Industrial Mechanical Type Businesses and Considerations

When people think of businesses often they do not think of Industrial Mechanical type businesses and yet much of the wealth generated in this country comes from such non-thought of businesses. Most folks do not realize that making things that run our civilization is big business and there is lots of it. Consider if you will the current economic condition in the United States. Things are really hopping and there is a lot of money to be made for those who can get things made on time and right the first time.

Consider all the needs for new refineries, pipelines, ethanol plants, wind generators, construction materials, bridges, aircraft and up-grading all the tooling to make Harley Davidsons, GM Automobiles and Peterbuild Trucks? What about all those tractors, locomotives, tanker cars and military vehicles too? Some one has to design, make and manufacture all these things.

There are structural pieces, ball-bearings, fittings, valves and hundreds of thousands of machined moving parts, which must be built at specific tolerances otherwise well they just will not work. This is something that America is well suited for, getting the job and the parts right the first time. Find a need and fill an important customers desires and you win. There are a million niches to fill too from Space Shuttle parts to the next cruise ship. So, do not sell industry short when considering a business category to hang your hat on.

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An Upside for Industrial, Mechanical, and Manufacturing Sector

It seems there is a lot of talk in the United States about quality manufacturing jobs. But, to compete with other countries and their low cost of labor, many manufacturing companies are buying robotic systems, and putting forth robotic mechanized assembly lines. It’s a lot cheaper to invest in a robot, amortize the cost of that equipment over a period of time, rather than paying for union workers, their pensions, and health care benefits.

Yes, I know that sounds like a mean-spirited thing to say in this day and age, but as a businessperson anyone that wishes to make a profit, maintain shareholders equity, and grow a business has to be thinking here. Luckily, there is some good news for industrial, mechanical, and manufacturing corporations right now the United States. Orders are up, and the global economy appears to be recovering. That means there are products to be made, and buyers waiting.

The supply chain is coming back to life, and things are looking pretty good. But before you jump up for joy and assume that this means more people will go back to work. Perhaps you should consider what I have to say. Most of the manufacturing equipment being bought up right now is high-tech equipment, the kind that operates with fewer employees, not more. Indeed, there will be people who will have to run many of these machines, but they will not need the hundreds, or even thousands of people on the line to produce the same amount of goods as before.

In fact, there was a great little article recently in Industry Week titled; “Manufacturing Technology Consumption Up 138.1% – February Consumption Totaled $329 Million” written by the IndustryWeek Staff and posted on April 11, 2011. The article stated in the teaser paragraph: “February U.S. manufacturing technology consumption totaled $329.43 million, according to AMT — The Association For Manufacturing Technology and AMTDA, the American Machine Tool Distributors’ Association. This total was down 10.9% from January but up 99.3% when compared with the total of $165.31 million reported for February 2010.”

The labor costs in China are also creeping up, along with inflation there. No longer will people work for 18 to 20 hours a day, 6 to 7 days per week. That sort of slave labor isn’t going to happen anymore. Rather than one dollar a day, these folks wish to live in the middle class, and that means they need to make twelve hundred dollars per year (which will increase after China’s currency is properly reevaluated). Already, that is an increase from one dollar a day to nearly 3 dollars per day. Even China is buying more automation equipment for their factories to become more efficient. In many regards this will level the playing field for manufacturers worldwide, but it doesn’t do very much good for employment in any country.

So on one hand this is very good news for those in the manufacturing business, but for many of the union employees who have pushed very hard to increase their salaries year after year, this doesn’t mean that they will automatically be returning to work to those once previously high-paying jobs. Indeed I hope you’ll please consider all this and think on it. If you have any comments, questions, and/or concerns please shoot me an e-mail.

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