Helping Manufacturing To Recover In 2011 Begins With Its Own Culture!

This post was updated from a previous post in March 2011...

Without question, the challenge now is greater than ever to identify stable, let alone growth markets, particularly for many manufacturers. And, it's more important than ever to target markets that represent less sensitivity to economic conditions.

Research that I conducted for the Manufacturing Alliance of Philadelphia and the Urban Industry Initiative, not only revealed a needs-gap for which MAP President, Steve Jurash is developing new services, but it has deepened my own perspective on manufacturing growth challenges that lay ahead. After interviewing Owners, CEOs and Presidents throughout Philadelphia, a big challenge that I find exists begins internally, within the business culture itself. I am speaking of manufacturers that have relied mainly on "opportunistic selling" as a strategy to sustain or grow their businesses. By the way, "opportunistic selling strategy" is an oxymoron!

The bottom line is this. Many traditional manufacturers of durable goods and those who provide contract services, are dependant on markets highly sensitive to economic conditions. A term used to describe these markets is "cyclical". When the economy shifts, so do cyclical markets and so goes the business, either up or down. Thus, a severe decline and slow recovery during this recession for many manufacturers that serve "cyclical markets".

When I spoke on this subject at a past Philadelphia City Wide Manufacturer's Meeting sponsored by MAP. My strong advice to all business owners in that meeting was straight forward... to develop a hedge marketing strategy, including a partial shift to markets that are less-cyclical.

Also, add a process for developing new products for emerging market niches and finally, consider bi-directional/International market opportunities. For example, GroupLamerica, LLC is highly experienced at matching not only US manufactured products with Latin America markets, but conversely with interest in US manufacturing operations to access US markets.

The point is, with minimal investment and some out-of-the-box thinking, manufacturers can create a new strategy mix that will allow them to "hedge" against further negative shifts in the market. And without a doubt, it can accelerate business growth in a recovering market!

Tangerine Strategies, LLC is a Certified Vendor and Coaching-Consortium coach for the Manufacturing Alliance of Philadelphia membership. MAP assists with the resolution of manufacturer's challenges including, closing the skills gap that prevents companies from obtaining highly trained employees through the first of its kind Job Ready Program.

Copyright (C) Dennis Paris 2011

IFAI EXPO: Biz Track... New Product Development as Business HEDGE!

As I presented, at a past IFAI EXPO (Orlando Convention Center) business track on "Growing Your Business Through New Product Development"; While the authorities to be have announced that the recession had officially ended mid 2009, many businesses still struggle. Also consider that demographic data suggests that baby boomers have reached an age where total spending is on the verge of declining. This concept is shared by many renowned analysts, however an article by Thomas Corley on ezine articles titled "Amercas Shrinking Economy and The Demographic Shift Causing It" does a nice job of explaining it.

If your business depends on an economic recovery level prior to this recession, we may become seriously disappointed as the demographics continue to play out. The point is, this is a critical moment in time where businesses MUST plan for their future, and New Product Innovation and Development is one avenue to HEDGE the direction of the markets!

Hope for Manufacturers in a Recession...

In a previous blog, I talked about 3 strategies for manufacturers to accelerate current business recovery or, to HEDGE against the effects of another decline in the event of a double-dip recession. Either way, a hedge strategy provides a better outcome for manufacturers. I spoke on this topic at a previous city wide meeting, sponsored by the Manufacturing Alliance of Philadelphia, who's membership works in collaboration with government and other agencies to resolve challenges that might harm the sector, including *job training. As promised I am providing additional research with examples of less cyclical markets, that can help a manufacturer to hedge against a slow recovery or worse.

Original strategies included;

(a) Access international market opportunities or to attract interest in US manufacturing (I've provided a link to a company that matches US interest in Latin America and conversely with interest in US Manufacturing.)

(b) Add an innovation-program for developing new products or a new production process (I will provide an overview in my next set of Blogs)

(c) Re-Balance targeted customers to include a mix of "less-cyclical" markets.

Particularly during recessionary periods, cyclical markets are what cause heavy suffering in most industrial sectors, particularly durable goods. On the other hand, Less or Non Cyclical (Non-C) Markets allow manufacturers to remain relatively healthier whether the economy is up or down.

With a little research, you may be able to uncover accounts within your customer files, who either directly or indirectly sell into Non-C markets. Subsequently, you can choose to target new prospects with similar needs, that compete or compliment each other within these same Non-C markets. And/Or, you can migrate some product production from your traditional, to Less-Cyclical markets.

An example is a Textile manufacturer that sells mainly into retail-store markets. While sales may have contracted, the home-textile market remains buoyant because textiles are used as a more cost effective form of "up-lifting" during poor economic times! Also, adding Design Services to traditional Product Manufacturing represents a revenue opportunity that many manufacturers miss - a topic that I will touch on in my next Blog.

Are these strategies relevant for small and medium size business? Absolutely! As a small business myself, I am implementing strategies in all 3 areas. and so are other smaller businesses.

These strategies also apply to businesses in the services sectors.

* The Manufacturing Alliance of Philadelphia's Job Ready Program is the first of its kind, designed specifically to close the skills gap that prevents companies from obtaining high qulaity training manufacturing employees.

A Strategy To Hedge Another Market Decline

As this economy pulls out of the Great Recession, business recovery will remain a challenge for a very long time. Hedge Marketing Strategy tips that I provide in this Blog are meant to help make your business more resilient in the event of a cooling off period in the economy, which can occur at almost any time. It can also accelerate growth during period of strong recovery.

This strategy is a continuation of a previous Blog on the same topic...

After analyzing, profiling and organizing your customer's purchasing behaviors into groups (or segments), you should be able to identify those that have been "more" and "less" active during the last 12 - 24 months of this recession. List your better performing customers and then describe them by market-type or category and the reasons for their level of purchases.

You will now want to do a little Internet research about these particular markets relative to their resilience during the recession thus far. And even though some markets are beginning to return, those represented by your more active customers should standout as better performers during the recovery.

It's likely that you will have spotted 1, 2 or more resilient niche markets or segments from some hidden activity within your customer base. You are now ready do a little more research to size and value the these markets relative to your business' offering. Targeting and growing sales within these newly defined segments will allow you to create a "hedge" against either a double-dip or a cooling off period in the economy.

Please feel free to contact me with any questions what so ever.

Survival: Hedge Marketing - Step #1

With your existing businesses, you should have the ability to look back over recent history to analyze customer activity. If you have many customers, start by looking at general trends over the last 1, 2 and possibly 3 years. These periods of time will give you a good contrast from pre-decline to more recent times.

Look for any changes in volume, price, type of services or products purchased. As you view these general changes, begin to look at customer types, niche or segment categories of customers for purchasing behaviors that are unique within their general population. Take the time to develop a detailed profile on each unique segment. Once you have accomplished this, you are ready for the next step of a Hedge Marketing Strategy... For business start-ups, there are ways of finding the same information on markets that you intend to target.

I will provide further detail on step #2 of my Hedge Marketing Strategy in my next post. For your business to be successful, you should have the ability to analyse your customers in this way...

Philadelphia Manufacturer's Strategies for Resiliency...

NEW emphasis on adding a SERVICE to your business offering.

Three Strategies to Accelerate Business Recovery AND Hedge Another Market Decline (Summary from a previous Blog)

1. Access international markets or attract interest in YOUR U.S. based manufacturing facility.

2. Add an internal New Product Development & Creative Concept program and process. (Detail in my next post!)

3. Re-Mix your business plan to include Less Cyclical markets.

Manufacturers suffer most during a recession because they mostly sell into highly cyclical markets! So, what to do?...

Migrate to customers from Less Cyclical markets! (see previous blog below for more detail) ............ See this chart for Examples.

Products to Services...

If you are a contract manufacturer and you provide engineering or design recommendations to your end-product-customer today, consider promoting this attribute as a separate paid offering! You will expand your market opportunities AND become involved earlier in your customer's buying cycle, while influencing the outcome!!!

Techniques for quickly entering new markets in my next post.

Contact me at directly for further clarification.

This topic was addressed at a recent Manufacturing Alliance of Philadelphia city-wide meeting. MAP asssists with the resolution of manufacturers challenges including, closing the skills gap that prevents companies from obtaining highly trained employees, through the first of its kind Job Ready Program.

Copyright (C) Dennis Paris 2011

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