Last year at this time, the North American manufacturing industry looked much different. Growth was still found in most factories then, leading to justifiable optimism. Not this year. Instead, we enter 2016 with a sense of foreboding. November marked the first decline in U.S. manufacturing activity in three years. Canadian firms have been hit even harder.
And yet it won't stay this way forever. If history proves anything it's that business cycles come and go, which here means that growth will return. Here are five things to do before it does:
1. Assess staffing. Downturns can be restorative if you use the time to review your team and find the weak spots. You need to be honest about this, because there will be some who aren't performing at the level you expect or need. Design a fair transition package for those you need to let go and don't be needlessly brutal. Hire a placement service to help those who need it and provide recommendations to those who ask for one. Then, spend time with the team members who remain. Remind them why you value their work and explain what opportunities you hope to provide over the long term.
2. Assess incentives. Your factory wasn't always suffering like this. And even in bad times some processes still work. Why? What can you do to replicate them? Take the time to diagnose your wins and then reverse-engineer incentives that encourage behavior that produces results. They don't have to cost much but they do have to be meaningful and directly tied to results.
3. Prioritize your factory's workload. Once you've audited both your employees and your work processes, it's time to focus effort. Start by making a list of your factory's highest priority projects. Next, arrange projects by value. (Sometimes the work that's due quickly isn't the most valuable.) Are there ways to combine effort and gain efficiency? Reorganize teams as needed and be aware that you may have to repeat this process as new customers come in and workloads shift.
4. Cut everything extraneous. While focus can help you to capture the highest-value opportunities, your floor may still be saddled with processes or equipment that get in the way of maximum productivity. Use downtime to cull everything that doesn't work or which creates unnecessary work. Whether that means selling or removing old equipment or reassigning workers whose skills are better deployed elsewhere, act quickly. A streamlined factory is always more likely to cash in on new opportunities as they arise.
5. Invest in new equipment. Manufacturing is a cyclical business. If you've planned well, you may have the option to draw on reserves to order advanced equipment. And if you haven't? Now is as good a time as any to make a list of software, tools and related equipment that could improve the productivity of your floor. Task your finance team with creating a distinct fund that will receive a small portion of profits as growth returns. Set rules that prevent drawing on this cash for ongoing operational needs. When the next downturn comes, you'll have excess cash for making investments at recessionary rates.
No factory manager likes preparing for the worst. The cyclicality of the manufacturing business leaves no alternative, which makes how you address down markets all the more crucial. Assess your staffing and incentives. Prioritize workloads and cut extraneous processes as you tune for maximum efficiency. And finally, always keep improving. Investments in new equipment and people are best made when no one else is buying.
John Mills is executive vice president of Business Development at Rideau Recognition Solutions, a global leader in employee rewards and recognition programs designed to motivate and increase engagement and productivity across the workforce.