Page 14 - MetalForming March 2012

Best Practices
By Bob Dobrowsky
Benchmarking Report Tells a Strong Recovery Story
This is the first in a series of columns reporting the findings of the PMA 2011 Benchmarking Report, pub- lished last December.
I recently had the opportunity to present data from the Precision Metalforming Association’s 2011 Benchmarking Report to the association’s Cleveland and East Michigan dis- tricts. Members participating in the meetings shared sev- eral interesting observations about their businesses, pro- vided key insights into the survey data, and suggested several changes to survey questions. Some of the survey’s key findings:
• Profits in 2011, as measured by earnings before interest and taxes, averaged six percent of sales, up from one percent in 2010.
• Performance has improved from the previous year in inventory turnover, receivables turnover, success rate on new quotes, capacity utilization and employee turnover.
• The industry continues to show strong performance relating to safety.
• The percentage of participants reporting negative earn- ings decreased from 37 percent in 2010 to 15 percent in 2011.
• Sales per employee and value added per employee—two important productivity measurements—climbed in 2011.
Members shared that certain measurements no longer were meaningful, and in some cases additional data is need- ed to better understand the impact of some measures. For example, a suggestion was made to replace the measurement for unexcused absences with one for unplanned absences.
Furthermore, given that almost everyone in the industry has an on-time delivery rate of at least 90 percent, a sugges- tion was made to start tracking premium freight as a per- centage of sales. This would help get a better handle on the costs required to maintain such a high delivery rate, we were told.
Lastly, members suggested extending the presentation period in the survey from 3 yr. to possibly 5 or 10 yr.
Bob Dobrowsky is a partner with the Cleveland office of Plante & Moran, PLLC, and is one of the leaders of the firm’s Ohio Manufacturing and Distribution prac- tice. He has been delivering professional services to privately held companies for the past 21 years. Bob has authored the annual PMA Benchmarking Report since 2003, serves as a member of the board of directors for PMA’s Cleveland district, and has pre- sented at various district level meetings. www.plantemoran.com
Bob.Dobrowsky@plantemoran.com
A Look Back
Training Dollars as a Percent of Total Payroll
The industry average for training investment as a per- centage of overall payroll has remained within a narrow
Training Dollars as a Percent of Total Payroll
3%
2% 1.3%
1.0% 1.1% 1.0% 0.9% 1.0% 1.1% 􏰀 􏰀􏰀􏰀 􏰀 0.8% 0.8%
􏰀
1.0%
􏰀
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Industry Average 􏰀 Most Profitable
􏰀
􏰀
band, between 1.3 percent in 2002 and 0.8 percent in 2010. Although the average is trending slightly downward, at the most profitable companies it’s trending upward. Most of the companies that participated in recent PMA district meet- ings noted plans to hire additional employees in 2012, but indicated that providing the necessary training will not be an easy task.
Accidental Injuries
Safety has steadily improved during the last 10 years. The number of accidental injuries per 100 employees, cur-
Accidental Injuries per 100 Employees per Year
16
12.2
–
11.0
􏰀 10.2
9.5
10.2 9.1
􏰀 8.8 􏰀 7.2 7.3
􏰀 6.4
8
􏰀
􏰀
􏰀
􏰀
􏰀
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Industry Average 􏰀 Most Profitable
rently at 6 to 7 instances per year, has dropped significantly from its high of 12 instances per year in 2002. One company attributed its strong safety performance to a highly experi- enced workforce, noting that an unexpected benefit of the economic downturn was an overall improvement in the quality of its workforce.
Successful Quoting
During the last 10 years, success rate on new quotes has trended upward. This holds true for the industry average and
12 MetalForming/March 2012
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