STAFDA State of Manufacturing: Reynolds: Worldwide Free Trade Is the Goal

Jason Sandefur

Manufacturing needs help from the U.S. government to create an equitable world free-trade system, Kim Reynolds stated in his State-of-Manufacturing address at the Specialty Tools & Fasteners Distributors Association 27th annual convention.\
Reynolds of M.K. Morse Co. in Canton, OH, noted that F.W. Dodge statistics show residential building is 9% ahead this year; however, nonresidential is down 5%, and nonbuilding construction has plummeted 16%, due mainly to cutbacks in state and federal spending.
Distributors to the construction industry find �a similar pattern� with those focusing on residential building and remodeling �have done pretty well the last three years.�
�In assessing the present state of the industry, the manufacturing sector is the one great concern,� Reynolds observed. �Fully 10% of all U.S. factory jobs have been lost since 1999.�
Much of the decrease �is due to technology-driven productivity gains,� as manufacturing has posted 4% increases annually for the past decade. �That means each year 4% fewer people are needed to produce the same amount of goods.�
�If we were here 100 years ago and someone told us we would one day need only 1% of our labor force to grow not only our own food, but that of much of the hungry world�s as well, we would have thought them crazy,� Reynolds declared. �But they would have been right.�
The �other major reason for the loss of U.S. factory jobs is that they�ve moved to China. � OEMs and retailers requiring cost reductions have promoted the �exodus.�
Buying Imported Products
�The same people who complain about foreign competition causing U.S. plant closings and lost jobs can be found shopping at Wal-Mart, stretching their paychecks by buying imported goods.�
�Recognizing we can�t have it both ways, policy makers in Washington have been reluctant to tackle the complicated China issue head-on.�
Small and medium-size manufacturers have seen a dramatic shift in revenue and profits in the last three years. During the strong economy of the late 1990s �it was easy to overlook the fact that companies and jobs were moving to China and Southeast Asia.�
Ken Morse founded the company in 1963. It now manufactures saws, blades and abrasives and his three daughters manage it. Reynolds began his career with Union Tools in 1975 and held district, region and national sales positions. He joined M.K. Morse in 1996.
Most Americans believe in free enterprise and open markets, but �in many cases the involvement of foreign governments in their trading system has led to corruption due to political objectives,� Reynolds finds. He cited the European Union, South Korea and Japan as having �interfered with free enterprise and skewed competitive advantages in favor of their domestic companies.�
The China market �represents both an opportunity and a threat,� Reynolds pointed out. �It is an opportunity because of its population and potential market for products. It is a threat because of its underdeveloped status, a billion Chinese workers and their government�s intention to make it a global manufacturing base.�
Small Business Recommendations
The Small Business Legislative Council has a four-point program it wants the government to support: (1) U.S. Department of Commerce should provide services to small manufacturers to help them compete against competitors in countries where governments are helping; (2) keep defense production in the U.S.; (3) U.S. trade negotiators should seek enforcement of WTO regulations on all countries; and (4) currencies should not be pegged to the U.S. dollar.
�If these four goals were achieved, we could make substantial progress toward a world trade system that is more equitable and closer to the ultimate free enterprise model we all want,� Reynolds opined.
�America cannot survive as a service economy,� Reynolds declared. �Manufacturing generates wealth, and without that function you cannot buy services.�
Reynolds advised manufacturers to concentrate on fully developing new product before introduction. �Too many products get introduced to the market with a lot of fancy bells and whistles,� Reynolds observed. �But once the hype wears off, the distributor realizes the product lacks the full development and follow-up of a complete sell-through program.�
�By using Marketing 101 distributors have the opportunity to embrace and take ownership in a manufacturer�s product,� Reynolds maintained. �Providing a distributor with a sustainable and profitable return on investment, especially in today�s economy, is more important than flash and glitz.�
Reynolds termed reps an �underutilized resource� that some distributors do noy use. �Other distributors are �begging� for sales reps who are prepared � and �prepared� is the key word � to come in and work with them.� Many distributors consider reps a �best practice� initiative and encourage salespeople to �ride with and sell with sales reps twice a month.�
�These qualified reps are passing on knowledge, adding value, planting seeds for future sales and closing sales on the day they �partner up�.�
�I even know of a distributor who pays cash rewards to his salespeople for end user calls they make with a rep.�
The best sales reps understand that �pull-through, sell-through sales help is their ticket to success. �2003 FastenerNews.com