Additional reporting by OEM Editor-in-Chief Stephanie Neil and Packaging World Editor Matt Reynolds
PMMI’s 2019 Executive Leadership Conference features impactful education that can help machine builders navigate the latest industry trends and take their business strategy to the next level. The conference kicked off in Palm Springs, Calif. with Shark Tank’s Daymond John sharing his “SHARK” points, which helped business leaders in attendance reinvigorate their approach to machine building and operating a business. John encourages leaders to set goals, do your homework, find the amour—or love—in your business and within your company, network and family, remember that you are the brand and most importantly, keep swimming when encountering challenges and new demands.
CPGs tell all
Equipment procurement and packaging managers from CPG companies Hershey, Bumble Bee Seafoods and Danone North America shared their top concerns and demands are and how machine builders can help them meet their goals and everchanging consumer demands.
“I would love to leave the executive leadership conference with a partner that can come in and automate one of my manual processes,” said Brett Butler, general manager of the Sante Fe Springs, Calif. operations at Bumble Bee Seafoods.
CPGs shared their top pain points, including the ones they experience when working with some of their OEM partners. Josh Becker, senior manager of packaging systems for The Hershey Group, said he wishes more machine builders would approach him with a solution tailored to his business rather than filling him in on the latest and greatest technology that has nothing to do with him.
Whereas Shawn French, director of packaging performance and productivity at Danone North America, wants OEMs to view customers as more of an ongoing relationship rather than a business transaction.
“It’s great when an OEM comes into fix our machine, but then they leave, and I wish they would spend more time on training our operators so that once they leave, we still have some knowledge on how to fix the machine or solve problems ourselves,” French said.
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The PMMI Advantage
As a PMMI member, there are a variety of opportunities and resources machine builders can leverage to enhance their business and stay abreast on emerging trends. PMMI is also offering different assistance programs for OEMs that want to break out into new, global markets, partner with schools to recruit a diverse, skilled workforce as well as continue onto higher education opportunities.
- See how machine builders can tap into the PMMI U Skills Fund to build lasting relationships with local schools to build their workforce: oemgo.to/skillsfund
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Balancing confidence with caution when making business decisions
Joe Galvin, from Vistage, a company that offers executive coaching for manufacturers, shared business optimization and leadership enhancement strategies for the CEOs in the audience.
According to Vistage, CEO confidence has fallen for five consecutive quarters from 110.3 in 2017 Q4 to 91.6 in 2019 Q1, but this is not necessarily a bad thing as Vistage encourages CEOs to have “confidence with caution” when making important decisions in this economy.
Vistage polled manufacturing CEOs and found the top 10 topics business leaders will have to make in 2019 (ordered from most important to less important):
- Productivity and education
- Market development
- Hiring, recruiting, sourcing
- Capital/cash management
- Financial Management
- Performance Management/HR
- Employee Development
- Mergers and acquisitions
- Sales
- Product pricing
Consider these 2019 top projections and questions that could empower CEOs to make the best business decisions for their company.
Talent management
Projection: Employee development is the key to retention, engagement and hiring.
Action: Improve retention by developing and engaging your existing people. This will set the foundation for finding the right people to add to your team. High performers want to work with other high performers.
Questions to ask:
- What development programs do you have in place?
- What are goals?
- What potential do you see in investing in a development program?
Customer engagement
Projection:Existing customers are the foundation for growth in a declining business cycle.
Action: Maintain the revenue base by shifting focus to improving customer service for existing customers.
Questions to ask:
- What priority do you place in customer service?
- Do you measure Satisfaction or NPS?
- What would you find if you did?
Operations
Projection:Technology-powered productivity drives operational efficiency.
Action: Digital transformation—leveraging business applications to transform processes—requires training and adoption to effectively improve performance and productivity.
Questions to ask:
- What processes are you considering or planning to digitize or automate?
- What training do you have in place to ensure effective use of your technology investments?
- Who is responsible for holding employees accountable for the use of systems and technologies?
Financial management
Projection:A slowing economy will force deeper scrutiny of cash, capital and investments.
Action:Tighten KPIs in critical business performance areas to improve visibility and predictability going into a declining business cycle. This will help determine when to take action, such as raising prices or cutting costs.
Questions to ask:
- What do you measure on a monthly basis?
- Do you have any established leading indicators that help you see when it is time to change?
- Are your KPIs aligned to strategy? Do you share performance with staff on the KPIs in place?
Leadership
Projection:The CEO’s ability to instill and communicate a strong culture will improve performance in all economies.
Action:Business cycles come and go, but building and living a strong culture sustains growth in the decline and powers the business forward when the cycle turns.
Questions to ask:
- How would you describe your culture today?
- What would your newest employee be able to tell you about your culture? Your most tenured?
- What investments do you make in promoting this culture for retention and recruitment?
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Wining the talent war
The rules have changed when it comes to recruiting and retaining talent. In a breakout session at PMMI’s Executive Leadership Conference, the results of research conducted by market intelligence firm Proactive Worldwide Inc., were shared. The main message: think differently about hiring.
“It’s not about recruiting talent that knows all of the information. The new mindset is to target people who you can train to do the job,” says Jeff Mansfield, senior vice president of Proactive Worldwide.
Mansfield outlined some of the talent techniques that work and that don’t work. When it comes finding new people, surprisingly, the consensus is that professional recruiters do not work. They bring in candidates, but at a high cost, and the individuals they target don’t necessarily provide high productivity which results in high turnover. In addition, Internet job boards and employment websites are not working.
Instead, in this digital age, what does work are digital interviews conducted via Skype, for example, which are important when recruiting candidates nationally. And, locally, industry events and open houses are still a great way to attract new talent as it brings in a wide pool of candidates with onsite interviews that accelerate the hiring process.
In addition, “social media is breaking the clutter of traditional job boards allowing you to broadcast opportunities to work with the business,” Mansfield says.
The industry also must start to think about erasing the stigma of manufacturing and packaging and work to “pitch the youth” in the community. To that end, develop relationships with educational groups earlier than high school and college. Hold an open house and have people in to visit the factory to understand the contributions the company makes to the community and visualize what it’s like to work in a modern manufacturing organization. “It’s about changing the image,” Mansfield says.
Also, think about the types of policies in place that cater to a more adaptive workforce—such as work at home options, flexible work schedules, incentive programs and providing a way for millennials to engage with leadership through monthly town halls or lunch and learn gatherings.
Lastly, think about the baby boomers who are retiring—who may not be ready to stop working completely. Perhaps keep someone who is ready to retire on with decreased hours or days. Instead of losing the talent completely one day, this provides a way to slowly transition the work—and the on-the-job knowledge.
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Cybersecurity
Does your company have a defined cyber risk strategy that is documented and communicated to executive leaders? More than 50% of manufacturing companies do not, and more than 29% of manufactures are aware of having had a cyberattack in the past 12 months. And now, there are even more ways that hackers are gaining access to an OEMs operations and data.
Emotet and Trickbot
According to Crypsis, Emotet is malware that steals data, banking credentials and potentially email. It can also spread other banking trojans, such as Trickbot, or other malware that steals financial information, bank logins and, in some cases, Bitcoin wallets. Emotet has the ability to propagate throughout a network, which makes it dangerous to businesses and other organizations that tend to have numerous endpoints linked together. For its part, Trickbot is another data stealer that can harvest email information, Point of Sale information and credentials, and then propagate itself. Trickbot also targets financial sites and steals banking information/ credentials.
Business email compromise
While the deployment of office 365 business email systems has been steadily increasing, so have the efforts to hack into these systems. attackers have developed increasingly sophisticated methods to launch what
is known as business email compromises, or bec, whereby they spoof users into giving up sensitive financial information that they can then exploit for financial theft and fraud, among other things.
New trends in ransomware
The overall trend is toward enterprise ransomware, where instead of attacking one machine or device, the attack spreads virally throughout the organization. Under this scenario, the sizes of ransom demands are increasing, to between 20 and 50 bitcoins. Negotiating ransoms is becoming less successful and generally ends up costing the victim more than simply paying the original ransom demand.
Find out how Crypsis, a data breach, security and digital forensics company identifies and eradicates threats and risks associated with cyberattacks, advises OEMs to combat these new threats by visiting: oemgo.to/elccyber
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As U.S. economy slows, manufacturers should shift focus
“The slowdown is real, it’s happening all around the world, it’s coming to our shores, and in some segments of the economy, it’s here already,” says Alex Chausovsky, Director of Speaking Services, ITR Economics. “Despite the good feeling, the strong customer orders, and the positive momentum, that mindset that you had from 2018 needs to change to a more conservative one, a more defensive one, and for slower growth in the U.S. economy overall.”
Growth will continue, of course, but it's going to feel slower compared to 2018. The growth for 2019 is expected to land around 0.9% GDP, relative to a 3+% growth for 2018. Chausovsky said this isn’t unexpected, given our decade-plus of nearly unprecedented expansion after the great recession market correction event of 2008. And even more recently, the recent continued expansion of GDP over the past two and a half years have been, in themselves, remarkable developments, though perhaps artificial due to a short-term tax reform that looks to experts like Chausovsky to be far more expensive than helpful when perceived via a longer view.
“The passing of the tax reform bill of 2017 added about six to nine months of acceleration to the usual U.S. economic business cycle,” he says. “But that boost, that injection of stimulus we gave ourselves, has ended. We’ve reached the back side of the cycle and we’re not expecting to see the benefits of tax reform any further of 2019.”
So according to ITR, the U.S. economy has peaked in terms of ITR space within the usual 2- to 4-year cycle. The good news, however, is that the impending slowdown isn’t expected to be particularly significant, it is only expected to feel different than the recent artificially-supported boom years. And after the mild slowdown, another rising trend is predicted in 2020 to 2021.
Learn how to prepare yourself to succeed in the future during this slowdown: oemgo.to/economyslowdown
To learn more about PMMI events like the Executive Leadership Conference, visit: pmmi.org If you are a part of a PMMI member company, learn how you and your colleagues can leverage your membership this year by visiting: PMMI Member News (Spring)
