MRO Today - Monstrous developments

Tom Hammel Squeaky wheels

by Tom Hammel, editor

Monstrous developments

According to several economic barometers, including the Manufacturers Alliance/MAPI Quarterly Industrial Outlook—Second Quarter 2008, U.S. manufacturing continued its downward trend in the second quarter. Medium-term prospects show only minimal improvement.

According to Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, and author of the report, “Automakers drastically cut production in the second quarter to clear out bloated stocks, and housing-related industries continued to reel from the gloom in residential construction. The declines in these major manufacturing industries, directly and indirectly, depress many other industries in the sector.”

On an annual basis, MAPI expects manufacturing production to fall 0.5 percent in 2008 before showing marginal improvement to 1.6 percent growth in 2009. Non high-tech industries are expected to bear the brunt of the bad news.

This climate makes it all the more encouraging to find a decidedly “low tech” company like Knaack, this issue’s cover story, that is holding its own and even advancing in the face of such odds.

Knaack faces more than just a down construction market. It also relies almost entirely on steel and aluminum as its key raw materials. But although the company produces “mainly boxes,” it serves somewhat diversified markets with them, a fact that helps immeasurably, or rather, quite measurably, at present.

And it has been aggressively pursuing cost containment Lean strategies since well before the recent pricing spiral began. All of which would allow Knaack to hunker down, tighten its belt, keep product expansions to a minimum for the duration of the downturn and just ride it out. Right?

Wrong. Last fall, Knaack unleashed on the reeling construction market its largest, heaviest, most expensive jobsite box line ever, the fittingly named “Monster Box.” We think the story of why and how they did it will perhaps give you a few heavy-weight ideas of your own. Read it and let me know what you think.