Business outlook positive
Predictions for 2018 were virtually all positive, ranging from solid enthusiasm to cautious optimism. Strongly positive, Guy Bucey, Inovabed, said “This year was great, next year I’m excited for. We’ve seen continues growth over the last three years. Based on our projections and talking with our vendors and customers, 2018 may be the best year yet.”
But some sounded a note of caution. Jason Susnjara, Thermwood: “2018 will be similar to 2017. Even though it has slowed somewhat due to the natural disasters that occurred earlier this year (hurricanes and fires), eventually we, as a machine manufacturer, will see a benefit from the rebuilding of those affected areas.” He also raised concerns about material supply issues and costs affecting the industry. Amanda Conger, executive director of the Cabinet Makers Association, spoke for her members. “CMA members are cautiously optimistic about the future,” she said. “2017 was an incredibly busy year for most small shops, but they are seeing the usual seasonal slowdown and are not sure what the early part of 2018 has in store for them.”
Casey Bell, Bellmont Cabinets, echoed some of those sentiments. “Speaking for the kitchen cabinet industry, the overall market should be one of growth,” he said, but he added a caveat. “There will be some that experience really strong growth and others that will suffer pretty badly. More than ever, manufacturers need to have current product offerings if they want to grow.”
Another positive voice comes from Jens Schulz, Leuco. “From our perspective, we see a positive trend going into 2018 and we believe it will hold through 2018,” he said. “In particular in the mixed materials side have we seen a strong growth tendency.” He raised concerns about political uncertainty and the potential of tax reform to affect 2018 in both negative and positive ways.
T.R. Herzong, Accu-Router, sees 2018 as “slightly better, trending up.”Although household income and existing home sales are down slightly, consumer confidence is up,” he said. “If Congress can pass tax reform, all the better. China's recent commitment to convert to electric cars in the next 10 years should keep oil down.”
Challenges for 2018
Among the challenges cited for 2018 are changing consumer demands, overseas competition, a lack of skilled labor, and across-the-board changes in industry.
“Consumer demand for better, cheaper, and faster products is a perpetual pressure on wood manufacturers,” said Paul Losavio, Vero Software. “The challenge for manufacturers becomes how to improve efficiency and quality in every business phase, which ultimately keeps costs lower. Therefore, businesses need to improve not just their manufacturing capabilities, but every aspect of their operation, from the sales/quoting process to the design phase, through to manufacturing and delivery.”
According to Jens Schulz, Leuco, “Skilled labor is the number one challenge, not just for Leuco alone, but across the woodworking and related industries. Recruiting, educating, engaging, and retaining skilled labor has become increasingly more difficult as we are competing with more and more “glamorous” high tech companies. We are having to completely redesign our employee engagement program to get a strong foundation for the future. Even in our physical facilities, we are having to give consideration to how to become more attractive to prospective employees.”
Guy Bucey, Inovabed, suggests the industry look in the mirror to attack the skills gap. “I continue to hear everyone talk about how there isn’t a large enough pool of people to hire from and that the training and skills aren’t there and we continue to create excuses,” he said. “I think the real challenge here is us the manufacturers, we need to stop blaming all these external factors for our issues and really start to look at how we are running our business and the way we train, educate and treat our people.”
“The skills gap is real,” said T.R. Herzong, Accu-Router. “There will be 3.5million new manufacturing jobs by 2025, 2 million of which are projecting to go unfilled. Forward-thinking companies are partnering with local high schools and community colleges to keep STEM talent at home and change the perception of careers in manufacturing.”
Mark Craig, Giben, sees challenges brought on by new technology.
How we look at equipment and technology is changing. Mark Craig, Giben, said, “I see the lines between the woodworking industry and other manufacturing industries becoming quite blurry and harder to define than they once were. The standards in manufacturing now belong to many different industries including woodworking and this will obligate the woodworking industry players, whether they be end-user manufacturers, equipment distributors or machinery and software manufacturers to up their games in terms of technology and efficiencies.”
Jason Susnjara, Thermwood, notes “CNC routers have become a commodity, and the prices of the foreign manufactured machinery will continue to drop as long as the U.S. dollar remains strong. Their machine margins will continue to slide, but to counter that they will increase their service and spare part prices.” He suggested that Thermwood and other U.S. manufacturers will have to bundle more technology in their products to compete.
Barney Rigney, Vac-U-Clamp, is also concerned about foreign competition, but he looks to the government. “The overriding concern that I see is an utter lack of understanding and support from our government,” he said. “The "playing field is not even and that it is unlikely to change.”
Barry Freiburger, George Guenzler & Sons, added his point of view from north of the border. “Our challenges from a Canadian perspective are different than from a USA perspective,” he said. “Currently, we have non-friendly business climate regarding legislated wage increases (attacking our competitiveness), and negative anti-business tax policy which will curb business investment over the short term. The USA is experiencing a very pro-business political climate that should be good for the wood products industry for years to come.”
Trends to watch
Trends in technology and business practices came up frequently in the predictions. Jason Susnjara, Thermwood, said, “Automation will be key next year and the years following. Another trend would be simplified programming or zero programming of equipment such as CNC.”
Mark Craig, Giben, said, “I see software continuing to play an important role in our industry as it promotes structure, order, and accountability. Small to medium-sized companies appear ready, more than ever before, to invest in systems which allow them to better extract the full potential out of their equipment and workforce. I also see end users becoming more educated about software and knowing what they want from a software package which makes them more willing to invest in what they know they need.”
Don Kaser, North American Plywood Corporation, commented, “The biggest trend we find is automation. As labor is short we need more automation to make up the void and increase efficiencies.”
Giuseppa Riva, SCM, pointed to the power of combining lean manufacturing with modern technology. “The news is that there are more sophisticated tools to implement the lean philosophy: Automation/integration (Robotics will grow in our industry more and more) to better control the process flow and to reduce the need of labor on the floor; Industry 4.0 and specifically the Internet of Things offering another dimension to the live data monitoring and collection.”
The CMA’s Amanda Conger, also pointed to technology. “Automation is becoming increasingly more relevant for the small shops as they struggle to find qualified employees,” she said. “One CMA member admitted that his CNC machine is his best employee.” However, she said there was also a huge challenge facing the industry in how it conducts its business.
“Antiquated websites and lack of online ordering are not acceptable given the speed at which business is operating,” she said. “This is especially true for small shop owners. They do not have the time to call several different suppliers to get the latest pricing, delivery times, etc. They need an ‘easy’ button when they need to place an order so they can get on with the project as quickly as possible.”
Casey Bell, Bellmont Cabinets, also called for improved business practices. “Our industry has to grow with the times in the way we do business,” he said. “There are too many companies that are still comfortable with manual systems for doing business. The next generation isn’t going to tolerate this.”