Interview with John Nofsinger, CEO of MHIA
Materials handling is one of Americas - and the globes - fastest growing industries. Despite contracting last year, the worst is now over and the indus...
Materials handling is one of America’s - and the globe’s - fastest growing industries. Despite contracting last year, the worst is now over and the industry is on the rise again. Indeed, as with many industries worldwide, materials handling took a hit during the economic downturn; now, it’s a case of getting the sector “back on track” and developing its presence in the supply chain.
In fact, so sure is the Material Handling Industry of America’s (MHIA) CEO, John Nofsinger, of material handling’s importance to the supply chain, he stands by its tag line: “The Industry that Makes the Supply Chain Work”.
In the U.S., the consumption of material handling and logistics equipment and systems totals more than $156 billion per year, while producers employ over 700,000 workers. In the UK, the industry’s total turnover exceeds £3.5 billion, according to the British Materials Handling Federation (BMHF).
“Once seen as a series of tactical activities, material handling today enjoys support at the highest and most strategic levels of business planning and operations,” explains Nofsinger of the industry as it stands.
So, materials handling is big business and is set to be even bigger in 2010 as the prospects for market growth take an upturn. Firms that reduced inventories during the recession will have to replenish those as the economy picks up. “The state of the $156 billion materials handling and logistics industry is healthy,” Nofsinger claimed at the NA 2010 Trade Show in Cleveland in April, organized by the MHIA. He also forecast growth in new orders in the 6 percent to 8.5 percent range this year.
“All industries today are facing incredible challenges to long-term productivity and profitability – from disruptive demographics (worker and skills shortages), globalization, consolidation, longer and more complex supply networks, energy and raw materials constraints, capital formation, as well as myriad environmental and sustainability issues,” says Nofsinger. “It is against this backdrop that material handling solutions are enjoying heightened awareness and credibility.”
He explains that those solutions include automating processes in order to address disruptive worker and workplace demographics; protecting and enhancing worker productivity and safety through ergonomic assistance; securing goods and their flow to assure proper span of control. The industry’s solutions also encourage sustainable and environmentally friendly packaging and load platform packaging and handling; and contribute to overall productivity and profitability.
WHAT THE FUTURE HOLDS
The NA 2010 Trade Show earlier this year gave an indication of where the industry is headed and showcased some of the progress being made. DC Velocity, the industry publication in attendance at the event, highlighted three of the more significant advancements in the sector. It recognized that the demand for integrated solutions in warehousing is encouraging vendors to collaborate when it comes to developing integrated products. DC Velocity also identified several target markets for the material handling equipment and software vendors, specifically the grocery, food and beverage, medical devices, and pharmaceuticals sectors. Government regulations now require manufacturers, distributors, retailers, carriers and 3PL specialists to track and verify the entire supply chain in order to avoid incidences of food contamination.
“A major factor leading to this elevation of importance has been the integration of physical and information technology elements of the process to allow concurrence, seamlessness and transparency,” says Nofsinger of the material handling solutions being adopted by companies today.
Richard J. Jarosinski, President and Chief Executive Officer of Portec Rail Products Inc, recently announced the company’s first quarter results, noting that the material handling industry is “off to a good start” this year. He admits though that the industry is not quite what it was prior to the recession but the signs are that the sector is on its way to recovery. Jarosinski observed that there are “positive signs” in North American freight car loading and intermodal traffic increases in particular. Portec Rail Products has seen increased demand for its friction management and wayside detection products and services in the first three months of 2010.
“In addition, we are happy to see the increased level of order activity for our UK material handling business,” he adds.
So material handling is flourishing on both sides of the Atlantic and there are signs of innovation within the industry again. The MHIA is also proclaiming that material handling is “healthy”. In fact, Nofsinger believes the recession “has set the stage for new business models and practices to address a new normal”, and that it will become more strategically important in the future.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.