Illustration by Ainsley Christofferson
Part II. Manufacturing
Beginning early in the 20th Century, Wichita, and the surrounding area, became an important part of the world’s culture. From mass producing dependable airplanes that shrunk the globe, to pocket stoves for soldiers during WWII, amusement park rides for people old and young at heart, camping equipment and coolers, and that smelly, viscous goo that helps clear the sinuses, this metro area became not only known for being in the center of the U.S., but also for leading it in innovative acuity.
McPherson boasts 14 plastics manufacturing companies, while El Dorado is birthplace to BG Products, an international automobile maintenance product manufacturer. The manufacturing industry has thrived in this region, and with the third highest concentration of aerospace engineers in the country, with 450 parts suppliers, Wichita is still positioned to revive the manufacturing spirit, compatible with a movement to “bring jobs back to the U.S.” mantra. That campaign faces growing turbulence, however, as the world’s economy continues to falter in the face of the pandemic.
Steven Trent, a noted economic forecaster with Citigroup recently stated in MarketWatch, “Even the stronger airlines are going to be smaller airlines for a while, and the weaker airlines maybe don’t survive.” Trent also predicted that airline recovery to pre-Covid-19 levels would not occur until 2023, and the year after for passenger traffic levels.
According to The World Bank, the baseline forecast is a 5.2% contraction in global GDP for 2020, with per capita income falling 7%. Wichita’s manufacturing trade totals are 11.6% lower than this time last year, according to the U.S. Bureau of Labor Statistics.
Given that the pandemic, combined with U.S.- China tensions, has disrupted trade routes, and supply chains, how are local manufacturers faring, and what will the future hold when, or if, business becomes normal again?
Some perspective from area manufacturers and subject experts:
John Hall, Plant Logistics Manager of Case New Holland Industrial (CNHI) in Wichita:
How has the pandemic impacted sales?
In March and April corporate expectations were that the market would be significantly impacted and we removed almost ½ or our planned volume for 2020 and shut down production for April and May. Starting in June retail sales were well above forecast and that trend has continued with addition of volume in each monthly cycle and a line rebalance up planned for the end of the year and increased volumes in 2021.
How has your workforce been affected?
Hourly workers were on furlough for 2 months
Any impact with regard to your supply chain?
Many of our suppliers were on furlough and that impacted our manufacturing start-up date and we’re still seeing some impact as we have had multiple suppliers with COVID hot spots.
As you compile various forecasts for 2021, what are some changes in your business model that may switch from 2020 temporary, to permanent in 2021?
During the furlough we performed an extensive analysis of our supply base with focus on vendor lead times so we can react quicker to movement in the business demands. There is also an aggressive project reduce standard commercial lead time from current month plus 2 to month plus 1.
Data: Cornerstone Data; Chart: Candor Visuals
What else would you like to add to help our readers understand the complexity of manufacturing in general, and during this pandemic?
CNHI is a global entity and the worldwide impact of COVID has created a wave or ripple impact as vendors in the rest of world regions have been impacted to different degrees and at different times. The transportation network has also been impacted by COVID in a way that has changed how we schedule both material through our supply chain and how we ship whole good product to our customers. I guess for CNHI Wichita it has forced us to self-evaluate how we do business and how we can be better prepared for the next global crisis.
Patty Koehler, President of JR Custom Metals in Wichita, said that economic conditions over the past several months, and short lead times, have made it difficult to schedule production, and said that is compounded by the fact that some Original Equipment Manufacturers (OEMs) have shut down entirely. “Some supply chains are simply not there.”
The inconsistent nature of production demand, and business layoffs and furloughs have rattled personnel managers across the globe. Koehler said that JR Custom Metals has “done everything we can to keep our workforce.”
In spite of those issues, Koehler sounds battle hardened when declaring “We welcome the challenge.”
Karyn Page, President and CEO of Kansas Global Trade Services, said that vacillating tariff and trade policies are hard on local exporters. Page doesn’t disagree with many of the reasons why the U.S. is confronting other nations’ trade practices, but the back and forth, improvised decision-making leads to difficulties when advising companies engaged in international trade.
“If President Trump was sitting right here, I’d lean over and tell him to stop these fluctuating trade and tariff policies,” Page said.
In terms of local businesses, Page believes Wichita is still a major player in terms of global exporting, she feels local leadership needs to step its game up to ensure that continues during the 21st Century. Diversification of its industries and conversion of current industries to meet the conditions of the 4th Industrial Revolution, largely characterized by digital transformation, are an absolute must.
“I think Wichita was a more vibrant manufacturing community in the 1980s and 90s than today, but the base and potential is here to do great things right now,” she added.
Debbie Franklin, Associate Vice President for Strategic Initiatives at Wichita State University, believes that the manufacturing landscape has been changing for many years prior to 2020, and that the addition of Deloitte’s Smart Factory at WSU is proof that the industry is continuously transforming:
“The US Manufacturing base stands at a challenging crossroads. To increase competitiveness, it is important to foster transformational ecosystems that will help propel the uptake of advanced manufacturing concepts and initiatives, while also having a direct connection to academic programs that are continually refreshed by new technologies, methods, and industrial operations. The collective convening power of Deloitte, The Smart Factory @ Wichita and Wichita State University, including the attractive and centrally located investments made at the WSU Innovation Campus, will make it easier to accelerate cyber manufacturing initiatives by drawing manufacturing leaders into an existing ecosystem of technology, industry, and academia.”
Competition can be an unsentimental tyrant, insensitive to past accomplishment, rewarding those who find a better way. Thus, it appears incumbent upon those who can continue the Wichita area’s proud manufacturing tradition, the engineers, the financiers, the politicians, the CEOs, the craftsmen, to step up, and innovatively find paths to solve problems which appear to be insoluble. What lies beyond terminal velocity? Let’s avoid finding out.