2008 Sales at 60 Percent Labor Costs

That’s the general scuttlebutt coming from conversations at FABTECH 2010 last month in Atlanta, where the attitude was upbeat; expectations for 2011 are high; and numerous exhibitor personnel said (at long last) that capital investment by metalforming companies is expected to escalate significantly next year.

 We heard numerous tales of new presses ready for installation or on order, and automation equipment moving into stamping and fabricating plants in big numbers. Companies also are quite busy, it seems, upgrading aging servo feeds with new motors; retrofitting new controls to older presses; and adding new fastening, welding and assembly technology to their plants, to become as vertically integrated as possible.

In short, it’s OK (maybe even great) to be operating to 2008 (or better) sales figures, but it’s not OK to stay at old technology levels. If you’ve stayed on the sidelines for the last three years riding out the storm and pinching pennies, it’s time to get back in the game and invest in technology.

At the same time, let’s not forget about the workforce—that 60 percent tasked with shouldering 100 percent (or more) of the load. Many of those 60 percent surely feel lucky to still be employed, having watched their friends and coworkers leave during the downturn. So, they’ve been motivated to step up to the plate, somehow finding the time and energy to increase their productivity.

For the short term, requiring such a lofty productivity improvement sounds barely doable, let alone sustainable, but at most shops it’s being done. That’s great. But eventually, one might expect the pressure of the productivity push to wear folks down. And presuming that the 60 percent still employed are the best of the best, I suggest we try to avoid wearing them out.

How to do this? Short of actually taking the plunge and hiring back a few folks, try instituting Morale Boosting 101, via communication and appreciation. Make it job one (okay, maybe job two second only to capital investments in new technology) in 2011. Communicate the positive aspects of working for your company; ensure that employees feel invested in the company. Ask for honest feedback on work conditions, and in response make honest and upfront efforts to improve conditions where possible.

Effective communications from the top down will boost employee morale, and performance. Take time to walk through the plant every day and call out employees by their name, thank them for a job well done, and listen to their concerns. Enhance their sense of value; link their performance to the company’s value. And in return, link performance to their ability to continue to enhance their skills and opportunities for advancement.

Now more than ever is the time for inspired leadership and respectful communication.

(And it might also be the time to consider adding to the workforce, before backs get broken.)

Technologies: Management

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