A sluggish economy and stiff global competition have hurt the manufacturing market, but Karl Heerdegen isn't running away from the niche. "The manufacturing market has taken a beating for the last three years," says Heerdegen, co-owner of The Northstar Group, a Buffalo Grove, Ill.-based distributorship.
When dealing with decision-makers in the manufacturing market, it's important to realize "they have always, and will always, gravitate to one of two concepts: does it save time or does it save money," Heerdegen says. During tough times, clients seek efficiency and demand added value from their vendors.
Recently, Heerdegen worked with a manufacturing firm that wanted a way to cut costs. Previously, The Northstar Group provided the client with large quantities of bar coded labels imprinted in two colors with the manufacturing firm's name. To save the customer money, Heerdegen suggested it switch to a black-and-white, bar coded label. "It lowered their cost without affecting the performance of the application," he says.
The client was pleased, Heerdegen says. And other distributors targeting manufacturing clients can relate: Applications that increase productivity, such as matching thermal transfer face stocks with new ribbons to print products faster, keep distributors inside their manufacturing clients' doors.
A Troubled Market
According to the National Association of Manufacturers (NAM), the manufacturing market hit a recession in 2001. That year, manufacturing Gross Domestic Product declined 6 percent while the rest of the economy rose 1.6 percent. According to NAM, the manufacturing market employs 2 million fewer people today than it did before the recession began. The sector lost 65,000 jobs in December 2002 alone, according to a recent issue of Manufacturing Metrics, a quarterly publication of Washington-based National Coalition for Advanced Manufacturing.
"Generally speaking, while there have been some embryonic signs of stability, they have yet to have a substantial impact on a weak and uncertain manufacturing output picture," according to Manufacturing Metrics. As a result, utilization of factory capacity remains weak. The 30-year average of capacity utilization in the manufacturing market is 80.4 percent, but the rate was 73.6 percent in December 2002. "Many analysts believe that overcapacity in the economy as a whole is a key reason for the weakness in business investment," Manufacturing Metrics states.
Consulting First, Selling Second
As the manufacturing market continues to recover with help from the private and public sectors, distributors succeed by helping manufacturing clients fight the economic slump. The long-term result for these distributors: grateful and loyal clients.
Mark Lewis has been working at Duluth, Ga.-based distributorship Data Supplies Inc.'s satellite office in Greenville, S.C., for five years. Three-fourths of his customers are in the manufacturing market. Lewis sells mostly printed products such as custom labels, stock labels and hang tags. Although his job title is sales representative, Lewis considers himself a consultant, aiming to save his manufacturing clients time, effort and dollars. "That's the way I approach everything I do," he says.
Lewis says his clients appreciate his ability to combine printed products. For example, many manufacturing employees use forklifts to pick packing-list items off warehouse shelves. Some of Lewis' clients used to pick all items on their lists and bring them to shipping managers, who would create separate, bar coded shipping labels for those items. At any given time, shipping managers would have stacks of packing lists, stacks of bar coded labels and piles of products.
Lewis now provides many of those clients with continuous or laser forms that include both packing lists and labels. They no longer have two stacks of forms, and shipping managers ensure "the right product is going out to the right place," Lewis says. Marrying the forms and labels reduces errors and clients' costs, he says.
When analyzing their manufacturing clients' operations, Lewis suggests distributors look for items with many labels (think lawnmowers or Barbie® toy cars), then create master sheets of labels for those products. A master sheet can follow a product down an assembly line. If the last person in the assembly line notices a label remaining on a sheet, he or she can place the label on the product. Plus, Lewis says, label kits impress people in charge of companies' bills of materials because the bills include only one item instead of 10 or more.
Providing Thermal Solutions
Although demand for conventional forms is declining, Lewis says distributors can sell continuous forms successfully in the manufacturing market. Unlike other industries that have switched to desktop printing, manufacturing firms still rely heavily on traditional forms because many of their applications require multiple copies and parts.
Heerdegen says more manufacturing clients recognize the need to improve their order processing and workflow systems, but most of his clients in the niche don't want to change existing procedures. "The advances are happening more so on the technological side of how they produce their products, not how they track them through their systems," he says.
But the manufacturing market has advanced "leaps and bounds" when it comes to labels, Lewis says. Perhaps the biggest advancement is the move from continuous labels to thermal transfer labels. Thermal transfer labels usually are imaged at the client's location by a heated printhead that contacts a ribbon coated with thermal ink, causing the ink from the ribbon to transfer onto the label and create an image. Because many manufacturing firms need variable data to track, ship and identify products, distributors say those firms are most ripe for thermal transfer label (and tag) sales.
Kara Gebhart, a freelance writer in Cincinnati, is a frequent contributor to Print Solutions. Email us your comments at bholt@printsolutionsmag.com.
Thanks to Color Craft Label Company, Memphis, Tenn.; Dealer Label, a PrintXcelSM brand, Terre Haute, Ind.; and Flottman Company Inc., Crestview Hills, Ky., for assistance.
Who's Who in the Manufacturing Market
When first approaching a prospective client in the manufacturing market, whom should distributor call on--head honchos, purchasing managers, shipping managers or engineers? "I don't go to purchasing people," says Mark Lewis, sales representative at Duluth, Ga.-based distributorship Data Supplies Inc. "I go through vice presidents, shipping managers, engineers--the ones creating products."
Lewis says shipping managers and vice presidents look for ideas to reduce the number of picking mistakes. People creating the products perk up and listen to new ideas more often than purchasing employees focused on cost savings, he says.
Karl Heerdegen, co-owner of Buffalo Grove, Ill.-based distributorship The Northstar Group, says sidestepping purchasing can be difficult. "The trick is to either delicately sidestep purchasing to get to marketing or make yourself so invaluable to purchasing that they funnel you through to marketing or the correct area," Heerdegen says. But unless a distributor has a good feel for a client's culture, he or she needs to start with purchasing, he says. "It always pays to give due respect to purchasing managers in the manufacturing market," Heerdegen says. "They've earned their stripes."
Market is Down, But Not Out
Some signs indicate the manufacturing market is fighting its way out of recession. According to a recent issue of Manufacturing Metrics, a quarterly publication of Washington-based National Coalition for Advanced Manufacturing, the sector's labor productivity continues to grow (the annualized gain was 5.5 percent in the third quarter of 2002). Average weekly hours of production increased significantly in November 2002 and December 2002 despite job losses, according to Manufacturing Metrics.
The board of directors at the National Association of Manufacturers (NAM) recently authorized its Campaign for Growth and Manufacturing Renewal "to put manufacturing back on a pro-growth track." Part of the campaign's goal is to combat manufacturing challenges while recovering from the recession. The challenges include global competition, which prevents most manufacturers from raising prices despite facing increased expenses.
On March 5, U.S. Commerce Secretary Don Evans spoke to attendees of NAM's Manufacturing Week event in Chicago about the challenges the manufacturing market faces. During his speech, Evans said that he has asked Under Secretary for International Trade Grant Aldonas to "identify the challenges facing American manufacturing, and outline a strategy for ensuring that the government is doing all it can to create the conditions that will allow you to maximize your competitiveness and spur economic growth."
