paco manufacturing's blog

CNC machining of a part

I want to preface this next blog by saying that yes, it’s pretty dry.  Sorry.  However, I do believe in the content.  I actually am pretty happy I work for a company which builds machines.  At times, I get to slip out into the shop and see what our guys are working on, and they are craftsmen.  A little bit of each of them goes into the machine and parts they manufacture.  This past fall I was able to actually become a CNC machine operator for a few weekends (having had in years past many hours of practice running power tools for home restoration projects) , and actually ran some parts for inventory.  It was fascinating (and yes, the “geek” in me tried to understand the machine code on the screen as it related to the operation of the machine during its various stages).  But, I felt this sense of pride… that something I was doing was going to be part of a machine and that it was going to last for a long time, and in turn become part of a process to make something else that was going to last for, well, maybe not as long, but become a durable necessity in our world.  It was a great experience and I gained a better appreciation for the skill and talent of our shop and of our engineers.  You can skip to the little video at the end if you want to see what they are capable of, but I do wish you’d take the time to read this post and better yet, click on the links and read the current events happening in the U.S.  A blog post is nice in that it can be personal, and as I have written before, “Business is Personal.”  This topic brings to mind not only my future, but my children’s future and our grandchildren’s future, so it is very personal.  And remember, I did warn you about the dryness…

U.S. manufacturing has been in the news recently.  President Obama gave a speech on June 8^th which was a call to action for training and development of workers within the manufacturing sector of the US.  As noted by the White House, “Preparing Americans to enter into the manufacturing sector will not only strengthen the economy and put Americans back to work, it’s critical to our nation’s success as we compete in a 21^st-century global economy.”  From a manufacturer’s point of view, it reads well when it affirms the need to build a workforce to compete with companies around the world.  The speech commends the manufacturing sector as being the lifeblood of the American economy; of being critical to the continued innovation of products and services through its private sector research and development processes; and for being a stable employer in communities across America.  There is a tremendous need to educate, train and develop the skillset of our next generation, and not completely lose the edge the U.S. held in the past.

Back in May, an analysis by The Boston Consulting Group, was released stating that the rise in China’s labor cost could see a “Manufacturing Renaissance” within the United States, particularly within certain states.  It was an uplifting article as it stated, “We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015.  As a result of the changing economics, you’re going to see a lot more products ‘Made in the USA’ in the next five years.”  The article goes on to state that a number of companies have already begun to rethink their production locations and supply chains for goods destined to be sold in the U.S.  It looks as if a window of opportunity is opening within the manufacturing sector of the U.S. economy, which should be given serious consideration by all.

As a small U.S. manufacturer we have witnessed the damage caused by the offshoring of manufacturing by the large corporations over the past twenty plus years.  These articles give us hope.  Along with hope, it makes sense for medium to large manufacturers to look within the U.S. for assistance with their production needs.  In other words, manufacturers do not have to rethink about bringing all their production back in-house.   Outsourcing certain production components locally or regionally, a company can realize the following benefits:

• Shorter delivery times – this can be a real asset when you are practicing Just In Time or Lean Manufacturing strategies;
• Fixed cost predictability – you get lot based pricing, and require less floor space and overhead;
• Scalability – the outsourced company is prepared to manage the temporary or permanent increase or decrease in production;
• Innovation – you are planning to implement a new production process and do not wish to give up the needed floor space or resources for short-run productions;
• Offsite inventory – cost savings are realized in floor space and lower manpower requirements used in maintaining inventory;
• Quality improvement – best practices and outsourced company engineering assistance which would be too difficult or time consuming to develop in-house;
• Improve production schedules – your factories are already at capacity or you have a component which falls outside your primary capabilities.

Outsourcing can encompass components directly tied to your resale product, or it can consist of the machine or machines needed to produce your product.  It can also relate to the consumables used in manufacturing your product within your facility.

Being a small U.S. manufacturer, pāco manufacturing^® looks forward to a Manufacturing Renaissance occurring back on this soil.  We have successfully survived over 50 years in the Contract Manufacturing arena, and know intimately the skill and talent of the people who have worked in this industry, whether it is within our own walls or with the customers we have partnered with over the years.  We agree that it is the lifeblood of the American economy, and will work tirelessly along with other manufacturers to keep it flowing.

Contract Manufacturing YouTube Video 

[note: being a newbie to these blogging codex's, I was unable to embed the video directly, but do hope you take time to click on the link above and our new video.]