On September 13th, the New York Times reported that the institute for Supply Management announced an uptick in manufacturing for the first time since the recession. The index rose to 52.9 from an abysmal 33 at year’s end 2008. Is this cause for celebration? Well, like the folks at any auto rental company besides Hertz say; not exactly. But it is cause for encouragement. While we haven’t returned to 2005-2006 levels (mid 50’s), the index reflects a stemming of the rapid deceleration in the manufacturing sector of America’s economy.
While it comes as a surprise to those of us who thought America had discontinued manufacturing completely, the uptick means that many who have been laid off are actually being called back to work, and that inventories that were allowed or even forced to dwindle are being replenished. But keep in mind, this isn’t growth, it’s replenishment. Will there be growth? Speculators are very cautious.
The Times selected Wisconsin as the focus for its examination as Wisconsin has the largest share of its labor pool employed in manufacturing, 17%. That said, Wisconsin’s only real growth hasn’t come from major equipment manufacturers like Rockwell Automation, but rather from Miller Beer. It appears that hard economic times benefit the manufacturers of some products, anyway.
But the slow roll to growth in manufacturing drives a question or two for supply chain managers. For those who rely on companies like Rockwell and other manufacturers; what happens if the bust goes boom, and the usual suspects have cut costs so deeply and delayed improvements for so long, that they can’t flip the switch to full tilt manufacturing? What happens if the new domestic manufacturing sector has constricted so tightly that new cost structures, longer supply cycles and even system transitions become facts of life. Well that would be challenging.
But if the last few years have taught us anything, it’s that those challenges are no longer the exception. So supply chain managers that aren’t already agile, better learn to be agile. If and when growth comes, we don’t caught wondering where our next order will be placed.