunities they might be able to though.”
What do you see as the most important trend driving the industry forward?
“I think energy costs and being financially competitive globally are the two drivers. That should be a positive for manufacturers in the US. I also think the work force issue is another one. We have to get bright young men and women into our industry in those skilled and semi-skilled. Maybe it’s because of a perception that manufacturing isn’t a good place to be at because of all the layoffs in 2008 and 2009, but that’s one of the battles we face. We need counselors in high school and college to encourage students to get into manufacturing. If we can’t overcome those issues, that’s going to be a real constraint.”
“There are some really optimistic signs though. PMA has supported the National Institute for Metalworking Skills for fourteen years now. We were one of six metalworking associations that came together to form the group as an independent body to develop the skill standards and credentialing systems for a variety of machining levels. The skill standards are not nearly as adopted as the AWS welding certification, but they’re the sort of things we need to have as a country so community colleges can offer the academic aspects along with some of the technical skills. Or perhaps do something with the companies individually to get people credentials so companies know what they’re hiring. So if we can’t get there then that’s a risk, but I think we will. I think there’s a lot of momentum and recognition going on for the first time.”
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