The theme of adapting to change was set very early for the Valve Manufacturers Association (VMA) and Valve Repair Council (VRC) 79th Annual Meeting. Originally set for mid-September, the event date was changed thanks to Hurricane Irma. However, VMA and VRC members are an adaptable group, and when the dates were re-set for Oct. 11-13, most attendees were able to adjust their schedules. At the Ritz-Carlton on Amelia Island, FL, Shawn Rhodes (pictured) offered a powerful start to the three-day event with his presentation on Using Change Management to Drive Excellence.
Success through Change
Rhodes is a former combat correspondent with the Second Marine Division. Embedded with Marine Corps units, he saw firsthand how the successful units maneuvered change and handled the extreme challenges of battlefields. Now he works with leaders in various corporations to implement the same skill set to make their companies more successful. In his presentation, Rhodes posed the question, “Will you manage change, or will change manage you?”
“The one certainty in business is that things will change. How that affects your business is determined by how quickly you can maneuver without sacrificing results,” he said. Rhodes offered actionable steps that ensure high performers achieve their goals in challenging environments.
Rather than simply planning and performing, high performers Plan, Perform and then Process those plans, making sure to get teams aligned on the objectives. “You won’t make the same mistakes twice because you are processing what has happened when you plan and perform.”
High performing teams set objectives that must be precise, profitable and with a specific purpose. An example Rhodes gives is, if you tell your staff to “go out there and out-service the competition” they will just run off without direction. Instead, say, “By June 1, we are going to develop questions to discover prospect problems with current suppliers so we can capture high-profile clients.”
During the planning process, you must also assess the challenges. “Identify what will stand in the way of success. Assess these things before you go out in the field to achieve the objectives,” he warned. “Then, once the challenges are identified, assess the resources available to overcome those challenges. And, you must share that with all of your staff.”
Finally, analyze what has happened, either in your own organization or from other sources. If you have senior leaders that are getting ready to retire, be sure they get that information out of their heads to the junior people. Otherwise, it will be lost to the organization. Engage the senior people and get that to the younger people. Keep training first and foremost in your organization. “As a leader, be willing to step up and admit what you’ve done wrong and say how you’ll fix it.”
Navigating the Crest
ITR Economics, compared handling the ups and downs of the economy and the fortunes of companies to riding a wave, noting that valve manufacturers have had a pretty good year since the 2016 annual meeting.In a presentation on economic conditions, Alex Chausovsky, senior analyst at
However, what they do over the next year will determine how they navigate the crest. “The next six to nine months is going to be the very best time to make investment,” he said. “Bring on people and make capital improvements. You have a near-term opportunity if you capitalize on the crest of the wave, but a year from now we’ll be on the down side.”
Regarding policies from the Trump administration, Chausovsky noted, “As of now, there really hasn’t been an influence, because none of the major things that were supposed to happen have actually happened. ITR does not do their analysis until after major policies are implemented and there is no guarantee that even a major tax reform (i.e. reducing corporate rate from 35% to 20%) will affect the GDP.”
He also advised valve industry leaders to look at the Industrial Production Index instead of GDP as it is more indicative of the direction of this sector. “See how extreme the drop was in 2009. It has never returned to the high it achieved in 2008. Business investment is at 16%, which has shrunk.”
Multiple leading indicators show that by mid-2018 a peak will be hit, and then there will be a downturn. “Many sectors will feel the negativity in 2019,” predicted Chausovsky. “There will be a mild macroeconomic pull out that may technically be a recession, but very mild. It doesn’t mean terrible things for your business if you position yourself with the mindset that the recession is coming. But 2020 and 2021 should show expansion.”
Chausovsky stressed that now is the time to do something with and for your company. “Be aggressive. Take risks. Invest in your company. Your own company’s data is key to planning your future. Look at your sales data and plot it. Benchmark yourself and know your market. It is more important to focus on rate of change vs. just sales.”
Also pay attention to the Purchasing Managers’ Index as it leads the U.S. economy by 9-14 months. The PMI “has been on a nice long rising streak,” said Chausovsky. “This will put inflationary pressures on your bottom line, unless you find a way to raise your prices,” he warned. “Figure out which customers are profitable, which are not. Figure out a way to get prices up on your less profitable customers.”
Chausovsky warned that one of the biggest challenges all manufacturers will have to overcome in the next few years is the dearth of skilled workers. “You will continue to struggle to find the right people and when you do, they will become more expensive. Retention has got to be the primary factor for your company— especially your top talent, the stars of your organization. You’ve got to do everything you can to keep them from leaving your company.”
- Budget for continued economic expansion through most of 2018.
- Be willing to take risks and invest in your business over the next two quarters.
- Hire sales people to grow as the economy accelerates then slows.
- Add new products. New ventures buck business cycle decline.
- Make sure your training and retention programs are top notch.
- Budget for higher wages and input costs—raise your prices!
The Changing Workforce
Schwartz recommend that employers take the time and make the effort to understand the differences and create a range of recruitment, training, work styles and orientation methodologies that will appeal to the various generations on their team.
International Trade in Flux
Eric McClafferty of Kelley Drye discussed the current international trade negotiations being conducted by the Trump administration, which has stated its goals of “leveling the playing field” to bring back or create manufacturing jobs in the U.S.
Negotiations on NAFTA, KORUS (with South Korea) and Chinese trade are ongoing, but to date, most actions have resulted from executive orders, including a withdrawal from the Trans-Pacific Partnership (TPP). There does seem to be interest in bilateral agreement with the UK, Japan and other TPP nations but so far there is no solid plan in place. Most companies are taking a wait-and-see approach.
While the presenters addressed different topics, all reflected the need to adapt to change. Companies that adapt—whether to a changing global marketplace, multigenerational workforces or erratic business cycles—will succeed, and the resilience of the valve industry is testimony to their adaptability.