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Manufacturing and the new way of doing business

The scrambled economy the pandemic has created is demanding a new way of doing business.

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At Marvin, the window and door maker based in Warroad, Minn., times are changing just as quickly as everywhere else. One big change: a redesigned hiring portal. Here a worker is seen at the company's West Fargo location.
Image: Courtesy of Marvin
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At Marvin, the window and door maker based in Warroad, Minnesota, times are changing just as quickly as everywhere else. The pandemic may be gone, sure – but the scrambled economy it’s left in its wake is demanding a new way of doing business.

One big change: a redesigned hiring portal. In a tight labor market, it’s just not acceptable to take a few days to get back to prospective hires anymore, said Kathleen Brenk, a senior human resources official with Marvin. The company has to be in touch in a matter of hours.

“We get back to applicants in about four to eight hours, from the minute that they click ‘apply.’” she said. ”We don't have the space to (wait for days) anymore, when there are lots of choices.”

Many businesses have been under extraordinary pressures since the end of the pandemic. Coronavirus scrambled demand – but now supply lines and worker availability are just as undependable, leading to massive costs for businesses.

U.S. business logistics costs rose 22% in 2021, according to the Council of Supply Chain Management Professionals , putting it at about 8% of national GDP – the highest since 2008.

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“Workers still have power in this job market,” a Wall Street Journal headline blares , citing increased offerings for remote work, numerous workers migrating to new industries and – perhaps most importantly – more job openings than there are unemployed people.

“The pandemic was tough. It was a lot of unknowns,” said Randy Morehouse, director of operations at Brookings,South Dakota-based Falcon Plastics. “But coming out of the pandemic I would say was almost worse, as stuff started to come back – and you ran into roadblock after roadblock of constraints. That was probably tougher on manufacturing than the actual pandemic itself.”

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'The pandemic was tough. It was a lot of unknowns,' says Randy Morehouse, director of operations at Brookings-based Falcon Plastics. 'But coming out of the pandemic I would say was almost worse, as stuff started to come back – and you ran into roadblock after roadblock of constraints. That was probably tougher on manufacturing than the actual pandemic itself.'
Image: Courtesy of Falcon Plastics

Falcon and Marvin aren’t the only ones adapting to a changing world. At WCCO, Vice President of Operations Rod Koch said updates to automation processes that helped the company weather the worst of COVID – like workers out with the virus or because of a close contact. But now it’s the materials side of things that’s seeing bigger problems. Koch said the company has hired multiple additional staff to help with sourcing.

“Shipping methods have really been a challenge. All the ports are congested, the pandemic – the ramifications of that – is still out there. There’s a severe lack of workers, whether it’s in ports, trucking, trains, the ships. Global logistics, as you’re probably well aware, are really challenging to say the least.”

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'Shipping methods have really been a challenge,' says WCCO Belting's Vice President of Operations Rod Koch. 'All the ports are congested, the pandemic – the ramifications of that – is still out there.' A worker is seen here at the company's facility in Wahpeton, North Dakota.
Image: Courtesy of WCCO Belting

It’s unclear how long this will last. Inflation has been strong all year, with June’s Consumer Price Index figures showing a 9.1% increase over a year prior – the highest in four decades. As of early July, though, gas prices had begun to ease, dangling the possibility that the worst of the tumult might be soon behind.

Federal Reserve officials have been trying to curb the effects of inflation – and an overheated economy – with an end to its easy-money policies and a hike in interest rates. Whether the economy gets a soft landing or crashes into a recession still remains to be seen, especially as central banks around the world execute significant rate hikes (the Bank of Canada increased interest rates by 1% on the same day that American inflation data was released in mid-July).

“Inflation makes everything difficult,” Lara Rhame, an economist with FS Investments, told The Wall Street Journal . “It erodes your savings, your wages, your profits. It’s punishing everybody.”

While inflation will eventually cool, it’s possible that things will never go back to the way they were pre-pandemic – that everything from the labor market to business practices are going to be different now. NPR reports that , at the end of May, there were 11.3 million open jobs, with layoffs “at historic lows.”

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“I think that the way people evaluate where they work, and how they work, is here to stay,” Brenk said. “I think people value an amount of flexibility. I think people value a schedule that’s predictable.”

This is true for businesses that are trying to balance their supply chains, too.

“Something that I could get in 10 days before, I need to have my purchase orders out three months, in order for it to ensure that we're going to have supply,” said Dawn Munson, purchasing manager at Falcon Plastics, adding that the company carries more material than they did before COVID, “because you never know what’s going to happen.”

“When you talk about things that we changed, our ordering habits changed,” she said. “Everybody, I think, is a little bit gunshy at this point. It’s been such a roller coaster of events that you’re not sure what is going to happen next.”

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