National Association of Manufacturers: Past and Future

We’ve been moving more towards a service based economy than manufacturing, but manufacturing isn’t dead by any means. Granted, we are mostly a service based economy already but services are taking a stronger focus. NAM or the National Association of Manufacturers is a testament to that notion. Since the day the association was founded in 1895, their mission has always been to give a voice for the manufacturers in the United States, specifically in legislative and governing bodies that could either positively or negatively impact its members. But they do often interact with the media and public from a public relations standpoint, so they should be considered stakeholder groups in these discussions.

They have driven a lot of synergy between industries in this country, pushing innovation, job creation, and the technology that has kept the United States a major player in a globalized economy. Moreover, what I like is that the association publishes findings from all of its members. For example, there have been certain anomalies in manufacturing processes that are industry wide. Members have the benefit of recognizing this as a problem and can work together to solve it. Quality is certainly one of the key benefits of American manufacturing, and it isn’t going away any time soon. This is one of our tools to influence consumer opinions about what we produce here, and to foster at least a certain sentiment against products that are only manufactured in China. Obviously, we can’t produce everything in the U.S because of the resources necessary to build certain things aren’t regional. Many of the components for electronics require materials found in Taiwan, India, and other East Asian countries. So although we have to sometimes import raw materials to the U.S for our work in progress inventories, the finished goods will still be finalized here, and with the hopes of exporting it. NAM has always supported the exporting of goods from our companies. We know that diversifying your customer base will allow you to generate revenue beyond the confines of the U.S and Canada market place, and beyond the benefits of NAFTA. Many of the members of NAM have seen a spike in exports.

The International Trade Administration and the U.S Department of Commerce released data showing the goods and services from the U.S, and the numbers are enlightening. Given recent announcements of the S&P lowering the U.S credit rating, both the Dow Jones Industrial and other indexes took a fall, obviously over worries of how this would impact growth and our GDP. I have yet to see any reflection of this hasty action in the Federal Funds Rate, but if that is raised, it could hinder a certain level of both private and government investment. However, the numbers have already spoken, as these recent events are only speculative. Exports are up 4.6 percent in March 2011 reaching a record $172.7 billion since the beginning of February. Keep in mind this is from small to medium sized firms. Finished goods accounted for $124.9 billion which leaves $47.7 billion for services rendered during the same base period. The ITA and U.S Department of Commerce also reported that narrowing our focus to February and March alone, $7.7 billion of goods and services were exported, surpassing expectations and surpassing anything done in history. I think this information is enough to curb the concern over today, and that perhaps some companies, such as small and medium sized firms, are no longer afraid of globalized environment.

As previously mentioned, we’ll need to keep an eye on the Federal Funds Rate or FFR. This is the primary interest rate that the central banks give to lend, and so its adjustment trickles down to the smallest of banks and across every type of financing imaginable. The Export-Import Bank of the United States, requests for export financing started increasing in October of 2010, when the bank processed over 1,700 applications for financing, resulting in more than $2.4 billion in export financing. For smaller enterprise during the period of October 2010 and January 2011, financing rose to $1.5 billion, up $100 million the same time the previous year. If the Federal Funds Rate were to increase, we would want to watch the applications for exportation loans, because this would be a direct cause and effect relationship. If the number loan applications go down over a given period, so the amount of exports in the following months will also be lower. But to affirm the notion of things moving in the right direction, applications would only be so high if businesses were optimistic about growth and were seeking creative solutions to expand their operations. Coming out of the recession starts with the mindset that future periods are going to yield growth and profits, and executive orders follow suit. Because the bank is an independent federal agency, the financing they provide can include export-credit insurance, which helps ease the pain of exporting goods or services. This includes dealing with trade regulations of the European Union and others, where there are added taxes and fees to protect domestic firms. This is still available and will remain available even if the U.S credit rating takes a little bit of a plunge. One of the primary things that I would be worried about is the fluctuation in currency. Even over a period of 30 days, which is a normal payment cycle, we can easily assess a loss during currency conversion. This is something that any company faces, but those larger corporations may have the resources to better predict currency values during certain periods. On June 7^th of 2010, the U.S Dollar was $.83 per Euro, but as of today, the U.S Dollar has fallen down to $.67 per Euro. This is a 20% change in just the last year and the trend continues downward.

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Raw Material Prices Indicate State of Manufacturing

It was only weeks ago that I was writing on the increase in U.S exports from small to medium sized companies, specifically in manufacturing. For our ailing manufacturing sector this seems to be great news but it seems as if this observation has been slightly sidetracked given the recent market performance of raw materials, specifically copper on the Dow Jones.

The price drop comes amidst reports that manufacturers are reporting lower demand for their inventories and so it can be assumed that companies will slow production which ultimately reduces the demand for copper, steel, and other materials. According to the Dow Jones, copper reached a five session low at $4.41 dollars per pound for September delivery, while August dropped 1.6% to $4.40 per pound, just one cent off from September. I don’t really find these numbers that surprising considering that the recession has extended well beyond the United States, while some believe it has been isolated to our borders.

In recent years copper has been the star on the raw materials market next to gold which is on its own playing field. I wouldn’t necessarily say the demand driving it was all here in the United States though. Both India and China have been producing a great deal of electronics that are heavily dependent upon copper. One such example is the influx of cell phones and now table PC’s such as Apple’s iPad. Production is in the millions for all of these devices which have really driven up the price and demand in those regions. It is also important to mention that the rising value of gold can be partially if not solely attributed to growth in electronics. It first came to my attention that copper was on the rise when there seemed to be an increase in copper theft even within the city that I live in. Individuals were stealing piping from construction sites and spools of copper wiring to later turn in for scrap. This is usually one of the first things that I hear about before I even watch the ticker for price fluctuation.

There are always smaller segments of manufacturing that rely heavily on copper alone, such as the heating and cooling industry and those organizations that produce electrical wiring for pretty big industries such as cable and telecommunications. But let’s face it copper is used in almost everything so its applications are wide spread. These organizations will greatly benefit from the price decrease, but all firms are still facing high transportation costs due to the price of crude oil. I can’t leave automotive out of the picture either because believe it or not, they still use copper, not just steel and fiber glass. Hopefully this will offset the financial impact of fuel, but I would guess it would be marginal at best.

 
The situation is extremely dynamic and there are always a host of variables. What some in the media world aren’t mentioning is that a copper mine in Chile, BHP Billiton’s Escondida has been idle for the last 10 days. Thankfully it isn’t because there are miners trapped; it is because there is a worker strike that has temporarily relinquished their responsibility to make deliveries of copper. This is in fact one of the largest copper mines in the world so a decrease in supply here would in fact have global implications, usually a price increase. The irony here is that the mine has had trouble meeting demand over the last few years and analysts had forecasted yet another short fall this year. The basic principle of supply and demand would generally hold true, but demand in the U.S has dropped. But I would not rely on copper as the litmus paper for American manufacturing. We’re still seeing growth, maybe a hiccup as we often have, but we’re still trending in a positive direction. There is a lot waiting and hesitation in every market due to the solvency issues of the United States government. The actions of the central banks and investment firms rely heavily upon the credit rating of the U.S. On a side note, Apple Inc. was found to have more liquid assets than the U.S treasury which I find pretty alarming. But back to the point that I wanted to make; manufacturing for the most part is very cyclic. Every industry that I have worked in generally has a slower period in the summer time. Moreover, industries such as automotive are going to be pushing their finished cars and trucks in the marketplace during this period. Much of what is going to be produced this year has been completed except for next year’s models in the spring. And because many of the manufacturers in this industry have moved towards a just-in-time or demand pull system, they won’t hold much raw materials in their inventories, and generally along with lean principles, neither will their suppliers. This includes having copper or other raw materials on order. 

This is all considered in the demand model. We react to weak numbers quickly, but I’m truly an optimist that is holding out. I’ve seen a great deal of optimism in American industries primarily because there has been a great deal of innovation. Innovation is one of those attributes that you look for to see if the optimists have came out of the dark and finally see a light at the end of the tunnel. I think the upfront research and development of the Chevrolet Volt says that the American think tank isn’t going anywhere. New technology that is moving this country forward would never have come to fruition in a country that has thrown in the towel. Copper is down for the time being, but on a global level it will flatten back out and start to rise. And the organizations that I worry about, such as the small and medium size manufacturers on Main Street are seeing a glimmer of hope. E-commerce is becoming more accessible and the ability to diversify has become a little easier, and they are exporting to other countries which helps generate revenue when things here in the United States get a little shaky.

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Manufacturing a Website for Manufacturing?

With the push towards e-commerce, you would expect that companies would place more emphasis on the inner workings of their website. My initial assumption was that most small business owners or medium sized firms didn’t really care if they had a website or not, but I am happy to report that I was proven wrong over time. The problem is that most companies don’t know how to use their website or have the means to design and build an appropriate one.

They understand the importance of e-commerce as a way to not only have a presence in search engines, but open their products and services to other countries without needing brick and mortar offices in those areas. It all really starts with a strategy. What do I need my website to do? In the case of manufacturing, which is the industry I have had the most recent experience, you’re looking at lead generation using an informative strategy. This means educating the user about your products or capabilities and then calling them to action. In other words, you establish credibility through the use of body copy, rich media content such as images and videos, and then provide the necessary link to contact; whether it is a form for a quote request or a number to call or in some cases, online chat.

Visual credibility really plays into an individual’s perception of what you can and cannot offer them, but design only means so much. If the site doesn’t function well and the user gets lost clicking through pages, then there isn’t really a point in providing a contact page because they won’t find it. Manufacturers are going to generally adopt an informative strategy, so you know what types of website content and contact methods that will be used, but what about the design?

I’ve never been much of a web designer, but I am certainly a marketer with the alignment of strategic planning in mind. I do understand the wondrous world of technology and how to get around in various software suites, but I’ll stress that it is very easy to get started and to improve a website. The first thing to do is to seek out a host for the website. Whether you decide to do onsite hosting or to use a provider, it is important to determine if you want the responsibility of server upkeep and maintenance. Secondly, do a little research on the keywords you would want to rank organically in search engines for. Using your company name is fine, but if you can find a domain without squatting, then that will help you get to the top of Google or Bing. If your product categories are what you want to rank for, I can almost guarantee someone has already taken those domains. However, you just will have to make sure to have pages with the titles in the URL that would help you achieve a certain level of search impressions and traffic.

Secondly, I’d build the website using a CMS or content management system such as Joomla! or Word Press. Both share much of the same functionality, but each platform has different plug-ins and styles of templates. Template files can be modified so there is a lot of room for customization. You have to install these into C-panel in order to use them, but once they are installed then the CMS becomes your interface to website creation. It reduces the need to learn some HTML, but as I’ve quickly learned, you can only avoid it for so long. You’ll want to integrate your branding across every page, but your home page or index page needs to be the core focus of your site. It tends to be the main page that individuals land on when searching for your company. The great thing about using templates and existing tools such as Joomla! or Word Press is the ability to envision your strategy. These templates often have sites up online that are examples of the template in action. You can usually get a good idea how the template will work for you from these examples. It is also important to look at what the competitors are doing, so getting some research up front about what your customers want and expect of you online and what your competitors are doing is very critical.

With the recent growth in social media, especially in B2C, I can only assume that this will grow in the manufacturing sector as well. I’ve integrated our social media accounts on our website and our blogs through simple icons and links. This provides not only links to more content, but this also impacts your linking structure which helps your page rank in Google. Without diving into the step by step details of building a site, you should modify the color scheme to match your industry. However, be sure to monitor the size of files and how you use your content. There has been a huge emphasis on site loading times, so larger photos and embedded videos increase the time it takes to load a page. As far as building the site, there are thousands of pages on Joomla! or Word Press site building, so this isn’t really the venue for it.

 
Some of the websites that I have stumbled upon recently are mostly images, some that don’t even have metadata to describe what the photo represents. Another major issue that I see with manufacturer’s websites is that they often do not have contact forms or contact information beyond the company’s location. Always provide a venue for contact, and because site widgets can easily provide contact forms, always have more than just a phone number. This could streamline the contact and quoting process. Moreover, always have real text not image files with text. At this present time Google cannot read text in images or flash files, although they have tested some technology in this area. The mistakes that have been pointed out seem to be the most common. It should not be very difficult to avoid these and there are plenty of Joomla! and Word Press developers that can build a site that is cost effective and very functional. This is the main benefit of using pre-defined templates instead of 100% custom designs. Cost is usually the biggest barrier to the investment.

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China: Product Labels Don’t Say It

In recent years, China has been growing rapidly despite the recession. Although, it doesn’t go without mentioning that even China saw thousands of factories close. Most of, if not all of the goods purchased in the United States are manufactured in China. Many citizens have moved deep from rural regions of the country to Beijing and other highly populated areas of the coast to work in factories. But what are the underlying issues in China, and how will those issues impact the country’s continued development. What environmental issues are there in China and how do they impact development and the economy? To really understand we’ll have to look at the following points:

1. What crime issues are there in China and how do they impact development and the economy?

2. What chronic diseases are plaguing the people of China?

What environmental issues are present in China?

     Kahn and Yardley write that China is in a dire environmental situation. Of all 560 million citizens living in metropolitan areas, only 1% of them are breathing air rated safe by the European Union. Although the country posts growth quarter over quarter, the achievement is paralleled with increased greenhouse gasses from coal usage. Coal is readily available to the country, but is one of the dirtiest sources of energy. Sulfur dioxide, a bi-product of burning coal, is responsible for acid rain not only in China, but the haze has carried to nearby Korea and as far as Tokyo, Japan. The air is loaded with heavy metals like lead and contains traces of the deadly substance arsenic. Children are often the victim of lead poisoning and cancer is extremely common. Not only are many finding it hard to breathe the toxic air, they can hardly drink the water. About 60 miles outside of Beijing, there are plots of land that used to be rice and agriculture fields, untouched and unbroken. Now, hundreds of chemical factories occupy the land. They spill their sulfuric acid and other toxic waste filled water into the Feng Chan River. One of the small tributaries that feed the river is so badly discolored it is called the little red canal. In the villages surrounding that portion of the river, the cancer rate is 30 times the national average. According to the Center for Remote Imaging, Sensing, and Processing or CRISP, pollution has extended from the rivers to the ocean where it has had an economic impact. In China alone, there have been 200 incidents of red tide reported in the last 10 years. In Hong Kong, a massive red tide bloom in 1998 was responsible for 32 million dollars in fish kill loss, which impacted the fishing industry in China. Over the span of all the incidents, estimates of losses top $240 million dollars. During red tides, people are warned not to each shellfish and other seafood that was harvested from the ocean. The pollution does not go without impacting the economy in a negative way. Lynch reports that injuries related to pollution including poisoning, cancer, and death cost China about 8 to 15% of its GDP. Also, in terms of production capacity, the country loses about 14 billion dollars.

     The economy in China continues to flourish. With the increase in industrialized production, factories dump toxic waste water into drinking water, which is also responsible for the red tide impacting the fishing industry. The air is filled with sulfuric acid from the burning of coal. The pollution has affected the ability for workers to produce goods and carry out their daily lives. Their economic growth is stifled by environmental injury cost. Cancer is impacting the workforce and the air is choking China.

What crime issues are there in China?

In an article on Reuters, Shipeng reports that China has a very serious crime issue sweeping the entire nation. Just from the early 1990’s to the early 2000’s annual crime doubled from 2 million to over 4 million crimes committed. The majority of these crimes, around 3.7 million, were theft, robbery, and burglary. This is due to the widening gap between the rich and the poor as the economy expands. Also in the report, the Ministry of Public Security, Wu Heping, was quoted saying that China is still in a period of high crime, but it has leveled out. Serious crimes committed such as murder and explosive attacks have dropped considerably. Sometimes policing the high crime ironically relies on crime itself. According to Xia (2006), the police force in China simply isn’t large enough to police the entire country. There are approximately 12 police officers for every 10,000 citizens, which is about 1/3 of western nations. Ill-equipped and underfunded, local police precincts have been using crime as income in order to operate. In fact, organized crime is greater than it has ever been in the country. Organized crime generates a hidden economy estimated to be worth 20% of China’s GNP. The sex trafficking industry generates approximately 500 billion dollars a year. One campaign in Shenzhen was aimed at getting rid of prostitutes in the area. Thousands of prostitutes were driven from the area, which also drove out their 10 billion in Yuan from local financial institutions. Sex trafficking continues to grow in China as the opportunity abroad disappears. Desperate for money, women are turning to prostitution, and organized crime has turned it into a market. Humantrafficking.org reports that there about 10 to 20,000 sex trafficking victims each year in China. Rapid economic growth along China’s east coast has resulted in migrations. This migration gives traffickers opportunity to lure women and girls.

As organized crime, sex-trafficking and theft and burglary take 

hold, the economy creates a further gap between the rich and the 

poor encouraging such crimes. China’s police simply do not have 

the resources to fight crime properly. In reality, many police 

forces rely on income from crime to operate. As long as the 

economy continues to grow at a phenomenal rate, so too will the 

crime rate. Unless China allocates funds to police forces to 

operate, and not from crime revenues, the country will continue 

its vicious circle.

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JC Gibbons joins the NAM

This month has been a very exciting one at JC Gibbons Manufacturing Inc. We are happy to announce that we have joined the North American Manufacturer's Association or NAM. We are very proud to be a company that makes American products and supplies American jobs. We are already proud members of the Precision Machined Parts Association or PMPA. Both organizations do their best to represent American manufacturing in front of the United States senate and congress. Our contributions and inclusion will help strengthen American pride!

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Getting Your Company On Facebook

Facebook has been a great resource for us to show the world our services at JC Gibbons Manufacturing. It can be a venue to show of pictures or videos of our products and services, but most importantly, it is a venue to keep in touch with our clients and potential clients on a daily basis. The site boasts any easy way to make a post and it has the ability for one-on-one chat which can be a great tool.

We think it will be a great tool for those that we do business with, so we wanted to make sure that this information is easily available. First off, visit the information page from Facebook about creating a page: create a fan page here.

Then you'll hit that green button in the top right corner to create a page, and you're off and running. It shows you how to create all the information for your business including adding a picture to your profile. It even shows you how to make contacts and how to use it to run ad campaigns similar to Google Adwords. It is just a great place to make connections.

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