Compared with the last recession in 1990-91, manufacturers today are (pick one): A) smarter, B) leaner, C) faster, D) just-in-time worshippers at the altar of Kan Ban, E) all of the above
E is right — which should be no shock.
Pick up any trade magazine, or even the Wall Street Journal, and you'll see articles extolling the virtues of computer-run systems that can track inventory and link suppliers to their customers via the Internet. It's a virtual world, a well-oiled capitalist machine lubed by a continuous flow of information, perfectly matching supply with demand.
You didn't hear that in the last recession, a decade and an eternity ago. We were just starting an unprecedented binge of investment for computer brainpower.
Now, as we slouch toward a recession, manufacturers face a compelling question: Will these new smarts keep inventories low, to help the U.S. economy emerge from the downturn more quickly than in past recessions?
Some economists say yes: This time around, we'll have a faster inventory correction, as economists call it. Translation: No massive overhang of unsold cars and washing machines piling up. Just as companies scaled back production quickly as the economy has cooled, so too will factories ramp up right away and rehire workers, once consumers resume buying.
Bingo! The economy comes back fast.
Earlier this month, I ran this concept by people at the National Design Engineering Show, that annual lovefest of high-tech factory solutions in Chicago.
Webster Plastics Inc. felt the pain in the last recession. The custom injection molder in Fairport, N.Y., used to be totally dependent on automotive customers. But in the early 1990s, carmakers "had huge inventories, and they shut us down," said Dave Hanna, sales manager, at the company's design show booth.
In 1991, Webster executives launched a restructuring. The molder diversified into new markets and got lean.
Even with better technology, the sudden economic slowdown has caught companies off guard. According to a recent survey by NAM, 18 percent of manufacturers said excess inventory is likely to persist into the second half.
At the design show, NAM President Jerry Jasinowski threw on the cold water of reality — he estimated that only about half of all U.S. manufacturers have any type of sophisticated inventory management systems.
The National Design Engineering Show may have gotten the techies all worked up. But will smart manufacturing help ease our economic pain? We'll have to wait and see.
Bregar is an Akron, Ohio-based senior reporter for Plastics News.