All of us in the manufacturing sector are knee-deep in the throes of inflation. Price increases on raw materials and external production services are frequent. Staffing shortages are making it difficult to get supplied goods. Rising interest rates make fiscal management and growth possibilities challenging. And, no one can predict the future. So how do you successfully manage a manufacturing business during an inflationary cycle without the benefit of a crystal ball? Here are six ways we have our eyes on.

Foresee the foreseeable

While it’s only in the last year or so that people have been talking about inflation, the reality is inflationary pressures began with the pandemic – three years ago. The cascading effects of Covid – supply chain, the great resignation – made it impossible to avoid an inflationary cycle.

Today, we’re close to peak price increases but that too was foreseeable. The reaction to inflationary conditions by the governments of most Western countries has been to offer various forms of assistance. Unfortunately, by putting money into the economy, those assistance programs have contributed to inflation. In addition, interest rate hikes by central banks could be predicted. The common economic wisdom is that interest rates should be one and a half to two points higher than inflation. Rising costs and prices forced the hands of central bankers.

Smart shopping

In this market, you have to be a smart buyer, exploring every possible avenue and looking for better prices and better value. For example, it took us several months to secure the supply of materials we need to make our RollX™ wheels. When we found it at a favourable price point, we committed to quantities that will allow us to maintain RollX production for months. The same is true for the plastics we use to make Envirothane™  wheels.

This also applies to capital investments – except the stakes are higher. When spending hundreds of thousands, if not millions, of dollars on equipment, manufacturers need to make well-informed buying decisions. Over a year ago, we committed to a new 300-ton stamping press and locked in the price. When we take delivery later this month, the market price for that machinery will be much more than we paid.

Price Protection

There’s no question that we are now seeing some of the highest price increases in years on our input materials and services. We’re doing everything we can to keep prices stable. That includes improving productivity and considering some creative work-week options for our employees. We haven’t raised our prices in a year and with the current market conditions, that’s quite an accomplishment.

Reshoring

Higher interest rates add a new dimension to decisions about whether to buy from overseas suppliers. Longer lead times mean that buyers’ money is tied up for much longer. When you have to pay 5% interest for two months to get overseas products, it eliminates most of the cost savings. Add to that the uncertainty of both the quality and accuracy of what is received, and it makes more and more sense to buy North American. We’re getting many calls every week from customers who want to shift to onshore suppliers.

The Opportunity Cost of Investing

Manufacturers today have a difficult choice. On one hand, they can invest in their businesses, often having to borrow money at higher interest rates to make that happen. The return on that investment is far from guaranteed and can only be realized over a significant period of time. Success depends on the effectiveness of sales efforts and market conditions. On the other hand, business owners can invest their money and earn 5% or more. It’s guaranteed and it’s immediate. It’s hard not to make that choice. Many businesses that are not operating well or don’t see a solid future for themselves, will choose to take the money. We’re all in on investing in the future of Algood.

Follow the Cycles

There are natural cycles that govern the ebb and flow of business in various industries. Periods of declining growth are generally followed by periods of accelerated growth. It’s possible to anticipate growth conditions by monitoring economic trends. By making investment, production, staffing and buying decisions that synced to market cycles, you greatly improve the possibilities for success.

The next year will be a test for manufacturers. Some will weather the storm and even be able to grow. Others will succumb to market pressures, deciding to put their money elsewhere or being forced out of business. Being able to stay focussed on the six items above could be the difference between success and failure.

As I look back at the past year, the thing I am most eager to say goodbye to is our Zoom calls. In fact, moving away from Zoom and to more personal contact is one of four trends I am looking at for 2023. The others are increased product development, more interest in reshoring and an economy that warrants cautious optimism. You can read more about our 2023 outlook here.

Zooming Out

I don’t know about you but I‘m just about done with our Zoom calls. In 2023, we’re Zooming out and getting back on the road. In the past couple of months, I‘ve been meeting with distributors and OEMs and it has been a fantastic experience. We’ve been able to trade ideas and make sure that we’re providing the best possible solutions. The results could never have been achieved on a Zoom call. There’s something about being in the same room with people that supercharges the interaction. Beyond the pure business benefits, there’s a social aspect to in-person meetings that people have been craving. People are happy to be engaging again. We even see more people visiting our showroom. Not only am I putting more meetings on my calendar, our sales reps will be hitting the road in 2023. We’re looking forward to being face-to-face with our customers again.

Back in Development

Through Covid and the first part of last year, our product development efforts were largely stymied. Business was very reactive, simply responding to short-term customers’ needs. In the past few months, our engineering and design team has finally been able to turn its attention to product development.

We will have several new product announcements in the first half of 2023. We’ll be introducing everything from low-profile casters to a brand new medium-duty entry to dual-wheel kingpinless heavy-duty casters.

Our catalogue, which is already the most extensive in the industry, continues to grow with new configurations being added regularly. Our online catalogues are continuously updated. We know there’s something unique about holding a printed catalogue and will continue to provide print-on-demand options to our distributors.

Even a printed catalogue is no substitute for having a caster in your hand. We deliver samples on a daily basis and are happy to entertain your sample requests. We will unveil a new website in 2023 with online 3D CAD modelling available for much of our product line.

Our capital investment continues. We added a de-coiler and straightener to improve the efficiency of our stamping operation and a new 300-ton press will be on the plant floor in the first quarter. We’re expanding the use of robotics in our assembly unit. All of that will improve lead times and enhance our ability to produce high-quality products, made to your specifications and delivered to meet your timelines. We already have a 99% on-time record and our continuous surveys demonstrate that our customers are extremely satisfied with the casters we deliver.

Reshoring Continues

This month I took a call from a customer who was fed up with offshore products. And, he’s not alone. More and more customers are tired of receiving a product that is inferior because corners have been cut. The reality is that inflationary pressures increase the likelihood of producers being lax about specs.

In addition, long lead times mean that buyers have to tie up cash (which is more expensive) for months as they wait to receive goods. Beyond the time it takes to get casters produced and on the water, North American ports are clogged and trains are over-booked. It can easily take two to three weeks longer than expected to get product from port to warehouse.

All of that will add to the appeal of fully North American made casters and wheels. With our integrated manufacturing facility in Toronto, we are ready to accommodate the increasing number of customers who see the advantages of goods produced on this continent.

The Economy: Cautious Optimism

Feedback from our customers indicates they are upbeat about the prospects for 2023. We are cautiously optimistic about the economy. While costs are still high, supply seems to be steadying and inflation is easing. Increasing interest rates will be a necessity until the economy stabilizes and that will be a drag on increased purchasing. In fact, The U.S. Fed announced a half-point increase as I wrote this post. There is a very delicate balance between inflation and interest rates with a significant margin of error. The economy will remain vulnerable but if trends continue, conditions should improve. We actually believe that the second half of 2023 looks promising and are looking forward to a more robust economic environment.

Our Customers Come First

The one thing that does not change from year to year is our commitment to our customers. Our customers are at the centre of everything we do. It’s been that way for the past 53 years and will continue in 2023. We look forward to continuing to meet your needs.

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Wishing all of our customers, distributor partners, suppliers, colleagues and friends all the best for the holiday season and a very Happy New Year.

I monitor economic news and insights very closely. It’s part of my daily media routine and there are a number of people whose opinions I seek out and follow. Based on all that, there are three interconnected E’s that are keeping me awake lately. The situation in Europe, the impending global energy crisis and the economy all have my full attention these days. I’m concerned but I’m also very confident that Algood will remain strong.

Europe’s supply of gas has been cut off by Russia and the effects are rippling through every country. Electricity supplies may not be enough to sustain the winter. In some places, raw material production is being shuttered.  Production of everything from manufacturing components to toilet paper is being reduced. Not surprisingly, both unemployment and prices are soaring.

Algood ships worldwide, including to Europe and some of our components are manufactured in Europe. Both of those factors may present a challenge to our business over the coming months. In addition, what happens in Europe definitely does not stay in Europe. There will be global repercussions to the current state of European affairs.

Gasoline and oil prices in North America peaked about six weeks ago but in California, there is a severe energy crisis. The Californian electricity grid can’t keep up with the demand and electricity imported from other states is not enough to close the gap. The state is re-evaluating its decision to mothball nuclear power plants. All of that makes the state more dependent on fossil fuels. While Russian oil represents only three percent of total imports to the U.S., nearly half of Russian oil shipped into the U.S. last year, or close to 100,000 barrels a day, ended up primarily in California, Washington and Hawaii. And California’s economy is the largest in the U.S. and the fifth largest in the world.

California may be the canary in the coal mine. We can expect extreme weather to put demands on energy grids throughout North America. While oil prices have been declining, reductions in global supply will reverse that trend. Rising energy costs will affect every type of production, having an impact on supply chain, employment and the cost of goods.

That brings me to E number three – the economy. The inflation rate is high. While the cost of some goods like steel, wood and paperboard have started to come down the cost of other supplies and components is rising. Central banks in the U.S. and Canada are increasing interest rates with no ceiling in sight. While experts debate about whether the economy is officially in a recession, the economic outlook gets bleaker. Stock markets are losing value.  A recent PwC study indicated that 50% of firms in the U.S. are forecasting layoffs. The future is, at best, uncertain.

A number of our suppliers and customers reducing output and laying off employees. We expect that supply chain issues will persist for both manufacturers and consumers. The impact on sales is unclear but it’s unlikely that our revenue will not grow this year.

Our employees have always been our most important asset and we are concerned for them. The cost of food, clothing and other items is increasing rapidly, straining personal budgets. Families are being forced to do more with less which increases stress levels.

We have faced tough situations before and not only did we survive, we thrived. In 2008, we didn’t lay off a single employee and made a decision to reinvest in our business. Over the past two years, we very successfully guided the company through the pandemic and emerged stronger.

Throughout it all, we have grown by being responsive to the needs of our customers. We have innovated by bringing new products to the market and by finding unique solutions to meet customers’ requirements. The quality of every caster and wheel that leaves our plant is guaranteed and our reputation for on-time delivery is unmatched.

Despite my concerns, I am confident that none of that will change.  We are moving forward with product development projects and capital equipment acquisition. I am watching these three Es – Europe, energy prices and the economy – very closely. But I’m also ensuring that we will be there for our customers and remain the next generation of Castersmiths.

I’d like to take this opportunity to wish all of our Jewish customers, colleagues and friends a Happy and Healthy New Year.

While everyone in the manufacturing sector and the business world is consumed with news about inflation, supply chain and the lingering pandemic, I’m concerned about something far more important – the physical and mental well-being of our employees. They are our most valuable asset and we are doing everything we can to help them and protect them.

The last two years have been unbelievably challenging for our employees and current circumstances aren’t much better.

Masks may now be optional but the risk of getting Covid remains high. While the current strain of Covid is less likely to cause serious illness, being infected is still disruptive. We provide employees with as many paid days off as they need to be healthy and safely return to work but family members may get sick or have to isolate. That presents financial and practical implications. Just think about kids and school, grocery shopping as well as getting to appointments. The constant worry about getting sick is unprecedented and takes its toll on people.

The pace of production in our plant has been intense. We are often struggling to keep up with demand, particularly as customers are challenged by off-shore suppliers. That, in turn, puts immense pressure on our staff. Every part, every component and every caster is critical. There is little to no down time. The pressure to produce and meet customer requirements is unending. It’s really hard to sustain the physical and mental effort needed to be “on” all the time. As I walk through the plant, I can see the strain on employees’ faces and it worries me.

The price of everything from gas to groceries to health and beauty supplies is rising quickly. And, as interest rates climb, housing costs are going up. To offset some of the impact, we give our employees store gift cards every other month. While that helps, a pay cheque definitely doesn’t go as far as it did a few months ago. The financial pressure on employees is dramatic.

We are slowly bringing our customer service staff back to the office. Working from home offers lots of convenience and flexibility but being isolated from fellow employees creates loneliness. It’s clear that employees crave the camaraderie of being in the office together. In the coming months, we’re hoping to have everyone back together again and to restore the family atmosphere that was a hallmark of Algood. And I am definitely looking forward to our first summer luncheon in almost three years.

While we consider capital enhancements to mitigate supply chain issues and buffet us from inflation, we know there is no greater investment we make than in our human capital – our employees. Even though I am very concerned about their physical and mental well-being, I believe that, with a little help from us, our employees will weather the storm. They just want to get back to some sense of normalcy and I couldn’t agree more.

Last Friday, Algood celebrated its 53rd birthday. Much has changed since our father, Max Guttmann, started Algood in 1969. But there’s a lot of truth to the adage that the more things change, the more they stay the same. There’s no question that looking at Algood then and now creates a portrait in contrasts (as you will see in the photos below). While my brother, Sean and I strive to make our own mark on the company, we feel our father’s presence and the values he held dear every day. And now, there’s a new generation who will add their very own touches to the culture and tradition that are so much a part of who we are.

Our father was a tool and die man, making stampings for brake drums. When the opportunity arose, he borrowed $3,000 to buy the machinery to make casters. He had two lines – one for small furniture like the TV dolly pictured below and one for office chairs. It was small and easy to manage. Then in 1972, he showed his competitors that he was a fighter by acquiring his own injection moulding equipment, which allowed him to produce plastic and urethane wheels. Perhaps more than any other business decision, that one made him the master of his own destiny.

Max was a problem-solver and a creative one at that. When the people at McCullough were struggling to produce a shroud for their chain saws with ten dies, he found a way to do it with three. That earned him a trip to L.A. Later, he found was one of the first people in the industry to find a way to simultaneously lock the wheel and the swivel on a caster. The ALock is a mainstay of our available brake options to this day.

If our father could see Algood today he would be blown away by the equipment and the processes as well as by the number of people that work here and the sheer volume of casters we produce in any given week. At the same time, there is much that would be familiar.

My father never forgot how he was welcomed to Canada as an immigrant. He made a point of helping other refugees families get settled in Canada, including the Vietnamese boat people in the 1970s. He also maintained a strong commitment to doing business in Canada and supporting other Canadian businesses. A number of years ago, with Dad’s principles in mind, we made a major commitment to invest in our own equipment and our future here in Canada. The events of the past two years have strengthened our on-shore resolve and made us even more proud to be a North American manufacturer.

Max respected and was connected to his employees. He appreciated what they brought to the company, never taking them for granted. Today, there is nothing that we value more than our staff. We are particularly proud of the ways in which we have protected and accommodated employees as we faced the challenges of Covid. With numerous people who have been with the company for decades, we have a deep sense of responsibility for every employee.

In 1969, small business strategy was simple. Produce goods of outstanding quality and deliver them on time, every time. Guess what. That hasn’t changed. We know that in 2022, what distinguishes Algood is our ability to produce casters of superior quality and get them to our customers exactly when we said we would. As an ISO 9001 company, we make an ongoing commitment to every aspect of quality.

So, what has changed in 53 years? For starters, we are totally committed to high-quality industrial engineering design. Through investments in CAD and 3D printing as well as the expertise to leverage the technology, our casters are well-engineered and beautifully designed. That same industrial design capability has also allowed for the in-house production of four robotic welding cells as well as numerous automation enhancements to our equipment.

We have become more innovative and our product line has increased exponentially. Many of those products have become industry leaders, like our RollX™ wheels with their sister Lava™ high temperature wheels and our iLock™ multi-positional braking system.

While some of the equipment our Dad bought over 40 years ago is still running well, we have more machinery – and more sophisticated machinery – than ever before. The production floor includes stamping and injection moulding equipment, three CNC machines, automated assembly stations and more. We also have a fully integrated manufacturing facility that includes a complete tool and die centre as well as our engineering and design complement.

Perhaps more than anything else, Algood’s success has been founded on a deep sense of family values. We are not a corporate conglomerate. We make decisions based on principles, integrity and honesty. The Algood stamp on every product signifies the personal responsibility that we take for its quality. Together, with our employees, we see ourselves as a family. And of course, starting in 1992, the second generation of our family took the reins in leading our company – with me as the President and Sean as the Vice President of Manufacturing.

Now, as my son Elie has made a personal commitment to be part of the future of Algood, he becomes the third generation that will take responsibility for the company. Undoubtedly, he will make his own unique mark, as I have made mine. What is equally certain is that he will be guided by his grandfather’s enduring values and principles.

It’s hard to believe that we have weathered another year in the throes of a pandemic. Strangely, while business is better than it was last year at this time, the outlook feels less certain. The economy seems like it’s on the edge, being impacted by so many factors. To survive and thrive in the year ahead, we’re going to have keep our heads up and our eyes open. As I see it, there are seven heavily interrelated trends that will require our attention and dominate the manufacturing sector in 2022.

Each of these seven trends have so much impact on each other that it’s almost hard to separate them. It definitely creates a scenario in which the most prized qualities for 2022 will be the insight to untangle complex situations and the nimbleness to do something about it. Here are seven factors to keep your eyes on.

Supply Chain – The flooding disaster in British Columbia exacerbated what was already a very difficult situation. It will continue to be challenging to source raw materials and components – at any price. For example, plastic material that we were previously able to get in one to two weeks is now taking six to eight weeks. Over the years, we built a reputation for getting product to customers on time but even our delivery dates have slipped from their exacting standards.

The good news is that we’re managed to secure most of our supply chain for the first half of next year. The bad news is that  but beyond that time frame, there are too many variables to be able to predict what will happen.

Manufacturers that have made themselves self-sufficient will be better able to weather the storm. For example, at Algood, we’ve been able to mitigate delays by having our in-house engineering department make changes to our tooling. When a hard to come by manufacturing component like a spray lubrication mechanism was not available, we created our own.  To control your own destiny in 2022, you will need to be independent.

Inflation – There isn’t a day that goes by without a price increase on something including raw materials, parts and operating costs. Frankly, it’s out of control and while many suppliers have no choice but to increase prices, some are taking advantage of the situation. Ultimately, inflation may put a damper on growth in the manufacturing sector. Interestingly, many price increases stem from our environmental efforts. For examples, the cost of plating and heat treating has increased significantly because of related carbon taxes.

Staffing – Whether a result of the Great Resignation or lingering government benefits, it’s much harder to find skilled employees today. That impacts production capability and will continue to increase staffing costs in 2022. In addition, the cost of keeping employees safe and healthy continues to rise, helping to fuel inflation.

Growth – The market size of the manufacturing industry in the U.S. is expected to increase 9.8% in 2021. That’s impressive, particularly compared to the 0.4% per year growth in the five years before that. While that’s good news, it comes with its challenges. At Algood, we have seen significant growth in orders but we have had to meet that demand with the same machinery within the same plant. And, as noted above, skilled employees are harder to find. All of that makes ingenuity an essential quality for the coming year.

R & D – Meeting the demands of Covid and simply surviving the pandemic put a damper on new product development. But as the manufacturing sector rebounds, new product development has slowly picked up steam. At Algood, we have a number of new products and re-designs in the works and are looking forward to releasing them throughout 2022.

We are also investing in both physical and human resources. We made significant machinery acquisitions in 2021 and will continue to expand our production capability in 2022. That includes hiring additional uniquely skilled individuals who can help us find ways to produce more product with fewer people hands-on.

Reshoring – The supply chain situation combined with uncertainties about quality and accuracy is fuelling the trend toward increased North American manufacturing. Many of our customers have implemented mandates against materials produced off-shore. In addition, many other manufacturers are seeking our assistance in buffering themselves from the effects of overseas production.

Agility – As noted above, all of these trends are interrelated and create a complicated outlook for the year ahead. The difference between success and failure may come down to the ability to quickly forecast change and the flexibility to take action. The challenges of 2022 will take their toll and the companies that have the foresight to zig when others are zagging will win the day. Those are the nimble ones that will still be standing next year at this time.

Of course, staying in touch with our customers will be continue to be key to our success in the coming year. Please let us know about your upcoming requirements and how we are doing. Open lines of communication will allow us to help make 2022  a remarkable year for you.

Let me take this opportunity to wish all of our customers, distributor partners, suppliers and colleagues a very happy holiday season and all the very best for 2022.

You can’t read an industry e-newsletter or visit a business website these days without reading something about the supply chain logjam that is gripping the world. But with all that has been written, there are two lesser-known truths that don’t get mentioned. First, the current situation was entirely predictable and as early as last January business and political leaders could have been working to mitigate what was coming. Second, there is a North American bright side to this mess.

In March 2020, the world, and with it the manufacturing industry, shut down. Completely.  The only goods that were being produced were related to fighting Covid. Just-in-time manufacturing, which had dominated the industry for decades, stopped dead. Employees were laid off, plants were closed, ships were docked, rail cars and transport trucks sat in yards.

In early 2021, as vaccination campaigns were being planned and implemented, a glimmer of hope emerged. That was the inflection point. That was the time for planning and action. It was clear that restarting the economy was going to be like starting a car that had been sitting for months. It was going to cough and sputter and it was going to need programs and policies to smooth the way.

By the spring of this year, the demand for goods was building. Gearing up to meet that demand didn’t go very well. Plants had to be brought back to life. Raw materials had to be sourced and most importantly, employees had to return. That was particularly difficult with concerns about workplace safety, parents having to be home to support their kids’ online learning and government assistance programs that, for some, made not working affordable and attractive.

Demand quickly outpaced supply and that imbalance has only grown in the past few months. Now, we wait weeks or months for supplies that used to be available in days. Even after goods have been produced, it takes an inordinately long time to receive them. Shipping supplies, like skids and boxes, are scarce and transportation channels are clogged. The economy needed to go from 0 to 100 and the manufacturing engine couldn’t keep up.

The situation is even worse for companies depending on product that is manufactured offshore. China had huge challenges getting workers back into plants and now is contending with power supply issues that are shutting down operations for one or two days a week. In addition, getting materials here from the Far East has been plagued with problems. There is now a worldwide shortage of shipping containers and even when goods are finally on the water, the backlog at North American ports accounts for weeks-long delays.

All of that leads to the second truth – the silver lining. The advantages of North American manufacturing have never been greater. While offshore producers need 16 weeks to supply goods, we can manufacture and ship casters in a quarter of that time. In the time it takes for one of the millions of containers at congested ports to finally be unloaded, North American suppliers, like Algood, are satisfying their customers.

In addition, the quality and accuracy of overseas shipments can’t be taken for granted. So, imagine that you wait four months to receive the supplies you need to finish a project that is delayed and you discover they can’t be used and need to be returned. That’s not a hypothetical situation. It’s happening every day.

The global supply chain shortage may be doing more for reshoring movement than any previous initiatives. North American manufacturers have the capability, expertise, ingenuity and the drive to produce goods of guaranteed superior quality with lead times that are shorter than those of any offshore producer. If that’s not a competitive advantage, nothing is.

Hopefully recognizing these truths will lead to change. On one hand, government and business leaders may be more proactive when faced with a looming global business crisis. And, on the other hand, the trend toward North American production may now have the momentum to rejuvenate the manufacturing sectors in Canada and the U.S.

Here in Canada, vaccination rates are soaring while Covid case rates continue to fall. While our reopening may be lagging behind what’s happening in many parts of the U.S., businesses and manufacturers across the continent are talking about returning to normal. But maybe returning to normal isn’t possible or maybe there’s a better idea. At Algood, there are many ways that we are using what we learned in the past 16 months to create a new and much better normal. Here are just some of them.

Employee Health, Safety & Scheduling
Gone are the days when no one cared about employees who come to work with the sniffles or when anyone can enter the plant. We’ll be protecting our surroundings by doing a lot more health education and restricting access to outsiders.

The last 15 months have proven that people can be productive working from home. Even before Covid, we had begun discussing the possibility of having our customer service reps and other office staff work remotely. We knew that it would save them the stress of traveling to and from the office while providing more time to meet the needs of their families. We’re committed to making it an option for those staff members who aren’t totally Zoomed-out.

Travel and Customer Meetings
Covid has proved that you can achieve outstanding customer service online. It has also has exposed the many costs of travel. We’re always looking for the best way to meet our customers’ needs and now we know that a Zoom call might be the best solution. However, a lesson we learned from Covid is that personal interaction is irreplaceable. Rest assured that I’ll still be booking many flights to see our customers.

Disaster and Recovery Planning
In our very early discussions about Covid, I urged our employees to think about it like a fire – that spreads quickly and does increasingly greater damage. Now, we understand that we really have to be prepared for any disaster and have recovery plans in place. What happens if a tornado rips through our plant or if we are the victims of a ransom ware attack? We have put a disaster and recovery plan in place and are meeting every six months to review and refine it.

Supply Chain Management
The popular thinking on this is that businesses now have to avoid putting all their supply chain eggs in one basket because Covid has revealed just how vulnerable companies are to their suppliers. The other side of the coin is that sourcing supplies from multiple vendors affects prices. Making a company a sole source vendor may reduce the costs and allow manufactured goods to be priced more competitively. We’ll be looking at both sides of the coin to ensure that our customers get the best service and the best possible pricing.

Reshoring
Pre-Covid and during the Trump administration the idea of producers pivoting to North American manufacturing was gaining traction. Now we are seeing that the real price of over-dependence on Asian markets is unsustainable lead times and undependable quality. Not only are more businesses repatriating their manufacturing plants, but we have more customers insisting on goods that are 100% North American made – and we expect both of those dynamics to continue.

Just-in-time (JIT) manufacturing
Lean or JIT manufacturing was a widely accepted practice pre-Covid. The idea was that by receiving goods only as they are needed for production, inventory costs and wastage could be reduced. The obvious downside is that all those benefits can be nullified by delays in the supply chain. The predicament is that post-Covid, you can’t count always on a producer’s ability to provide supplied goods exactly when they are needed. No matter how JIT fits into the future of the manufacturing sector we’ll be ready to meet the needs of our customers.

In many ways, we will be a better supplier and a better manufacturer because of the lessons learned from Covid. A new normal will be a very good thing.

Wishing our distributor partners, customers, colleagues and suppliers a safe and relaxing summer – and much success in the balance of 2021.

These days, everyone is talking about Covid-19 vaccines. It’s a particularly hot topic here in Canada because our supply of vaccines coming from a Pfizer plant in Belgium has been significantly reduced this month. While there are healthcare, political and business aspects to the discussion, I can’t help thinking about this vaccine issue from the perspective of a manufacturer. And that leads to some pretty eye-opening perspectives.

Pfizer’s vaccine supply to Canada is being produced in a plant located in Puurs, Belgium. This is a manufacturing facility that was, until this year, producing 400 million units annually. Having become the centre of Pfizer’s pandemic response in Europe, it is now expected to deliver about 1.5 billion doses of the Covid-19 vaccine by the end of 2021. Consider that the Pfizer vaccine was just approved in December. That’s a 400% increase in output with next to no lead time.

Canada’s supply reduction is a result of modifications being made at the plant in Belgium to increase capacity. To achieve a 400% increase in output, there is no doubt that new machinery would need to be added and doing that without impacting output is impossible. Having seen what happens when we add machinery to our plant in Toronto, I can only imagine the disruption being caused by adding equipment in Belgium. Frankly, it’s impressive that supply is only being cut by 25%.

The investment Pfizer is making in this facility is enormous. Production equipment is very expensive and very specialized. There are tens, if not hundreds, of millions of dollars of machinery on the floor in Belgium. In addition, there are over 2,000 workers at the plant in Puurs. If I lie awake at night thinking about the capital investments we are making at Algood, the people at Pfizer must never sleep.

This is a facility that is running 24/7 where every single unit produced is precious. There is no room for any delays and yet, as a manufacturer, you know there will almost certainly be glitches. All it takes is one simple bearing to fail and a production line can be down for hours, if not days. Production designers must come with up a plan that will meet targets despite those inevitable contingencies.

Beyond the equipment and the output, there are many important considerations. For example, 1.5 billion doses annually is over 4 million doses daily. You need an immense amount of space to store even one day’s production before it is shipped. Now, add to the challenge the fact that the Pfizer vaccine must be kept at -70ºC, which requires specialized freezers. In addition to all that, the facility must be kept perfectly clean to preserve the sterility of the vaccines and all Covid precautions must be maintained. It makes storing a day’s worth of caster production look like a walk in the park.

The supply chain logistics are mind-boggling. Besides the chemical ingredients in the vaccine, there are bottles, protective syringe caps and labels that must be available in never-ending supply. Any supply chain gap has the potential to halt production. While Pfizer has achieved some vertical integration, managing the supply chain is a thankless job.

Finally, I think about the pressure being put on Pfizer. Its CEO is fielding calls from political and healthcare leaders, business partners and investors while presiding over the efficient operation of the company. I recall the pressure we were under at Algood supplying casters in the early days of the fight against Covid. Fielding demanding and panic-filled calls at literally every hour of the day, the stress was almost unbearable. I can’t imagine how that effect is multiplied when you are supplying the world and my respect goes out to those leading Pfizer.

You see, while there are many facets to the discussion about Covid vaccines, there are some that can only be seen by a manufacturer.

This past February, the members of our management team looked at me like I was crazy as I rattled off all the measures that I thought we should immediately implement. I had just returned from two weeks of travel overseas and in the U.S., and from what I witnessed it was clear to me that the coronavirus (it wasn’t called Covid yet) could potentially have devastating impact. While business travel can be a real pain, but there is also no question that my travel in the weeks immediately before the onset of the pandemic provided me with the foresight to preserve the wellbeing of our employees and the viability of our company.

In late February and early March I found myself in places that were being dramatically affected by Covid. People were getting sick and those who weren’t were getting anxious. Governments were scrambling to respond and it was obvious that something huge was going on.

When I returned to Canada, I was really disappointed to see how little was being done by governments to prepare for a pandemic. That made me all the more determined to ensure that Algood and its people would be as safe as possible.

I began our management meeting by saying, “we have to treat this like a fire.” Fires spread quickly and can be unbelievably destructive. It took a while but I convinced the team that we needed to act and then the ideas began to flow. There is no question that the measures we put in place six months ago were the key to our ability to survive. And most of those measures are still in place today. Here’s what we did.

• We compressed the work week from five days to four. That reduced the amount of time that staff we were in the plant and office, minimizing their travel to and from work
• We expanded the night shift encouraging people to move from day shift to night shift to lower exposure to fellow employees
• Masks became mandatory for all employees
• We ordered as much PPE as we could get
• Because masks were already in short supply, we created our own bandanas for employees to wear
• We installed workspace barriers to protect employees
• We began planning for moving all non-plant staff offsite and determining how to manage the company remotely We began planning for moving all non-plant staff offsite and determining how to manage the company remotely
• The building was sealed. No one other than employees could enter for any reason
• Knowing that our supply chain would be vulnerable, we began seeking out alternate sources
• Contingency plans were developed in the event a staff member became infected including the communication and safety protocols and a standby request to a company that would sanitize the entire plant
• A schedule of health and safety meetings was put in place

As I said, most of these measures are still in place. In fact, at a recent health and safety meeting, employees told us they wanted to continue with this approach. In hindsight, there is very little, if anything, I would have done differently and the reality is that this crisis is far from over. We remain vigilant and are asking our employees to do the same.

Thankfully not one of our employees has fallen ill with Covid and business is strong. While there is undoubtedly some luck involved in that, I am certain that our actions have had impact.

Maybe when I can resume traveling, I’ll be a little more appreciative of the foresight and insight that it can bring.