The Corporation for Manufacturing Excellence (Manex) on March 31 released its NUMMI supplier viability assessment report, which recently was undertaken at the request of the Alameda County Workforce Investment Board (ACWIB). ACWIB engaged Manex to assess the continuing viability – in the absence of NUMMI - of a selected group of the county’s 31 manufacturing suppliers to the auto manufacturer scheduled to shut its doors on April 1.
The results of Manex’s assessments, which incorporated strategic, marketing, operational and financial reviews (including benchmarking performance against peer organizations nationwide), revealed that despite high levels of operational excellence in the top 5 percent to 10 percent of manufacturers nationwide, the majority will not survive the loss of NUMMI’s business that in many cases represents all – or almost all – of the firms’ revenue.
Without any action taken by these companies, the report projects losses of $160 million in revenue, 917 jobs, and $64 million in wages. The result is 75 percent unemployment among the companies participating in the study.
While the report identified several alternative revenue and market opportunities for many of the suppliers, including aerospace, medical devices, emerging clean tech, alternative energy and high-speed rail initiatives, it also noted that the short-term loss of NUMMI revenue is not the only pressing issue facing many of them.
“Many of the suppliers have had the luxury of significant and recurring revenue from NUMMI, but also succumbed to the resultant risk of being a captive supplier. Despite operational excellence and skilled workforces, several no longer have the innovation, strategy development, marketing or sales skills required to design new marketable products or to identify or penetrate new markets,” said Brent Meyers, president and CEO of Manex. “In many ways, the lack of revenue generation capability is a greater barrier to survival and success than the sudden loss of NUMMI orders,” he continued.
Meyers also stated that the companies with some level of customer and revenue diversification outside of NUMMI, and those that undertook initiatives and made at least some progress towards that goal since the shutdown became likely nine months ago – and certain six months ago – are significantly more likely to survive than others who have not.
According to the study, only two or three of the 13 suppliers are likely to remain viable without taking immediate action to identify and obtain new markets and customers. Six or seven additional suppliers would have a reasonable chance of business continuity if immediate assistance in the areas of strategy, marketing and sales were provided to them, and if they were able to sustain that progress through training and development – or augmentation – of their staff.
Upon receiving the report, the ACWIB indicated it would quickly explore how to move forward with the immediate advisory, training and development assistance for the businesses identified as having a reasonable chance of continued viability.
Founded in 1995, The Corporation for Manufacturing Excellence (Manex) provides a broad array of proven advisory and implementation solutions exclusively to manufacturers, distributors and their supply chains, enabling them to increase growth, productivity, quality and profitability. Manex delivers high-impact solutions in four key areas: strategy, people, process and performance. Meaningful, rapid impact and ROI are achieved through a modular-yet-holistic approach encompassing corporate strategy and planning, marketing strategy, training and development, Lean manufacturing, supply chain and logistics, Six Sigma, ISO and performance management systems. Manex is the Northern California affiliate of the NIST Manufacturing Extension Partnership.