M/F: What key trends do you see in the metalforming industry in the next few years? Specifically how will foreign competition affect the industry?

Thompson: I'm optimistic about our ability to compete internationally if exchange rates stabilize at current levels. On an international basis, the cost of most raw materials are a bargain in the U.S. Labor rates have increased modestly in recent years, but the productivity of American workers in manufacturing has increased substantially during the same period.

There is a new, improved work ethic and commitment to quality workmanship. New technology has improved productivity and reduced the cost of direct labor to a point in many businesses where direct labor cost is a small fraction of the total cost of manufactured products.

Exchange rates and direct labor costs were major factors in our competitive battles with foreign manufacturers in the past. The U.S. can be a tough global competitor in manufacturing in the decade ahead. That is one of the reasons for the substantial amount of foreign investment into U.S. manufacturing at this time.

M/F: What about foreign transplants competing in North American markets?

Thompson: There is always talk and concern about the Japanese. If Japanese metalforming companies locate within the U.S. to service Japanese automotive companies, they will eventually be direct competitors in all domestic markets. I do not view these firms any differently than I consider good, tough U.S. competitors. If they locate in U.S. communities and are subject to our laws and regulations, use domestically produced materials, and employ American workers, what makes them so different?

Basically, they are using the same resources to produce identical products. Perhaps-and this is not certain-they may have better management. If they do have something we don't have, we will adjust. We will learn and develop. I honestly believe there will be a growing market for domestic manufactured products in the U.S. in the decade ahead. I see good foreign transplants and strong, well-managed, domestic metalforming companies competing equally in the years ahead. Competition is the driving force of innovation. It will always be there. The strong will survive and grow.

M/F: Where will the greatest competition come from?

Thompson: There is always the threat of plastics and composites in the future. Can any of these materials duplicate the functional characteristics of metal at a finished component cost equal to, or less than, metals? Sheet and strip metals are inexpensive commodities compared to composites and most plastic materials.

Molded plastics have made substantial penetration into the metal casting market-but not in metalforming markets. Eventually plastics may be substituted for some metalforming applications, but I'm not overly concerned about this change.

Composites pose a different challenge. If composites are formed in machines under pressure with tools, why can't we lead the change? We can use the same channels of sales, the same tool building equipment, the same quality systems and measuring instruments, the same material handling equipment and similar resources to manufacture parts from composites competitively.

The production technology to form composites into components is closer to the metalforming industry than to the plastics industry at this time. We need to use our existing resources and refine the production technology to form composites if there is to be a substantial market for these materials.

Unfortunately, General Motors recently disbanded a group working on the technology to form composites. Independent metalforming companies are more likely to make technological advances in this field.

But first, the cost of these materials must be competitive with metal commodities. This may take several years. To be competitive with metal, composite materials need to be produced in higher volumes.

The telephone is Thompson's constant companion in the office at his plant in Holland, MI.

M/F: How will the competitive picture change for North American metalformers?

Thompson: First, we must accept the fact that competition will continue to intensify. There was a significant shakeout of smaller, less competitive firms in our industry in the late 70s and early 80s. The better-managed firms with specialized capabilities and state-of-the-art technology fed off the small "hit and ship" shops that could only compete on price. As quality in all its diverse forms was perceived as the principle distinguishing sales factor in most marketplaces, customers began demanding full-service capabilities from their component part suppliers including SPC, JIT, technical assistance and better communication. I think this trend will continue.