Episode 10 of the Australian Power Transmission Podcast
In this episode
Flexibility in manufacturing
Thanks for joining me for episode ten of the Australian Power Transmission Podcast, finally into double figures!
It is Monday, March 19th, 2012 and I’m Damian Harris, coming to you from beautiful Melbourne just after an amazing Australian Formula One Grand Prix. Congratulations to Jenson Button, with Mark Webber fourth and Daniel Ricciardo ninth in one of the best races for a while.
I’m recording this episode on a new Behringer Podcaststudio rig after a whole heap of messing around to get it up and running, so I hope the sound quality is up to scratch. Episode nine had some noises in it which I can’t explain, so goodbye M-Audio. One chance is enough.
*Business has been up and down across the globe in the power transmission sector over the last three months, with different economies experiencing various levels of performance. In North America, the Power Transmission Distributors Association has reported that the final quarter of 2011 saw its members experiencing the seventh straight period of growth.
The PTDA continues to monitor the economy and manufacturing demand – primarily in North America - and reports its findings regularly. You can check out the information on their website at ptda.org.
One of the major customers of individual PTDA members is Procter & Gamble, which is famous for manufacturing an extensive range of consumer products. P&G has just delivered the news that they are looking to trim $10 billion in total expenditure by the end of 2016, by various means. Various means always refers to job cuts across the board and usually severe cutbacks to production maintenance.
The jobs cuts have been put forward already, with a 10% reduction in non-manufacturing staff numbers, as well as cheapening packaging materials.
Anyone who supplies firms like Procter & Gamble knows that there will be a hold put on preventative maintenance measures – or at least a severe slowdown put in place. This will always have an adverse affect on the PTDA member businesses, both in revenues earned and stress levels raised when machinery inevitably fails and keeping it running becomes a breakdown situation.
*Timken is primed to invest $42 million into its Ohio infrastructure, manufacturing a new corporate facility for its Bearing and Power Transmission divisions. Getting involved in power transmission has become one of The Timken Group’s key growth strategies, so an investment of this nature which will see engineering, R&D, sales, customer service and marketing brought into the one facility is an obvious development.
Whilst I’m on Timken, they have also announced a 10% increase in the L10 life of its tapered roller bearing range. Timken attribute the performance increase to the prolonged continuous improvement efforts of design, manufacturing and material technology. All for a type of bearing that was first designed in 1898.
*Proving that all market segments except mining are having a real struggle in Australia at the moment, Murray Goulburn Co-operative will end milk drying operations at its Rochester, Victoria plant at a cost of 64 net jobs, whilst Mars Confectionery is planning to reduce its workforce by 38 staff at its Ballarat facility.
The pricing squeeze from Australia’s supermarket goliaths has been cited as playing a part in the latest round of rightsizing. Obviously, the high value of the Australian dollar is also having an impact on demand when exports are considered, putting a further negative tinge on the food manufacturing outlook.
*Australia’s south-eastern states of New South Wales and Victoria have experienced heavy rain and flood conditions, with regional centres Wagga Wagga and Griffith suffering the most. Griffith is renowned for both wine and rice production, with both industries remaining open but suffering losses.
Rice growers were coming under fire for the high amount of water used during the cultivation of the crop, however with the eventual breaking of the drought, these fears have now been supplanted with concerns of too much water.
*SEW-Eurodrive is once again promoting its Drive Academy, which will take place across Australia throughout 2012. As the complexity and functionality of variable speed drives continue to increase, so too the need for drive manufacturers to support their products with training and support.
SEW has set up training in modules that support their range, conducted at its in-house training centres in all mainland Australia state capitals.
*The Chevy / Holden Volt, which got a guernsey in episode six of the Australian PT Podcast, has suffered from disappointing sales in the US, forcing GM to idle its plant in Detroit for a month, starting today.
The Volt suffered from highly-publicised fires during crash tests and these have no-doubt hurt sales. The fires were later linked to leaking coolant coming into contact with the batteries. GM isn’t saying how elastic the demand curve is for electric cars, but at $41,000 in the US, the Volt is quite an expensive undertaking. They thought they could sell 10,000 a year, but are running at about 70% of this figure.
*Fresh from a round of right-sizing, Vacon has released an update to the NXP range of drives. The Finnish manufacturer has spent time and money in redesigning the top-of-the-line offering, which covers 0.55kW to 5.3MW, utilising both air-cooled and liquid-cooled technology.
Vacon’s new strategy appears to be to focus on the NXP, which is a high-end, fully-featured drive. They have opted to conformally coat their circuit boards in an effort to reduce dust and moisture ingress, whilst trading in some of the components for improved temperature stability.
*Also on the drive front, Nord Drivesystems has added an 11 to 22kW version to its SK200E sensorless vector range. Although aimed at the price-sensitive end of the market, Nord is quick to point out that the SK200E is fully-featured and rivals many higher-priced offerings.
*QANTAS unions have banded together in an attempt to keep heavy maintenance work done in Australia on both the Airbus A380 and Boeing 787. The airline that “still calls Australia home” is looking to consolidate existing maintenance facilities across the country, which will result in over 800 jobs going by the wayside, prompting three unions to join forces on the issue.
The Australian Workers Union, the Electrical Trades Union and the Australian Manufacturing Workers Union hope that a united front will assist in negotiations with QANTAS, whose safety record is claimed by the unions to be in part to maintenance operations being conducted in Australia.
QANTAS recently culled some catering staff in an effort to arrest a dramatic profit slide and we can’t be certain where the job losses will end. Airlines simply don’t make money, and the new generation of planes coming on tap are touted as requiring even less maintenance than those in the air now. Even more highly-skilled Australian workers are losing positions.
*Manufacturing flexibility has for decades been acknowledged as being one of the most important attributes a firm can have. Whilst manufacturing quality has occupied the front of the minds of scholars, with the development of six sigma, LEAN and other continuous improvement methodologies, the real skill has been in understanding market forces as they are happening, and the changes in demand they bring.
As the strategic landscape keeps changing and whole industries come to an end, it is important for firms to keep on the front foot and seek alternative income streams. Most manufacturing firms have a fully-skilled staff base that in most cases can make and market anything that is asked of them. The real issue in flexibility becomes the manufacturing infrastructure; can the machinery be turned to other things?
A story that came through from Associated Press on this issue refers to the efforts of Sappi Fine Paper, a paper mill in Cloquet, Minnesota. The writing is on the wall for many paper producers as the reach of the digital age broadens and the written word comes through in 1080p instead of on 80gsm.
Sappi Fine Paper will still take advantage of the forests in its geographic vicinity and process wood products at its mill, but the final product will not be pulp for paper manufacturers. Instead, the company is spending $170 million to convert its existing capital equipment to be able to turn out fibre products for export to textile manufacturers around the globe.
Currently employing 760, Sappi can see the change in demand and has acted pre-emptively to secure a financially-stable future. Strictly speaking, the company has changed focus, more than merely being a flexible manufacturer. This level of flexibility is known as a strategic approach and applies across the entire organisation.
It is no secret that manufacturing firms in western countries have a real struggle on their hands, due to a variety of reasons, with imports from low wage countries chiefly among them. Governments and business leaders have maintained the same mantra for a little while, suggesting firms work smarter and focus on high-end final products and services. I think that a renewed focus on flexibility is also important.
That wraps up the tenth episode of the Australian Power Transmission Podcast.
and, of course, www.australianptpodcast.com
Thanks to all for all the kind words, listens and downloads. I really appreciate the feedback and am happy to talk about power transmission until the cows come home. Look out, here they come.