Next imperative: Economy drives manufacturers to go lean; outsource more non-core functions

Plant managers are looking to extend the performance of their production assets, just as consumers are waiting another year to buy a new car or washing machine. A majority would outsource non-core functions—specifically, production machinery and assets maintenance—to bolster against recession, according to a survey by Advanced Technology Services, conducted with Nielsen Research.
By Manufacturing Business Technology Staff February 7, 2009

Today’s manufacturing leaders and plant managers are looking to extend the performance of their production assets, just as consumers are waiting another year to buy a new car or washing machine. A majority say they would outsource non-core functions—specifically, the maintenance of their production machinery and assets—to bolster against recession, according to a survey by Advanced Technology Services (ATS) conducted with Nielsen Research .

In the survey of 100 U.S. senior manufacturing executives—with titles of CEO, CIO, Vice President and Plant Manager—two-thirds said they would outsource maintenance as a hedge against a downturn in the economy.

The plant asset maintenance market—dedicated to the care and keeping of these assets—is sized at $124 billion and growing, as indicated by New York-based analyst firm Frost and Sullivan . Strategic factory maintenance is the imperative when access to credit is tight, new orders are down, and businesses must put off making new capital purchases.

Manufacturers like Eaton, Honeywell , and Service Heat Treating already adopted this recession-hedging strategy. By implementing lean strategies, eliminating hidden waste, and flexing with a customer’s changing business needs, ATS offers an avenue for these manufacturers to defer capital expenditures and be better prepared to hit the ground running when the economy does recover.

“ATS helped our factory run better”, says Glenn Kormanik, VP of Milwaukee-based Service Heat Treating. “Our plans for growth would have stopped in their tracks had we not begun to implement a world-class maintenance program with ATS. Doing so helped us compete for what little business there is today, and ensures we’re able to meet increased demand once the recession is past.”

According to Jeffrey Owens, President of ATS, “Companies are being forced to reexamine how they’re doing things to gain more efficiency from their manufacturing assets during this recession. Outsourcing the care and service of their most valuable assets to ATS enables them to improve productivity, reduce costs, and ultimately extend the life of those assets. That’s where we add value and help contribute to our customers’ bottom line, in both challenging and good economic times.”

An ATS white paper, Why Outsourcing Maintenance is Your Best Hedge in A Down Economy , provides guidance on what companies can do now to extend the performance of their factory assets and prepare for economic recovery. Get a copy .