The Institute for Supply Management (ISM), one of the leading supply chain organizations in the country, released some pretty dour statistics to kick off the new year. For the month of December 2015, ISM reports that new orders, production and raw materials inventories in the manufacturing sector were all contracting, with supplier deliveries slowing, but perhaps most alarmingly, the employment index was down by 3.2% from the previous month.
You won't find a whole lot of happy news in the MHI study of material handling business dynamics in December, either. While overall business activity expanded last month, the rate of expansion dropped by 12% from November, and capacity utilization was off 26% from the previous month. While shipments increased modestly (2%), new orders dropped equally modestly (2%), future new orders were down 3%, and exports were off an alarming 35% (a factor being blamed on the strong dollar).
We're currently conducting our annual Salary Survey, which provides a unique look into the daily lives of material handling and logistics managers. While the final results have yet to be tallied, we can tell you that the biggest concern in the industry right now is the talent shortage (with regulations coming in second). Roughly 70% of respondents have struggled to fill a position in the past year due to a lack of skilled candidates, indicating that finding and retaining talent isn't just an occasional problem, but in fact has already reached the epidemic stage.
So given all of the above, is it any surprise that the campaign for U.S. President has barely even acknowledged industrial challenges at all? For that matter, I'm not sure that any of the major candidates have talked about anything substantial at all yet.
At the top of the Democrat polls, we have Hillary Clinton, whose platform is based mostly on promises to keep on doing what President Obama has done for the past seven years, which is somewhat less than inspiring for anybody who has paid attention to the state of the country or the world lately. Leading on the Republican side, we have reality show host and occasional mogul Donald Trump, whose methodology to "make America great again" seems to be based solely on saying those same four words over and over until everybody believes it. One party focuses on social programs and giveaways, while the other paints a picture of a world on the brink of Armageddon. It's all political theater designed for show, not substance.
Meanwhile, the Obama Administration is strengthening current regulations while concocting new ones that will make it even harder for businesses to compete on a global basis. The only groups that ever seem to benefit from this constant stream of regulatory activity are government bureaucrats and corporate lawyers, who end up with expanded staffs and plenty of billable hours.
Along with the new regs, of course, come new opportunities to increase government revenues through new taxes, fines, processing fees and other time-tested methods of creating money out of nothing. As one pundit observed recently, the amount of money that Washington spends every year has almost nothing to do with how much money the government collects. If you tried running your personal life that way, you'd be broke within a month, and if you tried running a business with that kind of imaginary budget you'd be promptly fired and/or indicted. But it's business-as-usual in Washington.
And according to Jonathan Starks, chief operating officer at freight transportation forecasting firm FTR, Washington will be playing an ever-increasing role in the supply chain arena in the coming months. As Starks sees it, "The regulatory pressures will only be increasing over the next few years as the recently introduced regulations [e.g., the recently-passed transportation bill] finally get implemented."
In this month's cover story, David Sparkman does a yeoman-like job analyzing the new regulatory hurdles that the material handling and logistics industry will face in 2016.
And two other regular contributors, Alan Will and Dan Charney, offer insights into how companies like yours can find and develop the kind of supply chain talent necessary to remain competitive and relevant in today's economy. We hope their timely reporting will serve as a refreshing alternative to the noise and silliness of the mainstream media.
Happy New Year!