Dim outlook, but progress, at N.J. manufacturers

A recent survey of manufacturing executives found they have much work to do to prepare for the next generation of manufacturing, with those in New Jersey having a dimmer view of the progress they are making to achieve strategic goals.

Manufacturing executives in the state said they found the Next Generation Manufacturing Study worth considering as they plan for their businesses’ future, particularly in competing globally.

The national study was completed last year, with the cooperation of the New Jersey Manufacturing Extension Program, a not-for-profit that advises small to midsize manufacturers on how to become more efficient, profitable and competitive.

According to the study, New Jersey manufacturers have more negative views of the progress their companies are achieving in several areas identified by researchers as necessary for achieving world-class status. Survey responders said they are making less progress in customer-focused innovation, development of superior processes, management of supply chains and engagement in global trade.

However, the state’s manufacturers are ahead of national responses in their investment in human capital and in sustainability.

“While the big picture may show that manufacturers in New Jersey have held water or lost a little ground, I think if you were to drill down, (you’d see) that manufacturers have weathered the storm,” said Clifford F. Lindholm III, president and CEO of Passaic-based Falstrom Co., which provides custom electronics manufacturing to the defense industry.

Lindholm said New Jersey manufacturers are in a unique position when planning for the next generation of manufacturing, since many are niche companies that serve a well-defined group of companies. This may have allowed some companies to grow without making some of the investments raised by the survey.

Some of the more negative responses from New Jersey executives may reflect the state’s character, he said.

“We just like to complain in New Jersey sometimes,” he said. “Being a manufacturer and running a business in New Jersey, I think you’re twice as likely to complain.”

But Robert Loderstedt, president of the New Jersey Manufacturing Extension Program, said manufacturers may have a negative view of the long term while they’re focused on the immediate future.

“You’re asking me why I’m not progressing up this next generation manufacturing ladder — I’m trying to stay alive,” he said.

The study will be useful for New Jersey manufacturers, said Loderstedt, who noted it raised a few red flags, including a lack of succession planning.

Without a plan in place, “you really run the risk of somebody buying the company and not really caring about the employees,” potentially shutting down the company and sending the jobs overseas, he said.

The study also shows the gap between what company owners say they value and how much they actually invest, Loderstedt said.

“When you look at categories like employees, innovation, sustainability, you typically don’t see the kinds of responses to the quantitative questions that show that they’re actually doing these things,” Loderstedt said.

Ryan Pfluger, plant manager for Jackson-based custom parts maker VEP Manufacturing, said the elements of next-generation manufacturing highlighted in the study were important to his business, which is owned by his family.

“The biggest issue is to try to get new employees that we can train and get productivity out of them,” Pfluger said.

And while his business has made sustainability a focus, it is challenging to bear the upfront costs of green-energy investments that can take many years to pay off, he said.

“We still use a lot of electric — there’s no way around it,” Pfluger said, adding that while VEP had explored installing solar panels, the end of government subsidies for the installation made it cost prohibitive.

The survey reflects issues that have long challenged manufacturers, according to Robert Staudinger, president and CEO of Chatham-based metal component maker National Manufacturing Co. Inc. But while many of the concepts are familiar to executives, he said, the study’s focus on the increasing velocity of change in manufacturing is useful.

“These are strategic issues for business managers to consider, and we always look for continuous improvement — so there isn’t an end to this, it’s a journey,” Staudinger said, adding that what may have been considered world class 10 years ago, may not be considered so today.

Staudinger added it’s helpful to consider outside perspectives in assessing future needs.

“You have to have an external view and an internal view to continuously challenge for improvement and growth,” he said.

 

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