Friday, October 5, 2018

UPDATED (10/05/2018): Unit Labor Costs suck profits from mattress manufacturers - and it may be getting worse!

(The main body of this post originally posted on June 1, 2018, but it has been updated in light of new relevant information.)


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. 


UPDATE 10/05/2018
The September 2018 US Jobs Report show another drop in unemployment rate to 3.7%, the lowest since 1969! Likewise, as suggested in this June 1 post, annual wage growth rate rose to 2.8% over the past 12 months.

Let's repeat, fewer workers are in your area, and higher labor costs are in your future. Read the remainder of the post below for help from GSG.....


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.



Monday, October 1, 2018

Chinese tariffs and anti-dumping duties offer relief for US mattress manufacturers

Efforts to oppose China's mattress dumping practices in the US mattress market are under way.

WASHINGTON, September 18, 2018 – Corsicana Mattress Company, Elite Comfort Solutions, Future Foam Inc., FXI, Inc., Innocor, Inc., Kolcraft Enterprises Inc., Leggett & Platt, Incorporated, Serta Simmons Bedding, LLC, and Tempur Sealy International, Inc. (collectively, the “Mattress Petitioners”) today filed an antidumping duty petition demonstrating how unfairly traded imports of foam and innerspring mattresses from China are causing material injury and threat of material injury to the US mattress industry. The petition was filed with the US Department of Commerce and the US International Trade Commission. The Mattress Petitioners allege dumping margins ranging from 267 percent to over 1,777 percent. The dumping margin is the difference between the Chinese producers’ US prices and a normal value calculated under US trade law... (read the entire press release at BedTimes Magazine)

The related press release issued by the Mattress Petitioners goes on to say that some adult mattresses from Chinese exports cost a mere $18! Obviously this leads to a damaging cut in the market share for domestic manufacturers.

The International Sleep Products Association (ISPA) encourages all US mattress producers impacted by this to immediately download and complete a questionnaire provided by the US International Trade Commission (USITC). 


80% of the $3.67B in imported bedding in 2017 came from China.
Source credit: ustradenumbers.com
91% of the tonnage of imported bedding in 2017 came from China.
That's a lot of volume of cheap beds!
Source credit: ustradenumbers.com
The graphics above show that the value/ton of China imports is very undervalued compared to other listed importers.

Facing the threat of possibly retroactive duties and a new 10% tariff announced last month, Chinese imports may slow down rapidly. A quick look at the USITC questionnaire focuses on the impact this has had on your capacity and your market share

The mattress import growth from China has been expanding for over a decade, and if you're still using the same machinery of that era, you may struggle to meet capacity demand should your market share rebound. Now is the time to assess your capabilities and your insufficiency too.

If a loss of market share in recent years has forced you to downsize staffing, you probably can't rely on new hiring to meet new production increases. Due to the current record-low unemployment rate, the manufacturing labor force is just not available. You'll need new machines that can produce more volume with less manual labor.

GSG suggests these three key machines for top productivity with minimal labor requirements:
Gribetz V16 1600 RPM quilt machine.
Fastest Tack & Jump quilter in the world!

Porter EST-501 semi-automatic flanger.
Automated turning belts and panel guides make for fast easy work!

Gateway Systems Mattress Master Optima semi-automatic tape edge.
Turning arm and flipping device make this tough task easy and efficient.

Act now to inform the USITC about the impact of mattress dumping, then act fast to assess your changing manufacturing needs with the help of your GSG representative.


Friday, September 21, 2018

Football and Economics; it's all about the stats!

Well the fourth quarter is upon us. Is your game plan a winner or a.. errr... a Browns?

The Cleveland Browns have finally got the win they've been struggling for since 2016! How does your team (and by "team", I mean your business) compare to the Dow Index? The Dow is a bellwether for the economy as a whole. So, is your mattress business on a winning streak or does it perform like the hapless Browns?

Touchdown dance or sitting on the sidelines?
It's great to see the economy doing so well - unless you're stuck on the sidelines. One reason mattress manufacturers are struggling is because they haven't changed their playbook to keep pace with today's market. If your mattress operations still look like it did when the Browns last had a winning season (2007!), it is time to huddle up and make a new game plan.

The customer has really moved the goalposts on us in recent years. Take a look at this...



Need a little razzle dazzle to start that winning streak?

Visit the Gribetz Spectrum quilter web page and see how much mattress quilting has changed since 2007!







Tuesday, August 28, 2018

Economic indicators look good, but is it time for mattress producers to react?

These are exciting times we live in!



The economic climate for US manufacturers in the summer of 2018 has been very lively. Let's summarize recent developments that are favorable for these producers:

  • unprecedented business confidence
  • strong GDP growth
  • record-breaking stock market performance
  • new tax incentives
  • manufacturer-favorable deregulations
  • strong efforts to balance import/export trade
  • a new post-NAFTA manufacturing trade agreement with Mexico
  • an uptick in retail sales
  • record low unemployment, coupled with rising consumer confidence

Of course many of these conditions impact some sectors far more than others, but, as a whole, it's becoming a very good manufacturing environment - and a very good selling market on the cusp of a boom! The key is finding out how to capitalize on factors you can benefit from the most.

So far, mattress industry sales have remained fairly sluggish as these economic changes have developed. This may be due in part because these economic changes have occurred so rapidly the consumer, and the mattress producer have not had time to react. If your business is still operating in the same fashion it did prior to today's business conditions, it may be TIME FOR YOU TO REACT.

When the mattress shopper catches up with the market, be ready to deliver. There is still time to upgrade your equipment for more productive highly-efficient equipment before the calendar year runs out. Thanks to recent manufacturer-favorable tax code changes, you can now deduct up to $1,000,000 worth of equipment with the Section 179 deduction. So you can basically get $1,000,000 worth of equipment for only $650,000 this year!*

Click on this Calculator to plug in your own numbers and see how you can benefit:

 Section 179 Calculator
(Courtesy of section179.org)

It's time for you to capitalize on these favorable business conditions, and prepare yourself for when the mattress shoppers catch up.


* This tax information, though based on a realistic scenario, may vary from your actual experiences. It is provided for illustrative purposes only. Consult a qualified tax professional for specific information before making purchase decisions.




Thursday, July 26, 2018

'Industrial Artificial Intelligence' for the mattress industry - Google it!

It's easy to get sucked into the news stories about robots and the imminent "robotcalypse" that will replace all our factory workers. That storyline has been prevalent since the mid-20th century, and it's an easy-to-grasp concept for most people. It's been in the making for 75 years, but it still hasn't really materialized.

Here's a new storyline that's not quite so easy to comprehend for some: industrial artificial intelligence . It's not about placing a micro-chip in your brain like some science fiction writers like to imagine, but it does place a micro-chip in your factory machines to learn processes and become more efficient.

Google has just announced the availability of Artificial Intelligence (AI) chips compatible with a Google development kit so manufacturers like you can more easily develop an AI program in-house. The link from The Verge below describes the Google program in greater detail....

This is similar to cloud-based retail IoT systems offered for residential HVAC systems, home security, and turning the lights off when you leave your house - but specific to machine efficiencies. Google already offers some Cloud-based AI packages, but this is a little different. This new chip program can be installed directly at the machine level for more greater cyber-security control, and better satisfy industrial needs locally.

Google doesn't do everything right, but they do know a few things about algorithms and user-friendly systems, and those details are key to AI success in the mattress factory.

It may still require some high-tech mojo on your part to install these Google chips, and produce a useful program to interpret the collected data. In order to effectively take advantage of AI down the road, you're first going to need to identify your manufacturing efficiencies and waste areas ahead of time.

Greenlight XT OEE system in use on a Porter mattress border machine.

The easiest way to start is with a "bolt-on" Overall Equipment Effectiveness application like our Greenlight XT system from GSG. You can automatically track machine operations, identify downtime and service issues, piece counts, and other critical production operations in real-time. Greenlight assimilates this info for you in customize-able charts and reports, and you can put it to use immediately!

This highly-affordable Greenlight system does not require any chip integration or special programming, and it can be retro-fitted to most existing factory machines. You can choose to follow the interpreted metrics on your in-house server or access it remotely via the internet.

If you're a naturally intelligent business person, you'll take your first step towards Industrial Artificial Intelligence with a visit to the Greenlight webpage at the GSG website.


Monday, June 25, 2018

Diverse mattress sales channels call for diverse manufacturing systems

"... Party City announced on Monday it plans to open 50 pop-up toy stores throughout the country from September through the holiday-shopping season. The announcement comes ahead of the Friday deadline when all Toys 'R' Us locations are expected to close.  The new temporary stores will be called ‘Toy City’ and will coincide with the company’s Halloween City pop-up stores in a variety of locations across the country..." (read the full Fox Business story here: https://www.foxbusiness.com/features/party-city-looks-to-become-the-next-toys-r-us)

Niche business models like this may be the way forward for bricks and mortar retailers combating online sales. A seasonal pop-up store may not work for everybody, but clearly every traditional retail category is being challenged by online sales, and it's going to take some creative business structure changes to deal with it.

Ironically, as bricks and mortar mattress retailers are playing catch-up to offer online goods, many online start-ups are now rolling out physical stores to reach more shoppers. Everybody wants to have their cake and eat it too!
GSG can provide hyper-efficient, flexible mattress manufacturing throughout your plant.
Square pegs don't fit round holes
As your retail channels diversify, it demands that your mattress manufacturing must become more sophisticated too. Diversifying sales outlets put a lot of strain on your supply chain and your manufacturing systems built for your traditional sales channels. It takes hyper-efficiency, and, more importantly, flexible production to compete in multiple sales worlds. Each channel has different demands to operate effectively.

Toys 'R Us was built for a different era of shopping experience, but today's shopper is building their own shopping experience. If you're going to stick with your traditional sales methods, hang in there! GSG will be there for you, just as we always have been. But if you're ready to try some alternative business models, GSG has many new, innovative systems to help you adapt.


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!