Vol I, January 2005

MM2M

Northern Machine Tool Co. has been a Muskegon manufacturing mainstay since 1946. Building tooling for the automotive and office furniture industries, the firm has been doing business strictly on U.S. soil. That is about to change.

Northern Machine Tool President Steve Olsen said that although it currently is not doing business on an international level, Northern Machine Tool is opening the door of global possibilities.

“We’re working on forming an alliance with a company like ours in Korea and in China,” Olsen said. “It’s not because we want to; it’s because we think it’s smart business to do so.”

Olsen said the tooling sector is sophisticated enough in those two countries that it could complement what’s being done at Northern Machine Tool. Of course, any work done overseas must first receive customer approval. It was customers and fellow tooling firms with global experience that suggested possible alliance partners, said Olsen. “But to actually find someone who is a good match for us, I have to do that.”

Foreign competition is certainly one dynamic affecting the tooling sector. Olsen understands the pressure low-cost tooling work coming into America from China and other countries has put on the U.S. tool and die industry.

“From a price standpoint, nobody can compete with China,” said Olsen. “But my customers have asked us to take some of the work they’ve placed with us and subcontract that to China or Korea. That way we both share in the cost gain of doing that overseas.”

When it comes to the subject of foreign competition and the outsourcing of jobs overseas, Olsen said federal officials need to put things into perspective and look at how the issue affects all manufacturers not just the corporate giants.

“I think the federal government loses sight of the impact that a China or Korea have on the small manufacturer. If I’m General Motors I can put a plant up in China, but if I’m here in West Michigan employing 45 people, I’m not going to put a plant in China,” said Olsen.

U.S. manufacturing has been hit pretty hard lately and the future looks cloudy. One thing is certain to Olsen. The manufacturing sector will be different five years from now.

“There will still be manufacturing, and it will be strong in America and in Michigan, but I think there will be less of us.

There’s a weeding out process going on now, but I can’t say how many of us will be left,” he said.

For Northern Machine Tool in particular Olsen envisions a leaner company with a younger workforce. He also hopes to see a benefit from the overseas alliances on which he is currently working.

Technology will continue to be a major influence, turning tooling into a hostel of high technology. Olsen cited the influence of e-commerce and the Internet as well as the constant influx of technology advancements on the plant floor. To keep ahead of the high-tech curve, Northern Machine Tool continues to invest in the latest CNC equipment and has automated its processes as much as possible.

“We’re continually looking at what’s out there that can help us improve our process, whether it’s a software product or a machine tool product,” Olsen said. 

Northern Machine Tool’s business is 80 percent automotive and Olsen said he remains bullish on the industry and Michigan’s newly introduced strategy to attract and retain automotive jobs.

However, he does feel that the Single Business Tax is certainly a detriment to growth, and that bureaucratic roadblocks must be lifted to stimulate expansion.

“In business, you have to react right now or you lose the sale. Unfortunately, the bureaucratic process, like gaining brownfield approval for a site, moves at a snail’s pace.”

Olsen said that overall Michigan and Muskegon are good places to do business. In fact, Northern Machine Tool continues to press forward with an expansion ready for completion by mid-2005.

“A plus for Michigan is the that the workforce is very trainable. We have a very good pool of tool & die makers and skilled machinists to pick from here,” said Olsen. “I also think the Muskegon Career Tech Center is going to be a major plus for technical education in the county.”

Rising health care costs are creating a huge negative impact on manufacturing in general, said Olsen. He has no definite solution to fix what is ailing the health care system, but he knows there is a problem.

“What we’re doing now doesn’t work. Cost sharing with employees lessens the burden from the employer and adds it to the employee, but doesn’t fix the problem,” he said.

Health care costs and foreign competition are only part of manufacturing’s burden, stated Olsen.

“Manufacturing is being stressed — by government, by customers, by suppliers, by the health care system. You throw all these things together and you have a perfect storm. The compounding of all these external issues continues to mount on our backs.”

Olsen said he appreciates the help from organizations like the Muskegon Area Chamber of Commerce and the Employers Association of West Michigan. “If they don’t have the answer, they can certainly point you in the direction of the person who does.”

Northern Machine Tool is deeply rooted in the Muskegon community. It supports 21 different community nonprofit organizations and is a strong supporter of United Way. Olsen sits on the board of Community Foundation of Muskegon County and the county’s American Red Cross board.

Northern Machine Tool’s 35,000-square-foot Muskegon facility employs 45.The company is TE 9000 compliant.

COPYRIGHT 2004. MIBIZ NETWORK. ALL RIGHTS RESERVED.

This article appeared in the MM2M, Vol I, January 2005 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.