Friday, June 1, 2018

Unit Labor Costs suck profits from mattress manufacturers - and it may be getting worse!

Here are some highlights from today's US Bureau of Labor press release regarding the American employment situation...

"... Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries...
  • Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods industries. 

Good news for the American worker; wake-up call for the American manufacturer.
More Americans are enjoying better incomes, and hopefully the American manufacturer can benefit when the population spends that extra money on manufactured products - like new mattresses!

But as we've pointed out many times in this blog, as the pool of available workers shrink, labor costs will increase. Employers are forced to increase wages to attract ideal applicants, and keep existing employees from jumping ship for a higher paying job at a different business.

This impacts two key areas of your profitability: Unit Labor Costs (the labor cost to produce one unit of your manufactured product) go up, and Productivity (the amount of value produced per employee) goes down. That's not a good scenario for manufacturers like you.

As explained in a another recent BLS report regarding 2017 Manufacturing Productivity Costs, "... Employers experience increased unit labor costs when hourly compensation growth outpaces productivity growth. Unit labor costs increased in 19 of the 21 manufacturing industries, as hourly compensation growth outpaced that of productivity..."

Based on this most recent May report, Productivity Costs may be worse for American manufacturers in 2018 if employment trends continue this trajectory. 

Efficiency trumps Unit Labor Costs
To combat rising labor costs, you need to cut out waste, and produce more value per employee. Handling and disposing of material scraps from cut and sew operations in the mattress factory is a total drain on profitability! It adds no value to your product, and sucks money right out of your operations. GSG now offers a vacuum-powered automatic waste disposal system from Waste-exit. It literally sucks waste out of your mattress production.




Check out this video see this amazing system at work
and
learn more at our website.

Eliminating the waste is the low hanging fruit for improved efficiency, but there are many other areas to improve upon and GSG has solutions for every area of your mattress plant. Click here to see more new hyper-productive equipment from GSG.



Friday, April 13, 2018

Mattress manufacturers optimism grows despite intense competition

All the recent news points to improving business opportunities and manufacturers are ramping up for it. In a nationwide survey of manufacturers reported this week, small manufacturers are expressing record high optimism right now...
"...More than 93% of manufacturers have a positive outlook on their company’s prospects in the U.S. economy – the second-highest level ever recorded by the National Association of Manufacturers – its most recent quarterly survey revealed.

Meanwhile, optimism among small manufacturers was at its highest level ever recorded throughout the survey’s 20 year history; 94.5% of companies reported that they were positive about their future..." (Read full story at Fox Business: https://www.foxbusiness.com/markets/trump-says-tax-cuts-allow-workers-to-pocket-more)
All of this optimism appears to be true of the mattress industry too, according to Furniture Today magazine:
"...Strong attendance at the recent International Sleep Products Assn. Expo indicates a growing sense of optimism in the industry, ISPA officials said.

ISPA reported that the expo, held last month in Charlotte, N.C., was one of the largest and most successful shows it has ever held..."  (Read full story at Furniture Today: http://www.furnituretoday.com/article/552466-ispa-expo-turnout-shows-bedding-optimism-increasing/?utm_content=69912013&utm_medium=social&utm_source=twitter)
GSG was witness to this optimism in our show space at ISPA EXPO as visitors came looking for ways to enhance their products and methods. Crowds had a great response toward our new Gribetz Spectrum mattress quilt machine. Gribetz engineer, Michael James, hosted a series of presentations in the booth that define key leaps in mattress construction during his 35-year career in the industry. Our booth guests enjoyed hearing from Michael, but they were mostly enthusiastic about the new, unique styles this machine can create.
Michael James, 35-year industry veteran Gribetz Engineer,
hosted industry talks at ISPA EXPO 2018.
While optimism runs high in the mattress industry, so does challenging competition, and everyone wants differentiation to set themselves apart from others. Our customers acknowledged that this unique quilt machine is ideal for just that! The Spectrum has 15 independent sewing heads that can automatically switch to different patterns for the most efficiently produces stylish quilt panels in the industry.
The Spectrum uses Targeted Pattern Placement technology to create quilted mattress panels with a unique combination of pattern designs.
There's much more it can do. Take a look at this video, and visit the Spectrum web page at www.gsgcompanies.com.


Friday, February 2, 2018

National manufacturing productivity is up - are you keeping pace with your peers?

Great gains in productivity were achieved by manufacturers in the 4Q of 2017. Were you one of them?

"... Unit labor costs increased 1.3% over the last four quarters.However, manufacturing sector labor productivity increased 5.7% in the fourth quarter of 2017, as output increased 7.3% and hours worked rose 1.5%.These were the largest quarterly increases in manufacturing sector productivity and output since the second quarter of 2010, when output per hour increased 7% and output jumped 10.7%..."(read full IndustryWeek story here: http://www.industryweek.com/economy/overall-labor-productivity-down-manufacturing-productivity)
This report includes some great numbers for your manufacturing peers, but if you're a mattress manufacturer, and can't claim similar production gains, you may be slipping behind. As world economies are heating up, US manufacturers are using technology and improved efficiency to get more production from a more expensive shrinking workforce.

2018 is poised to present even greater challenges for mattress manufacturers. The American worker is expected to have more disposable income on hand and they are ready to spend it. The potential for greater mattress sales is a welcomed announcement - unless you're not prepared to meet demand.

Dropping unemployment rates are good news for the macro-economy, but if you need skilled labor to meet an increase in production demand, good luck! As the report indicates, unit labor costs increased along with the production output, so to maintain good profit margins, your productivity improvements will have to exceed your labor costs growth.

Profit from quilting
The mattress quilting department equipped with Gribetz quilters is one of the most profit-producing departments in mattress manufacturing. You can gain so much value-added productivity per hour with Gribetz quilters that it can raise average productivity across your whole plant. If you are having a hard time sourcing and training quality skilled workers in other mattress production departments, it would be wise to invest in Gribetz equipment to lift your overall productivity profit.

More uptime = more productivity = more profits!
Gribetz has recently introduced a new quilter that makes this process even more productive. The Spectrum quilter is composed of 15 independent sewing heads. It automatically switches from one quilt pattern to another with no need for costly down time to changes needle settings.
See the NEW Gribetz Spectrum at ISPA EXPO in March.


Profit from the Spectrum sooner with new tax incentives this year!
See the Spectrum at the ISPA EXPO, March 14-16, in Charlotte, NC. Now is the best time to invest in a Spectrum thanks to the recent changes in US Tax Law. You can now expense the full cost of this equipment this year, rather than dragging depreciation costs through a series of years. Buy it now, expense it immediately and start profiting from it right away!



(All productivity claims are based on reasonable manufacturing conditions. All operations are different and your results may vary. Consult your tax professional for full details about tax incentives listed herein.)

Tuesday, January 2, 2018

Growing labor concerns amid a shrinking workforce in 2018

Interestingly, three major labor concerns facing manufacturing employers in 2018 have nothing to do with the growing costs of increasing wages...
"...Laws affecting inquiries into the criminal histories of job applicants and workplace drug testing are among the issues manufacturers will grapple with in 2018...."
(Read full IndustryWeek magazine article here: http://bit.ly/2CtVztu )
Mattress manufacturers can budget for "fixed" expenses like wages and benefits, but some things about your workforce are out of your control. When unforeseen circumstances disrupt your productivity it compounds other expenses and can send your business spiraling. This IndustryWeek article addresses these increasingly alarming hiring concerns:

  • Suppressing background criminal histories
  • Productivity losses due to the opioid crisis
  • Alternative drug testing methods
All of this complicates an already challenging hiring environment for mattress manufacturers. It's understood that your most valuable asset may be your good workers, but it is becoming difficult to retain them, and even harder to replace them when they're gone.

2 keys to beating labor concerns starting in 2018
This news emphasizes the need to choose mattress manufacturing equipment that increases daily productivity, and requires less skill to operate. These two factors are key to beating these labor problems and keeping your production moving forward at all times.

Here are two GSG machines to start with...
Gribetz V16 quilter can increase daily production by 40%

The strong, fast Mattress Master Optima de-skills the tough work of tape edgers.


Click here for more details: V16 quilter  and Optima Tape Edge Machine

GSG has many new machines that fulfill both of these key criteria on the same machine. Visit www.GSGcompanies.com to see equipment choices for every part of your mattress manufacturing plant.

Best wishes in 2018. Global Systems Group hopes you have a highly productive and profitable year!