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2020: A New State of Wisconsin Manufacturing

Friday May 1, 2020, Dane Manufacturing Inc., Author – Nicholas Stuhr

As the world contends with the social, political, and economic impact caused by the novel-coronavirus, Wisconsin manufacturers are left to keep vendors, employees and customers calm –which is made more difficult by public officials lacking the assertiveness to confidently provide answers needed by manufacturers across the state and country.

As uncertainty looms, many manufacturers have evaluated pivots into medical supplies and other necessity-based products in attempt to offset the temporary (or permanent) loss of once normal business activities and customer accounts. Others anticipated the situation and made strategic pivots in the early months of the COVID-19 spread; primarily while it was still an isolated situation in Eastern China.

One example of a successful pivot is Ohio based manufacturer Bullen Ultrasonics, which made considerable investments in automation in 2019 and kept a careful eye on the COVID-19 situation in China in late 2019 and early 2020.

“Bullen Ultrasonics has limited raw material requirements, as the majority of our material is customer-supplied,” offers (Beatty) when asked about any supply chain disruptions. “A few months ago, we had concerns about sourcing materials from China, and increased our purchases and inventory to adjust accordingly. Due to this foresight, we have not had any delivery issues.”

The company also points to a couple of key investments that have allowed for maintaining production levels and standards. “We spent most of 2019 focusing on automation, improving cross training, upgrading our quality system, and taking steps to enhance our IT infrastructure. All of these initiatives have paid dividends during this time,” offers Beatty.

Bullen has also spent much of the last three years focused on improving company culture, with a focus on reinforcing communication and trust within each team. “During times of stress, like this period, these types of initiatives have created an ability to have honest conversations with one another. We have been able to directly address the fear present inside and outside the company,” he states.

“Ohio Manufacturer's Investments Pay Off During Crisis”                                  By: Jeff Reinke                              Mar 27th, 2020 
https://www.manufacturing.net/operations/article/21125032/ohio-manufacturers-investments-pay-off-curing-crisis

 

Bullen made the decision to stock inventory in the event the COVID-19 situation scaled as rapidly as feared. This, along with the investment in automation, allowed Bullen the ability to maintain manufacturing capacity through the utilization of equipment and process automation. These decisions have allowed Bullen to stay relevant, operating, and profitable during the first two quarters of 2020, an outcome not experienced by many of the nation's manufacturers.

Dane Manufacturing has been focusing on the correct balance of skilled labor and process automation for nearly two decades. The investments made by Dane Manufacturing weren't in preparation for a pandemic, but rather a safe, sustainable, and profitable manufacturing floor where employees could perform at their best; all while maintaining the confidence that the company was providing the right resources to keep them safe and their careers stable in the highly competitive manufacturing environment in which Dane operates.

The COVID-19 pandemic has created the time and space for many manufacturing companies to pivot inwards, and keep a closer eye on people, culture, and wellness during the crisis. A wellness focus bonds an organization and reminds us all that we operate in a codependent business ecosystem where the managerial leaders are just as important to the organization as the factory workers that produce, assemble and package goods. Author Stephan Gold provided the following insight into wellness focused efforts:

“The social and economic turmoil unleashed on our society by the spread of the SARS-CoV-2 virus has created a level of apprehension not seen in this society since the financial crisis, or perhaps even since World War II. Anxiety is compounded by the 24-hour news cycle, social media, and global messaging apps. Misinformation travels around the globe while the truth is still putting on its shoes.

Between home quarantines, meeting cancellations, travel restrictions, supply chain complications, budget cuts, personal concern about contagion, and more, every business feels the effects of this public health crisis. In the face of all these challenges, employers have an opportunity to alleviate some of their employees’ stress by providing tools to ensure their mental well-being.

The companies aren’t pitching mindfulness as some magic cure for the stress of the business world. These tools won’t eliminate the underlying concerns afflicting employees. Rather, they are intended to help build resilience. Circumstances will change, events will unfold that disrupt our lives. How people respond to these changes—their level of acceptance—determines their resilience and ultimately their happiness. Mindfulness trains us to build a wider space between outside stimulus and our response by teaching us self-awareness—of one’s thoughts, emotions, and physical reactions occurring in the body at any given moment—and to be aware of what’s going on around us. Deep awareness of the present moment transitions us away from our habitual state of planning, worrying about the future, and reminiscing and regretting the past.” 

“Reducing Employee Stress in a Time of Widespread Disruption”                     By: Stephen Gold                           04/03/2020 

https://www.mapi.net/blog/2020/04/reducing-employee-stress-time-widespread-disruption

Dane Manufacturing's leadership has worked feverishly to secure SBA backed loans through the Payroll Protection Plan and has committed to keeping all employees on payroll while this storm is weathered together These actions have created continuity and congruence of the company's goals and vision. Led by Troy Berg (CEO) and Mike Lisle (President), Dane Manufacturing has instilled the Company's long-term values into the very bloodstream of the organization through confidence and action. Dane Manufacturing's focus on wellness hasn't come through large corporate initiatives, it has come through commitments made, and commitments kept to the employees of Dane Manufacturing, its customers, vendors and community.

So, what comes next? Unfortunately, none of us have a crystal ball laying around to provide the answer. What we do know is that whatever comes next will be different than the world that we used to live and operate within. It's hard to imagine a scenario of winners and losers post COVID-19 because the manufacturing world is so interconnected and is not a zero-sum entity. Rather, we will need to focus on individual wins as a part of a larger community of manufacturers. To accomplish this, there are some key factors within the manufacturing space that many organizations and legislators will be forced to embrace if they wish to maintain manufacturing solvency during and after the COVID-19 pandemic.

Tougher trade regulations with China

"Democrats and Republicans alike are fed up with unfair Chinese trade practices.

As the initial shock of the coronavirus pandemic is gradually replaced by collective determination to not only grapple with the nation’s current critical medical equipment shortages but also prevent the repetition of similar disasters in the future, Americans are coalescing around a new commitment: getting tough on China. 

New polling reveals that the bulk — 69% to be exact — of the U.S. general population, regardless of party affiliation, is united in favoring the tough trade policies that the government has recently enforced against China. Of those surveyed by The Harris Poll, 50% called for even tougher action, and 73% of Americans favor reinstating more tariffs should China fail to uphold its end of the U.S.-China trade deal’s “Phase One.”

Before we launch into more, let’s be crystal clear: Bigoted attacks against Chinese nationals and Chinese-Americans are abhorrent and must come to a complete stop. COVID-19 knows no borders and has devastated communities all over the world. People are suffering — this is true in America as it is elsewhere. Attacking people for their origins is not only oppositional to America’s founding philosophy but also counterproductive. Our scrutiny must turn to the Chinese government instead.

China has long abused international trade law to unfairly advantage its industries though industrial subsidies and currency manipulation on top of egregious human rights violations.

In the short term, this has meant that corporate America has benefitted from bigger paydays while America’s factory workers floundered, withering communities around the country. In the long term, the consequences have been even more far-reaching and perhaps unexpected for some.

The stressors the coronavirus has placed on America’s healthcare system has exposed the fragility of our national stockpiles and our ability to manufacture the goods our nation needs in times of emergency.

We can only hope that today’s global pandemic will remain a once-in-a-lifetime experience, but we cannot remain naïve to our vulnerabilities. 

Decades of offshoring America’s manufacturing have undercut our nation’s ability to respond to crises like the pandemic. Our nation’s supply chains for crucial medical equipment are in some cases hopelessly entangled by dependence upon other countries — pharmaceuticals are a prime example of this — and our manufacturing capability winnowed down to the point of impotence in far too many scenarios."

“Americans United in Calling for Tough Action Against China, According to New Polling” Author: Cathalijne Adams        April 9, 2020 

https://www.americanmanufacturing.org/blog/entry/americans-united-in-calling-for-tough-action-against-china-according-to-new

Companies like Dane Manufacturing have been embracing and investing in vertical integration for decades to compete with companies which exploit China's unfair practices in manufacturing. These infrastructure investments have proven profitable for both Dane Manufacturing bottom-line, and for the employees of the company as it has provided professional growth opportunities, training resources, and enhanced compensation packages.

It is time for suppliers and vendors to evaluate their affiliation with Chinese manufacturers into the future. As stated in the quote above, "COVID-19 knows no borders and has devastated communities all over the world. People are suffering — this is true in America as it is elsewhere."  It is not implied or suggested that we turn our backs on neighbors across borders, but rather that we ensure American manufacturing is healthy and sustainable; and that the American factory worker has a gainfully employed future. Community value should trump commerce value, and the COVID-19 pandemic has shown us that in quick fashion.

"Buy America" Focus

As a secondary or tertiary effort to tougher trade regulations with China, it will become paramount that US based companies buy from American manufacturers to aid in our social and economic recovery from the COVID-19 pandemic. The medical supply and PPE industry has been leading this initiative since the first case of COVID-19 was confirmed in the US.

In New York State, legislation was signed to ensure "Buy America" became a permanent fixture of the State's economy and has set an example for other states to follow.

"Language to maintain Buy America was included among the many other things in the nine bills that make up the New York State Budget, which was passed on April 2 and signed into law by the governor on April 3. The state’s Buy America requirements had been set to expire on April 15 of this year.

Under the law, all structural steel and structural iron used in state and road bridge construction projects with contracts worth more than $1 million will be required to be Made in America. Buy America already has been beneficial to New York, as several of the state’s biggest infrastructure projects have used American-made structural iron and steel, including 110,000 tons of steel to help build the Mario M. Cuomo Bridge, 11,500 tons of steel for the Kew Gardens Interchange and 6,850 tons of steel for the first two phases of the Kosciusko Bridge.

The same week we were in Albany, New York Gov. Andrew Cuomo declared a State of Emergency due to the spread of COVID-19. Since then, New York has become the epicenter the coronavirus outbreak. Cuomo has been on the front lines, trying to meet the needs his state is facing, and putting a call out for much-needed medical supplies.

The United States already is ramping up its manufacturing of PPEs and ventilators, and there’s serious discussion about reshoring critical manufacturing of pharmaceuticals and other vital medical supplies. Meanwhile, there’s talk that Congress will finally pass a robust infrastructure investment package in the coming months to help kickstart the economy (which is a good idea).

Buy America will be critical in these circumstances. These preferences ensure taxpayer money is reinvested right back into local communities, supporting good-paying jobs and the economy, rather than being sent overseas to the lowest bidder."

“New York Makes Buy America Permanent, Setting an Example for the Rest of the Country”   BRIAN LOMBARDOZZI      APRIL 6, 2020 

https://www.americanmanufacturing.org/blog/entry/new-york-makes-buy-america-permanent-setting-an-example-of-the-rest-of-the-

Dane Manufacturing, along with other Wisconsin manufacturers, is hopeful that Governor Tony Evers will follow New York's lead and provide the necessary leadership to Wisconsin legislators for similar initiatives.

Back to Business

As the "Safer at Home" restrictions are lifted and the state and country try to regain a sense of normality, it will be critical to manufacturers that operational liquidity is obtainable. The CARES act, however beneficial during the COVID-19 pandemic, is not intended as a long-term stimulus program.

"The CARES Act is essentially a rescue vehicle for the economy. It’s not a long-term stimulus package, but rather a short-term emergency spending package to provide a specific injection of funds right now.

We’re facing a dramatic economic slowdown. Businesses don’t have the capital they need to operate because there’s not a lot of commerce going on. People are staying safe, staying inside and spending less money than they ordinarily would, and that has an impact on the economy generally and businesses specifically. The CARES Act is designed to provide capital for businesses and capital for families to weather the crisis."

“CARES Act Offers Support for Manufacturers Affected by COVID-19”           NAM News-Room April 8, 2020 

https://www.nam.org/cares-act-offers-support-for-manufacturers-affected-by-covid-19-7658/

Dane Manufacturing and scores of other manufacturers across the state and nation rely on financing vehicles for capital expenditures and infrastructure investments; both short and long term.

The enormity of the US manufacturing industry will require large financing and special funding initiatives from both private and governmental entities to perpetuate the solvency of the industry. Perhaps more important than the availability of liquidity is the willingness and resolve of our state and nation’s legislators and financial institutions’ commitment to working with manufacturing companies of all sizes to maintain the confidence of business owners and employees alike.

"The Federal Reserve signaled Wednesday (April 29, 2020) that it will keep its key short-term interest rate near zero for the foreseeable future as part of its extraordinary efforts to bolster an economy that is sinking into its worst crisis since the 1930s.

Chairman Jerome Powell noted the gravity of the downturn caused by the coronavirus outbreak and made clear that the Fed would continue to do all that it could to provide support.

Speaking at a virtual news conference, Powell said he believed the viral outbreak would imperil the economy for potentially a year or more, particularly if a vaccine or an effective treatment isn't developed before then. He warned that a deep and prolonged recession could cause devastating damage by forcing businesses into bankruptcy, keeping unemployment high and eroding the skills of idled workers.

“It will probably take some time for us to get back to a more normal level of employment and ultimately, maximum employment,” the chairman said."

“Fed Likely to Hold Rates Near Zero for Months”         By: Christopher Rugaber              Apr 29th, 2020 

https://www.manufacturing.net/economics/news/21130991/fed-likely-to-hold-rates-near-zero-for-months

Regardless of the how the COVID-19 pandemic is handled by state and federal legislators, the people of Dane Manufacturing are reflecting on the company’s history, and lessons learned from a 100-year business. Dane Manufacturing has endured every bull and bear market since 1917, and has proven it has the resolve and determination to be successful in the best and worst of economic times. Dane Manufacturing’s commitment to its employees, vendors and customers has galvanized the individuals and companies within its reach and provided the confidence that every day moving forward will be more productive and profitable than the last.

Together we’ll make it through to the other side of this pandemic, and companies like Dane Manufacturing will lead the way. It’s a feeling that’s alive throughout the company; from the factory floor to the office of the President and CEO.