by Dave Quint

If you are in the business of manufacturing metal parts or products and you hired an expensive business consulting firm to analyze your current predicament of depressed business levels AND if the advise they gave you is what I’m going to tell you, which is: "increase your capacity in this down market" then there’s a good chance you would ask for your money back and say " The Boy is Crazy" BUT BE CAREFUL because trend setting thinking is inherently hard to recognize as a reality.

Is this you ? If you are a typical shop today then more than likely your backlog of work has shrunk from 12 months approximately 20 yrs ago to about 8 to 10 weeks approximately 5 years ago to just several weeks today ( or there abouts). Not only is the current backlog only several weeks but your fears are further compounded by the fact that you have no idea where the work is going to come from once you work your way through your current backlog of only two weeks. You realize there is more work out there to be had but its just a bunch of companies in such a hurry that they refuse to schedule in behind your current backlog. In an effort to appease your fears about only having a two week backlog you desperately try to distract and tempt them with cheap prices in hopes that the good deal will make them wait. So here goes your margins also. Uh oh, more anxiety and pessimism. Now you got shrinking margins to go along with your seemingly shrinking backlog. This current anxiety is causing today’s manufacturing decision-makers to not want to make additional investments in their businesses. The idea of spending money in seemingly down times seems alittle insane at face value, but in the world of ‘cause and effects’ not making necessary business investments is really a ‘cause’ disguised as an ‘effect’.

( Note:The focus of this discussion is to get modern day backlogs in their proper perspective because pricing and margins is a non-issue as far as it being something new to contend with. Pricing negotiations and all the other stuff that effects margins like manufacturing efficiencies, cost of production, supply and demand etc etc have been with us since the first manufactured part was sold to Moses for his ox cart.)

Is This Still You ? Some how, miraculously, your 2 week backlog turns into another two weeks as another guy in a hurry lands on your door step needing a quick turn around and so on creating a fairly steady 2 week backlog that somehow seems to last all year. At the end of the year you look back over the past 12 months and other than a lot of self imposed stress and pessimism over the short backlog and slightly smaller margins you conclude that the year could have been a whole lot worse than it seemed along the way