January Perspective - Fastener + Fixing

Feb 01, 2018
National Machinery LLC, Andrew H. Kalnow, owner & CEO

Whatever one might say or think, things have not been dull on the American scene. Talk about surprises. If BREXIT thought it had top billing the stunning victory of Donald Trump in the American presidential election stole the show late in 2016. Andrew Kalnow

Now, in 2017, and going into 2018, Trump still captures media headlines almost daily. The constant clamour and controversy emanating from the White House has much of the world aghast. Here in the States, it leaves many Americans severely strained by political polarisation, while the rest of us are simply numb from the ceaseless drama and antics.

The surprise of 2017 was that the Trump revolution has had little significant change to show so far for all its bombastic ways. One major example of this, the border wall with Mexico and rampant trade protectionism, probably comes as a major relief for many business people in the States and around the world. It’s one thing to institute tariffs against egregious anti-dumping, and another thing to spark international trade wars that would undoubtedly disrupt supply chains and, perhaps, destabilise the world economy.

Trump will succeed (as it seems as I write this article) in bringing about a major overhaul of the US tax code. He did promise this. With his promise of the tax overhaul, he also promises vibrant economic growth and more job creation in and for America. In fact, Trump contends that ‘his’ new tax programme may well stimulate the American economy to an ongoing 5% growth rate, a rate which has not been seen for decades. Although most economists view Trump’s 5% GDP growth as unrealistic, the US economy is in fact healthy. Recently released industrial production statistics show a 3.4% year-on-year increase. Capacity utilisation is relatively strong at 77.1%. Moreover, the Wall Street Journal’s most recent survey of economists echoes a very positive outlook for the US economy. This includes 90% of the economists surveyed stating that the Republican tax bill will increase the pace of economic growth over the next two years. 

A looming threat

There may well be dangers, however. This is particularly true for manufacturers, including the fastener industry, if Trump’s goal of fiscal stimulus does in fact succeed as he envisions it. When the American economy, with its modest growth rate, has been free of recession for eight years, a near doubling of the GDP growth rate could well lead to an overheated economy. Whether a bursting bubble again occurs as in 2008, or just the onset of a true recession, would be the question. 

On a more mundane (but quite pertinent) level, what about workforce availability and cost of labour, in particular, for the fastener production business? Are machine operators and skilled machine maintenance personnel at a surplus? Is the cost of labour, with likely wage inflation and almost uncontrollable healthcare costs, bound to be a greater and greater problem? When I travel the world I hear again and again that machine operators are in short supply, and that younger, new hires are more difficult than ever to attract and retain in production positions. What can be done to counter this trend?

Modernisation and technology to the rescue

The challenge of rising labour costs, and finding and retaining skilled machine operators and machine maintenance people, is a worldwide issue. I hear about it everywhere I travel, even in China. With the population of cold forming machines and experienced operators/maintenance staff getting older and older – and pushing to retirement every year – there is a slow burning crisis in human resources in the industry. Older style and aged machines require much more know-how to operate than new equipment with modern electrical controls.

The production speeds and uptime of newer equipment are such that fewer operators are required. This ‘technology solution’, whereby modern equipment is deployed to address a critical shortfall in workforce numbers and skill level can be a double win when capacity and productivity gains are also achieved by virtue of greater machine production speeds and uptime.

At National Machinery, we offer industry leading solutions. Our family of FORMAX® cold forming machines continues to lead the pack in speed, reliable precision, and quick changeover. Meaningfully lower labour costs per unit of output are achieved with the greatly reduced changeover times through our FormaPak quick-change system or our robotic option for larger machines. The higher production speeds of FORMAX machines earn a further payback. Younger and/or newly hired workers are attracted to FORMAX equipment compared to older equipment and more basic competitor offerings. These modern machines are technology at work and also boast state of the art electronics. This is also true with National’s line of SMART thread roller machines, following our recent acquisition of SMART Machinery Srl.