fedgazette

Survey will help determine needs of U.P. manufacturers

Michigan State Roundup

Published January 1, 1999  |  January 1999 issue

About 150 manufacturers in the Upper Peninsula (U.P.) of Michigan can expect to receive a survey soon, asking them about how they conduct their business and what services, if any, would help them improve their efforts. The survey will be conducted by Northern Initiatives, a Marquette-based, nonprofit, community development corporation, and follows a similar effort from last year.

"We're conducting these surveys to improve our understanding of the manufacturing sector and our response to their needs," says Christine Rector, director of Marketing Services for Northern Initiatives, which provides accounting, marketing and quality control services for U.P. businesses.

The survey will be a follow-up to a similar effort last year, which garnered 37 responses. Estimates vary, but Rector says there are about 400 manufacturers in the U.P.; many of those are very small operations and are not included in the survey sample. "We kept it to companies with 12 or more employees using established production techniques," Rector says.

Rector says that the U.P.'s manufacturing sector was chosen for special study because it is so important to the overall economy, in terms of the jobs it provides and the spin-off businesses that often develop. Northern Initiatives does not engage in bidding wars for businesses, Rector says, so the best way to improve economic growth and, by extension, provide higher-wage jobs, is to help existing businesses improve productivity and profitability.

Last year's survey revealed that supervisory and management skills, quality systems, and business system difficulties were the top concerns of U.P. manufacturers. Specifically, production planning, scheduling and inventory management were mentioned most often by survey respondents. This year, Northern Initiatives hopes to learn more about these problems and others so that it can more effectively offer solutions.

One U.P. business that has used Northern Initiatives in the past—and will do so again in the future—is Argonics, a Marquette-based producer of custom molding of polyurethane products for high-wear applications with 61 employees. After a year of planning, Argonics began production in January 1994 with less than two dozen employees and a host of issues to contend with, says owner Bob Flood. One of those issues was accounting. From past business experience, Flood was knowledgeable about distribution accounting but knew little about manufacturing accounting. And he needed help if the business was to survive.

"I sent out a distress call," Flood says about his contact with Northern Initiatives. After two weeks of analysis the group had discovered some problems—relatively simple, in hindsight, says Flood—recommended a new system and since then the problems have not recurred.

That service was provided at no cost to Argonics, but since then his growing business has had a need for marketing services, and this time he is contracting with Northern Initiatives for their expertise. Rather than hire a full-time marketing staff, Flood will use Northern Initiatives to explore a particular industrial sector, one that he knows something about but could possibly profit by learning a lot more. "In a sense, I'm jobbing out my marketing," he says.

Rector offers the example of one manufacturer who came to Northern Initiatives with the reasonable desire to increase sales of all its products, but the company did not know the cost and profit margins of its individual products. After some analysis, it was discovered that one-third of the company's product line was actually unprofitable, so increasing those sales would not have accomplished much, she says.

Northern Initiatives does not rely on its own expertise in offering advice to U.P. businesses. It has established networks, on-line and face-to-face, where companies can advise each other. One such program, the Continuous Improvement Group, meets monthly and analyzes a particular aspect of business by walking through one of the members' shops. Critiques are offered on all types of subjects, including such mundane issues as housekeeping—anything to improve efficiency.

"You get so wrapped up in your own business, and don't see the stupid things you're doing," says Flood, who is a member of the group.

The Northern Initiatives survey will likely be completed by the end of the first quarter, Rector says.

David Fettig

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