More than five years ago, Avio-Tech Ltd. quoted a project to produce control panels and components for industrial conglomerate Textron Inc.
The Twin Lake-based manufacturer, which focuses primarily on the military/defense industry, lost out on the job to a Canadian supplier. The failed bid lost at the hands of foreign competition was ultimately the catalyst that led company president Lee Thomas to explore ways to make his business more competitive.
Avio-Tech eventually connected with the Great Lakes Trade Adjustment Assistance Center (GLTAAC), where Thomas and his staff embarked on a five-year journey with the federally funded program that operates out of the University of Michigan’s Economic Growth Institute and is a bit of secret to many small manufacturers throughout the state.
Trade Adjustment Assistance for Firms is a federal program designed to work with manufacturers that have been hurt by imports and are looking to take measures to enhance their competitiveness.
As one of 11 across the country, the Great Lakes center works with small manufacturers throughout Michigan, Indiana and Ohio, providing them with general consultation and funds up to $75,000 that must be matched by the company itself.
Working with the Great Lakes center, Thomas didn’t target changes to the shop floor first. Instead, he used the matching funds to overhaul the company’s web presence in addition to acquiring NIST SP 800-171 accreditation, which qualifies the company to be considered for certain government contracts.
“We do a lot of partnering with local businesses in Michigan and a lot of our strength comes from the partnerships that we have established with those businesses,” Thomas said. “So, we spend effort in that regard to secure a good relationship with those businesses and I know, in part, the web presence we established has been very helpful in that.”
Coming out on the other side of the GLTAAC initiative, Thomas said he saw the program as a worthwhile venture that he readily suggests to colleagues.
Thomas said two measures of success are whether the company is growing and, if so, whether it’s profitable.
“We are,” Thomas said of both. “That comes from a result of a number of things and indirectly I think the GLTAAC engagement has been part of that. Every day you end up having issues of one kind or another, which require something that needs to be solved and I’ve used them as a resource to talk about specifics.”
Manufacturers face import competition
According to GLTAAC, import exposure is high throughout the Great Lakes states. In Michigan, 78 percent of manufacturers are seeing more with year-over-year manufacturing imports up by an average of 4.2 percent.
With the COVID-19 pandemic taking a bite out of sales, many small manufacturers around the state can’t afford to lose a significant client to imports, making programs like the GLTAAC and other measures to remain competitive so important.
“I don’t think COVID has changed the world economy and imports aren’t going away,” said Kevin Rucinski, senior project manager at the Economic Growth Institute at the University of Michigan. “It has disrupted the global supply chain but the supply chain will adjust in some fashion. Every business owner should always be looking at how to improve (their) competitive advantage, imports notwithstanding.”
When it comes to competing with China and low-cost countries, it’s no mystery that overseas suppliers are generally leaps and bounds ahead of the many small U.S. manufacturers on technology and automation.
Still, when Rucinski and his team at GLTAAC work with clients to fine tune operations, many of the changes — as seen with Avio-Tech — aren’t even made on the shop floor. He said many inefficiencies can be weeded out by analyzing the marketing, sales and management areas of the business.
“Everyone wants more sales but a lot of time manufacturing companies don’t have a sales and marketing mindset — they have more of an operational mindset,” Rucinski said. “But, they know how to make stuff.”
To qualify for the GLTAAC’s program, a company must show sales and employment declines period to period and demonstrate that it has been affected by imports. This can generally be determined through a brief phone call, and Rucinski said almost every manufacturer in the state can successfully argue that it has been affected by imports.
Because of the economic hardships of COVID-19, many companies now meet the criteria of declines in both sales and employment, which could lead to a potential surge in companies leaning on the GLTAAC for funding.
Laurie Harbour — president and CEO of Southfield-based Harbour Results Inc., a consultant for small and medium-size manufacturers — has steered a number of her clients in GLTAAC’s direction, many of which had not heard of the program.
When it comes to working with her clients and helping them stack up with competition both overseas and within the states, she said efficiency is an important point of emphasis.
“We tend to keep around more labor than we need and not challenge the sort of status quo on how we’ve always done things,” Harbour said. “If we don’t challenge that status quo, we end up being less efficient than others.”
Still, Harbour acknowledged that competing with imports can sometimes feel like bringing a knife to a gunfight.
“The bigger challenge right now for China and for the low-cost countries is sheerly a wage rate issue,” she said. “We do have a lot of very efficient and productive companies in Michigan and in the U.S. but we struggle — their labor rates are so much lower and their governments also play with their currency. They have built a manufacturing base that they want to keep full so — for the lack of a better word — they drop their prices to win business and people here go, ‘How do you even build a tool or make a part for that kind of money?’”
The pandemic has been felt not just among U.S. manufacturers but throughout the industry on a global scale. This means import competition could become even more fast and furious in the near future.
“COVID has decimated a big portion of manufacturing around the globe, not just here,” Harbour said. “And the reason I say that is because China will keep coming back with vengeance. They want to win business over here and import products over here. So, they’re going to be even more competitive and that means we have to be competitive.”