Going to BCMC?

My conception of what BCMC is and why a person might want to attend has changed. In past years, reasons for going included shopping for new equipment, seeing what new ideas were being introduced, attending a seminar on the economy or a part of the business you wanted to get to understand better, seeing old friends or simply sharing problems with other component manufacturers.

The manufacturing machinery 'side' of the show is clearly not the centerpiece anymore. The technologies offered are now well established, and although you will be able to find something new, it is unlikely that these "new" things will justify the trip.

The primary reason to attend in 2011 is education, to make an investment in yourself and your company. With 2-3 days and perhaps $1000 you can immerse yourself in many of the things you didn't have time for this year, like learning about some additional capabilities in the software you are currently using, or finding out how other CM's are doing 'more with less.' Although overall attendance is down significantly from a few years ago, BCMC still represents the largest congregation of CM's anywhere.

Have a passion about the details of truss design? Several senior engineers will be there to talk over whatever subject is a 'hot button' for you. Have a machinery maintenance question? Want to know how other people assign work to their designers? Whatever the subject, there will be CM's and MiTek 'experts' there, on the floor, ready to discuss anything you're interested in. This is a great time (before the crowds return) to spend as much unhurried, 1-on-1 time as you want.

Truss Labels

Truss labels clearly identify the truss for the end user in the field, and provide contact information in case someone wants to know, "Whose truss is this?" Truss labels are printed on either rugged paper or a tough plastic and attached to every truss.

Trusses have always been “labeled,” more times than not by the stacker using a Magic Marker writing the truss ID on the 1½ " edge. Contact information can be added through use of a rubber stamp applied to the 3½ " face. Why go to the extra expense of printing and attaching a label?
"Labelers" feel that they are presenting a professional impression. Labels allow for the truss ID and contact information to always be the consistently displayed, not subject to "who is doing the marking" and weather conditions. It might only take one job site visit prompted by unreadable truss marks to get a company started making truss labels.

Although you can use a standard laser printer with some heavy stock paper, the "standard" way to create truss labels is to use a dedicated, industrial thermal printer and a roll or fan-folded stack of labels specifically designed for use with that that printer. Industrial printers are fast and have no problems with ink smearing or running. Among the thermal printers, the most often seen in the Northeast are the CL408e and CL412e printers from Sato. The "408" model works fine for most people. The "412" printer has better resolution and is a good choice, especially if you'd like to include graphics, like a logo, on the label and costs about $1,500. Don't skimp on extra memory if it's offered, it can speed up printing considerably. The Zebra S4M is also popular, and runs about $800. Datamax is another option.

The cost of printing labels includes the labels themselves, and an ink transfer strip. As labels are fed into the printer, the ink transfer strip (on a roll like packing tape) gets used up in the printing process. All told, a reasonable estimate for overall material costs are about 3 to 5 cents per label. One component manufacturer that sells $5-7 million in trusses a year calculates that he prints 66,000 labels at a cost of about $2,800 per year.
The choices for labels are many, and probably the best plan is to contact a high quality label supplier who can ask the right questions and find the best solution for you. You might ask about options for special colors and pre-printed backs. Dasko and Workflow One are two such label suppliers.

Labels are either "unsticky" and attached under a plate, or "sticky" and wrapped around a chord with the ends overlapping so the label is actually attached to itself as well as sticking to the wood. "Unsticky" labels (4” x 6" is common) are either made of paper or a tough plastic. The "wraparound" style is usually made of paper.

Label printers come with Windows drivers, just like any other business printer, that needs to be installed on the computer that will be using the printer. In MiTek's software suite, truss labels are printed using the custom report engine in the business management (MBA) software, that can be customized to look like most anything you'd like. Since MBA is also used to create the production groups, it's an easy process to print only the labels you need for a particular production group, put a rubber band around the stack, and then hand the labels to the production guys with the other paperwork.

I’d like to hear your thoughts about the value, or lack of value, in using printed labels.

Margin Discipline

Starting in early 2009, my discussions with fabricators in the Northeast began to include our guesses as to the timing of the “recovery” that surely was coming. The last half of 2008 saw a shocking drop off in orders, coupled with a shattering of confidence in where it would all end. But by Spring of 2009, the worst seemed to be behind us, and we started speculating on when things would get back to ‘normal.’ Conversations about when the economy would improve, banks would begin lending, and people would again be buying new houses have continued from that time right up until this Spring.

Now, over two years later, these speculations don’t seem “right” anymore.  It’s a feeling that, “Yes, there is indeed a problem, but waiting for time to pass isn’t going to fix it.” Why would I say that? It seems to me that since about May of 2009 that a new “level” of demand for building components emerged and for the past two years (and taking into account some seasonal and regional fluctuations) things have been pretty consistently at this ‘new level.’ If that’s true, what are the implications?

Excess Capacity

Let’s make an assumption that may not be too unreasonable. Specifically, let’s assume that in mid-2008 the market (or “demand”) for components in the Northeast was about equal to capacities of the fabricators in the market. If it was in fact only about 90% of the capacities of the fabricators, it won’t make a whole lot of difference to our analysis. The market then plunged and I’ll suggest that the new demand level is roughly 35% below the old level. During this same period several component manufacturers closed their doors, which may have taken about 10% of the production supply out of the market. This leaves roughly 25% additional unused capacity in the Northeast. After years of having the problem of ‘getting the work to  and through the shop,’ things have changed drastically. Having built and run our businesses in one market, we found ourselves competing in a completely different one.

The Response

Cutting costs and lowering overhead were the logical responses to the relative lack of work. Everyone made adjustments over time. The decreased demand means there is much more volatility, and often fabricators are busy for a few weeks, and then orders drop off to almost nothing. Staffing for the “valleys” while coping with the “peaks” has been a feature of life in this new market. When there wasn’t enough work to go around, a sense of desperation caused many to lower their margins – to “give it away” in order to meet sales objectives or “give the shop something to do.” The market understood this, and took further advantage – waiting longer to place orders and demanding unrealistic delivery schedules.

Reduced margins are expected when supply exceeds demand, but market forces have not put things back “in balance.” Not enough fabricators have closed down, in part because of a belief that things will “come back,” and in part because many have the resources to weather the storm, and in part because quitting is just not in our nature.

Changing

If demand for components continues to be considerably less than the supply for the foreseeable future, is there any way to be profitable, or more profitable – doing a lot better than ‘breaking even?’ I think there is, but it will require changing the way we look at things. I think margin discipline is the best hope for a profitable component manufacturing industry in today’s ‘buyer’s market.’ How to do it?

1. The key to margin discipline is understanding your costs, including overhead. Once you know your costs and decide on your minimum margin, stick to it. Get more if you can, but don’t sacrifice margins to get the job.

2. Coming to the realization that you and your competitors are all in this boat together. You are part of a community of suppliers in a market with excess capacity. You can continue to fight for the work that’s out there by sacrificing margin – or maybe do something different. An outward reflection of this realization would be to reach out to your competitors more. Get to know them, sharing your common struggles and questions. Doing this will help to build the sense of community this initiative requires.

3. Respect the product. This ain’t lumber, and not only is it custom designed and manufactured, the design work you do it still the best quality control check your customer has prior to construction. The services and products supplied by component manufacturers is worth every penny (and then some) you charge for it. You demonstrate your respect for the value of what you provide each time you price a job.

4. The fabricators that consider themselves leaders in the market can demonstrate that leadership now. Lead by example. Encourage and help others to follow.