Leveraging innovative approaches while building on business basics are key to a successful expansion and growth plan.
By Eric Voyles, Executive Vice President & Chief Economic Development Officer, TexAmericas Center
While the COVID pandemic dried up orders in some industries, others were flooded with new business demand like never before.
Business growth is a good problem to have, of course, but when that trend isn’t handled properly, the effects can be devastating. For manufacturers considering growth during COVID, it means taking innovative approaches while remaining true to core business basics.
In recent years, lean manufacturing has been the go-to solution industrywide. It did, however, work against many manufacturers during the 2020 pandemic who found themselves with little inventory on hand and an ever-present threat of shutdown looming.
But lean principles shouldn’t be shrugged off entirely. The premise behind lean manufacturing looks to carry industry through these times as well. Lean taught us to question ourselves: What are we doing right? What should we be doing better?
The same holds true today. This is, undoubtedly, a challenge unlike any we’ve seen before. But we can still answer those same questions as we begin to navigate business in a new world. There is opportunity for growth, but it’s important to move ahead with caution and forethought.
Industry leaders would be well-advised to take time to reflect on their existing operations as they get back to basics. If business is strong enough to warrant a new location, tread carefully. Analyze the cost structure involved in opening a new location, making sure it checks the boxes of having good customer access, cost-effective transportation, and low utility costs.
Meanwhile, avoid being dazzled by incentives in a new location because, while they will help your business stabilize more quickly, it won’t benefit your growth plans if you stabilize at a higher cost.
What could help you, however, is clustering with others in your industry. Consider expanding to a location where your suppliers, customers – even your competitors – already operate. There’s less risk to setting up shop in a community such as this: A supply of trained talent already exists there and vendors are local so you can access material more quickly.
It’s also valuable to consider opening multiple, smaller operations instead of a regional mega-site. A COVID outbreak at a smaller facility can be more easily absorbed than a large shut down that would affect your entire revenue stream. Likewise, a second location could step up and cover production for both facilities if need be. The duplication of costs might pay off in the form of an insurance policy against an outbreak.
Employers also need to be proactive with safety protocols as a method of keeping business operations running. Separate workstations, plexiglass dividers, and staggered shifts are likely to become the norm moving forward.
Additionally, it has become critical for employers to recognize that attendance policies need to change. COVID has ushered in a new reality for companies, some of which report that employees miss an average of one day per week now. And it’s not just about work ethic anymore. Companies don’t want sick employees spreading germs at work and causing potentially bigger problems. For the first time, working while sick needs to be truly discouraged.
That’s why it won’t be surprising to see manufacturers in growth mode take this time as the nudge they needed to invest in automation. Say what you will about machinery – they don’t call in sick to work, and they don’t spread germs to other machines. Companies that have struggled with outbreaks in the workforce certainly can see the advantage of employing machines instead of humans.
For manufacturers expanding in this new era, the rules of engagement have changed. Whether a business grows through new locations, added safety measures, or increased automation is a decision that each company needs to address individually. There are no right answers to these brand new challenges.
As always, however, innovation that builds on solid business basics will continue to be a winning solution.