the return of manufacturing capacity to North America is
shortening supply chains that used to stretch to Asia, it is
also beginning to highlight the inefficiency of transportation
and logistics even among North American Free Trade Agreement
That is a key
challenge facing precision metalformers ahead of the New
"There has been
consolidation among metalforming assets. Five major high-volume
stampers in Cleveland are gone. They got bought up, moved,
consolidated. Some of the capacity is going to Mexico. Mexico
is exploding," according to Steve Peplin, chief executive
officer of Talan Products Inc.
is among a host of American companies shipping automotive,
electrical equipment and myriad other parts to major U.S.
manufacturers Mexican plants, Peplin said.
president of Bamberg, S.C.-based Phoenix Specialty
Manufacturing Co., agreed.
"Companies are looking
(to streamline) the entire supply chain, but there are some
insanities. A parts guy in Chicago sends stuff down to
Mexicoand its not even labor intensive like
assembling wire harnessesto have it worked on, and then
sends it back to Michigan. Then its put into Ford
pickups," he said.
"You see how spread
out the supply chain is. That makes us vulnerable, and the
logistics costs have not been paid strict attention. It
isnt just transportation," Hurst said.
"(Companies) have raw
and in-process inventory all over the place, and it multiplies
at each sub-supplier," he added.
Some stamp, press,
tool and die and fabricating shops are switching from cell
manufacturing to line manufacturing to improve efficiencies,
according to Hurst. A part enters the line, moves a few feet at
a time to the next process, and then its complete. "There
are no buckets of inventory all over the shop floor," he
the same thing. "The machine shop is no longer making this
widget and putting the product here, then there. Rather, he
finds a common place, reducing the total cost," Hurst said.
Another way to reduce
inventory and related costs, Peplin said, is to share market
"We do commodities
metal management for customers. In a rising market, we buy
forward. In a declining market, we buy short," he said.
Customers get the
right price either way and "our material cost as a percentage
of sales stays the same," he added.