The annual FABTECH expo was held November 12-14 at the Las Vegas convention center. It is the largest metal forming, fabricating, welding and finishing event in North America and only comes to the west once every three to four years. The other rotating locations are Chicago, IL and Atlanta, GA.
FABTECH is co-sponsored by five industry-leading associations: the American Welding Society (AWS), the Fabricators & Manufacturers Association, International (FMA), the Society of Manufacturing Engineers (SME), the Precision Metalforming Association (PMA), and the Chemical Coaters Association International (CCAI).
The first day’s attendance was a record high of over 15,000, and show organizers reported that 25,903 attendees walked the more than 450,000 net square feet of floor space during the three-day show to see live equipment demonstrations, compare products side-by-side and find cost-saving solutions. Because of the Las Vegas location, many attendees probably came to have fun over the weekend and attended the show the first day. I visited the show on the second and third day so I missed the huge crowd of the first day. It was my first FABTECH show, and it was overwhelming in size and scope. I haven’t seen exhibitor displays as large since the heyday of the Los Angeles WESTEC show in the early 1990s.
I was curious to see if attendees were going to the show to browse or actually place orders. Judging by the number of “sold” signs on equipment and my interviews with exhibitors, attendees were placing orders and not just browsing. Exhibitors speculated that many were buying to take advantage of the “accelerated depreciation for the purchase of capital equipment” that will expire on December 31st, unless Congress extends the current tax rates (referred to as the Bush tax cuts).
The October issue of West Manufacturing News reported, “FABTECH’s annual expo comes as manufacturing continues to lead the American economy out of the recession…Offshored work is returning home and profits at manufacturing companies increased 25% in 2011.”
Out of the more than 1,100 manufacturers participating in the expo, 274 companies were displaying new products. There were 113 new products in the welding section alone, and the rest were displayed in the forming and fabricating, finishing, metal forming, and tube bending, pipe and wire forming sections.
I met the COO of Lincoln Electric, Christopher Mapes, while standing in line at Starbucks, and he arranged for me to have a demonstration of their new VRTEX® virtual reality arc welding training simulator. These computer based training systems are educational tools designed to supplement and enhance traditional welding training. They allow students to practice their welding technique in a simulated and immersive environment. The VRTEX® systems promote the efficient transfer of quality welding skills and body positioning to the welding booth while reducing material waste associated with traditional welding training. I actually got to put on the helmet and perform a virtual weld. I have watched welding in the shops I have represented over the years, but it was my first time to actually perform a virtual weld. I immediately saw how great the training system would be for training the next generation of workers in programs such as the Workshops for Warriors I wrote about in October.
The FABTECH educational conference held simultaneously with the three-day expo included an unprecedented number of sessions on such manufacturing topics as laser and water jet cutting, product finishing and coatings, forming and fabrication, lean, online and social marketing, metal stamping, tube and pipe ending, and welding. The educational sessions were available for half-day, all-day and a three-day program. The education programs and special events were packed with attendees.
There was at least one special event each day: On day one, there was a workshop on “Lean Manufacturing for Managers” and a “State of the Industry: Manufacturers’ Executive Outlook.” On day two, there were three special events: “Post-Election Analysis: How the Results Impact U. S. Manufacturing; the “American Jobs for American Heroes,” in which Steve Nowlan, President, Center for America (CFA), briefed attendees on the opportunity for manufacturers to hire military veterans for skilled manufacturing jobs. The American Jobs for America’s Heroes is an alliance of the National Guard, CFA, Corporate America Supports You (CASY) and the Military Spouse Corporate Career Network (MSCCN) to help 60,000 unemployed National Guard members, veterans and spouses find skilled jobs in the private sector. The final event was a presentation by Harry Moser, President of the Reshoring Initiative on “To Offshore or Reshore? How to Objectively Decide!” I attended the “Post Election Analysis” and “To Offshore or Reshore? special events.
According to the after-show press release, at the State of the Industry roundtable with manufacturing CEOs, the CEOs concurred that growth in manufacturing should continue for the next year; however, all said a stumbling block to growth is the lack of skilled workers in manufacturing. The CEOs emphasized that manufacturers need to be more aggressive in influencing parents of students, having students influence each other and have school be a more active voice in recruiting potential workers.
The Post-Election Analysis panel featured Washington insiders Paul Nathanson, Founding Partner, Policy Resolution Group, Omar Nashashibi, The Franklin Partnership LLP, and David Goch, Webster, Chamberlain & Bean, all of whom have long track records in representing manufacturing interests.
They discussed the so-called looming fiscal cliff, tax reform, and other issues that will impact manufacturers. Paul Nathanson said, “Manufacturers need certainty to plan and there are major challenges ahead because of tax increases with the expiration of current tax rates and new taxes under Obamacare.” He feels something will get done before end of year and doesn’t think that sequestration will go in effect.
Omar Nashashibi said, “The new Congress will look at tax reform. The expiration of current taxes and Obamacare taxes represents $5.4 trillion of tax increases. The President proposed 28% taxes for corporations, but that doesn’t affect 70% of businesses that are LLCs, LLPs, partnerships, or sole proprietorships.
David Goch said, “Congress will do what they have done in the past – a 6-9 month ‘punt.’ The continuing resolution for funding ends March 31st if the debt limit isn’t reached sooner.” He warned the audience not to be surprised if the “carbon tax” reappears. “A recent Brookings Institute report proposed a “carbon tax” that would result in $1.2 trillion revenue over 10 years. It would make economists happy as it encourages investment vs. consumption. It would make Republicans happy because there would be no new taxes, and it would make environmentalists happy.”
They all believe that Congress will reach a deal to at least move the deadline for a debt deal before the end of the year. All agreed that the manufacturing sector has gained influence in Washington over the past two years and encouraged manufacturers to get involved in advocacy efforts for the industry via their trade associations.
While I am an authorized speaker for the Reshoring Initiative, I attended Harry Moser’s presentation on Tuesday afternoon to see if he had any new data that I could add to my own presentation. I appreciated being reminded that W. Edwards Deming’s “4th Key Principle for Management,” in Out of the Crisis, was: “End the practice of awarding business on the basis of price tag. Instead, minimize total cost.” If companies had been practicing this principle for the past 20 years, we would have had far less manufacturing sourced offshore.
Moser’s Total Cost of Ownership (TCO) calculator enables companies to calculate the cost of all of the variables, including the hidden costs and risk factors, of doing business offshore. Moser stated, “Manufacturers have to look at the total costs of offshoring to reliance that the savings gained might not e as significant as they think…Once you factor in tariffs, shipping costs, increase inventor because of delivery delays, quality control and communication issues, it’s a financial win to bring certain types of manufacturing back to North America.”
Some of the new data included in his presentation was:
- 61% of larger companies surveyed “are considering bringing manufacturing back to the U.S.” (MIT forum for Supply Chain Innovation 1st Qtr. 2012)
- 40% of contract manufacturers have done reshoring work this year (MFG.com 4/12)
- Percentage of U.S. consumers who view products Made in America very favorably: 78% (2012) up from 58% (2010) (AAM June 28-July 2, 2012)
- 76% are more likely to buy U.S. product
- 57% are less likely to buy Chinese product (Perception Research Services Intl. survey 7/12, 1400 consumers)
According to the Reshoring library of case studies, the top four industries that have reshored are:
- Electronic equipment, appliances & components
- Transportation equipment
- Machinery
- Furniture
The main reasons why companies are reshoring are:
- Wage and currency change
- Quality, Warranty, Rework
- Delivery
- Travel Cost/Time
- Inventory
Moser believes that just by using the TCO calculator, 25% of manufacturing offshored could return to America, representing about 300,000 jobs. In conclusion, Moser recommends:
- Keep existing domestic sources
- Shift outsourcing back to U. S.
- Repurpose own offshore to serve the offshore market and incrementally invest domestically to serve domestic market.
- Shut own offshore facility and build new domestic facility.
In the after show press release, John Catalano, FABTECH show co-manager, said, “We’ve received great feedback from attendees and exhibitors. Attendees were impressed with the size and scope of the show and the vast array of new products and technologies on display. Exhibitors were enthusiastic and report that sales activity was brisk and leads were plentiful.”
Mark Hoper, FABTECH show co-manager, said, “If you can take the pulse of the economy by what’s happening in manufacturing, then you have to be optimistic that we are headed for economic growth, said. A constant theme I heard both on the show floor and at the seminars was that, while challenges and uncertainties remain, most manufacturers believe that their businesses are headed for continued growth in 2013.”
Mark your calendar to attend FABTECH 2013, which will be held on November 18-21 at McCormick Place in Chicago, IL.