Laurie Harbour, president and CEO of Harbour Results Inc., which does operational assessments of businesses, said her customers aren't seeing greater than about a 10 percent difference in cost between buying tools and parts made in China versus here. The labor rates are rising 15 percent a year in China, but the bigger issue could be they are now making about a $2 an hour more than Mexico.
“Mexico's industry is not just automotive; it's appliances and everything else. There are new plants popping up in Mexico that will become as much of a competitor,” Harbour said during a panel talk about macro trends impacting polymer manufacturers.
Mengel said he thinks reshoring from China to the United States is happening, but it seems to be more anecdotal than data driven.
“It's not showing up in the GDP,” he said of the gross domestic product.
Manufacturers probably have more to worry about from the smaller, aggressive countries taking on China, India and the United States, according to Chris Kuehl, an economic analyst for the Fabricators and Manufacturers Association.
“If you look at where the expansion is taking places it's in place a lot of us have never heard of. The next big wave is likely to be some of the African states,” he said naming Botswana and Mozambique.
China isn't going away, but U.S. manufacturers will see a more diverse set of competitors from Latin America as well, Kuehl added.
“The challenge right now is that we are an early global economy and it's almost impossible to predict what country or what industry will explode where,” he said.
Closer to home, the panelists talked about how to establish accountability in the workplace as well as how to develop a positive work culture for attracting and keeping good employees.
One way to hold people accountable is to set standards and then have one-on-one meetings to talk about what's working, what isn't, and what can be recalibrated so the next month is stronger, better, leaner and meaner, said Jack Daly, a sales management expert who is the only keynote speaker invited back in the MAPP conference's 14-year history.
“That process can work for your business,” Daly said. “You just need people who will schedule it and make it happen.”
The difficulty in finding the right employees is compounded by the skilled labor shortage. Small- and mid-size companies often feel like a farm team training employees who will leave for another dollar an hour, Kuehl said. Part of the problem is that only 5 percent of U.S. high schools still offer an industrial arts program, he added.
“The rest do not. They are all college-bound [programs],” he said. “I taught college for 15 years and there were a whole lot of people who weren't happy. They were smart, motivated and intelligent. They were kinetic learners. Twenty-five percent of the population is a kinetic learner. They learn with their hands. They want to make stuff. We have miserably failed that population and it's to our detriment.”
He suggests businesses get more involved with their communities, make sure trade schools know they're paying attention, and let kids know what careers are out there for them.
“It's going to be slow. It's going to be frustrating and some people are going to be a lot more interested in hearing from you than others,” Kuehl predicted.
When good employees are hired, Daly said businesses can provide them needed training by leveraging the Internet. He recommends online videos, which allow people to learn when they're ready whether that's at the plant or elsewhere.
Mengel said internship programs for college students taking courses with an industrial focus are a good way to find skilled employees and show off a work place with a strong work culture.
“You need to bait the hook,” he said.
Harbour noted results of a study that says 40 percent of high school seniors aren't ready for a four-year university.
“But we as parents put them there,” she said. “There's a whole disservice to them. We need to get the parents to understand that our jobs are good jobs and you make good money.”
Marketing or sales?
The panelists also answered an audience question about whether marketing really matters. Would companies just be better off to have a good sales staff?
Mengel said marketing definitely matters because it defines a business and what customers can expect.
“We have relationships and leverage them for sales but we don't leverage our uniqueness,” he said.
Harbour put it this way: “You have to know your niche. You have to market that niche and you have to gather the intelligence to grow it, brand it, and get it out in front of the world.”
Daly questions the corporate title senior vice president of sales and marketing.
“How the hell is that supposed to work?” he asked. “Every moment you're on one side of the house you're not on the other. They are extremely different disciplines and both require a lot of attention.”
To illustrate the importance of marketing, he pointed to people standing in the rain overnight to buy the next Apple iPhone or the latest bottle of wine from Silver Oak in Napa Valley. Those businesses started out as tiny firms that put a big emphasis on marketing, Daly said.
“Focus on marketing and creating perceived value and your firm will grow and you'll never have a question about whether you should be marketing,” he said.